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The extraordinary circumstances of 2020 tested Assured Guaranty's business model, operations, and people once again and we delivered remarkably strong results in a year marked by a public health crisis and economic crisis, volatile financial markets, a tumultuous social and political environment. We prepared well for the technological and organizational challenges of operating remotely and safely during the COVID-19 pandemic and our employees showed the dedication and capability to achieve strong results. Most importantly, we saw the clear success of our efforts over many years with several in insured portfolio that would perform well in a severely distressed global economy. The year's challenges made our 2020 accomplishments all the more impressive. Our new business production totaled $389 million of direct PVP exceeded by $75 million -- the direct PVP we produced in every year but once since 2010. The sole exception was the $553 million of direct PVP we produced in 2019 making the last two years direct production our best in this decade. These strong results compare to a reliable base for future earnings for years to come. In our core business, U.S. municipal bond insurance we guaranteed more than $21 billion of foreign primary and secondary markets, generated $292 million of PVP, both 10-year records for direct production. We again set new per share records for shareholders' equity and adjusted operating shareholder's equity with totals at year-end of $85.66, $78.49 respectively. During the year, our adjusted book value per share exceeded $100 for the first time. At $114.87 year end of adjusted book value per share reflected the greatest single year increase since our IPO $17.88 and the second highest growth rate of 18%. We retired a total of 16.2 million common shares mainly through highly accretive share repurchases at an average price of $28.23. We spent 11% less in 2022 repurchase. We repurchased 31% more shares than in 2019. We returned a total of $515 million to shareholders through repurchases and dividends. We also repurchased $23 million of outstanding debt. Our Paris-based subsidiary Assured Guaranty SA was awarded ratings of AA by S&P and AA+ by KBRA and underwrote its first new transactions allowing us to seamlessly continue our continental European operations in the wake of Brexit. We also transferred our portfolio of transactions insured by our UK subsidiary to the French company. And we successfully integrated our asset management business in its first full year of operations and rebranded it Assured Investment Management. 2020 was a profitable year where we earned $256 million in adjusted operating income or $2.97 per share. But our most compelling news of 2020 was our performance in U.S. public finance where conditions were volatile. The benchmark 30 year AAA municipal market data interest rate began the year at 2.07%, jumped in March as high as 3.37%, bottomed down in August at a historic low of 1.27%. In early spring investors were shocked by the potential scale of the pandemic's economic impact, municipal bond funds experienced method outflows. At that time for PO analysts of any were predicting that 2020 will see $452 billion of municipal bonds issued the greatest annual par value on our volume on record. This action by the Federal Reserve to help stabilize financial markets by maintaining short-term interest rates near zero and supporting the federal loan program. These included $500 billion municipal liquid facility which reassured the bond market by providing a backup source of liquidity for states and municipal. Investors returned to the municipal market with a heightened focus on credit quality, trading value stability and market liquidity all concerned to drive demand for our bond insurance. And investment grade credit spreads widened significantly before [Indecipherable] BBB credits. As a result bond insurance penetration rose to 7.6% of par volume sold in the primary market, almost a full percentage point above the past decade's previous high. Assured Guaranty led this growth with a 58% share of insured new issue par sold. $21 billion of U.S. public finance par we insured in 2020 was 30% more than in 2019 and included taxable and tax exempt transactions in both primary and secondary markets. 2020 PVP was up 45% year-over-year. Many issuers took advantage of lower interest rates to refund existing issues in many cases using taxable bond for advanced refunding. Correspondingly, taxable issues widened the investor base in non-traditional investors both domestically and internationally. Many of these investors could particularly benefit from our guarantee because of our greater familiarity with the municipal bond structures and credit factors. We insured $6.8 billion of forum taxable municipal new issues in 2020, up from $3 billion in 2019, $1.5 billion in 2018. We also guaranteed $2.5 billion of par the new issues that had underlying ratings in the AA category from S&P or Moody's, which was $1 billion more than in 2019. While investors had no reason to see default risk in such high quality credits many believe the risk, the rating downgrades had increased in all rating categories. This gave investors an additional incentive to prefer our insured bonds over uninsured bonds. There are Demonstratable cases where after [Indecipherable] bonds we had insured saw underlying downgraded or its credit viewed as distressed the insured bonds sell at market value better than the comparable uninsured bonds. The increase in institutional demand for our guarantee was evident in 39 new issues, up from 22 in 2019 where we provided insurance in $100 million or more of par. These include one of our largest U.S. public finance transactions in many years, $726 million of insured refunding bonds issued by Yankee Stadium, LLC. Our production in Healthcare Finance made a strong contribution during 2020 as we guaranteed $2.7 billion of primary market par on 25 transactions. As the only provider of bond insurance in the healthcare sector Assured Guaranty had 9.7% of all healthcare revenue bond par issued in 2020. Additionally we guaranteed for $164 million of healthcare par across 39 different secondary market policies. Another highlight was our reentry after seven years into the private higher education bond market where we insured a total of $690 million of par for Howard, Drexel and Seton Hall Universities. For Howard University we insure two issues totaling $320 million in par in insured par. Our International Public Finance business produced $82 million of PVP during 2020 even though a number of opportunities were delayed due to pandemic conditions. However the pandemic also had the positive effects of widening credit spreads. We executed significant transactions including three solar energy transaction in Spain, student accommodation financing for Kingston University in the United Kingdom. We have developed a strong pipeline for 2020. In our Worldwide Structured Finance business, we executed a diverse group of transactions in the asset-backed securities, insurance capital management and other structured finance sectors and generated $16 million of PVP during 2020. Even though pandemic conditions constrained our marketing activities we were able to lay the groundwork for a variety of potential transactions in 2020. The efficacy of our underwriting and risk management was evident in the overall performance of our insured portfolio. This credit quality changed little even as necessary efforts to control the endemic disrupted the economy. Our par exposure to credit review below investment declined by $531 million, a 6% decrease and ended the year at less than 3.5% of net par outstanding. Our surveillance professionals reacted to the early news of the pandemic by properly identifying the insured portfolio sectors most likely to weaken evaluating the vulnerability of each of these sectors obligations, reaching out directly to issuers in many cases. In general what we found was reassuring. We have paid only relatively all first-time insurance claims we believe were due at least in par to credit stress rising specifically from COVID-19. We currently project full reimbursement of these claims. U.S. municipal bonds make up about three quarters of our insured portfolio, asset class they are well structured to protect bond holders with most of our transactions containing covenants that requires issuers to increase tax rates, fees and charges, make sure they are adequate funds to meet their service requirements. And many also require remaining to debt service reserve funds with up two year's worth of debt service coverage. Municipalities generally improved their financial condition in the decade since the Great Recession, which further prepared them to handle the market disruption caused by the pandemic. Regarding Puerto Rico, we announced earlier this week that we have agreed to conditionally support their revise GO of public bidding authorities plan support agreement with the Oversight Board and other creditors of Puerto Rico in the PBA. As we have said all along we support it consensually, negotiated and comprehensive approach to resolving Puerto Rico's current financial challenges. We have conditionally supported this agreement with the express understanding that the affected parties will work with us in good faith to make this agreement part of a more comprehensive solution one that respects our legal rights and ultimately achieves the goal of bringing the Title 3 process to adjust an expeditious conclusion. We will continue to work diligently and sharply toward the resolution of any remaining issues the GO and the PBA credits as well as other Puerto Rico credits such as salary and transportation bonds, prevention authority bonds and others. This effort is taking place amid occurred during economic news, significant federal assistance has been unlocked, Commonwealth revenues continue to exceed the expectations underlying the Oversight Board's fiscal plans resulting in aggregate Commonwealth balances tripling over the last three years to more than $20 billion at year-end 2020 and reaching as high as almost $25 billion mid-year. Our total net par exposure to Puerto Rico decreased in 2020 by $545 million including $372 million of water and sewer bonds that were redeemed without any claims having been made on our policy. Turning to asset management, our corporate strategy for any new business -- for entering new business was to diversify our business profile by building a fee-based revenue source that complements our risk-based premium revenues utilizing our core competency of credit evaluation. Assured Investment Management also gives us a in-house platform to generally improve investment returns -- to generate improved investment returns. Our Asset Management subsidiary accomplished a number of strategic objectives. AssuredIM issued two new CLOs, opened a European CLO warehouse during the year. It also created a specialized investment advisor that launched new healthcare opportunity funds and continued its planned strategy of unwinding certain legacy funds. AssuredIM sold CLO equity positions in those bonds to third parties. Even though AssuredIM assets under management in the wind down funds were reduced by $2.4 billion its total AUM changed very little declining by less than 3% to $17.3 billion. Assured Guaranty's insurance companies have allocated $1.1 billion of investments from AssuredIM to manage, of which, almost $600 million was funded as of year-end. As of October 1, 2020, we were pleased to learn that Assured Guaranty would become a competitor of the Standard & Poor's Small Cap 600 Index. We believe there are thousands of passive and active small cap mutual funds and exchange-traded funds, attractive benchmark to this Index and therefore are likely to hold our shares for the long term. These investors' appetite for our shares was reflected in a 31% increase in our share price the week following the announcement. Our share price continue to grow and in the year 44% higher than on October 1 almost doubling through February 25 of 2021. Inclusion in the Index changed the composition of our shareholder base to be somewhat more heavily weighted toward the index focused asset managers including our second- and fourth-largest shareholders which together hold approximately 20% of our shares at year-end. Times like these are no substitute for financial strength, experience and judgment. These are qualities that enables Assured Guaranty to stand the test of time to more than three decades of market cycles and unexpected economic shocks. They are attributes that enables us to help borrowers of public finance, infrastructure and structured finance markets as well as financial institutions, pension funds, insurance companies, retail investors to navigate the current economy. We are optimistic about 2021. On the whole U.S. municipal revenues have fared much better than the market originally feared from the pandemic. They remain under stress. But we believe few investment grade credits will default least of all those that we have selected to insure. We are confident in the quality of our insured portfolio, our financial strength and our financial liquidity. And many investors have a renewed appreciation of our value proposition. As infrastructure spending increases in our markets to address deferred needs and provide economic stimulus we expect to continue to find opportunities to assist issuers managing their financing costs. Longer term, we believe 2020 was a pivotal year that's likely to leave a lasting impression the great value our guarantee provides when something as unexpected and distressing as COVID-19 occurs. We continue to work to create value through a thriving financial guarantee business and a growing asset management arm. We will never lose sight of our role as stewards of capital where we are committed to managing efficiently protect policyholders, to reward our shareholders and our clients. Let me start by highlighting this year's achievements against our long-term strategic initiatives. In 2020 we had strong PVP results, particularly in the U.S. public finance sector which replenished enough deferred premium revenue to offset scheduled amortization and refundings. We also retired 16.2 million shares, mainly through share repurchases which helped to boost adjusted book value per share to a new record of over $114 per share. In our Asset Management business, we increased fee earning AUM from $8 billion to $12.9 billion or 62% across CLO opportunity and liquidity strategies. As of yearend 2020 Assured Guaranty insurance companies had $1.1 billion of invested assets that is managed by Assured Investment Management of which $562 million is through an investment management agreement and $522 million is committed to Assured Investment Management funds, which had a total return of 15.6% on the invested balances. Turning to our fourth quarter 2020 results, adjusted operating income was $56 million or $0.69 per share compared with $87 million or $0.90 per share in the fourth quarter of 2019. The contribution from our insurance segment for fourth quarter 2020 was $109 million compared with $133 million in fourth quarter 2019. While loss expense was higher in fourth quarter 2020 primarily related to our Puerto Rico exposures, our earned premiums and income from the investment portfolio both increased on a quarter-over-quarter basis. Net earned premiums and credit derivative revenues increased $30 million to $159 million in fourth quarter 2020 compared with the $129 million in fourth quarter 2019. These amounts include premium accelerations of $65 million and $39 million respectively. Total income from the insurance segment investment portfolio consists of net investment income and equity earnings of investees totaling $94 million in fourth quarter 2020 and $84 million in fourth quarter of 2019. Net investment income represents interest income when fixed maturity and short-term investment portfolio and with $70 million in fourth quarter 2020 compared with $85 million in the fourth quarter of 2019. The decrease was primarily due to lower average balances in the externally managed fixed maturity investment portfolio due to dividends paid by the insurance subsidiaries and were used for AGL share repurchases and the shift of investments to Assured Investment Management funds and other alternative investments as well as lower short-term interest rates. Equity in earnings of investees represents our investment in the Assured Investment Management funds as well as earnings from our strategic investments. This component of investment earnings is more volatile and the net investment income on the fixed maturity portfolio and will fluctuate from period-to-period. In the fourth quarter 2020 equity earnings was $24 million compared to a negligible amount in fourth quarter 2019. As of December 31, 2020 the insurance subsidiaries investment in Assured Investment Management funds was $345 million, compared with only $77 million as of December 31, 2019. The insurance companies have authorization to invest up to $750 million in Assured Investment Management funds of which over $43 million has been committed including $177 million that has yet to be funded. In addition, the company has a commitment to invest an additional $125 million in unrelated alternative investments as of December 31, 2020. As we shift assets into these alternative investments, average balances in the fixed maturity investment portfolio and the related net investment income may decline. However, the long-term we expect the enhanced returns on the alternative investment portfolio to be approximately 10% to 12%, which exceeds the returns on the fixed maturities portfolio. In the Asset Management segment adjusted operating income was a loss of $20 million compared with a loss of $10 million in fourth quarter 2019. The additional net loss was mainly attributable to $5 million in placement fees associated with the launch of new healthcare strategy and an impairment of a right of lease -- right of use asset of $13 million related to the relocation of Assured Investment Management offices to 1633 Broadway, Assured Guaranty's primary New York City location. Our long-term view of the Asset Management segment remains positive based on our recent success in increasing fee earning AUM by 62% and launching a $900 million healthcare strategy with significant third-party investment. In addition, we believe the ongoing effect of the pandemic on market conditions may present attractive opportunities for Assured Investment Management and for alternative asset management industry as a whole. Adjusted operating loss for the corporate division was $28 million in the fourth quarter of 2020 compared with $32 million in the fourth quarter of 2019. The corporate division mainly consists of interest rate expense on U.S. holding company's debt. It also includes Board of Directors and other corporate expenses in fourth quarter 2019 also included transaction expenses associated with the BlueMountain acquisition. On a consolidated basis the effective tax rate may fluctuate from period-to-period based on the proportion of income in different tax jurisdictions. In fourth quarter 2020 the effective tax rate was a provision of 12.7% compared with a benefit of 3.5% in fourth quarter 2019. The benefit in fourth quarter 2019 was primarily due to the favorable impact of a new regulation related to base erosion in anti-abuse tax. Moving on to the full-year results, adjusted operating income was $256 million in 2020 compared with $391 million in 2019. The variance was mainly driven by the Insurance segment and Asset Management segment adjusted operating income, which declined $83 million and $40 million respectively on a year-over-year basis. Please note asset Management full-year results are not comparable between 2020 and 2019 as 2020 includes a full year of operating results while 2019 includes only one quarter as the BlueMountain acquisition occurred on October 1, 2019. The insurance segment had adjusted operating income of $429 million in 2020 compared with $512 million in 2019. Full year insurance results were lower, primarily due to a large benefit in our RMBS exposures in 2019 that did not recur in 2020, partially offset by a commutation gain in 2020 on the reassumption of a previously ceded portfolio. Net earned premiums and credit derivative revenues were $504 million in 2020 compared with $511 million in 2019 including premium accelerations of $130 million -- and a $130 million respectively. Also, noteworthy is that public finance scheduled earned premiums increased 5% in 2020 compared with 2019. The corporate division had adjusted operating loss of $111 million in both 2020 and 2019. Turning to our capital management strategy, in the fourth quarter of 2020 we repurchased 4.3 million shares for $126 million at an average price of dollars and $28.87 per share. This brings our full-year 2020 repurchases to 15.8 million shares or $446 million at an average price of $28.23. So far in 2021 we have purchased an additional 1.4 million shares for $50 million. Since January 2013, our successful repurchase program has returned $3.7 billion to shareholders, resulting in a 63% reduction in total shares outstanding. The cumulative effect of these repurchases was a benefit of approximately $29.32 per share in adjusted operating shareholder's equity and $51.48 in adjusted book value per share, which helped drive these metrics to new record highs of $78.49 in adjusted operating shareholder's equity per share and $114.87 of adjusted book value per share. From a liquidity standpoint, the holding company currently has cash and investments of approximately $204 million of which $133 million resides in AGL. These funds are available for liquidity needs or for use in the pursuit of our strategic initiatives through to expand the asset management business or repurchase shares to manage our capital.

q4 adjusted operating earnings per share $0.69.

These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Some of today's remarks include non-GAAP financial measures. These non-GAAP financial measures should not be considered a replacement for and should be read together with our GAAP results. Tom will provide some comments on our performance as well as a brief overview of the current operating environment. Bernadette will then provide details on our first quarter results and fiscal 2022 outlook. We're pleased with our strong sales growth in the quarter, which reflects the on growing broad recovery in demand across our out of home sales channels as well as continued improvement in our key international markets. However, our margin improvement lags our volume recovery as a result of the timing of pricing actions to offset cost inflation as well as challenging macro factors that increase our cost and affected our production run rates and throughput. These ongoing challenges combined with the extreme summer's heat negative, negative impact on potato crops in the Pacific Northwest will result in higher costs as the year progresses. As a result, we now expect our gross profit margins will remain below pre-pandemic levels through fiscal 2022. We believe many of these costs and supply chain challenges are transitory and we're taking aggressive actions to mitigate their effects on our operations and financial performance. We're confident that our actions along with our investments to improve productivity and operations over the long-term will get us back on track to deliver higher margins and sustainable growth. Before Bernadette gets into some of the specifics of our first quarter results and outlook, let's briefly review the current operating environment starting with demand. In the U.S., we continue to be encouraged by the pace of recovery in restaurant traffic and demand for fries. Overall, restaurant traffic has largely stabilized at about 5% below pre-pandemic levels led by the continued solid performance at quick service restaurants. Traffic at full service restaurants continued to rebound in June and July, but it did soften a bit in August as the Delta variant surged across most of the country. Demand improved at non-commercial Foodservice outlets especially in the education market, which help to offset the near-term slowdown in full service restaurants. The fry attachment rate in the U.S. which is a rate at which consumers order fries when visiting a restaurant or other Foodservice outlets also continued to help support the recovery in demand by remaining above pre-pandemic levels. Demand in U.S. retail channels also remained solid with overall category volumes in the quarter still up 15% to 20% from pre-pandemic levels. Outside the U.S., overall fry demand continued to improve in the quarter, although the rate of improvement varied widely among our key international markets. Demand in Europe, which is served by our Lamb-Weston/Meijer joint venture gradually recovered as vaccination rates climbed. Demand in Asia and Oceania was solid but also softened in August due to the spread of the Delta variant and South America remain challenged especially in Brazil. So overall, we're happy with the recovery in global demand and believe it provides a solid foundation for continued volume growth in fiscal 2022. With respect to the pricing environment, I'm pleased with the progress of our recently implemented pricing actions demanded sharp input costs inflation. In our Foodservice and Retail segments as well as in some of our international business, we'll begin to realize some of the pricing benefits in the second quarter and more fully in the third quarter. In our Global segment, the contract renewables for large chain restaurant customers have largely progressed as we expected and we'll generally begin to see the impact of any pricing actions associated with these contracts in our third quarter. In addition, we'll continue to benefit from price escalators for most of the global contracts that are not up for renewal this year. These price adjustments reset based on the underlying timing of the contract renewals were largely during our physical third quarter. Overall, we expect our price increases across our business segments will in aggregate mitigate much of the cost inflation. However depending on the pace and scope of inflation and the increase of potato cost resulting from this year's poor crop we may take further price action as the year progresses. In contrast to demand and pricing, the manufacturing and distribution environment continues to be difficult. Our supply chain costs on a per pound basis have increased significantly due to input and transportation cost inflation as well as labor availability and other macro supply chain disruptions that are continuing to cause production inefficiencies across our global manufacturing network. Although we're making gradual progress to mitigate these challenges, they have slowed our efforts to stabilize our manufacturing operations during the first half of physical 2022. As a result, we expect the turnaround in our supply chain will take longer than we initially anticipated. Now turning to the crop, the early read on this year's crop in the Columbia base in Idaho and Alberta indicates that it will be well below average levels and both yield and quality due to the extreme heat over the summer. As we're still in the middle of the main crop harvest, the extent of the financial impact of the crop condition will be determined over the coming quarter as the harvest is completed. While we expect this impact will be significant, we're examining a variety of levers to mitigate the effect on our earnings as well as on customer service and supply. As usual we'll provide a more complete assessment of the crop and its impact on earnings when we release our second quarter results in early January. So in summary, I feel good about the overall pace of recovery in French Fry demand especially in the U.S. and believe it provides a solid foundation for future growth. I also feel good about the current pricing environment and how we're executing pricing actions in the marketplace. We do expect higher potato costs input and transportation inflation, labor challenges and other industrywide operational headwinds to continue for the remainder of this fiscal year. While we're taking specific actions to mitigate these challenges they will keep our gross margins below pre-pandemic levels through fiscal 2022. And finally, I'm confident that we're taking the right steps to get our company back on track to delivering more normalized profit margins. As many of you know, this is my first earnings call as CFO of Lamb Weston. I've now been in the role for about nine weeks. For those on the line that I haven't met, it's a pleasure to meet you over the phone. I'm looking forward to meeting many of you in person over the coming months as we get back into the cadence of in-person investor meetings and industry events. As Tom discussed, we feel good about the health of the category and our top line performance in the first quarter and expect our gross margins going forward will improve as we benefit from our recent pricing actions, as well as from other actions that we're taking to mitigate some of the macro challenges affecting our supply chain. Specifically in the quarter, sales increased 13% to $984 million, with volume up 11% and price mix up 2%. As expected, volume was the primary driver of sales growth reflecting the ongoing recovery in fry demand outside the home in the U.S. and in some of our key international markets, as well as a comparison to relatively soft shipments in the prior-year quarter. Lower retail segment sales volume partially offset this growth, largely as a result of incremental losses of low-margin private label business. Overall, our sales volume in the first quarter was about 95% of what it was during the first quarter of fiscal 2020 before the pandemic impacted demand. Moving to pricing; pricing actions and favorable mix drove an increase in price mix in each of our core business segments. As I'll discuss in more detail later, our pricing actions include the benefit of higher prices charged to customers for product delivery in an effort to pass through rising freight costs. The offset to this is higher transportation costs in cost of goods sold. Gross profit in the quarter declined $63 million, as the benefit of higher sales was more than offset by higher manufacturing and transportation costs on a per pound basis. The decline in gross profit also includes the $6 million decrease in unrealized mark-to-market adjustments, which includes a $1 million gain in the current quarter compared with a $7 million gain in the prior year quarter. The increase in cost per pound, primarily related to three factors. First, we incurred double-digit cost inflation for key commodity inputs, most notably edible oils which has more than doubled versus the prior year quarter. Other inputs that saw significant inflation include ingredients such as wheat and starches used to make batter and other coatings and containerboard and plastic film for packaging. Higher labor costs were also a factor as we incurred more expense from increased unplanned overtime. Second, our transportation costs increased due to rising freight rates as global logistics networks continue to struggle. Our costs also rose due to an unfavorable mix of higher costs trucking versus rail as we took extraordinary steps to deliver product to our customers. Together, inflation for commodity inputs and transportation accounted for approximately three quarters of the increase in our cost per pound. The third factor driving the increase in cost per pound was lower production run rates and throughput at our plants from lost production days and unplanned downtime. This resulted in incremental costs and inefficiencies. Some of this is attributable to ongoing upstream supply chain disruptions including the timely delivery of key inputs and other vendor supplied materials and services. However, most of the impact on run rates was attributable to volatile labor availability and shortages across our manufacturing network. So what do we do to mitigate these higher costs and stabilize our supply chain? First, price; we are executing our recently announced price increases across each of our business segments and implementation of these pricing actions are on track. Our price-cost relationship will progressively improve as our pass-through pricing catches up with deflationary cost increases. We'll begin to see some benefit from these actions in the second quarter and it will continue to build through the year. If needed, we will implement additional rounds of price increases to mitigate the impact of further cost inflation. We've also increased the freight rates that we charge customers to recover the cost of product delivery. And we are adjusting them more frequently to better reflect changes to the market rates. These adjustments have also lagged the cost increases. While we saw some benefit in the first quarter, we expect to see more of a benefit beginning in the second quarter. In addition, we're significantly restricting the use of higher costs spot rate trucking. Second, we're optimizing our portfolio. We're eliminating underperforming skews to drive savings through simplification in terms of procurement, production, inventory management, and distribution. We're also partnering with our customers to modify product specifications without comprising food, safety and quality. These modifications will help mitigate the impact of lower potato crop yields from this year's crop as well as some of the impact of reduced potato utilization that results from poor raw potato quality. Third, we're increasing productivity savings with our Win As One program. While realized savings to-date have been small given that the initiative is still fairly new we began to execute specific cost reduction programs around procurement, commodity utilization, manufacturing waste, inventory management and logistics as well as programs to improve demand planning and throughput. We expect savings from these and other productivity programs will steadily build as our supply chain stabilizes. And finally, we're managing labor availability and volatility. This includes changing how we schedule our labor crews, which provides our employees more control and predictability over their personal schedules and reduces unplanned overtime. We're also reviewing compensation levels to make sure we remain an Employer of Choice in each of our local communities. This is in addition to the other recruiting tools and incentives such as signing and retention bonuses. Moving on from cost of sales; our SG&A increased $13 million in the quarter. This increase was largely driven by three factors. First, it reflects the investments we're making behind information technology, commercial and supply chain productivity initiatives that should improve our operations over the long term. About $4 million this quarter represents non-recurring ERP related expenses. Second, it reflects higher compensation and benefits expense. And third, it includes an additional $3 million of advertising and promotional support behind the launch of new branded items in our retail segment. This increase compares to a low base in the prior year when we significantly reduced A&P activities at the onset of the pandemic. Diluted earnings per share in the first quarter was $0.20, down from $0.61 in the prior year, while adjusted EBITDA including joint ventures was $123 million, down from $202 million. Moving to our segments, sales for our Global segment were up 12% in the quarter with volume up 10% and price mix up 2%. Overall, the segments' total shipments are trending above pre-pandemic levels due to strength in our North American chain restaurant business especially at QSRs. Our international shipments in the quarter also approached pre-pandemic levels, despite congestion at West Coast ports and the worldwide shipping container shortage continuing to disrupt our exports as well as softening demand in Asia due to the spread of the Delta variant. The 2% increase in price mix reflected the benefit of higher prices charged for freight, inflation driven price escalators and favorable customer mix. Global's product contribution margin, which is gross profit less advertising and promotional expenses declined 45% to $43 million. Input and transportation cost inflation as well as higher manufacturing costs per pound more than offset the benefit of higher sales volume and favorable price mix. Moving to our Foodservice segment, sales increased 36% with volume up 35% and price mix up 1%. The strong increase in sales volumes largely reflected the year-over-year recovery in shipments to small and regional restaurant chains and independently owned restaurants. Volume growth in August was also tempered by the inability to service full customer demand due to lower production run rates and throughput at our plants largely due to labor availability. Our shipments to non-commercial customers improved through the quarter as the education, lodging and entertainment channels continued to strengthen. Overall non-commercial shipments were up sequentially to 75% to 80% to pre-pandemic levels from about 65% during the fourth quarter of fiscal 2021. The increase in price mix largely reflected pricing actions including the benefit of higher prices charged for freight. Foodservices product contribution margin rose 12% to $96 million. Higher sales volumes and favorable price mix more than offset input and transportation cost inflation as well as higher manufacturing costs per pound. Moving to our Retail segments; sales declined 14% with volume down 15% and price mix up 1%. The sales volume decline largely reflects lower shipments of private label products, resulting from incremental losses of certain low margin business. Sales of branded products were down slightly from a strong prior-year quarter that benefited from very high in-home consumption demand due to the pandemic, but remained well above pre-pandemic levels. The increase in price mix was largely driven by favorable price including higher prices charged for freight. Retails product contribution margin declined 59% to $15 million. Input and transportation cost inflation, higher manufacturing cost per pound, lower sales volumes and a $2 million increase in A&P expenses to support the launch of new products drove the decline. Let's move to our cash flow and liquidity position. In the first quarter, we generated more than $160 million of cash from operations. That's down about $90 million versus the prior year quarter due primarily to lower earnings. We spent nearly $80 million in capital expenditures and paid $34 million in dividends. We also bought back nearly $26 million worth of stock or about double what we have typically repurchased in prior quarters. During the quarter, we amended our revolver to increase its capacity from $750 million to $1 billion and extended its maturity date to August 2026. At the end of the first quarter, our revolver was undrawn and we had nearly $790 million of cash on hand. Our total debt was about $2.75 billion and our net-debt-to-EBITDA including joint ventures ratio was 2.7 times. Now, let's turn to our updated outlook. We continue to expect our sales growth in fiscal 2022 to be above our long-term target of low to mid-single digits. In the second quarter, we continued to anticipate sales growth will be largely driven by higher volume as we lap a comparison to relatively fast shipments during the second quarter of fiscal 2021 due to the pandemic. We expect price mix will be up sequentially versus the 2% that we delivered in Q1 as the execution of pricing actions in all of our segments remain on track. For the second half of the year, we continued to expect our sales growth will reflect more of a balance of higher volume and improved price mix as we begin to lap some of the softer volume comparisons from the prior year and as the benefit from our earlier pricing actions continue to build. Our volume growth, however, may be tempered by global logistics disruptions and container shortages that affects both domestic and export shipments. It may also be tempered by lower factory production due to macro industry and labor challenges, as well as a poor quality crop. With respect to earnings, we expect net income and adjusted EBITDA including joint ventures will continue to be pressured through fiscal 2022. That's a change from our previous expectation of earnings gradually approaching pre-pandemic levels in the second half of the year. Driving most of this change is our expectation of significantly higher potato costs, resulting from poor yield and quality of the crops in our growing regions. We previously assumed the potato crop that approached historical averages. Outside of raw potatoes, we expect double-digit inflation for key production inputs, such as edible oils, transportation and packaging to continue through fiscal 2022. We had previously assumed these costs would begin to gradually ease during the second half of the year. We also expect the macro challenges that have slowed the turnaround in our supply chain to continue through fiscal 2022. That said we expect the labor and transportation actions that I described earlier along with our Win As One productivity initiative will help us continue to gradually stabilize operations, improve production run rates and throughput and manage costs as the year progresses. For the full year, we expect our gross margin may be at least 5 points to 8 points below our normalized annual margin rate of 25% to 26%. While we recognize this is a wide range, it reflects the volatility and high degree of uncertainty regarding the cost pressures that I've discussed. Consistent with prior years, we'll have a better understanding of the crop's financial impact in the next couple of months and we will provide an update when we release our second quarter results in early January. Below gross margin we expect our quarterly SG&A expense will be in the high 90s as we continue our investments to improve our operations over the long-term. While equity earnings will likely remain pressured due to input cost inflation and higher manufacturing costs both in Europe and the U.S. We've also updated a couple of our other targets for the year. First, we've reduced our capital expenditure estimate to $450 million from our previous estimate of $650 million to $700 million. This significant reduction is due to the timing of spend behind our large capital projects and effectively shift the spend into early 2023 -- fiscal 2023. Despite the shift in expenditures, our expansion projects in Idaho and China remain on track to open in the spring and fall of 2023 respectively. And second, we're reducing our estimated full year effective tax rate to approximately 22%, down from our previous estimate of between 23% and 24%. Our estimates for total interest expense of around $115 million and total depreciation and amortization expense of approximately $190 million remain unchanged. So in summary, the strong recovery in demand helped fuel our top line growth in the first quarter, but higher manufacturing and distribution costs led to lower earnings. For fiscal 2022, we expect net sales growth will be above our long-term target of low to mid-single digit, but that our earnings will continue to be pressured for the remainder of the year due to higher potato costs from a poor crop and persistent inflationary and macro challenges. Nonetheless, we expect to begin to see earnings improve in the second quarter behind our pricing actions and the steps we're taking to improve our cost. Now, here's Tom for some closing comments. Let me just sum it up. We feel good about the near-term recovery in demand in the U.S. and our key international markets, as well as the long-term health and growth of the category. We're taking the necessary steps with respect to pricing and continuing to focus on stabilizing our supply chain to mitigate near-term operational headwinds and improve profitability. We're on track with our recently announced capacity investments to support our customer and category growth, as well as our long-term strategic and financial objectives.

q1 earnings per share $0.20. q1 sales $984 million versus refinitiv ibes estimate of $1 billion. sees fy 2022 net sales growth above long-term target range of low-single digits. lamb weston holdings - sees net income and adjusted ebitda including joint ventures to be pressured through fiscal 2022.

I'm joined today by Chris Simon, our CEO; and Bill Burke, our CFO. Additionally, we provided a complete P&L, balance sheet, summary statement of cash flows, as well as reconciliations of our GAAP to non-GAAP financial results and guidance. Please note that these measures exclude certain charges and income items. Before I get into our results, I want to review the news we announced a few weeks ago. In April, CSL Plasma notified us that they do not intend to renew their US supply agreement for the use of our PCS2 plasma collection system equipment and the purchase of plasma disposables that expires in June of 2022. We were informed that CSL's decision was not based on the level of service or quality of our products, but rather reflects the change in internal strategy that was made some time ago, presumably before they had experience with NexSys and Persona. We are disappointed by CSL's decision, but it does not change our commitment to the plasma market and our technology to improve collections. The NexSys and Persona value propositions are strong, supported by real-world data and real-time customer feedback. And we are excited about what this platform means for our customers. We are taking a comprehensive approach to address the impact the CSL transition will have in fiscal '23. We are acting with urgency, but we are being thoughtful and balanced in our planning. Our ability to respond is enhanced by the steps we have taken these past few years to strengthen our financial health, improve productivity, drive innovation, reshape our portfolio and build a collaborative performance-driven culture. We are well positioned to navigate this change. We are focused on driving value for customers and shareholders, and our decision making is guided by a through-cycle mindset. We will continue to pursue growth strategies to maintain our market leadership, including developing innovation in partnership with our customers. We also remain committed to productivity and being good stewards of the Company's resources. We will provide more details on the path forward as our plans take shape. With that, let me turn to our results for the quarter and the fiscal year. Today, we reported organic revenue decline of 14% in the fourth quarter and 13% for fiscal '21; and adjusted earnings per share of $0.46, down 33% in the quarter, and down 29% to $2.35 for the year. Fiscal 2021 was a difficult year for Haemonetics as the pandemic had varying effects across our businesses and their respective customers. Despite the challenges, we made progress to build a stronger Haemonetics. We divested non-performing assets like the Fajardo blood filter manufacturing operations, Blood Center donor management software in the US and Inlog SAS blood bank and hospital software in Europe. We made organic and inorganic investments in attractive and growing markets, including the launch of Persona and the Donor360 app, and the acquisitions of ClotPro and Cardiva Medical. We modified our capital structure for financial flexibility and remain diligent with cost containment, while continuing to fund growth. We made significant changes to the way we source and make our products as part of our Operational Excellence Program. While we cannot control the pandemic's impact on our customers' businesses, we met every challenge, keeping our employees safe and our plants operational with high levels of service and customer support. Early fiscal '22 will continue to be challenging, but we expect the pace of recovery to accelerate over the year. The end market demand for our products remain strong, and we do not see structural or other changes from the pandemic that would impact the need for lifesaving plasma-based medicines or hospital devices for critical areas of medicine like trauma, interventional cardiology and electrophysiology. We have healthy and viable businesses, delivering exceptional value adding technology. We have proven our resilience and our ability to drive growth and productivity, and we will do so again as our markets recover from the pandemic. Turning now to our business units. Plasma revenues declined 28% in the fourth quarter and 26% in fiscal '21, as the pandemic continued to have a pronounced effect on the US-sourced plasma donor pool. We saw lingering effects beyond fourth quarter into April. North America disposables declined by 31% in the fourth quarter, primarily driven by declines in volume and a negative impact from the expiration of pricing on a historical technology enhancement with one of our customers. Sequentially, plasma collection volumes declined by 13% compared with historical average seasonal declines of about 7%, as additional economic stimulus hindered recovery. Fiscal '21 was an especially difficult year for plasma collections, given the interplay of different factors affecting donor behavior. Our customers have taken extensive measures to ensure the health and safety of donors and to launch a myriad of promotional campaigns to encourage plasma donations. Our teams have remained focused on ensuring no disruptions to our supply, service and support. Despite the environment, we advanced our innovation agenda with the FDA clearance of Persona, which safely yields an additional 9% to 12% of plasma on average per collection. We extended the reach of our customers to donors via a Donor360 app, which allows donors to engage with centers before in-person visits, decreasing door-to-door time and improving the overall donor experience. Given the pandemic's negative effect on collections, increased yield is more important than ever and feedback from NexSys customers operating with YES technology or Persona continues to be positive. We believe they were able to offset some of the headwinds from the pandemic because they benefited from safe, higher plasma yield per donor, bidirectional paperless connectivity and increased donor satisfaction. NexLynk DMS rollouts continue on pace, and the software continues to be a key enabler and differentiator for NexSys. All of our major customers have agreed to adopt NexSys somewhere in their collection network, and we anticipate that by mid-fiscal '23, the majority of our customers, excluding CSL, will be on NexSys in the US or globally. As we emerge from the pandemic and see future sustained increases in available donors, the operational efficiency benefits of NexSys, integrated with NexLynk DMS, will be an increasingly valuable tool to support greater donor traffic. We anticipate initial Persona rollouts this fiscal year, as we strive to move in sync with our customers and pace our technology implementations to meet their individual needs. We are committed to advancing our innovation agenda across devices, disposables and software to develop products that create long-term sustainable value for our customers. We continue to do everything we can to support our customers, and we remain cautiously optimistic about the timing and pace of recovery. The demand for plasma-derived medicines remains strong, and our customers are doing what they can to recruit and retain donors. Unfortunately, donor economics play a critical role in plasma collections, and we expect collections will be muted until government stimulus wanes. Beyond stimulus, we expect a return to the long-term 8% to 10% growth of the US-sourced plasma collections market, and we see potential to grow in excess of that as customers strive to replenish depleted plasma inventories. Hospital revenue increased 12% in the fourth quarter and 4% in fiscal '21. Our Hospital business experienced continued sequential improvement over the first nine months of the fiscal year. Fourth quarter recovery was uneven, as we saw another spike in COVID cases early in the quarter, followed by a material improvement in February and March, coupled with the anniversary of the previous year impact of COVID-19 in China and other geographies that were affected earliest by the pandemic. Hemostasis Management revenue was up 19% in the fourth quarter and 9% in fiscal '21. North America, our largest market, showed sequential growth throughout the first nine months of the year. And despite a spike in COVID cases early in the fourth quarter, the business exited in a strong position, including additional penetration into new accounts. China, our second largest market, benefited from a lower comparator in the prior year fourth quarter due to the early onset of COVID-19. Strong capital sales in North America and EMEA have also contributed favorably to our fourth quarter and fiscal '21 results. We continue to drive our go-to-market strategies for viscoelastic testing to meet the unique needs of our regional markets. We are executing on the Chinese market introduction of our locally designed and manufactured viscoelastic testing technology that expands our product offering to meet the needs of that geography. Transfusion Management was up 9% in the fourth quarter and fiscal '21, primarily driven by strong growth in BloodTrack through new accounts and geographic expansion of SafeTrace Tx. Our teams have used remote tools to advance installations and utilization in customer environments where access continues to be restricted. Cell Salvage revenue grew 2% in the fourth quarter and declined 8% in fiscal '21. Our Cell Salvage results in the quarter benefited from the easy comparison with the prior year quarter in China and 80% growth in capital sales as we continue to upgrade our customers to the latest technology. Partially offsetting these benefits in the fourth quarter was overall lower procedure volume due to COVID-19. The integration of Cardiva Medical is going well, and the performance of the business is exceeding expectations. The VASCADE proprietary vascular closure technology strengthens our hospital portfolio in the attractive interventional cardiology and electrophysiology markets, and the team is focused on driving the strategy underlying this acquisition. Although excluded from our organic revenue results, Cardiva added close to $8 million of revenue in March, as our teams continue to drive penetration in the top hospital accounts for interventional procedures in the US. Additionally, as US procedure volume continues to improve, we've seen increasing benefit from product utilization among existing accounts. Our long-term outlook for this business is strong, as our combined product development and regulatory teams work closely together on OUS registrations and driving additional product innovation. Overall, the pandemic has validated the essential role of our technologies in hospital. We have demonstrated our ability to safely and effectively sell, including to new and existing accounts, install and service our equipment despite limited access to hospitals. Blood Center revenue declined 10% in the fourth quarter and 4% in fiscal '21. Apheresis revenue declined 3% in the fourth quarter and grew nearly 1% in fiscal '21. Fourth quarter apheresis results were impacted by unfavorable distributor order timing in EMEA and a competitive loss, partially offset by strong capital sales. Order timing was overall a benefit to our full year fiscal '21 results, as distributors made large stocking orders in response to the pandemic, particularly in Europe and the Middle East. We also benefited from strong capital sales as we continue to support our customers in the collection of convalescent plasma. These benefits were partially offset by the previously disclosed competitive loss that had a $17 million impact on our full year results. Excluding this loss, overall Blood Center revenue actually grew in fiscal '21. Whole blood revenue declined 24% in the fourth quarter and 14% in fiscal '21, driven by lower collection volumes due to COVID-19 and discontinued customer contracts in North America. We remain committed to supporting enhanced product quality and services for our blood center customers, while preserving cash generation and exploring portfolio rationalization as appropriate. I will begin by discussing our fiscal '21 actual results, followed by our fiscal '22 guidance. Chris has already discussed revenue, so I will start with adjusted gross margin, which was 50% in the fourth quarter, a decline of 30 basis points compared with the fourth quarter of the prior year. Adjusted gross margin year-to-date was 50.3%, a decline of 130 basis points compared with the prior year. On the positive side, we continue to benefit from productivity savings realized from our Operational Excellence Program and lower depreciation expense related to our PCS2 devices, which were mostly depreciated by the end of the prior fiscal year. We also saw benefits from the recent acquisition of Cardiva Medical. The primary drivers of the adjusted gross margin decline were unfavorable pricing and product mix, mainly due to the impact of COVID-19, higher inventory-related charges and the impact of recent divestitures. These inventory-related charges, which relate to CSL's intent not to renew the US plasma disposables supply agreement, had about 220 basis points impact on our fourth quarter and about 60 basis points impact on our fiscal '21 results. The combination of our recent divestitures and our strategic decision to exit the liquid solution business resulted in a net negative impact of 70 basis points on our fourth quarter and about neutral impact on our fiscal '21 adjusted gross margin. Adjusted operating expenses in the fourth quarter were $81.9 million, an increase of $9.2 million or 13% compared with the fourth quarter of the prior year. Adjusted operating expenses for fiscal '21 were $283 million, a decrease of $9.8 million or 3% compared with the prior year. Adjusted operating expenses, both in the fourth quarter and fiscal '21, were impacted by higher variable compensation, the acquisition of Cardiva Medical and the impact from the 53rd week. Contributions from our productivity savings and cost containment efforts that we put in place earlier in the pandemic helped to offset some of the impacts and allowed us to make additional growth investments into our business. As a result of the performance in adjusted gross margin and adjusted operating expenses, fourth quarter adjusted operating income was $30.5 million, a decrease of $16.8 million or 35%, and adjusted operating income for fiscal '21 was $154.6 million, a decrease of $63.4 million or 29% compared with the prior year. Adjusted operating margin was 13.5% in the fourth quarter and 17.8% in fiscal '21, down 630 basis points and 420 basis points respectively compared with the same periods in fiscal '20. For both periods, the lost leverage from revenue, coupled with the inventory-related charges, higher variable compensation and impacts from portfolio changes, outpaced the impact of cost mitigation efforts and productivity savings. These inventory-related charges and higher variable compensation put downward pressure on operating margins by approximately 500 basis points in the fourth quarter and approximately 100 basis points in fiscal '21. The variable compensation incentives we established during the pandemic and the one-time inventory-related charge due to the recent customer announcement are not expected to affect future operating margins. The adjusted income tax rate was 12% in the fourth quarter and 14% in fiscal '21 compared with 18% and 15% respectively for the same periods of the prior year. Fourth quarter adjusted net income was $23.9 million, down $11.5 million or 33%, and adjusted earnings per diluted share was $0.46, down 33% when compared with the fourth quarter of fiscal '20. Adjusted net income for fiscal '21 was $120.7 million, down $50.6 million or 30%, and adjusted earnings per diluted share was $2.35, down 29% when compared with the prior year. The inventory-related charges and higher variable compensation had a downward impact on adjusted earnings per diluted share of $0.18 in the fourth quarter and $0.12 in fiscal '21. Our Operational Excellence Program continued to deliver positive results and drive improvements in adjusted gross and adjusted operating margins. This program has also enabled us to offset some of the challenges resulting from the pandemic. During fiscal years '20 and '21, the program-to-date gross savings are approximately $34 million, with the majority of those savings dropping through to adjusted operating income. Cash on hand at the end of the fourth quarter was $192 million, an increase of $55 million since the beginning of the fiscal year. Free cash flow before restructuring and turnaround costs was $99 million in fiscal '21 compared with $139 million in the prior year. Fiscal '21 included a $54.3 million payment for a compensation-related liability as part of the Cardiva Medical acquisition. The total purchase price paid for Cardiva Medical was reduced by the amount of this liability. Lower increases in inventory, lower capital expenditures and improvement in accounts receivable compared -- when compared with the prior year have benefited fiscal '21. Although the free cash outflow for inventory is lower than in the prior year, the impact from lower sales volume in Plasma has resulted in a higher disposables inventory balance. We will continue to monitor our inventory levels and expect inventory fluctuations to continue as we adjust our production to support customer demand and our Operational Excellence Program initiatives. In addition to free cash flow, the fourth quarter ending cash balance benefited from the completion of a $500 million convertible debt offering, which resulted in a net cash inflow of $439 million. Offsetting the cash inflow during fiscal '21 was $390 million of net cash spent on recent portfolio moves and $82 million of debt repayments, including a $60 million repayment of the revolving credit line that was outstanding at the end of fiscal '20. Our current debt structure includes a $700 million credit facility that does not mature until the first quarter of fiscal '24 with the majority of the principal payments weighted toward the end of the term. At the end of the fourth quarter, total debt outstanding under the facility was $302 million. There were no borrowings outstanding under the $350 million revolving credit line at the end of fiscal '21. During the fourth quarter, we completed a $500 million convertible debt offering. Our EBITDA leverage ratio, as calculated in accordance with the terms set forth in the Company's existing credit agreement, is 3.4 at the end of fiscal '21. The existing $500 million share repurchase authorization will expire at the end of May 2021 with $325 million remaining on the authorization. We will update our capital allocation priorities in the next few quarters as we continue to develop our long-range plan. Now, I will turn to our fiscal '22 guidance. Our business continues to be impacted by the pandemic. Therefore, our fiscal '22 guidance includes wider than usual ranges that reflect the uncertainty of the pace of the continuing recovery. We will narrow or update our guidance as necessary throughout the year. Our fiscal '22 organic revenue growth is expected to be in the range of 8% to 12%. We remain confident in the continued market growth underlying the commercial plasma business and anticipate Plasma revenue growth of 15% to 25% in fiscal '22. At the low end of our guidance range, we assume that the second and third rounds of economic stimulus will continue to impact plasma collections through the first half of fiscal '22 with stronger collection volumes in the second half of fiscal '22. At the higher end of our guidance range, we assume that recovery will begin mid-second quarter with additional acceleration toward the end of the fiscal year as customers begin to replenish safety stock levels. In both cases, we expect the run rate for plasma collections to be at or above fiscal '20 levels at the end of the fiscal year. Disposable revenue related to CSL collection volume is included in the guidance for 12 months. In fiscal '21, we recognized disposable revenue in the US from CSL of approximately $89 million. This Plasma revenue guidance also includes the net impact of initial rollouts of Persona and NexSys adoption for customers with whom we have agreements, with the majority of the benefit toward the end of the fiscal year. These benefits are partially offset by price adjustments, including the expiration of fixed term pricing on a historical PCS2 technology enhancement and a one-time safety stock order in fiscal '21. We expect 15% to 20% organic revenue growth in our Hospital business in fiscal '22. This growth rate assumes the recovery of hospital procedures will continue to improve throughout the year and will be close to fully recovered across all geographies by the end of our fiscal '22. Our Hospital revenue guidance includes Hemostasis Management revenue growth in the mid-20s. The Cardiva Medical acquisition is anticipated to deliver $65 million to $75 million of revenue and is excluded from organic revenue growth until the anniversary of the acquisition date. Our fiscal '22 guidance for Blood Center revenue is a year-over-year decline of 6% to 8%. The anticipated revenue decline in Blood Center reflects the annualization of business exits, primarily within North America whole blood, the non-repeating revenue related to convalescent plasma in fiscal '21 and the effects of order timing, which favorably impacted fiscal '21. We expect fiscal '22 adjusted operating margins in the range of 19% to 20% and adjusted earnings per diluted share in the range of $2.60 to $3.00. Our adjusted earnings per diluted share guidance includes an adjusted income tax rate of approximately 21%. In fiscal '22, we expect our Operational Excellence Program to deliver gross savings of approximately $22 million with less than half benefiting adjusted operating income due to inflationary pressures and investments in manufacturing. The program began in fiscal '20. And by the end of fiscal '22, we anticipate achieving approximately $56 million of gross savings, with about 60% of those savings benefiting adjusted operating income. The remaining year of the Operational Excellence Program is being updated as part of our comprehensive effort to address the impacts from the anticipated customer loss in early fiscal '23. We intend to communicate the updated Operational Excellence Program as part of our longer range plan. We also expect our free cash flow before restructuring and turnaround expenses in fiscal '22 to be $135 million to $155 million. Before we open the call up for Q&A, I want to reiterate the key points that we hope you take away from today's call. First, while the pandemic continued to impact our business, we don't believe it has caused any structural changes to the end market demand for our products. By the end of our fiscal '22, we expect full recovery across all of our businesses, but the exact pace of the recovery is the biggest variable included within our guidance. Second, we believe our product portfolio strongly positions us to capitalize on the market recovery ahead. Despite the challenges put in front of us, our teams remain focused on rationalizing our product portfolio to emphasize the products and markets that meet our strategic goals, prioritizing investment and allocating capital to strengthen the core capabilities and technology that make us distinctive. Third, our Operational Excellence Program continues to drive transformation, primarily in our manufacturing and supply chain, as we become more agile and flexible. We made significant progress to date, which has allowed us to offset some of the headwinds due to the pandemic, and we expect to have close to 60% to 70% of the program completed by the end of our fiscal '22 with the majority of those savings benefiting our adjusted operating income. And finally, we have a proven dedicated team, committed to driving value for our customers and our shareholders. We are proud of the way our teams have risen to meet the challenges over the past year. We recognize more challenges are ahead, including difficult donor economics and the eventual loss of CSL in Plasma. We are committed to taking action, managing costs and mitigating the impact without compromising future growth of our business. And while we have a lot of work to do in the coming quarters, we're confident that our teams' experience, resilience and agility will ensure that Haemonetics has a bright future.

qtrly adjusted earnings per diluted share $0.46. sees fy 2022 gaap total revenue growth of 13 – 18%. sees fy 2022 adjusted earnings per share $2.60 - $3.00.

On the call are Jeff Mezger, Chairman, President and Chief Executive Officer; Matt Mandino, Executive Vice President and Chief Operating Officer; Jeff Kaminski, Executive Vice President and Chief Financial Officer; Bill Hollinger, Senior Vice President and Chief Accounting Officer; and Thad Johnson, Senior Vice President and Treasurer. And with that, here is Jeff Mezger. We delivered healthy results in the second quarter marked by one of the strongest quarters for both operating and gross margin performance in some time. Operationally, our divisions are doing an excellent job of navigating this environment of demand strength and well-publicized supply chain constraints as we effectively balance pace, price and starts to optimize our assets and manage our production. With our full year coming into better view, we are poised for continued returns-focused growth expanding our scale to about $6 billion in revenues and generating a return on equity of roughly 20%. As for the details of the quarter, we produced total revenues of $1.44 billion and diluted earnings per share of $1.50. We achieved an operating income margin of 11.3% driven by several factors. In addition to strong market conditions, we are benefiting from solid performance in our newer communities, operating leverage from both the increase in our community absorption rate as well as overall higher revenues, disciplined management of our SG&A costs and the ongoing tailwind from lower interest amortization. Our profitability per unit grew meaningfully on a sequential basis to nearly $47,000. We achieved or surpassed our expectations across our financial metrics, although deliveries were at the low end of our range as some of our deliveries shifted into the third quarter due to supply shortages and municipal delays. That said, with the benefit of local scale in most of our divisions, we are relying on our long-standing relationships with subcontractors and trade partners to mitigate delays. With the progression of our work in process and our success in accelerating starts, we are confident in our ability to achieve full-year deliveries of between 14,000 and 14,500 homes. Our balance sheet is solid. Having worked through the bulk of our inactive assets, our inventory has rotated into a higher-quality portfolio of communities. We have grown our equity while reducing our debt resulting in a significantly lower leverage ratio, which we expect will decline further by year-end. We recently completed a $390 million debt offering, the net proceeds from which together with a portion of our existing cash will be used to retire our '21 maturity in full. Ultimately the offering will contribute to a reduction of our debt levels and lower our average borrowing rate, providing an ongoing tailwind to our future margins. We continue to allocate the substantial cash we are generating in a consistent manner prioritizing our future growth to drive greater earnings and returns. In addition, our balanced approach includes returning cash to stockholders, primarily through our quarterly dividend, which we have raised in each of the past few years and reducing our debt, as I just mentioned. In the second quarter, we invested $575 million in land acquisition and development, expanding our lot position sequentially by 7,800 lots to roughly 77,500 lots owned or controlled with 45% of the total optioned. This growth in active inventory, together with improving margins, should help to drive further improvement in our return on equity. As we discussed last quarter, we are assuming a lower monthly absorption in our underwriting as compared to our current pace and no inflation either in ASP or costs. In addition, we are pursuing moderately sized deals in our preferred submarkets averaging between 100 and 150 lots and staying on strategy and positioning these new communities to be attainable near the median household income for that sub-market. We believe using this disciplined approach helps to manage our risk as we acquire land throughout this cycle. While we expect our near-term growth to come primarily from our existing markets as we work to gain market share and expand our scale, we are also selectively entering new markets. Along with our success in Seattle and recent reentry into Charlotte, we are announcing today that we have started up a division in Boise, Idaho, a top 25 housing market. We see a meaningful opportunity in this fast-growing metro area to offer our personalized homes at affordable prices and we are excited about extending our market strategy to Boise. We now have over 900 lots under control and anticipate our first land parcel closing in the third quarter. We successfully opened 33 new communities in the second quarter. However, as a result of the heightened demand for our homes, we sold out more communities than we had projected and also experienced slippage in some community openings. Jeff will provide more detail on our community count expectations for this year in a moment. Looking forward to 2022 with our strong lot pipeline, we remain on track for double-digit year-over-year community count growth. As we prepare for the significant acceleration of new community openings over the next six quarters, we have also stayed focused on building our backlog to drive our revenues for the balance of this year and into 2022. Our monthly absorption rate rose to seven net orders per community during the second quarter, even as we managed sales primarily through price increases and secondarily through lot releases in order to balance pace, price and starts. We are sensitive to affordability as we work to stay within appropriate range near the median household income of each submarket. Our order ASP has climbed in the past three months, reflecting a combination of mix as well as rising prices. Our largest sequential net order increase was in our West Coast region. Although this region carries our highest average selling price, it remains competitive with resales within our submarkets. Our Los Angeles/Ventura business provides a good example. This division generated the strongest sequential order growth in the second quarter. And although it operates at a higher ASP, it is still below the median resale price of homes in its submarkets which are as much as $100,000 higher and selling within a few weeks of being listed. Resale prices have moved significantly and our relative position has actually been enhanced. As to lot releases, our approach is similar to how we gauge interest in a new community. Homebuyers complete an application and go through their initial credit process to join a list of qualified buyers. We then work through that list as we release lots. We are typically raising prices in conjunction with each lot release and have not seen a decrease in the conversion of qualified buyers even as base prices have risen. Our teams work hard to earn our place as the number one customer ranked national homebuilder in third party customer satisfaction surveys by prioritizing service and the relationships we have with our buyers and we're focused on continuing to do so during this time of limited supply. The metrics that we monitor internally for shifts in affordability are stable. Buyers are not adjusting the size of the homes they are purchasing to stay in the market. Although we offer floor plans below 1,600 square feet in over 75% of our communities, buyers are still selecting homes averaging 2,100 feet, which is consistent with their choices over the past couple of years. As is evident in our results, the desire for homeownership is strong and we believe will remain so for the foreseeable future. There are two primary factors in forming our view. The first is an acute shortage of supply stemming not only from limited resale inventory, but also from the under production of new homes over the past 15 years. This deficit will take many years to correct and until inventory reverts to more normalized levels, the imbalance between supply and demand should continue to support new home sales. Another key factor is demographics. The size of the millennial population and the pent-up demand from this cohort together with the Gen Zs now reaching their homebuying years form a large and healthy pool of prospective buyers. These demographic groups value personalization and we believe we are well positioned to capture increases in home sales given our expertise in serving the first-time buyer which represents 64% of our deliveries this past quarter with our built-to-order approach. Net orders were 4,300, our best second quarter since 2007 with strength throughout the quarter resulting in year-over-year growth of 145%. This comparison narrowed at the end of May when we experienced a significant acceleration in order rates that has lasted for the past year. We are matching starts to sales and in the first half of this year we have quickly scaled up our production to start over 8,500 homes. To put this in context, the homes we started in the past two quarters represent about 75% of the total homes we started for the full year 2020. Almost 95% of the homes in production are already sold and we remain committed to our built-to-order business model. We value the visibility that our even flow [Phonetic] production provides and the flexibility that it affords in positioning our communities to move with demand. Offering a personalized home creates meaningful differentiation for our Company, which we view as an advantage because buyers value choice. Nearly 80% of our orders in the second quarter were for personalized homes, which also creates an additional revenue stream from our design studios and with lot premiums. Our studio revenue per unit rose sequentially in the second quarter and is continuing to average about 9% of our higher base prices. We continually monitor the frequency of studio selections and had been raising prices on some products, enhancing an already accretive studio margin. As to lot premiums, we have found over time that if buyers can pick the home they want and build that home on a lot they choose, they're willing to pay for that choice and we can generate additional revenue. Every incremental dollar of lot premium is an additional dollar of margin. Between studio revenue and lot premiums, we are averaging about $40,000 per home today and believe there is opportunity to continue to grow this going forward. We ended the quarter with a robust backlog value of $4.3 billion, up 126% year-over-year representing over 10,000 homes. As I referenced earlier, our backlog supports the higher revenues we anticipate this year and sets the stage for another year of revenue growth in 2022. KBHS Home Loans, our mortgage joint venture, continued to be a solid partner for our customers handling the financing for 75% of the homes we delivered in the second quarter. These buyers have a strong and consistent credit profile with an average down payment of about 13% or over $50,000 and an average FICO score that inched up to 727. The majority of our buyers are opting for conventional loans similar to the past few years. Switching gears, we published our 14th Annual Sustainability Report in April, the longest-running report in our industry. We've been on this journey for over 15 years. And the commitment we have made to sustainable homebuilding has resulted in KB Home being the industry leader in energy efficiency. We have built over 150,000 ENERGY STAR certified homes to-date, more than any other builder, and have the lowest published average Home Energy Rating System, or HERS, index score among production homebuilders. And we're striving to be even better with an aggressive goal to further improve our average HERS score from 50 down to 45 by 2025, a level which translates into an additional estimated reduction in a KB Home's carbon emission of about 8% per year. In closing, we are poised for an incredible year of expansion in revenues, margins and return on equity as we execute on our ongoing plan to increase our scale while driving a higher ROE. Equally as important, we are positioned for a strong start to 2022 with the expected increase in our year-end backlog and projected community count growth next year. We are pleased with how this year has unfolded and look forward to updating you on our continued progress. I will now cover highlights of our financial performance for the 2021 second quarter and provide our current outlook for the third quarter and full year. During the quarter, we generated improvements in all our key profitability measures and continued to enhance our balance sheet strength and liquidity. With our operations performing well, we leveraged 58% growth in housing revenues to generate a 216% increase in operating income for the quarter. In addition, our net orders reached their highest second-quarter level in 14 years. Based on our robust financial results and our order performance, we are once again raising our outlook for the remainder of 2021. Our housing revenues of $1.44 billion for the quarter increased from $910 million in the prior-year period, reflecting a 40% increase in homes delivered and a 13% increase in overall average selling price. Considering our current backlog and construction cycle times, we anticipate our 2021 third quarter housing revenues will be in a range of $1.5 billion to $1.58 billion. For the full year, we are projecting housing revenues in the range of $5.9 billion to $6.1 billion. We believe we are very well positioned to achieve this top line performance due to our strong second quarter net orders and ending backlog of over 10,000 homes, representing nearly $4.3 billion in ending backlog value. In the second quarter, our overall average selling price of homes delivered increased to nearly $410,000, reflecting strong housing market conditions, which enabled us to raise prices in the vast majority of our communities, as well as product and geographic mix shifts of homes delivered. For the 2021 third quarter we are projecting an overall average selling price of $420,000. We believe our ASP for the full year will be in a range of $415,000 to $425,000. Homebuilding operating income significantly improved to $162.9 million as compared to $51.6 million in the year-earlier quarter, reflecting an increase of 560 basis points in operating income margin to 11.3% due to meaningful improvements in both our housing gross profit margin and SG&A expense ratio. Excluding inventory related charges of $0.5 million in the current quarter and $4.4 million of inventory-related charges and $6.7 million of severance charges in the year-earlier quarter, this metric improved to 11.4% from 6.9%. We expect our homebuilding operating income margin, excluding the impact of any inventory-related charges, to further improve to a range of 11.7% to 12.1% for the 2021 third quarter. For the full year, we expect our operating margin, excluding any inventory-related charges, to be in the range of 11.5% to 12%. Our housing gross profit margin for the second quarter expanded to 21.4%, up 320 basis points from the prior-year period. The current quarter metric reflected the favorable pricing environment over the past several quarters when most of the orders relating to the second quarter deliveries were booked, increased operating leverage due to higher housing revenues and lower amortization of previously capitalized interest. Excluding inventory related charges, our gross margin for the quarter increased to 21.5% from 18.7% for the prior-year period. Our adjusted housing gross profit margin, which excludes inventory-related charges as well as the amortization of previously capitalized interest, was 24.2% for the 2021 second quarter compared to 21.9% for the same 2020 period. Our continued gross margin improvement trend demonstrates that we have been successful in offsetting input cost inflation with selling price increases. In addition, with our strategy of locking in material and labor costs at the time each home starts, we have largely mitigated the impact of cost inflation during the construction process. Assuming no inventory-related charges, we expect a sequential increase in our 2021 third quarter housing gross profit margin to approximately 21.7% and further improvement in the fourth quarter. Considering this expected favorable trend, we believe our full year housing gross profit margin, excluding inventory-related charges, will be within the range of 21.5% to 22% representing a 215 basis point year-over-year increase at the midpoint. Our selling, general and administrative expense ratio of 10.1% for the quarter improved from 12.6% for the 2020 second quarter. The 250 basis point improvement reflected the continued benefit of overhead cost reductions implemented last year in the early stages of the pandemic, increased operating leverage from higher revenues and the severance charges in the year-earlier quarter. Considering anticipated increases in future revenues and our continuing actions to contain costs, we believe that our 2021 third quarter SG&A expense ratio will be approximately 9.8% and our full year ratio will be in a range of 9.8% to 10.2%. Our income tax expense for the quarter of $30.3 million, which represented an effective tax rate of 17%, reflected the favorable impact of $14.8 million of federal energy tax credits recorded in the quarter relating to qualifying energy-efficient homes. We expect our effective tax rate for the full year to be approximately 20%, including the expected favorable impact of additional federal energy tax credits in the third and fourth quarters. Overall, we produced net income for the second quarter of $143.4 million or $1.50 per diluted share compared to $52 million or $0.55 per diluted share for the prior-year period. Turning now to community count, our second quarter average of 205 communities decreased 17% from the year-earlier quarter. We ended the quarter with 200 communities as compared to 244 communities at the end of the 2020 second quarter. On a sequential basis, our average community count decreased 8% from the first quarter and ending community count was down 4%. The decreases were due to our strong absorption pace of seven monthly net orders per community during the quarter, which show 42 close-outs as well as community openings that were delayed to the third quarter. Over the past 12 months our robust absorption pace has driven the close-out of over 150 selling communities. Although they will not generate additional net orders, we will continue to produce revenues and profit in future quarters associated with nearly 80% of these sold-out communities as we work through the construction and delivery of the sold homes. The upside from our strong pace of orders is now reflected in our backlog which will drive increased future housing revenues. Our expectation of continued strong net order activity will drive elevated levels of community close-outs in the second half of this year. Our goal is to offset the impact of these close-outs by opening a higher number of new communities in both the third and fourth quarters to achieve sequential growth. We anticipate our 2021 third quarter ending community count will increase sequentially by approximately 5%, followed by another modest sequential improvement in the fourth quarter. With our significant year-over-year increase in lot supply and our focus on developing and opening new communities as quickly as possible over the next six quarters, we believe we can achieve sequential increases in our quarter-end community count over that period. We remain committed to our target of double-digit year-over-year growth in community count for 2022. Favorable operating cash flow in the quarter generated primarily from homes delivered net of higher levels of land investment resulted in quarter and total liquidity of approximately $1.4 billion including $608 million of cash and $788 million available under our unsecured revolving credit facility. Earlier this month, we completed the $390 million issuance of 4% 10-year senior notes and used a portion of the proceeds to redeem approximately $270 million of tendered 7% notes that mature on December 15, 2021. We expect to realize a charge of approximately $5 million for this early extinguishment of debt in the third quarter. It is our intention to redeem the remaining $180 million of the 7% notes at par value on September 15. Once completed, this redemption, partially offset by the new issuance, will result in a net $16 million reduction in debt and an annualized interest savings of nearly $16 million, contributing to our continuing trend of lowering the interest amortization included in future housing gross profit margins. In addition, we believe the $350 million of our maturity in 2022 of 7.5% senior notes represents another opportunity to reduce incurred interest and enhanced future gross margins. In summary, given the size and composition of our quarter-end backlog of over 10,000 homes, along with our expanded production capacity, we expect further improvement in our financial results and return metrics in 2021 as compared to our expectations at the time of our last earnings call. Using the midpoints of our new guidance ranges, we now expect a 45% year-over-year increase in housing revenues and further expansion in our operating margin to 11.75%. This profitability level should drive a return on average equity of approximately 20% for the full year. We believe our emphasis on returns-focused growth will continue to drive improved financial results, increased scale and higher returns to further enhance long-term stockholder value. Alix, please open the lines.

q2 earnings per share $1.50. q2 revenue $1.44 billion versus refinitiv ibes estimate of $1.5 billion. qtrly homes delivered rose 40% to 3,504. net orders for quarter grew 145% to 4,300, with net order value increasing by $1.35 billion, or 196%, to $2.04 billion.

We are joined here today by Bill Meaney, president and chief executive officer; and Barry Hytinen, our executive vice president and chief financial officer. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations to these measures in our supplemental financial information. We are pleased to have delivered record performance for both the fourth quarter and the full year. These record results are reflective of our broad offerings, deep customer relationships, resilient business model and our dedicated teams. Despite the challenges associated with the pandemic and most recently with the Omicron variant, our Mountaineers around the world have continued each and every day to put our customers first now with renewed and invigorated focus on growth. And our historically high revenue and profitability are a testament to our Mountaineers' commitment. Speaking about our Mountaineers, I wish to begin my remarks by stating that we are all saddened by the overnight events in the Ukraine. Our thoughts and prayers are with our customers there and our fellow 60 Mountaineers and their families living and working in the Ukraine. I am sure for all of us, given the current events in Europe, it deals in many ways inappropriate discussing our financial results with this backdrop. Yet at the same time, it is in keeping with our Mountaineer spirit. With that, let me begin our discussion of our remarkable and record year. In the fourth quarter, we achieved our highest ever quarterly revenue of $1.16 billion, yielding eight and a half percent of total organic revenue growth and record EBITDA of $431 million. For the full year, we achieved record revenue of nearly $4.5 billion and EBITDA of $1.6 billion. These results were fueled by increased demand for our services across key markets. For the full year, we delivered organic storage rental revenue growth of 2.6%, reflecting continued benefit of pricing combined with positive volume trends. We drove double-digit growth in digital offerings, including data center inside our digital transformation services and secure IT disposition, now referred to as ALM, or asset life cycle management. Our digital services and ALM businesses continue to build momentum, growing over 20% in the fourth quarter and capping off an excellent year of growth. Further to our recent success in the ALM area, we are also pleased to report that the acquisition of ITRenew, announced in December, closed in January. This acquisition will accelerate our growth trajectory in this $30 billion market, which is growing over 10% per year. Our newly created ALM division will absorb our historical secure ITAD business line. This enlarged division not only helps us provide chain of custody for our customers' IT assets, but our ALM activities also assure our customers that their IT assets are wiped of any data at the end of their life and destroyed and recycled in a responsible way. On this last point, in terms of recycling, our expanded offerings in this space around a circular economy are important for both IRM's and our customers' ESG goals leading to carbon neutrality. This expanded ALM division also strongly complements our fast-growing data center business, bringing capabilities to serve some of the largest and most innovative companies in the world in a more cradle-to-grave way, consistent with the best security and ESG practices. This expanded ALM platform will directly benefit from Iron Mountain's 225,000 loyal customer base, which includes 95% of the Fortune 1000. This global customer base is supported by 25,000 Mountaineers across 1,450 facilities in 63 countries. Our recent expansions in data center, machine learning-driven data analytics and insights and now ALM are just some of the examples of how we continue to invest in growth to capitalize on our many opportunities ahead, serving a customer base which has been loyal to Iron Mountain for decades. I have shared with you previously how in the last five years, these investments have taken the total addressable market, or TAM, of our products and services from $10 billion to some $80 billion. I am happy to report our continued build-out of new products and services in the last year as well as growth in these underlying markets has now taken our TAM to over $120 billion. Our continued drive in building an ever-expanding set of synergistic and customer-centric solutions, together with global reach and scale, is the fuel behind much of the acceleration in our growth. Let me share a few examples of how we've been empowering our customers' success in growth through our diverse solution offerings and unmatched customer service. Our recent customer win with a large aerospace company, where we won a backfile digitization deal of over $20 million, is a superb example of collaboration among our entertainment services, technology organization and our global records organization, or GRO. In order to achieve its goal of being a 100% model engineering company and to most effectively use designs and data from historical archives to refine new designs, this aerospace company sought help with the digitization and auto classification of over 50 million digital engineering assets. We were tasked to store, classify and utilize machine learning to identify relevant information while maintaining compliance with International Traffic in Arms Regulations known as ITAR. To this end, we developed and implemented an ITAR-compliant solution using our InSight machine learning platform operating in the AWS government cloud environment. Iron Mountain is uniquely positioned to assist our partner with this initiative with our storage capabilities, our understanding of ITAR compliance complexities, our machine learning-trained analytic engines and our technological support to ensure efficiency and success. Moreover, this project enables us to deliver critical insight into engineering data, not just to this company but also to other manufacturing and engineering customers across the globe. We concluded a Phase 1 contract and have also been awarded a Phase 2 contract for this branch. The agency originally planned to select three vendors for the first contract due to the high volume of microfilm reels needing to be processed, but our solution surpassed the customer's expectations, and Iron Mountain was awarded the exclusive contract to process all 177,000 of microfilm reels or over 2 billion records needing analysis. This win was based on our unique splitting technique, proprietary machine learning, automated QA process and processing scalability that helped us to differentiate our offer from the competition. These technology innovations for the customer have enabled future use cases, which rely on advanced pattern recognition at scale, including OCR microfilm processing projects, applying machine learning extraction techniques for digital mailroom, invoice processing and extracting information from claims documents, to name a few. Another example how Iron Mountain is working with customers to support their digital transformation is our recent partnership with a production and development company operating in the U.K.'s North Sea. We've undertaken a significant back scan of their legacy archive records to meet their regulatory obligations to the U.K. oil and gas authority in order to relinquish their license to operate on 230 wells they wish to abandon. They're required to digitally upload all information assets to the National Data Repository. Using the InSight platform, we were able to solve the problem of having enormous amounts of data to sift while consolidating physical and digital data in disconnected information silos and resulting in millions of dollars of annual savings. Moving back above ground, recently in our Crozier Fine Arts division, we won a contract to provide comprehensive storage solutions and logistical support for the museum operations of the Academy Museum of Motion Pictures. We were excited and proud that based upon a foundation of long-term partnership and trust built up through many years of support from Iron Mountain's entertainment services division, they came to us to meet their evolving needs where Crozier services were an ideal match. Now, turning to wins in our data center business. Recall that our bookings target for the year was 30 megawatts. We are pleased to have finished the year with nearly 49 megawatts of leases signed with over 27 megawatts of leases in the fourth quarter alone. This includes the new 20-megawatt lease in our Manassas, Virginia data center announced in December. This lease is expected to commence in phases from mid-2022 through mid-2023. We continue to see strong demand for comprehensive data center solutions from our existing customer base. This lease is indicative of our ability to meet that demand and reflects our commitment to strategically partnering with our customers to meet their individual requirements. Based on current design plans, we now expect that the VA2 facility to support 36 megawatts, up from 30 megawatts previously. With these changes and other additions to our portfolio, our total capacity is now in excess of 600 megawatts. Finally, we continue to be recognized for our leadership around ESG. This has been an important focus for us for many years, having produced annual sustainability reports outlining our commitments and progress since 2013. Some of our past recognitions have included 100% of our data center power is generated by renewables. We were the launch provider of Green Power Pass, which allows our customers to report reductions in their carbon footprint when using our data centers. We were a co-signer with Google to expand our commitment to green-powered data centers to 24/7 carbon-free electricity, and we were one of the original signatories of the UN Global Compact on Sustainability back in 2016. More recently, we announced, in addition to their RE100 program, we have joined the Climate Group's EV100 initiative and reached a key milestone in electrifying our global vehicle fleet in line to reach our climate pledge commitment to achieve net zero carbon emissions by 2040. We have made real progress toward our carbon reduction goals. Since establishing our first science-based targets, we have reduced absolute greenhouse gas emissions by over 60% from our 2016 baseline while growing the business. We believe that our commercial growth and ESG initiatives make us stand out, and we suspect they were a major factor of our being ranked among the top 100 on Newsweek's list of America's most responsible companies. In summary, our future ahead is bright. We are building on our growth momentum as we expand our portfolio to meet our customers' evolving needs. And with our strong footprint, powerful portfolio and deep customer relationships, we are confident that we can continue this momentum as we ascend our mountain range and provide another set of performance records this year and the years ahead. In the fourth quarter, our team delivered strong performance, exceeding the expectations we provided on our last call. On a reported basis, revenue of $1.16 billion grew 9.4% year on year with total organic revenue up eight and a half percent. Revenue was $10 million ahead of the high end of the expectations we shared previously despite the U.S. dollar strengthening and being more of a headwind in the quarter. As an example of the momentum we are building, on a two-year basis, our total organic revenue growth continued to accelerate in the quarter. Organic storage revenue grew 3.6% in the quarter, reflecting our strong pricing and data center commencements. Organic service revenue increased $65 million or 17.6% driven by continued strong growth in digital solutions and asset life cycle management. As revenue associated with our traditional transportation services were still down nearly 10% from pre-pandemic levels, we are even more pleased with this performance. Adjusted EBITDA was $431 million, an increase of $56 million from last year. As a result of strong flow-through driven by pricing and productivity, fourth quarter EBITDA exceeded the high end of our expectations by $6 million despite additional FX headwind. AFFO was $267 million or $0.92 on a per share basis, up $76 million and $0.26, respectively, from the fourth quarter of last year. In both cases, we significantly exceeded the high end of our expectations. Now, let me briefly summarize the full year. Revenue of $4.5 billion increased 8% on a reported basis and over 6% on an organic constant currency basis. Adjusted EBITDA increased 11% year on year to $1.635 billion, an increase of $159 million year on year. We achieved the high end of our full year guidance. AFFO increased 14% to $1.01 billion or $3.48 on a per share basis, in both cases, exceeding our full year guidance ranges. Now, let's turn to segment performance. In the fourth quarter, our Global RIM business delivered revenue of $1.02 billion, an increase of $76 million from last year or 8% on a reported basis from last year. On an organic basis, revenue increased 7%. Constant currency storage rental revenue growth of 4.2% or two and a half percent on an organic basis reflects our focus on revenue management and solid volume trends. With positive volume trends and growth in our adjacent and consumer businesses, total physical volume was in line with our expectations for the quarter and the year. Global RIM adjusted EBITDA was $453 million, an increase of $49 million year on year. Adjusted EBITDA margin was up 160 basis points year on year, reflecting continued pricing strength and productivity. Turning to our global data center business. Our team booked 27 megawatts in the quarter. For the full year, bookings came in at 49 megawatts, significantly exceeding our full year guidance of 30 megawatts. We are very pleased with the team's leasing performance. To give some historical context, we leased 10 megawatts in 2018, 17 megawatts in 2019 and excluding our joint venture in Frankfurt, 31 megawatts in 2020. In terms of revenue, as we projected, fourth quarter growth accelerated to 25% year over year. Storage revenue grew 18% year on year, and service revenue was up sharply and in line with our projections. As a reminder, service revenue in the second half includes fit-out services we are providing to our Frankfurt joint venture. We expect that activity will be completed early in 2022. Even with the large service component, EBITDA margin increased sequentially with strong commencements. We are pleased with our data center performance, and our pipeline has continued to strengthen, both in terms of hyperscale and retail colocation. In 2022, we expect to lease 50 megawatts, which would represent 28% annual bookings growth. We project full year data center revenue growth in a range of high teens percent year on year with even higher growth rates on storage. With our strong prior-year bookings and recent commencements, we have very good visibility to revenue. With pricing and improved mix, we expect data center margin for the full year to be up modestly compared to 2021. Turning to Project Summit. This quarter, the team delivered $30 million of incremental year-on-year adjusted EBITDA benefit. For the full year, as compared to 2020, Summit delivered $160 million of benefits. We continue to expect another $50 million of year-on-year benefit in 2022. Total capital expenditures were $219 million, of which $173 million was growth and $46 million was recurring. For the full year, total capital expenditures were $606 million, of which $309 million was growth capital related to data center development. In 2022, we expect total capital expenditures to be approximately $850 million. We are projecting approximately $700 million of growth capex, with data center development representing about three-quarters of that. We expect recurring capex to approach $155 million. Turning to capital recycling. As we have said before, we view the market for industrial assets as highly attractive as a means to supplement our growth capital. With that backdrop, in the fourth quarter, we upsized our recycling program and generated approximately $63 million of proceeds, bringing the full year to $278 million. Turning to the balance sheet. We ended the quarter with net lease adjusted leverage of 5.3 times, in line with our projection and modestly improved compared to last quarter. As we have said before, we are committed to our long-term leverage range of four and a half to five and a half times. For 2022, with the closing of the ITRenew transaction, we expect leverage to tick up modestly in the first quarter. We expect to exit the year at levels within our target range. From a cash perspective, I would like to recognize our team for driving strong collections, improving our days sales outstanding and resulting in year-on-year improvement in our cash cycle. The collective performance has resulted in a five-day improvement from pre-pandemic levels. With our strong financial position, our board of directors declared our quarterly dividend of $0.62 per share to be paid in early April. Also, as you may have seen, we are pleased to announce an important strategic milestone related to our unconsolidated joint venture focused on the fast-growing valet consumer storage market. MakeSpace recently completed a merger with Clutter, a similarly sized business also focused on valet storage. We expect the combination will result in considerable benefits, including a focus on a single brand, Clutter, broader reach and natural synergies. Iron Mountain will continue to provide storage services to the business, and our ownership interest will be nearly 25% of the combined entity. We are excited about the opportunities that lie ahead and expect continued benefit to our total physical volume. Now, turning to our outlook. For the full year 2022, we currently expect revenue of $5.125 billion to $5.275 billion. We expect adjusted EBITDA to be in a range of $1.8 billion to $1.85 billion. At the midpoint, our guidance represents revenue growth of 16% and EBITDA growth of 12%. We expect AFFO to be in the range of $1.085 billion to $1.12 billion, which represents 9% year-on-year growth at the midpoint point. We expect AFFO per share to be in a range of $3.70 to $3.82. Our guidance assumes organic global physical volume will be consistent to slightly positive year on year. We expect revenue management will be a significant benefit, and I will note that the majority of those actions have already been taken as we speak to you today. And nearly all of them will be in place by the end of the quarter. As Bill mentioned, we are planning for a continuation in the strong trends we are seeing in digital solutions and our organic ALM business, combined with a slight recovery in our service activity across the year. Our guidance also assumes the contribution from our acquisition of ITRenew. As we closed the deal at the end of January, we are including 11 months of the results in our guidance. Our guidance includes approximately $450 million of revenue from ITRenew. We estimate the stronger U.S. dollar will result in foreign exchange headwinds to revenue of approximately $60 million year on year with the vast majority of that in the first half. In terms of EBITDA, our expectations include the benefit from revenue management and top-line growth, the contribution from ITRenew as well as Project Summit benefits. dollar and the divestiture of the software escrow business, which we sold in late second quarter. With the ongoing volatilities in the market associated with the pandemic as well as the closing of the ITRenew transaction during the quarter, we felt it would be helpful to share our expectations for the first quarter. We expect total revenue to be in excess of $1.2 billion. We expect EBITDA to be approximately $425 million. We expect AFFO to be in excess of $250 million. In summary, our team is executing well. Our pipeline continues to expand, and momentum continues to build across our business. Our addressable market has grown significantly over the last several years, and we expect this to continue to expand. We feel confident in our ability to deliver higher levels of growth. And with that, operator, please open the line for Q&A.

q4 revenue rose 9.4 percent to $1.16 billion.

I hope you are all doing well and staying safe. Obviously, there are many aspects of 2020 that we, along with many of you, are happy to turn the page on as we focus on a safer and healthier 2021. In summary, we were pleased with our fourth quarter results, which demonstrated the continued stability and resiliency of our utility water end market. As anticipated, flow instrumentation sales were less worse sequentially but still down year-over-year. We delivered gross margin improvement, continued cash flow generation and earnings per share growth, albeit with a number of moving parts that Bob will walk through in more detail. I'm extremely pleased with our ability to complete two meaningful acquisitions over the past several months that are strategic growth drivers for Badger Meter. Earlier this month, we acquired Analytical Technologies, Inc, or ATi, combined with s::can, which we purchased in November 2020, we now have a great foundation in which to build a real-time, on-demand water quality monitoring offering to customers in both utility water and industrial markets. I'll talk about the water quality offering in more detail later on the call, as well as the current environment and what we see looking out into 2021 and beyond. As you can see on Slide 4, total sales for the fourth quarter were $112.3 million compared to $107.6 million in the same period last year, an increase of 4%. This reflects the activity stabilization we experienced in the third quarter, which has essentially continued despite the resurgence of COVID-19 cases and various regional restrictions. In utility water, overall sales increased 8% against a difficult comparison in Q4 last year, which was also up 8% over 2018. The acquisition of s::can completed in November 2020 contributed approximately 3 points of the current quarter's revenue growth, with core organic revenues in utility water up 5% year-over-year. On an organic basis, this quarter's sales were the second highest in history, second only to the third quarter of 2020, which of course included a sizable chunk of pandemic-induced backlog catch-up as we discussed at the time. Positive revenue mix trends continued with further adoption of smart metering solutions, including increased ORION Cellular radio sales and BEACON software-as-a-service revenue, along with ultrasonic meter penetration. We also ultrasonic meter penetration. We also had the benefit of strategic pricing initiatives, which I'll discuss shortly. As anticipated, flow instrumentation sales were sequentially less worse, down 10% year-over-year compared to the 18% decline experienced in Q3 2020, although activity levels continue to reflect the broadly challenged markets and applications served globally. Operating profit as a percent of sales was 15.1%, a modest 10-basis-point decline from the prior year's 15.2% with a number of moving parts at the gross profit and SEA line that I will dissect in more detail. Gross margin for the quarter was 39.2%, up 100 basis points year-over-year. Margins benefited from higher sales volumes, strategic pricing actions and positive sales mix as previously discussed. These favorable gross margin drivers were offset by a discrete network sunset provision recorded in the quarter as well as the natural post-acquisition drag to gross margins caused by amortization of the inventory fair value step-up recorded for the acquisition of s::can. I'm going to spend a bit of extra time today on three of these items, price cost, the acquisition impact to margins and the discrete network sunset provision, to help walk you through the impact in the quarter and thereafter as applicable. Starting with price cost. As I'm sure you've seen copper prices, which are a proxy for our recycled brass input costs, have increased significantly. Currently averaging around $3.60 per pound, this represents over a 30% increase year-over-year. We've reminded investors that while meaningful, the impact of recycled brass on our cost structure has been moderating over time as we sell more software and radios versus primarily meters in the past. I will also remind you that we have and continue to offer polymer, mechanical and ultrasonic meters as part of our choice matters go-to-market philosophy. To give you some level of sensitivity, if copper prices stay in this range for the entire year, it could be a potential cost headwind of about $4 million to $5 million year-over-year. The other side of that price -- cost equation is price. And as we have done with working capital and operating metrics like SQDC, safety, quality, delivery and cost, we have designed more robust processes and metrics to actively manage strategic pricing for the evolving and valued solutions that we offer to customers. In doing so, we have proactively implemented a number of strategic pricing actions that resulted in positive net benefit from price in the fourth quarter, in advance of the lagging headwind from input cost increases, principally copper. It would be our expectation that we are largely able to offset commodity inflation with price during the year with perhaps some minor manageable lag effects. The second topic is acquisitions and their impact to margins. In the fourth quarter, s::can results were included for two months. So these two months, as expected, totaled approximately $2.5 million in revenues. We recorded the typical amortization of inventory fair value step-up and acquired intangible assets, which all told, resulted in a modest loss in Q4 2020 for the short stub period. As we look to 2021, the combination of s::can and ATi, with total acquired revenue of approximately $37 million, we expect to be earnings per share accretive. The first quarter of 2021 will include the remaining s::can, plus a full quarter of ATi inventory step-up amortization, but we expect normalized profitability in the remaining quarters. Ken will discuss the longer-term opportunities for these acquisitions in his remarks. Finally, turning to the non-recurring discrete network sunset provision. This relates to the sunsetting of the CDMA cellular network for the early adopters of our original cellular radio offering. This sunset is a carrier event that is part of the natural evolution of technology and impacts a variety of IoT devices across an array of industries. As the innovator in cellular radios for water metering applications and as a company focused on customer care, Badger Meter provided protections for such circumstances. Until recently, firm's sunsetting plans by the carriers were not in place. Now that these plans appear more firm, we have taken this provision, which reduced gross margins in the quarter by approximately 300 basis points to cover future radio upgrades for these early cellular customers. To be crystal clear, there is no defect in the radio itself. The logical question then follows. Will this continue to be an ongoing challenge with cellular radios? The short answer is no. The CDMA network was already well established when Badger Meter introduced its first cellular radio. These first networks had been in service nearly 20 years at that point. Subsequently, we have moved ahead of the technology curve, as demonstrated by the launch of ORION LTM [Phonetic] in 2019 and our continued innovation around cellular radio technologies. These technologies will be supported by multiple generations of cellular networks. Turning to SEA expenses. The fourth quarter's spend of $27.1 million increased $2.3 million from the prior year. This includes the addition of s::can for two months, including the resulting intangible asset amortization. More broadly, higher personnel costs were partially offset by lower travel, trade show and other pandemic-impacted expenses. Including both s::can and ATi in 2021, we expect ongoing SEA as a percent of sales to average in the 25% to 26% range. The income tax provision in the fourth quarter of 2020 was 22.6%, slightly lower than the prior year's 24.3% rate. With the additions of s::can and ATi, we don't expect a significant change in our normalized tax rate in 2021, absent any new statutory US tax code changes. In summary, earnings per share was $0.45 in the fourth quarter of 2020, an increase of 7% from the prior year's earnings per share of $0.42. Working capital as a percent of sales was 26%, with about 1% of that associated with the addition of s::can. On an organic basis, primary working capital as a percent of sales declined about 200 basis points year-over-year. Our full-year free cash flow of $80.5 million was 10% higher than the prior year's $73.2 million and represents approximately 163% conversion of net earnings. Our cash flow focus will not abate and we anticipate free cash flow conversion to exceed 100% in 2021. However, I would caution we do not expect to see the conversion at the robust levels of the past two years, given the structural change in working capital already achieved. We ended the year with approximately $72 million of cash on the balance sheet after taking into account the s::can acquisition. In early January, we deployed $44 million net of cash acquired for ATi, remaining in a net cash positive position. Along with the continued full access to our untapped $125 million credit facility, we have ample financial flexibility to continue executing on our capital allocation priorities. Turning to Slide 5, I'd like to highlight the two transactions we completed since our last earnings call and how we believe they bring significant value to the Badger Meter portfolio. s::can acquired in November of 2020 and Analytical Technology, Inc, or ATi, acquired just a few weeks ago are both pioneers in providing real-time water quality monitoring solutions. This is differentiated from traditional water quality testing because these solutions capture real-time data through sensors and systems that do not rely on labs, reagents or other consumables resulting in lower capital and operating cost for customers. Just as water quality -- just as water utility billing moved from manual reads to advanced metering infrastructure or AMI, we believe water quality monitoring will evolve from lab sample testing to online real-time collection, monitoring and reporting. Adding real-time water quality parameters to Badger Meter's core flow measurement, pressure and temperature sensing capabilities as to the scope of actionable data for utilities to improve operating efficiency and for industrial customers to monitor both process and discharge water. We see multiple avenues for growth synergies by bringing together these two acquisitions into Badger Meter. For example, from a water quality sensor standpoint, with this combination, we have a full product offering of both electrochemical and optical sensors. From a geographic standpoint, where ATi is strong in the US and UK, s::can has an installed base in 50 countries. From a scale and coverage standpoint, leveraging customer relationships, inside sales, rep networks and distributors will create a greater ability to cross-sell throughout the water ecosystem, including water utilities, wastewater treatment and industrial water applications. There is no question it will take time and investment in order to realize these long-term growth synergies. We need to advance our communications to capture quantity plus quality data parameters, online real-time VR industry-leading ORION Cellular radios. We will need to augment BEACON and EyeOnWater to store, integrate, analyze and visualize information, providing a holistic view of the water network. This is no small undertaking but one that we are organized to execute. In the near-term, it is business as usual for the two acquired businesses. The combined acquired annual sales of approximately $37 million with EBITDA margins in the mid-teens will be earnings per share accretive to our results. Now turning to our outlook on Slide 6. While we were all hoping that turning the calendar 2021 would also turn the page on COVID-19, that is obviously not the case. Despite the continued uncertainty, we remain fully prepared to manage safely in support of our customers in the essential water sector, as we did throughout much of 2020. There has been no significant change in customer tone regarding utility budgets with spending on critical and necessary activities, which includes metering solutions required for billing and reducing non-revenue water. As we have stated, our large and diverse customer base will have different needs, circumstances and priorities. But as a whole, utility water bid tenders and awards are largely continuing with their normal processes with limited extended timelines or deferrals. While we don't provide guidance, Bob will walk through the detail on a few of the items that will impact us in 2021, including price/cost, SEA levels and the expected impact of recent acquisition activity. Obviously, we had some significant quarterly swings on the top-line throughout 2020, so the growth rates that are uneven in normal circumstances will be more so during 2021. We will continue to drive cash flow, which is the fuel to invest in and grow our business. This includes both organic and acquisition-driven growth with a focus on additional product and software offerings serving water-related markets and applications. For example, expanding functionality of our EyeOnWater software app that helps drive consumer engagement. Finally, we will continue to advance a variety of priorities on the ESG front, including relentlessly focusing on employee safety, reducing greenhouse gas emissions, fostering our culture of inclusion and of course promoting water conservation and quality. Despite the unprecedented backdrop of a health and economic crisis, we have delivered utility water revenue growth, SaaS revenue as a percent of sales growth to now 5%, strong EBITDA margin expansion, robust working capital management and cash flow and successful execution of two accretive acquisitions. It's a true testament to the criticality of the water industry and the exceptional Badger Meter team.

q4 sales $112.3 million versus refinitiv ibes estimate of $109.2 million. q4 earnings per share $0.45.

We are pleased to discuss our fourth quarter and full year results with you today. This has been a record-breaking year for Miller Industries as we achieved the highest full year revenue and net income in our Company's history. We finished the year with strong top line growth, gross margin expansion, and an increase in earnings per share. Revenue during the fourth quarter increased 12.9% to $203.1 million versus $180 million a year ago, driven by broad-based demand across our portfolio. Our domestic business continued its strong performance during the quarter as new order rates remained steady and our distributors continued to work at full capacity to deliver existing orders. Our international business also performed in line with our expectations on a year-over-year basis. Additionally, our fourth quarter results benefited from a catch-up related to supply chain delays we experienced during the third quarter. Quarterly gross profits increased by 21.6% year-over-year to $26.9 million and our gross margin expanded 100 basis points year-over-year to 13.3%, which reflects strong demand, favorable mix and other cost reduction measures. Additionally, during the quarter we continue to realize benefits from our cost control initiatives as SG&A expenses as a percentage of sales decreased by approximately 20 basis points from the prior year period. Net income was $11.7 million or $1.03 per share compared to net income of $10.8 million or $0.95 per share in the fourth quarter of 2018. As we move into the first quarter of 2020, our backlog remains healthy in both our domestic and international markets, and we remain committed to providing best-in-class customer services while continuing to invest in our business and generating shareholder value. Further, our balance sheet remains healthy, as we continue to pay down debt and strategically deploy our resources to drive sustainable long-term growth. After that, I'll be back with comments about the market environment and some closing remarks. Net sales for the fourth quarter 2019 were $203.1 million versus $180 million for the fourth quarter of 2018, a 12.9% year-over-year increase driven by broad-based demand across our portfolio, as well as some additional sales that were included in the fourth quarter as a result of supplier delay issues we experienced in the preceding quarter. Cost of operations increased 11.7% to $176.2 million for the fourth quarter 2019 compared to $157.8 million for the fourth quarter 2018, driven by our top line sales growth. However, cost of operations as a percentage of net sales contracted approximately 100 basis points to 86.7% from the prior year period. Gross profit was $26.9 million or 13.3% of net sales for the fourth quarter 2019 compared to $22.2 million or 12.3% of net sales for the fourth quarter 2018, reflecting a favorable product mix. SG&A expenses were $11.8 million for the fourth quarter 2019 compared to $10.8 million for the fourth quarter 2018. As a percentage of sales, SG&A decreased approximately 20 basis points to 5.8% from 6% in the prior year period, driven by our effective cost controls and increased operational efficiency across the organization. Interest expense, net, for the fourth quarter 2019 was $565,000 compared to $449,000 for the fourth quarter 2018, as an increase in customer floor plan financing cost more than offset lower long-term debt-related interest expense. Other income expense for the fourth quarter 2019 was a net gain of $211,000 compared to a net expense of $465,000 for the fourth quarter 2018, due primarily to currency exchange rate fluctuations. Net income for the fourth quarter 2019 was $11.7 million or $1.03 per diluted share. Net income for the fourth quarter 2018 was $10.8 million or $0.95 per diluted share. Now, let me briefly review our results for the 12 months ended December 31, 2019. Net sales for the year were $818.2 million compared to $711.7 million in the prior year period, an increase of 15%. Gross profit for the year was $96.5 million or 11.8% of net sales compared to $83.3 million or 11.7% of net sales for 2018. SG&A expenses were $43.4 million for 2019 or 5.3% of net sales compared to $39.5 million or 5.6% of net sales for 2018. Net income for the year was $39.1 million or $3.43 per diluted share, an increase of 15.9% compared to net income of $33.7 million or $2.96 per diluted share in 2018. Now, turning to our balance sheet. Cash and cash equivalents as of December 31, 2019 was $26.1 million compared to $27.5 million as of September 30, 2019 and $27 million at December 31, 2018. Accounts receivable at December 31, 2019 totaled $168.6 million compared to $165.8 million as of September 30, 2019 and $149.1 million at December 31, 2018. Inventories were $88 million as of December 31, 2019, compared to $98.1 million as of September 30, 2019 and $93.8 million at December 31, 2018. Accounts payable at December 31, 2019 was $95.8 million compared to $114.9 million as of September 30, 2019 and $98.2 million at December 31, 2018. During the quarter, we reduced our long-term debt by approximately $5 million from the prior quarter, bringing the balance to approximately $5 million as of December 31, 2019. Overall, our balance sheet remained strong and we continue to generate solid free cash flow, which provides us with financial flexibility to invest in our business and continue to drive long-term shareholder value. Lastly, the Company also announced that its Board of Directors approved our quarterly cash dividend of $0.18 per share payable March 23, 2020 to shareholders of record at the close of business on March 16, 2020. We are very proud of our performance this quarter and our record setting year. Our performance this quarter was very encouraging as we returned solid year-over-year growth on both the top and bottom lines. Our steadfast commitment to operational excellence, disciplined cost control measures and strategic capital deployment grant us flexibility to invest in long-term growth of our business while generating shareholder value. Our quarterly dividend of $0.18 per share underscores our continued commitment to returning capital to our shareholders. As we transition into this turbulent first quarter of 2020, we remain confident in the strength of our backlog and our underlying fundamentals in all our end markets. We will continue to monitor the developing situation with COVID-19, and the impact it may have on our supply chain and operations. Finally, we are confident that our previous and ongoing capital investments in conjunction with our strong cash flows and healthy balance sheet have positioned us to best serve our customers, while providing us with the financial flexibility to pursue any future opportunities to grow our business. I'd like to close by welcoming our two new Board members, Leigh Walton and Deborah Whitmire. Leigh Walton is an independent director and she has more than 40 years of experience, advising public companies on -- in the areas of corporate governance and corporate finance. Debbie Whitmire, as the Company's Executive Vice President, Chief Financial Officer and Treasurer, and has provided invaluable expertise and leadership to our senior management team over the last several years as a member of our executive committee. The leadership they will bring will be a valuable contribution, and I hope you all join me in congratulating them and welcoming them on the Board. In addition, I'd like to just take one second to congratulate all the employees at Miller Industries and all of our vendors, suppliers and other partners, distributors for a phenomenal year, a record-breaking year after 30 years of $818 million in sales.

compname reports q4 earnings per share of $1.03. q4 earnings per share $1.03. q4 sales rose 12.9 percent to $203.1 million.

Actual results may differ materially from those made or implied in such statements, which speak only of the date they are made and which we undertake no obligation to publicly update or revise. Our Chairman and CEO, Clarence Smith, will now give you an update on our results. And then, our President, Steve Burdette, will provide additional commentary about our business. We're very pleased with another record quarter with sales of $260.4 million and net income of $24.2 million. Our team has done an outstanding job in producing this performance through the ongoing COVID concerns, significant product pricing increases, major hiring challenges, especially in warehouse and distribution, rising operating costs in unprecedented supply chain disruptions. I believe that we've outperformed the competition in being able to deliver to our customers. We're very pleased with the efforts of our merchandising team and the pricing discipline at the store level. Even with the unusual and significant demurrage and LIFO charges, we increased our gross margins and reached record operating profits. Our available inventory is in the best shape we've had in over a year. We're finally restarting new product development that was on hold due to COVID and the massive backlog of sold orders. Clearly, our priority focus is bringing in sold merchandise to bring down our backlogs and to better serve our customers. However, we are a home furnishings retailer, and fashion and style are important drivers of sales. We're always excited to see the latest design and styles hit our floors, which is an important differentiator for Haverty. In the past several months, we've added over 500 online exclusive products, including outdoor products and specialty occasional items which have had good response. We greatly appreciate our manufacturing partners in China and Vietnam who struggled with COVID shutdowns over the past several months, but are opening back up and increasing their production levels. Because of the COVID-related shutdowns, we will have gaps in imported products, creating some out of stocks, especially in case goods. Our merchandising and supply chain teams have a strategy to soften this gap related to the Vietnam factory shutdowns. We expect to end 2021 with 121 stores, one store over last year. In 2022, we have plans to open five stores, netting three. We're evaluating numerous opportunities for locations, which we can serve in our distribution footprint. We've been pleased with our strategy of converting existing retail space to Haverty stores. Recently, we've had very good results with stores in the 30,000 to 35,000 square foot size, a building size with more availability. With the importance of our website and special order tools, we can present a large selection set of merchandise without requiring a much larger store. We're in the process of planning 2022 capex. We expect we will be in the same range as we had last -- this year, approximately $35 million net. Investments in stores and renovations are the largest block. Our single largest investment will be expansion of our Virginia Distribution Center, which we bought back earlier this year. We're converting the facility from a regional home delivery center to a full distribution center to better serve our Atlantic Coast growth. The expansion will allow us to receive direct shipments from the north port, reducing shipment cost and allow for quicker deliveries. Our IT and marketing teams made major investments in remaking and upgrading our website to be the best in class industry leader. We're focused on ease of use and inspiring our customers throughout the process, utilizing the Adobe platform. It will align with an upgraded 3D floor plan, significantly improved graphics, design and search. We're expecting the rollout of the new site early in the second quarter next year. As we just released, our fourth quarter written sales were down approximately 3.5% from the same period last year with delivered sales up 17.5% over last year. For perspective, this year's Q4 written sales to date are up 20.9% and delivered are up 41.5% over 2019. We're having record delivery weeks as we receive more incoming sold product and are having much better inventory compared to last year. As all of retail is struggling with the late shipments for Christmas, we also have real challenges in supply chain, and I would like to ask Steve Burdette, President, to give us an update on our supply chain status. I am thrilled with our results for the third quarter. Our performance could not have happened without the dedication of our entire team in the stores, distribution centers, home delivery service and home office, whom I want to congratulate personally for their efforts. Our supply chain network has been able to increase the flow of products into our warehouses over the third quarter. Our warehouse inventory levels rose over 8% for the third quarter, and we are seeing our inventories continue to rise so far in October. We will expect to see a slowdown in imports arriving in the November-December timeframe. The headwinds during the quarter continued with the Vietnam shut down beginning in late July, rising container rates, container congestion at the ports along with container capacity, staffing issues with the continued spread of the Delta variant and trucking pressures moving products within our network. There was a bright spot during the quarter with the foam supply as our vendors do not see this as an issue moving into the fourth quarter. Vietnam began its shut down in late July and things accelerated in August where majority of our factories were closed for the months of August and September. We are getting positive news from our vendors that they began opening at the beginning of October. However, it will be a slow process to get back to 100% production. Majority of the vendors feel like they will be able to get back to 50% to 75% of production by Chinese New Year with a return to 100% not happening until late first quarter next year. A few vendors did give a more upbeat outlook that they will be back to 100% production by the end of November because of the safety and medical protocols that they had in place. Also, we continue to see shipments coming from Vietnam now. Container capacity, container rates and port congestion continue to be areas of concern. We expect these issues to continue well into 2022. Our container prices on the spot market continued to increase during the quarter. However, we are seeing a downward trend in October. We continue to balance our shipping mix so that no more than 20% to 30% is on the water at one time at these spot market rates. Due to our focus on ensuring that we could provide our customers with a more consistent flow of product, we incurred higher freight costs during the quarter and a substantial amount of demurrage and detention expense that we expect will be reduced significantly during the fourth quarter. Staffing continues to be a concern as it is not only impacting our distribution, delivery and service areas, but it's impacting our manufacturers and trucking partners. We continue to evaluate each of our areas of the business to ensure that we are competitive so that we are attracting the best talent. We did start seeing some traction in the latter part of the quarter, but still have opportunities. We consider our people our most valued asset as we know our service is what sets us apart from our competitors. We have seen our average age of the undelivered pool continuing to increase to nine weeks from eight weeks over the quarter. Our special order lead times have stabilized due to the improvement in foam supplies, and we have started seeing higher production quantities from our domestic suppliers over the last four weeks. Our special order business is still suffering from these delays, but we feel confident that we will be able to see a bounce back due to a more confident sales team seeing the improvement in our lead times. We remain optimistic for the fourth quarter. Our teams are doing a wonderful job communicating with our customers regarding any delays with their products. While there will be a slowdown in import receipts from Vietnam, we are expecting improved shipping times from our domestic suppliers and improvements in shipments from our bedding suppliers to help offset some of these delays. In the third quarter of 2021, delivered sales were $260.4 million, a 19.7% increase over the prior year quarter. Total written sales for the third quarter of 2021 were up 2% over the prior year period. Comparable store sales were up 17.7% over the prior year period. Our gross profit margin increased 60 basis points from 56.2% to 56.8% due to better merchandise pricing and mix and less promotional activity during the quarter. These improvements were partially offset by an increase in our LIFO reserve as we continue to see increased freight and product cost. Selling, general and administrative expenses increased $16.1 million or 16% to $116.2 million, primarily due to increased sales activity. However, as a percentage of sales, these costs declined 1,400 basis points to 44.6% from 46%. As Steve mentioned earlier, during the third quarter of 2021, we did experience increased port congestion and we incurred significant demurrage costs of approximately $2.3 million, which negatively impacted our selling, general and administrative costs. However, as demonstrated in the past four quarters, our financial model has substantial operating leverage at these sales levels. Other income in the third quarter of 2020 was $2.4 million, which includes the gain on surplus property that was adjacent to our distribution center in Dallas, Texas. Income before income taxes increased $7.4 million to $31.9 million. Our tax expense was $7.7 million during the third quarter of 2021, which resulted in an effective tax rate of 24%. The primary difference in the effective rate and statutory rate is due to state income taxes and the tax benefit from vested stock awards. Net income for the third quarter of 2021 was $24.2 million or $1.31 per diluted share on our common stock compared to net income of $18.3 million or $0.97 per share in the comparable quarter of last year. Now looking at our balance sheet, at the end of the third quarter, our inventories were $119 million, which was actually up $29.1 million from the December 31, 2020 balance and up $28 million versus the Q3 2020 balance. At the end of the third quarter, our customer deposits were $120.1 million, which was up $34 million from the December 31, 2020 balance and up $31.7 million versus the Q3 2020 balance. We ended the quarter with $232.3 million of cash and cash equivalents. We have no funded debt on our balance sheet at the end of Q3 2021. Looking at some of the uses of cash flow. Capital expenditures were $28.1 million for the first nine months of 2021 and we paid $13 million of regular dividends during the first nine months of 2021. During the third quarter, we purchased $19.5 million of common stock as 537,196 shares. As previously reported, our board of directors authorized an additional $25 million of share repurchases. At the end of the third quarter of 2021, we had $22.3 million remaining under current authorization in our buyback program. We continue to expect our gross profit margins for 2021 to be between 56.5% to 56.8%. We anticipate gross profit margins will be impacted by our current estimate of product and freight costs and changes in our LIFO reserve. Our fixed and discretionary type SG&A expenses for 2021 are expected to be in the $278 million to $281 million range, an increase over our previous estimate, primarily due to rising warehouse and demurrage costs. The variable-type costs within SG&A for 2021 are expected to be in the range of 17% to 17.3%. Our planned capex for 2021 remains at $37 million, anticipated new replacement stores, remodels and expansions account for $18.7 million, investments in our distribution network are expected to be $15.2 million and investments in our information technology are expected to be approximately $3.1 million in 2021. Our anticipated effective tax rate for this year is expected to be 24%. This projection excludes the impact from vesting of stock awards and any potential new tax legislation. This completes my commentary on the third quarter financial results. We are very pleased with the record performance here underway. We're comparing well with the second half records of 2021 and against 2019. We believe that the pneumatic return to home that COVID precipitated has changed the importance of home for years to come. We agree with the recent editorial from Jerry Epperson, an industry veteran and analyst in furniture today this week. Following the boomers, the millennials and Gen Xers have moved to desiring homes because of life changes related to having children. We're having another housing boom where people want to move to the suburbs. We're getting back to the 67% of our households being homeowners. The home will continue to grow in importance. You can now shop, bank, see the doctor and go to church from home. This is going to transform our nation in terms of level of productivity, innovation and new ideas. Haverty's 136-year history and strength is in serving the home furnishing needs in the 16 Southern Atlantic and Central states. These areas are gaining the most transplants from the rest of the country. We think that our locations, premium product merchandising, H Design services and dedicated distribution positions us to continue to grow from the all time record set in the past years. We believe we have the experience, the deep resources and strong commitment to growing our sales and maintain strong double-digit operating profits in the years ahead.

q3 earnings per share $1.31. q3 same store sales rose 17.7 percent. q3 sales rose 19.7 percent to $260.4 million. qtrly comparable store sales increased 17.7%.

2020 was a year with many facets. We started the year confident that the commodity price headwinds faced over the past several years would ultimately transform into tailwinds. Then a pandemic hit and basically turned all of our worlds upside down. Like most other public companies have started in the earnings cycle, navigating the choppy waters of 2020 was truly a challenge. Our priorities during the COVID-19 pandemic continue to be protecting the health and safety of our employees, while continuing to provide our essential services to the industries and communities we serve. We implemented significant changes and safety protocols across our global operations to protect our employees, serve our customers and ensure business continuity. We did incur direct costs of about $7.5 million related to these actions to protect our employees from COVID. This doesn't include the plant disruptions, production slowdowns or customer order delays. The result of our efforts allowed us to continue our operations through fiscal 2020 with minimal disruption. Your hard work made 2020 one of our best years in Darlings long history. We finished the year strong with a combined EBITDA, adjusted EBITDA of $214.5 million in fourth quarter. All of our segments in the Global Ingredients platform put up solid results as the $146.3 million of EBITDA in the base business was the best quarterly performance of 2020 and reflected the growing momentum of an improved pricing cycle. The Feed segment ended the year with a solid performance of $90.2 million of EBITDA, driven by the higher raw material volumes and better prices in both proteins and fats for the quarter. The commodity price momentum has certainly carried into 2021 as prices are close to their 10-year mean reversion average. We believe that 2021 results for the Feed segment should increase significantly over the previous year. I'll dive into that a little later in the call. Our Food segment continued to show strength, finishing 2020 with its best quarterly performance in our history. Our collagen peptide sales drove better results posting approximately $50 million of EBITDA for the fourth quarter. With our three new Peptan facilities online last year, we anticipate solid growth in this segment for 2021. Now, as we had indicated on our third quarter call, Diamond Green Diesel had its turnaround in early fourth quarter, which led to DGD selling approximately 57 million gallons of renewable diesel at $2.40 per gallon or contributing $68.2 million of EBITDA to Darling during the fourth quarter. For the year, DGD certainly met our expectations, selling 288 million gallons of renewable diesel at an average of $2.34 per gallon. Darling's share of EBITDA from DGD for 2020 was $337.3 million. Our European Bioenergy business reported another solid quarter, which we believe will be steady through 2021. This decision was based on the go-forward unfavorable industry economics for biodiesel. Our action does free up valuable low carbon feedstocks that can be sold to DGD and also helps us focus our energy on making DGD the best low cost renewable diesel producer in the world. Brad will cover the particulars of the asset impairment charge related to these shutdowns a little later in the call. Our current take on the economic recovery is bullish. Ag commodity markets are experiencing a very favorable pricing environment. The energy market also is stronger than a year ago with ULSD trading above where it was at the end of February 2020. These two together make for a strong operating environment for Darling and DGD. We believe as the U.S. and world economies reopen later this summer, demand for eating out, taking road trips will help us to maintain a good percentage of the improved commodity price environment we are experiencing today. At the top, we'd like to point out that our fiscal 2020 was a 53-week year with the extra week in our fourth quarter. Also I will speak to several adjusted amounts, which reflect the shutdown of our two biodiesel plants with a restructuring and asset impairment charge recorded in the fourth quarter of 2020 and also adjusting the Q4 '19 and fiscal year 2019 results for the retroactive blenders tax credits related to 2018 and 2019 all being recorded in our fourth quarter 2019 results. We think this will give a better comparison of our results period-to-period. The previously mentioned pre-tax restructuring and asset impairment charge of $38.2 million related to the shutdown of the two biodiesel facilities included a goodwill impairment charge of $31.6 million, other long-lived asset charges of $6.2 million and $0.4 million of restructuring charges. Now, for a few of the highlights; net income for the fourth quarter of 2020 totaled $44.7 million or $0.27 per diluted share compared to a net income of $242.6 million or $1.44 per diluted share for the 2019 fourth quarter. Net income for fiscal 2020 was $296.8 million or $1.78 per diluted share compared to $312.6 million or $1.86 per diluted share for fiscal 2019. In the fourth quarter of 2020, we recorded a 30.6 million after-tax restructuring and asset impairment charge related to the shutdown of our Canada and U.S. biodiesel facilities. Excluding this charge, adjusted net income was $75.3 million or $0.45 per diluted share. Additionally, the fourth quarter of fiscal 2019 included retroactive blenders tax credits related to 2018, as well as for all of 2019. Excluding these credits for periods prior to the fourth quarter of 2019 resulted in an adjusted net income for the fourth quarter of 2019 of $50.1 million or $0.30 per diluted share. Excluding the restructuring and asset impairment charge related to the shutdown of the two biodiesel facilities adjusted net income for fiscal 2020 was $327.4 million or $1.96 per diluted share. Excluding the retroactive blenders tax credits related to 2018 adjusted net income for fiscal 2019 was $226 million or $1.34 per diluted share. Now, turning to our operating income, we recorded $74.4 million of operating income for the fourth quarter of 2020 compared to $293.3 million for the fourth quarter of 2019. Excluding the pre-tax $38.2 million restructuring and asset impairment charge adjusted operating income for the fourth quarter of 2020 was $112.5 million. Excluding the retroactively reinstated blenders tax credits recorded in the fourth quarter of 2019 for prior periods, the adjusted operating income for the fourth quarter of 2019 was $100 million. Therefore, on a comparative basis the fourth quarter of 2020 adjusted operating income improved $12.5 million over the fourth quarter of 2019. The fourth quarter 2020 gross margin increased $29.8 million over the prior year amount, which partially offset the $38.2 million impairment charge and a $10 million increase in depreciation and amortization, which was partially attributable to the Belgium Group and Marengo acquisition assets added in the fourth quarter of 2020. Operating income for fiscal 2020 was $430.9 million as compared to $475.8 million for fiscal 2019. Excluding the $38.2 million restructuring and impairment charge, the adjusted operating income for fiscal 2020 was $469.1 million. Operating income for fiscal 2019 was $475.8 million. Excluding the retroactive blenders tax credits related to 2018 adjusted operating income for fiscal 2019 was $389.2 million. The $79.9 million increase in adjusted operating income for fiscal 2020 as compared to fiscal 2019 was primarily due to a gross margin increase of $108.3 million and a larger contribution and equity earnings from our renewable diesel joint venture Diamond Green Diesel. These improvements more than offset a $20 million increase in SG&A, asset sales gains of $20.6 million in fiscal 2019 and a $24.7 million increase in depreciation and amortization. SG&A increased $20 million in fiscal 2020 as compared to fiscal 2019, primarily due to increases in insurance premiums, labor cost, COVID-related costs and foreign currency effect, which were partially offset by lower travel cost. Interest expense declined $1.7 million for the fourth quarter 2020 as compared to the 2019 fourth quarter amount and declined $6 million for fiscal 2020 as compared to fiscal 2019. Turning to income taxes, the company's 2020 effective tax rate of 15.1% is lower than the federal statutory rate of 21% primarily due to the biofuel tax incentives. Tax expense and cash tax payments for 2020 were $53.3 million and $36.8 million respectively. For 2021 we are projecting the effective tax rate to be 20% and cash taxes of approximately $40 million. Looking at the balance sheet at year-end January 2, 2021 debt was reduced $141.4 million during the year with a net paydown of $189.8 million. The bank covenant leverage ratio ended the year at 1.90. Capital expenditures totaled $280.1 million for 2020 as we plan to spend approximately $312 million on capital expenditures in fiscal 2021. The company received $205.2 million in cash distributions in 2020 from our Diamond Green Diesel joint venture. Lastly, we repurchased approximately 2.2 million shares of common stock totaling $55 million during fiscal 2020 and paid approximately $29.8 million in cash in the fourth quarter of 2020 for the Belgium Group and Marengo acquisitions. Now diving into 2021, with the commodity price improvement and continued strong raw material volumes, we believe that our Food, Feed and Fuel segments prior to adding Diamond Green Diesel should generate between $565 million and $600 million of EBITDA. That's a conservative 12% to 20% improvement over 2020. DGD, we believe will be able to earn at least $2.25 a gallon EBITDA in 2021 and should produce between 300 million gallons and 310 million gallons this year, which would generate between $335 million and $350 million of EBITDA for Darling share. This range does not include any additional upside for renewable diesel gallons that could be produced in 2021 as the 400 million gallon expansion is on track to commission in early Q4. We should know better in the middle of the year the exact timing of when the Norco expansion will be approximately online. Now, the DGD Port Arthur location is making excellent progress with all key long lead equipment items ordered and site work nearing completion. This 470 million gallon renewable diesel facility should be operational by the back half of 2023 securing Diamond Green Diesel's leadership position as the largest low-cost producer of renewable diesel in North America. We anticipate all costs of both expansion projects will be funded by the internal cash flow of Diamond Green Diesel. However, we still anticipate DGD putting a non-recourse revolver in place shortly. Now, let's do something different and turn to the feedstock question. I will try and answer this question now but sure you will ask it again during the Q&A. Darling believes there's adequate low carbon feedstocks to supply the 1.2 billion gallon renewable diesel platform of DGD. We do expect growth in animal fats and certainly think that used cooking oil will recover a little this year and grow in the future years. Our approach for keeping our feedstock advantage for DGD is twofold. What can Darling do to render or collect more out of our footprint today, either through process or technology improvements or competitive positioning and what are the bolt-on opportunities to grow our volumes of animal fats and waste oils around the world? We do believe there are multiple avenues for us to pursue in expanding our feedstock footprint and we have faith that our large global presence will put us on a pathway to get results that others might not be able to achieve. Operating animal byproduct businesses on five continents allows us to see what no one else can see and provide supply chain arbitrage that will make our renewable diesel platform second to no one. As we grow another year older and wiser we continue to position our company in the best place to take advantage of the changing times. We are excited about our outlook for 2021, encouraged by the growth of our low carbon fuel standards around the world and we are doubly pleased with the great progress at Diamond Green Diesel and our joint venture partner Valero as we are now inside of nine months of the biggest renewable diesel project in North America starting up. So with that Alicia, let's go ahead and open it up to question and answers.

q4 adjusted earnings per share $0.45 excluding items. q4 net income $0.27 per gaap diluted share.

Actual results may differ materially from those made or implied in such statements, which speak only of date they are made and which we undertake no obligation to publicly update or revise. Our Chairman and CEO, Clarence Smith will now give you an update on our results. And then, our President, Steve Burdette will provide additional commentary about our business. We're very pleased with the record results for the second quarter with sales of $250 million. We've done a good job in our expense controls across the board, and combined with pricing disciplines from the merchandising teams and stores, we achieved solid gross margins and 11.7% pre-tax operating profits. Our ongoing objectives are to grow market share in our existing distribution footprint and maintain double-digit operating margins. We believe that the increased importance of home that was jump-started with the impact of COVID last spring is a longer-term trend. While we don't expect the rush that impacted our industry to be at the elevated levels we experienced in recent quarters, we do believe that home is a priority and a sustainable trend for the near future. The strong desire for homeownership, combined with Havertys strong positioning in Florida, Texas and the Southeast, puts us in an ideal position for today and for the future. Our supply merchandising and distribution teams are working with our factories and shippers to bring in product to fill orders and reduce our record backlog. The shipping challenges that home-related industries are experiencing have caused major delays for furniture, which we believe will be problems until the spring of 2022. We are working to increase our inventories as the production and product flow improves. We're investing in our distribution capacity to support growth over $1 billion over our regions. We just completed additional racking to our mothership, the Eastern Distribution Center in Braselton, Georgia, which adds 20% more storage capacity. We will evaluate potential expansions to our network to better serve our planned growth. Our current focus is on building market share in our key markets with store positioning and target marketing to our core customer and new homeowners. Examples of this were the opening of Myrtle Beach earlier this year, the opening of a third store in Austin, in the fast-growing Pflugerville, Round Rock markets and a store opening tomorrow in the villages in Central Florida. We're in a deep dive reviewing potential locations in our best markets, which will reach the fastest-growing areas and leverage our existing infrastructure. We expect to announce several new fill-in locations for the 2022 openings. We're very excited about the rollout of the WE FURNISH HAPPINESS marketing campaign, which we believe more clearly separates Havertys from our competitors and continues to raise the bar on service, quality, furniture and design. We continue to be focused on our front door, havertys.com. We've committed to significant investments in IT and state-of-the-art systems to better reach and appeal to our customers. We've contracted with Adobe to bring on a collection of applications and services that will lay the foundation for unmatched customer experience. The new foundation will improve functionality, help us create content easier and faster, provide better personalizations using AI-driven automation and enhance our analytics and reporting. Our goal is to have the best-in-class website experience. I'm very excited with our results for the second quarter. This performance was due to the commitment, passion and determination of the store, distribution, home delivery, service and home office teams, whom I want to congratulate personally for their efforts. Our supply chain network has been able to increase the flow of products into our warehouses over the second quarter even with all the headwinds. Container capacity continues to be under pressure with the continued increase in demand across all of retail. We expect this to continue to be an issue for the remainder of the year, even if there is a softening in demand. Also, container prices on the spot market continue to increase with prices varying between $12,000 and $22,000 a container. We have been able to balance our shipping mix, so that no more than 20% to 30% is on the water at one-time at these increased rates. As I stated last quarter, we finalized our contracts on May 1, which are significantly below the spot market rates. Foam continues to be an issue for some of our domestic vendors, however, their production has increased during the second quarter, but still not at 100%. Our import vendors are not having any foam issues. The recent closures in Vietnam due to the increased spread of the Delta variant are not expected to have an impact on our customers, if the closures remain at the projected two weeks. They are expected to open back up beginning the week of 8/2. However, if the closures are prolonged four to six weeks then there may be an impact to our customers, who already bought and future customer lead times. Also, we are seeing port congestion in Vietnam and China, along with continued issues at the LA port and railyards. Our merchandising and supply chain teams are monitoring the situation very closely with our vendors. Our pool is now approximately 2 times larger than last year, with the average pool age stretching to approximately eight weeks from six weeks over the last 90 days. Our special order lead times have increased to 12 weeks to 20 weeks, depending on the vendor, causing some softening in our special order business. Our distribution, home delivery service network delivered a record quarter. Over 90% of our markets are delivering within a week to the customer's home once we have the product in our warehouses. Staffing continues to be our #1 concern in both distribution and home delivery. The extra unemployment moneys that have stopped in most of the states we operate our warehouses, but there is still not enough people looking for work to fill the jobs available. However, we remain optimistic that we will see this improve during the third quarter. In the second quarter of 2021, delivered sales were $250 million, a 127.3% increase over the prior year quarter. If you recall, our retail operations were closed due to the pandemic in the month of April in 2020. 103 stores reopened on May 1, 2020, and the remaining stores reopened by June 20th. Total written sales for the second quarter of 2021 were up 67.5% over the prior year period. Comparable store sales were up 46.9% over the prior year period. This only include stores that were open for a full month in both periods. Our gross profit margin increased 240 basis points from 54.2% to 56.6% due to better merchandising, pricing and mix and less promotional activity during the quarter. These improvements were partially offset by an increase in our LIFO reserve as we continue to see increased freight and product cost. Selling, general and administrative expenses increased $39.8 million or 54.7% to $112.4 million, primarily due to increased sales activity. However, as a percentage of sales, these costs declined over 2,000 basis points to 45% from 66.1%. As demonstrated in the past three quarters, our financial model has substantial operating leverage at these sales levels. Other income in the second quarter of 2020 was $31.8 million, which included the gain on the sale-leaseback transaction of three distribution facilities in 2020. If you recall, the gross proceeds from the sale was approximately $70 million. Income before income taxes increased $10.5 million to $29.2 million. Our tax expense was $6.3 million during the second quarter of 2021, which resulted in an effective tax rate of 21.6%. The primary difference in the effective rate and statutory rate is due to the state income taxes and the tax benefit from vested stock awards. Net income for the second quarter of 2021 was $22.9 million or $1.21 per diluted share on our common stock compared to net income of $13.6 million or $0.72 per share in the comparable period last year. Excluding the gain on the sale of our distribution assets in 2020, our adjusted earnings per share in the second quarter of last year was a $0.52 loss. Now, turning to our balance sheet. At the end of the second quarter, our inventories were $115 million, which was up $25 million from the December 31, 2020 balance, and up $10.2 million versus the second quarter of 2020. At the end of the second quarter, our customer deposits were $116.1 million, which was up $29.9 million from the December 31st balance and up $58.5 million versus Q2 of 2020. We ended the quarter with $235.3 million of cash, cash equivalents. We have no funded debt on our balance sheet at the end of the second quarter of 2021. Looking at some of our uses of cash flow, capital expenditures were $10.9 million for the first half of 2021, and we paid $8.6 million of regular dividends during the first half of 2021. During the second quarter, we did not purchase any common shares in our buyback program, and we have $16.8 million remaining under current authorization for this buyback program. We expect our gross margins for 2021 to be 56.5% to 56.8%. We anticipate gross profit margins will be impacted by our current estimates of product and freight cost and changes in our LIFO reserve. Our fixed and discretionary type SG&A expenses for 2021 are expected to be in the $275 million to $278 million range. This is an increase over our previous estimate, primarily due to rising warehouse compensation and benefit cost. The variable type costs within SG&A for 2021 are expected to be in the range of 17.3% to 17.5%, a slight decrease over our previous guidance. Our planned capex for 2021 has increased from $23 million to $37 million. Anticipated new or replacement stores, remodels and expansions account for $18.7 million. Investments in our distribution network are expected to be $15.2 million, and investments in our information technology are expected to be approximately $3.1 million. The largest increase in our planned capex for 2021 is in our distribution network. In the third quarter of this year, we will be buying back our Virginia warehouse, which we sold and leased back last year. This is a key distribution asset that may be expanded in the upcoming years. Owning this asset gives us more flexibility as we evaluate our future growth plans. Our anticipated effective tax rate in 2021 is expected to be 24%. This projection excludes the impact from vesting of stock awards and any potential new tax legislation. This completes our commentary on the second quarter financial results.

compname reports q2 earnings per share $1.21. q2 earnings per share $1.21. q2 same store sales rose 46.9 percent. q2 sales $250 million. qtrly diluted earnings per common share of $1.21.

I'm Arnold Donald, President and CEO of Carnival Corporation & plc. Today, I'm joined telephonically by our Chairman, Micky Arison, as well as David Bernstein, our Chief Financial Officer; and Beth Roberts, Senior Vice President, Investor Relations. We are absolutely thrilled to be back doing what we do best, delivering amazing, memorable vacation experiences to our guests. Our team members are overjoyed to be back on board and it shows our guests are having a phenomenal time. Our onboard revenues for guests are off the charts, and our Net Promoter Scores have been exceptionally strong. I've had the pleasure of visiting a number of ships in recent weeks, both here in the U.S. and abroad. And I can tell you, the ship looks spectacular, and the crew has an amazing energy. There is such an incredible spirit on board. Our protocols have been working well, beginning with a seamless embarkation experience and have enabled us to build occupancy levels at a significant pace as we return more ships to service. Our brands executed extremely well in this initial phase of our return to serve, particularly given significant restrictions on international travel, hampering our ability to offer our normal content-rich deployment options, as well as the operating requirements in certain jurisdictions that limit our normally high occupancy levels. Our itinerary planners came up with creative deployment alternatives, our marketing department made them accessible with little investment, our yield managers priced them appropriately to achieve occupancy targets very close to them, and coupled them with bundled packages to drive exceptionally strong revenue on board. And despite all the additional protocols, our crew delivered an amazing guest experience. The combination of which enabled us to deliver cruise vacations at scale while producing significant cash from these restricted voyages. Now while we normally don't disclose this level of information, we try to find a way to give you a sense of why we're viewing the restart as hugely successful beyond the enthusiasm of our guests and crew and the unprecedented Net Promoter Scores. It became complicated because most of our voyages, while cash flow positive, are programs that could not be compared to 2019. And in most cases, would normally be priced lower than the 2019 alternatives. So for example, in the U.K., we're only able to offer senior cruises without any ports of call, and that's our version of vacation, which were not comparable in ticket prices to peak season Mediterranean or Baltic sailings offered in the summer of 2019. That said, even with occupancy limitations, these cruises generated cash for our stakeholders. They supported a return for our workforce, and they successfully served guests, resulting in high satisfaction levels. Now at Carnival Cruise Line, we were able to offer more comparable itineraries than 2019, our revenue per dims were up 20% compared to 2019 and that's inclusive of the impact of incentives from previous cancellations, and that's despite the quoting nature of the bookings. In fact, Carnival Cruise Lines restarted more ships out of the United States than any of the cruise brand and still achieved occupancy above 70%, all of which combined to generate an even greater cash contribution. Clearly, Carnival Cruise Line is a brand that continues to outperform. While the Delta variant and its corresponding effect on consumer confidence has certainly created a myriad of operating challenges for us to navigate in the near term and has led to some booking volatility in August, to-date it has not had a significant impact on our ultimate plan to return our full fleet to guest operations in the spring of 2022. On our last quarterly business update, we said that we expected the environment to remain dynamic and it certainly have. Of course, agility has been a key strength of ours over the last 18 months, and we continue to aggressively manage to optimize given this ever-changing landscape. In fact, while by design, we're not yet at 100% occupancy. We have individual sailings with over 4,000 guests. To-date, we have carried over 0.5 million guests this year already. And on any given day, we are now successfully carrying around 50,000 guests, and expect that number to continue to rise as we introduce more capacity and as we increase occupancy over the coming months. The Delta variant has clearly impacted our protocols, which will continue to evolve based on the local environment. In markets like the U.S., where case counts are higher, we've taken swift actions to reinforce our already strong protocol, such as additional testing requirements and indoor mass requirements with all U.S. sailings operating under the CDC's vaccination requirements. Our protocols go above and beyond the terms of the conditional sale order and are much more rigorous than comparable land-based alternative. Again, our highest responsibility and therefore, our top priority is always compliance, environmental protection and the health, safety and well-being of everyone, our guests, the people in the communities we touch and serve and of course, our Carnival family, our team members shipboard and shoreside. The Delta variant has also created some disruption in our supply chain, impacted the timing of opening for some destinations and created a heightened level of uncertainty that has been reflected in the broader travel sector and in our own booking trends. We quickly adjusted our deployment to push out the start date on a few select voyages. For some of our more exotic winter deployments, like our popular world cruises, we rebooked guests for our 2023 departures. Effectively, we've managed our near-term capacity to optimize the current environment, just as we indicated we would. The modifications we've made to the pace of the roll of our fleet will optimize our cash position in the near term. Looking forward, we continue to work toward resuming full operations in the spring, in time for our important summer season where we make the lion's share of our operating profit. Of course, we have ample liquidity to see us through to full operation. And we continue with a prudent focus on cash management to ensure we have flexibility under a multitude of scenarios. The current environment, while choppy, has improved dramatically since last summer, and it should improve even further by next summer if the current trend of vaccine rollout and advancements in therapies continues. For instance, in markets like the U.K., where vaccination rates are already higher, consumer confidence remains strong, and we are seeing strong momentum. So far, we've announced the resumption of guest cruise operations for 71 ships through next spring, and that's across eight of our nine brands. We're evaluating the remaining shifts through next spring, with a continued focus on maximizing future cash flow while delivering a great guest experience in a way that serves the best interest of public health. Importantly, even at this very early stage of our rollout, our ships are generating positive cash flow. Based on our current rollout, we expect cash from operations for the whole company to turn positive at some point early next year. Looking forward, we believe we have the potential to generate higher EBITDA in 2023 compared to 2019, given despite our modest growth rate, additional capacity and our improved cost structure. As further insight into booking trends, we are well positioned to build on a solid book position and intentionally constrained capacity for the remainder of 2021 and into the first half of 2022. With the existing demand and limited capacity, we are focused on maintaining price. Even recently with heightened uncertainty from the Delta variant affecting travel decisions broadly, we continue to maintain price. We have also opened bookings earlier for cruises in 2023, and we're achieving those early bookings with strong demand and good prices. And based on that success, we've begun to launch 2024 sailings even earlier. In fact, these efforts contributed to the $630 million increase in guest deposits, our long-term guest deposits. And that's deposits on bookings beyond 12 months, are 3 times historical levels, driven in part by our proactive efforts to open more inventory for sale in outer years. Now we expect guests deposits to continue to grow through the restart as we return more ships to service and as we build occupancy levels. Again, these favorable trends continue despite dramatically reduced advertising expense. We continue to focus our efforts on our lower cost channels like direct marketing to our sizable past guest database of over 40 million guests, and earned media, as we build on our multiple new ship launches and restart news flow. Of course, and most importantly, we are delivering on our guest experience. Word-of-mouth remains the number-one reason people take their first cruise. And as I mentioned, our Net Promoter Scores are well above historical levels across our ships that have returned to service so far. During the quarter, we furthered our strong track record of responsibly managing the balance sheet. We completed two refinancing transactions, among other efforts, resulting in a meaningful reduction in annual interest expense. We have many more opportunities for refinancing ahead and are working through them at an aggressive pace. Also importantly, we have continued to make advancements in our sustainability efforts. Last week, we published our 11th Annual Sustainability Report, Sustainable from Ship to Shore, which can be found on our sustainability website www. In the report, we build on the achievement of our 2020 goal by sharing more details on our 2030 goals and our 2050 aspiration. The report shares additional light on the six focus areas that will guide our long-term sustainability vision, including climate action, circular economy -- that's wage reduction, sustainable tourism, health and well-being, diversity, equity and inclusion and biodiversity and conservation. Now these areas align with United Nations' Sustainable Development Goals. Climate action is a top sustainability focus area. We are committed to decarbonization, and we aspire to be carbon neutral by 2050. As we have previously shared, despite 25% capacity growth since that time, our absolute carbon emissions peaked in 2011 and will remain below those levels. We are working toward transitioning our energy needs to alternative fuels and investing in new low-carbon technologies. Now because of the pause in guest cruise operations, the 2020 sustainability performance measures are not comparable to prior year data. That said, there is a lot of valuable information on the progress we made in our sustainability journey despite what an incredibly challenging year. We were clearly among the most impacted companies by COVID-19, and I'm very proud of all we've accomplished collectively to sustain our organization through these challenging times, including all we did for our loyal guests, all we did for our other many stakeholders, and all we did for each other within our Carnival family. In many regards, I believe our collective response to the pandemic is strong testimony to the sustainability of our company. For that, I again express my deepest appreciation to our Carnival team members, both shipboard and shoreside, who consistently went above and beyond. I'm very humbled by the dedication I've seen in these past 18 months. We continue to move forward in a very positive way. Throughout the pause, we've been proactively managing to resume operations as an even stronger operating company. Our strategic decision to accelerate the exit of 19 ships left us with a more efficient and effective fleet, and has lowered our capacity growth to roughly 2.5% compounded annually from 2019 through 2025, and that's down from 4.5% pre-COVID. We've opportunistically rebalanced our portfolio through the ship exits as well as a future ship transfer, any modification to our newbuild schedule to optimize our asset allocation, maximize cash generation and improve our return on invested capital. While capacity growth is constrained, we will benefit from an exciting roster of new ships spread across our brands, enabling us to capitalize on the pent-up demand and drive even more enthusiasm and excitement around our restart plan. And we will achieve a structural benefit to unit costs in 2023 as we introduce these new, larger and more efficient ships, coupled with the 19 ships leaving the fleet, which were among our least efficient, with the aggressive actions we've already taken, optimizing our portfolio and reducing capacity. We are well positioned to capitalize on pent-up demand and to emerge a leaner, more efficient company, reinforcing our global industry-leading position. We have secured sufficient liquidity to see us through to full operation. Once we return the full operation, our cash flow will be the primary driver to return to investment-grade credit over time, creating greater shareholder value. I'll start today with a review of our guest cruise operations along with our third quarter monthly average cash burn rate. Then I'll provide an update on booking trends and finish up with some insights into our refinancing activity. Turning to guest cruise operations. It feels so great to be talking about operations again. We started the quarter with just five ships in service. During the third quarter, we successfully restarted ships across eight of our brands. We ended the quarter with 35% of our fleet capacity in service. Our plans call for another 27 ships to restart guest cruise operations during the fourth quarter and the month of December. So on New Year's Day, we anticipate celebrating with 55 ships or nearly 65% of our fleet capacity back in service. For the third quarter, occupancy was 54% across the ships in service. Our brands executed extremely well. Occupancy did improve month-to-month through the quarter and in the month of August, occupancy reached 59% from 39% in June and 51% in July. Occupancy for our North American brands reflects our approach of vaccinated cruises, which for the time being, does limit the number of families with children under 12 that can sail with us. Occupancy for our European brands reflects capacity restrictions, such as social distancing requirements for our Continental European brands and a 1,000-person cap per sailing for some of the quarter in the U.K. For the full third quarter, our North American brands occupancy was 68%, while for our European brands, occupancy was 47%. Revenue per passenger cruise day for the third quarter 2021 increased compared to a strong 2019 despite the current constraints on itinerary offerings which did not include many of the higher-yielding destination-rich itineraries offered in 2019. As Arnold indicated, our guests are having a phenomenal time and our Net Promoter Scores have been incredibly strong. As always, happy guests seem to translate into improved onboard revenue. Our onboard and other revenue per diems were up significantly in the third quarter 2021 versus the third quarter 2019, in part due to the bundled packages as well as onboard credits utilized by guests from cruises canceled during the pause. We had great growth in onboard and other per diems on both sides of the Atlantic. Increases in bar, casino, shops, spa and Internet led the way on board. Over the past two years, we have offered and our guests have chosen more and more bundled package options. In the end, we will see the benefit of these bundled packages in onboard and other revenue as we did during the third quarter 2021. As a result of these bundled packages, the line between passenger ticket revenue and onboard revenue seems to be blurring. For accounting purposes, we allocate the total price paid by the guests between the two categories. Therefore, the best way to judge our performance is by reference to our total cruise revenue metrics. As we previously guided, the ships in service during the third quarter were, in fact, cash flow positive. They generated nearly $90 million of ship level cash contribution. This was achieved with only a two-month U.S.-based restart during the third quarter as our North American brands began guest cruise operations in early July. We expect the ship level cash contribution to grow over time as more ships return to service and as we build on our occupancy percentages. For those of you who are modeling our future results, I did want to point out that due to the cost of a portion of our fleet being in pause status during the first half of 2022, restart related expenses and the cost of maintaining enhanced health and safety protocols, we are projecting ship operating expenses in 2022 per available lower berth day or per ALBD, as it is more commonly called, to be higher than 2019 despite the benefit we get from the 19 smaller, less efficient ships leaving the fleet. Remember, that because a portion of the fleet will be in pause status during the first half, we are spreading costs over less ALBDs. We do anticipate that most of these costs and expenses will end with 2022 and will not reoccur in fiscal 2023. Now let's look at our monthly average cash burn rate. For the third quarter 2021, our cash burn rate was $510 million per month, which was better than our previous guidance and was in line with the $500 million per month for the first half of 2021. The improvement versus our guidance was due to the timing of capital expenditures, which are now likely to occur in the fourth quarter and some other small working capital changes. With the timing of certain capital expenditures now shifting to the fourth quarter, the company expects its monthly average cash burn rate for the fourth quarter to be higher than the monthly average rate for the first nine months of the year. Other good news positive factors impacting the fourth quarter are restart expenditures to support not only the 22 ships that will restart during the fourth quarter but also the additional ships that will restart in the first quarter of 2022, along with the significant increase in dry dock days during the fourth quarter, driven by the restart schedule. All these expenditures have been anticipated, and given the announced restarts, many of them are now occurring in the fourth quarter. Also, during the fourth quarter, we are forecasting positive cash flow from the 50 ships that will have guest cruise operations during the quarter. And ALBDs for the fourth quarter are expected to be 10.3 million, which is approximately 47% of our total fleet capacity. Now turning to booking trends. Our booking volumes for the all future cruises during the third quarter 2021 were higher than booking volumes during the first quarter. That trend continued over the first couple of months of the third quarter, such that we expected the third quarter would end at higher booking levels than the second quarter, but we did manage to achieve that because of lower booking volumes in the month of August when the Delta variant impacted travel and leisure bookings generally. The impact on bookings in August was mostly seen on near-term sailings. However, the impact quickly stabilized in the month of August. Our cumulative advanced book position for the second half of 2022 is ahead of a very strong 2019 and is at a new historical high. Pricing on our second half 2022 book position is higher than pricing on bookings at the same time for 2019 sailings, driven in part by the bundled pricing strategy for a number of our brands, but excluding the dilutive impact of future cruise credits or more commonly known as FCCs. If we were to include the dilutive impact of future cruise credits, pricing on our second half 2022 book position is now in line with pricing at the same time for 2019 sailings. This improved position is a result of positive pricing trends we have seen during the third quarter. This is a great achievement, given pricing on bookings for 2019 sailings is a tough comparison as that was the high watermark for historical yield. Finally, I will finish up with some insights into our refinancing activity. We are focused on pursuing refinancing opportunities to extend maturities and reduce interest expense. To-date, through our debt management efforts, we have reduced our future annual interest expense by over $250 million per year. And we have completed cumulative debt principal payment extensions of approximately $4 billion, improving our future liquidity position. The $4 billion extension results from three things: first, the July refinancing of 50% of our first lien notes were $2 billion. Second, the completion of the European debt holiday amendments, which deferred $1.7 billion of principal payments. The deferred principal payments will instead be made over a five-year period, beginning in April 2022. And third, the extension of a $300 million bilateral loan with one of our banking partners. As we look forward, given how support of the debt capital market investors and commercial banks have been, we will be pursuing additional refinancing opportunities to meaningfully reduce our interest expense and extend our maturities over time.

carnival corporation & plc provides third quarter 2021 business update. carnival corp - booking volumes for all future cruises during q3 of 2021 were higher than booking volumes during q1 of 2021. carnival corp - cumulative advanced bookings for second half of 2022 are ahead of a very strong 2019. carnival corp - voyages for q3 of 2021 were cash flow positive and company expects this to continue. carnival - booking volumes for all future cruises during q3 of 2021 were higher than booking volumes during q1 2021, albeit not as robust as q2 2021. carnival corp - monthly average cash burn rate for q3 of 2021 was $510 million. carnival corp - also opened bookings for further out cruises in 2023, with unprecedented early demand. carnival corp - company expects monthly average cash burn rate for q4 to be higher than the prior quarters of 2021. carnival corp - expects monthly average cash burn rate for q4 to be higher than prior quarters of 2021. carnival corp - expects a net loss on both a u.s. gaap and adjusted basis for quarter and year ending november 30, 2021. carnival - consistent with gradual resumption of guest cruise operations, continues to expect to have full fleet back in operation in spring 2022.

During today's call, we will also reference non-GAAP metrics. I hope that all of you and your families are staying safe as we deal with these unprecedented times. One thing the pandemic has brought to light is the hard work of everyday heroes. So I want to express our profound appreciation for the frontline workers that keep the world moving forward and that includes thousands of Donaldson employees. I'm always impressed by our employees. But I'm particularly proud of their performance during the pandemic. Every day, they show up with relentless customer-first attitude, which is more important than ever as we support critical markets like agriculture, transportation, and food and beverage. Since the outbreak began, our decision making has been guided by three priorities, supporting the health and safety of our employees, delivering on our customer commitments and doing our part in reducing the transmission of the virus. Providing a safe work environment is always a top priority, but we intensified our efforts. We have significantly limited business travel, implemented a thorough cleaning regimen in factories and office spaces, instituted remote work policies for all that are able and introduced COVID-related paid leave while promoting existing employee assistance programs. Our crisis response team reviews these protocols regularly and we adjust when appropriate. Social distancing practices and enhanced cleaning schedules will be in place for the foreseeable future and we are reopening our offices in various locations around the world. The pace of bringing our employees back to the office will be dictated by guidance from health experts along with our own assessments of workplace readiness. We are taking a cautious approach and we will remain flexible as we execute these plans. I also want to provide an update on the status of our operations. Overall, we're in a good position and have not experienced meaningful disruption. Our success can be attributed to a handful of factors, starting with our footprint. We have a region to support region production strategy and that allows us to be nimble and flex appropriately based on local conditions. That has been incredibly valuable as the pandemic affected different parts of the world in different ways, at different times. Additionally, our defense -- our diverse portfolio of businesses is heavily biased toward replacement parts and essential or critical markets giving us the opportunity to continue production during government-mandated shutdowns. These structural benefits have been brought to life by our excellent team. There has been an unprecedented level of collaboration and coordination among us, our suppliers and our customers, and our teams are acting quickly and decisively to mitigate risks and deliver on our commitments. Of course, things are still uneven. So I want to provide a run down of our operational situation today. The Asia-Pacific region is in recovery mode with China furthest along. Conditions in India are still tighter than other countries, but that has been loosening, and we are on a good path. Europe is in various stages of reopening and our supply chain risk has gone down over the past month. The temporary shutdowns due to government mandates have been lifted and we are stabilizing rapidly. The Americas are further behind on the recovery curve with varying degrees of lockdowns continuing in South America, while large customers in North America only recently began reopening their factories. The global situation has been improving in recent weeks. All our critical suppliers are online and our production employees are at work and engaged. Based on these factors, I am confident we can continue supporting our customers around the world. I'm going to turn now to a brief overview of our third quarter sales, which were slightly better than we expected based on a strong finish in April. Total sales for the quarter were down 11.7% from the prior year, or 9.7% without the currency headwind. Engine segment sales were down 14%, reflecting a sharp decline in our first-fit businesses. While it is impossible to precisely estimate the impact of COVID-19 on our results, our first-fit businesses were clearly under pressure as many large customers stopped producing equipment during the quarter. In our On-Road, sales were down 47% as customer shutdowns were compounded by an already weak truck market in the US and China. As a reminder, our first-fit On-Road business is only about 5% of total revenue. So our aggregate exposure to the truck market is limited. In the US, which is the largest portion of our On-Road business, third-party data indicates that our sales fared better than total Class 8 truck production. Based on our track record of program wins, we are well positioned to have a strong performance when this market recovers. Third quarter sales of Off-Road products were down 25%, with more than half the decline coming from Exhaust and Emissions. We are comparing against a large increase in Europe last year related to pre-buys for an upcoming regulatory change. So we expected pressure this fiscal year. As a side note, we continue to work on the transaction related to the sale of our Exhaust and Emissions business to Nelson Global Products. We will provide more details as we have them, but for now, I want to reiterate our commitment to the strong relationships we have with our employees, customers and suppliers. Excluding Exhaust and Emissions, third quarter sales of our filtration-related Off-Road products were down in the mid-teens. On a relative basis, products for the agriculture market performed better than the construction and mining markets, and overall global demand for new equipment remains under pressure. Engine Aftermarket performed much better than our first-fit businesses in the quarter and results were mixed by channel and region. The total aftermarket decline of 8% was primarily due to a low double-digit decline in sales through the independent channel. The pandemic is contributing to lower equipment utilization and that impact was compounded in the US by the collapse of the oil and gas market. Economic and geopolitical uncertainty in Latin America added to the pressure, but share gains in Eastern Europe and China were notable offsets as we build our presence in these markets. Sales through the OE channel of Aftermarket were down only slightly in the quarter and up in local currency. We believe a portion of the demand was from large OE customers buying inventory ahead of need, so we expect additional volatility in future periods. Rounding out the Engine segment, sales of Aerospace and Defense were about flat with last year. As expected, the commercial fixed-wing market is under pressure, but we were able to largely offset the impact with growth in filters for ground defense vehicles and helicopters. Turning to the Industrial segment, sales were down 6% in third quarter, driven by a 12% decline in Industrial Filtration Solutions or IFS. Our dust collection business, which makes up 60% of IFS, was hit hard by the pandemic. Our quoting activity and replacement demand were under pressure as economic uncertainty went up and global industrial production dropped. We remain confident in our value proposition and expect that quoting will go back up as the economy reopens, but it is too soon to say how long that will take. But, we are not just waiting for the recovery. Our industrial air filtration team has done an excellent job, engaging our customers with things like virtual trainings, reinforcing our brand as a strategic and supportive partner. The pandemic has also given us an opportunity to demonstrate our value proposition in Process Filtration. Sales in Europe and the US, our two largest markets, were both up year-over-year, and in local currency. Sales for all Process Filtration were up in the low single digits. We continue to expand our share in the food and beverage market and this business remains a strong contributor to our future growth and profit margin expansion. Third quarter sales in Gas Turbine Systems or GTS were up 6% driven by strong sales for retrofit projects. Like the large turbine projects, retrofit sales can be lumpy. We had a solid performance last quarter and we remain very proud of the improved profitability in GTS. Special Applications' sales were up 5% in the third quarter, driven by strong growth in Disk Drive and Venting Solutions. Our Disk Drive business continues to benefit from share gains and increased expansion of nearline storage for the cloud and growth in venting is related to value-added solutions for batteries and powertrains in passenger cars. Given the state of the auto industry, the venting performance was particularly impressive. We are leveraging our technology and pressing into a new market to meet an expanding need. There are powerful examples across the company of how innovation is driving results and the pandemic has not changed our long-term priorities. I'll talk more about that later. Before turning the call to Scott, I want to provide a few comments on trends in May. Total sales for the month are expected to be down about 24% from last year. Many of our large OE customers reopened facilities in the month, but we did not see much of a rebound, which may relate to the inventory building that occurred during our third quarter. On a regional basis, sales trends are consistent with what we saw in third quarter. Asia-Pacific is performing the best, while sales in the Americas are the weakest. Sales in China were up in the month, which is the best performance we've seen in a while, but there is also quite a bit of uncertainty related to the durability of the increase. So we are more cautious than optimistic at this point. The situation in both North and South America remains challenging and it is hard to find bright spots in those geographies today. In terms of product sales, replacement parts are predictably doing better than new equipment. Businesses like Engine Aftermarket and Process Filtration offer a bit of relative stability, while new equipment production for engine-related products and capital investment for dust collection systems were still under pressure. While we would not typically go into detail on the current quarter trends, we felt it was important to give a little more context, given the extraordinary pace of change. As we contemplate the final two months of this fiscal year and our plans for fiscal '21, we will remain focused on executing those things under our control, including promoting the safety and well-being of our employees, maintaining tight control on discretionary expenses, making targeted investments to support near and long-term growth priorities and protecting the strength of our financial position. I want to echo Tod's sentiment. Donaldson has great employees. The way we work has changed rapidly during the pandemic and our teams have stayed connected, remained productive and delivered results. As predicted, third quarter was a volatile period, the demand environment deteriorated per month demand and things became more uncertain as COVID-19 spread broadly. Unfortunately, the situation is still unclear. Economic conditions are varied by region and market, resulting in an uneven and unpredictable demand. Given that, we feel it's prudent to continue to withhold fiscal '20 and '21 guidance for our key financial metrics. I will however talk about some general expectations during my remarks, so I'll turn now to a recap of third quarter performance. All things considered, we are in a good position today. Despite a sales decline of 12%, our third quarter EBITDA margin was flat with the prior year. Additionally, our decremental margin was about 19%, which is significantly better than our historic average in the mid to high 20% range. The favorability was due in part to the product mix and lower incentive compensation. So let me take you through some of the puts and takes. Third quarter operating margin was 13.4% compared with 14% in the prior year. Loss of leverage on lower sales was a primary driver of the decline and that impact was compounded by higher depreciation related to our capacity expansion projects. Based on the nature of these investments, the third quarter depreciation impact was skewed toward gross margin in the Engine segment. Overall, our teams are doing an excellent job mitigating the pressure created by lower sales. In terms of gross margin, plant managers are quickly adjusting labor to account for changes in demand and our procurement and supply chain teams continue to drive optimization initiatives that will have long-term benefits. These efforts, combined with favorable mix of sales and lower raw material costs, narrowed the third quarter gross margin decrease to 60 basis points. Additionally, we had strong operating expense performance in the third quarter. On a dollar basis, operating expenses were at the lowest level in three years, which comes at the three years of incremental investments related to our Advanced and Accelerate portfolio and R&D capabilities. I want to add that we are not pausing investments in these initiatives, which are critical to our long-term growth plans. As a rate of sales, third quarter operating expenses were up only slightly from the prior year. We had favorability from incentive compensation, which was down nearly $6 million and discretionary expenses were significantly reduced in relation to COVID-19. Despite the near-term pressures from the pandemic, we are pushing forward on our margin initiatives. New capacity that brings a lower cost to manufacturers coming online, we are steadily adjusting the supply chain, our procurement teams are driving cost reductions and our commercial teams continue to manage pricing. The list is the same as what we have been sharing for more than a year. These are our top priorities, and regardless of the macro backdrop, we feel confident in our ability to continue making progress. We also feel confident in our financial position. At the end of the third quarter, our leverage ratio was 1.0 times net debt to EBITDA, which is where we were at the end of the second quarter and right in line with our long-term target. Working capital was down from the prior year, driven by reductions to receivables and inventories and our cash conversion in the quarter was 98%. We continue to work with our suppliers and customers to manage credit and supply chain risk and we are also working with our valued banking partners to further bolster our liquidity position. Out of an abundance of caution, we drew an additional $100 million from our revolving credit facility during third quarter. Then, later in May, we entered into an additional 364-day credit agreement that gives us access to another $100 million. At the same time, our pace of capital expenditures has decelerated. Third quarter capex declined by more than 40% and the spend trajectory is consistent with what we communicated previously. Importantly, the projects were already in various stages of completion as COVID-19 spread. So we could finish these projects without putting our financial position at risk. Although the demand environment today is materially different than it was a year ago, we still feel confident that these projects will improve our cost structure, strengthen our customer service at local level and position us to grow in strategically important markets and geographies. Let me share a few examples of what we're working on. We are setting up our first PowerCore line in China to support new program wins with local manufacturers. We doubled the production cap capacity for Process Filtration, position us for larger presence in the food and beverage industry, and new capacity in the Americas and Europe allows us to optimize the point of manufacturer for Engine-related projects. We still have a little work to do, but our teams are working hard to get them online soon. Returning cash to shareholders is another important part of our capital deployment priorities. We are committed to the quarterly dividend, which has been paid every year for more than 60 years and increased annually for 24 years in a row. As I said to many of you, that's an awesome track record and I don't want to be the person that messes it up. Share repurchase has always been the more variable component of our capital deployment. We have been regularly repurchasing our shares for decades and we know that's a valuable activity to many of our shareholders. We take a thoughtful and measured approach in the execution of our share repurchase plans. Our minimum objective in any given year is to offset the dilution related to stock-based compensation, which is about 1% of shares. The level of repurchase beyond that amount is governed by our balance sheet and other opportunities to deploy capital. We repurchased 1.6% of outstanding shares so far this year. Based on the uncertainty created by the pandemic, we do not expect additional share repurchase in fourth quarter. As the situation of the pandemic evolves, we will continue to prioritize a strong financial position and remain focused on executing our strategic priorities. That has been our approach for a very long time, and we believe it will serve us well for a long time to come. Donaldson Company turns 105 this year. We have experience with every type of economic environment and we have always emerged to become an even stronger company. Our playbook is simple and consistent. We leverage our deep technical expertise to build a portfolio of filtration capabilities that we deploy into a diverse set of markets. We are a returns-focused company. We think long term, while maintaining a clear focus on those things we control in the near term. The pandemic has no impact on this playbook or our strategic priorities, which always starts with technology. Along those lines, I'm very excited to share that our new Material Research Center is nearing completion. This R&D facility is a $15 million investment in building our material science capabilities. We leveraged some of this know-how in our Process Filtration business today, but the new facility is going to give us significantly stronger platform. We plan to further penetrate the food and beverage market followed by future expansion in specialty chemicals, electronics, and eventually life sciences. These markets are less cyclical, highly technical, and therefore highly profitable, making them an attractive complement to our strong Engine business. Technology remains a core part of our Engine strategy as well. We want to win new business with products that drive aftermarket retention. While the pandemic has created uncertainty, we are still working with large OE customers on new programs and their demand for proprietary products is going up as they look to grow their parts business. Through our technology, Donaldson becomes a core part of the customers' growth strategy, giving us a wide competitive mode. The value of these products to our company has been demonstrated year after year, so we continue to make investments. We recently introduced the new generation PowerCore filter called PowerCore Edge. It has the smallest footprint of any generation yet and our world-class media makes it an excellent solution for Off-Road applications that face heavy dust environments. PowerCore Edge will be another powerful tool for driving long-term share gains in our core markets. Additionally, we are building our first PowerCore line in China. As large Chinese manufacturers move up the technology curve, a couple of things happened that create opportunity for us. First, a higher performing piece of equipment requires more advanced filtration. With our strong global brand, decade-long presence in the country, and significant experience supporting world-class OEMs, we are a natural partner for the Chinese manufacturers. Second, when end users buy a more expensive piece of equipment, they are more likely to maintain it properly. That makes PowerCore particularly interesting. As the replacement cycle is created in China, retaining the parts business is now valuable to those manufacturers. Advancing our R&D capabilities and growing our portfolio of innovative products are what we would consider standard work at Donaldson. As I mentioned, we think long term and we are committed to creating value for all our stakeholders. I am confident we can deliver on that commitment because we have dedicated, talented and incredibly smart teams in every part of our company. I'm proud to be on the team with them.

withdrew financial targets for fy 2020 and 2021. expects may 2020 sales to be down about 24%. donaldson company - continues to work through process of the binding offer received from nelson global products.

In addition, we will also be presenting certain non-GAAP financial measures. We delivered solid first quarter results due to robust demand for our products and services in each of our business segments. Orders over the last three weeks or 12 weeks, excuse me, are 25% higher than the same period F '20 pre COVID. We reported first quarter fiscal 2021 adjusted earnings of $1.25 per diluted share, a 36% increase over the first quarter of last year. Our Motive Power business generated strong revenue and earnings growth, while our Specialty business continued its positive momentum, fueled by accelerating demand for our transportation products. Despite challenges in the supply chain, Energy Systems began its rebound from a challenging fourth quarter, driven by growing demand and a variety of end markets, including mid spectrum 5G, broadband and utility markets. Similar to other industrial companies, we are facing some challenges in the wake of the world's steepest economic recovery as businesses reopen and competition for labor, materials and transportations remains fierce. While we are seeing unprecedented demand growth, we have experienced constraints in our ability to bring on new employees necessary to keep up with demand. Freight and tariffs continues to be a source of cost pressure, along with a variety of other components, including resins and semiconductor. Our team has responded well to these short-term challenges and we expect to see steady improvements in the supply chain as we work to mitigate its impact by identifying alternative sourcing methods and further leveraging our global footprint to align supply with demand. As these temporary issues unwind, we will benefit from the strong market momentum. I'd now like to provide a little more color on some of our key markets. Let's start with our largest segment, Energy Systems, which saw a modest improvement from the prior quarter, growing revenue by more than $22 million and generating a nearly $4 million gain in operating income versus Q4. Demand for our Energy Systems' products remains strong, with order intake from one of our larger telecom customers picking up after a slow Q4 that was driven by 5G radio availability, labor and permitting challenges. Broadband orders continue to improve and are expected to accelerate dramatically as the California Public Utilities Commission public safety grid shutdown extended network backward -- backup programs roll forward. While the market is displaying positive momentum, Energy Systems continues to experience drags in three primary areas. First, we have seen higher tariffs and freight costs as our efforts to move contract manufacturing out of China closer to home is slowed by COVID versus our plan. Also, container shipping rates are in an unprecedented fourfold from historical rates and expedited fees are common. Delayed sales due to supply chain challenges, including semiconductors, continue to constrain our top line and gross margins due to a lack of capacity for higher margin cable power supplies, DC power plants, and Thin Plate Pure Lead products. Second, we have incurred additional engineering costs to support our Touch-Safe collaboration with Corning as well advancing -- as well as advancing our lithium offerings and the other NPIs supporting 5G and renewables from which revenue will begin to accelerate in the second half of this fiscal year. Our investment in R&D will also accelerate during the calendar year to advance the DC fast charging initiative that will benefit our next fiscal year. These investments will position us to be a significant participant in these new mega market trends. Third, the ES group has been more heavily burdened with the ramp up of the integration inefficiencies of the NorthStar acquisition. As noted prior, this integration and expansion is roughly nine months behind schedule due to COVID. Despite the short-term cost pressures, we remain committed to TPPL expansion and cost improvements to handle the rapidly expanding TPPL demand in all lines of business. Driven by sound underlying demand, we expect the Energy Systems business to continue its upward trajectory with the full opportunity set to be unleashed as these COVID-related supply chain headwinds subside. Our Motive Power business was a bright spot during the quarter. Despite some lingering supply chain constraints, we returned to the historically higher end of our return on sales for this business. Our backlog is now at historic levels and our NexSys TPPL along with recently released lithium variance continues to gain market acceptance. We anticipate normal seasonality over the summer holiday months. While lift truck industry order statistics remain exceptionally high, we are being mindful of OEM supply limitations. We are confident they're -- we are well positioned to benefit from a steady recovery throughout the balance of the fiscal year. The restructuring of our Hagen, Germany facility remains ahead of schedule in regards to cost and timing, with most of the cost savings yet to be realized. We will further evaluate our global footprint to ensure we can meet strong current order patterns and continue to extract savings with further standardization of our legacy product offerings and other business transformation initiatives. Our Specialty business contributed another strong quarter to our overall results despite the NorthStar-related cost drag I mentioned earlier. As the high-speed line and other productivity capacity enhancements are installed in our TPPL factories, we will enjoy lower costs and increased capacity in our second half results. Demand in our transportation business remains exceptional, buoyed by significant incremental revenue that we are positioned to win as additional Springfield capacity comes online. US transportation grew rapidly from the year ago quarter and our backlog remains at record levels. We expect continued strong demand for the remainder of the calendar year from the US economic recovery. We delivered exceptional results in aerospace and defense, as all of our markets were strong including tactical vehicles and munitions. Munitions recorded several key wins based on our industry-leading technology that provides 40% extended life in thermal batteries. We will have doubled this business since the acquisition in just five years. Positive recent conversations with several large customers, combined with the US source lithium initiatives the Biden administration is highlighting in their infrastructure legislation, gives us great confidence in the future growth opportunities in many of our businesses. As you all know, we announced our battery energy storage system plus DC fast charge initiative in the fourth fiscal quarter, which remains on track regarding product development and performance all while this tremendous market opportunity continues to grow. Our goal is to deliver an EV charger that charges any electric passenger car as fast as the car can handle, reducing the process from hours to minutes. By using a large stationary battery to quickly charge the EVs, we can dramatically reduce system installation costs at many sites, including the size of the AC transformer and high voltage cabling from the utility interconnect, as well as the opportunity to provide optimized energy usage and emergency backup power. Feedback from our potential launch customer has been very positive, both on the speed of the development and level of software maturity, and we will continue to provide updates on this exciting initiative as we move forward. Although we expect to continue to face some supply chain disruptions in the near term, the fundamentals of our business are stronger than ever with global demand for our products and services growing by the day. The massive 5G build out is getting underway and will provide a strong multi-year tailwind for EnerSys. Thin Plate Pure Lead demand is growing rapidly in all lines of business, and the launch of best-in-class modular lithium systems in Motive Power and Energy Systems further enhances our market-leading positions. Lastly, a large bipartisan infrastructure bill is moving through Congress with additional bills being discussed, which could provide another catalyst for EnerSys in areas such as the electric grid, EV charging, and the rural build out of high-speed broadband. I'd like to close by recapping our strategic initiatives, which remain unchanged. One, to accelerate higher margin maintenance free Motive Power sales with NexSys iON and NexSys PURE. Two, to grow the portfolio of products in our Energy Systems business, particularly in telecom, with fully integrated DC power systems and small cell site powering solutions, which will accelerate our growth in 5G, as well as the addition of our battery energy storage system plus DC fast charging initiative. Three, to increase Thin Plate Pure Lead capacity, particularly for transportation market share in our Specialty business. And finally, four, to reduce waste through the continued rollout of our EnerSys operating system. We will continue to execute on each of these initiatives and look forward to providing you updates on our progress in the quarters ahead. With that, I'll now ask Mike to provide further information on our first quarter results and go forward guidance. I am starting with Slide 11. Our first quarter net sales increased 16% over the prior year to $815 million due to a 12% increase from volume and 4% from currency gains. On a line of business basis, our first quarter net sales in Energy Systems were up 5% to $371 million; Specialty was up 21% to $108 million; and Motive Power revenues were up 28% to $336 million. Motive Power's growth was mostly from 22% in organic volume and 5% in currency improvements. The prior year Motive Power first quarter revenues were impacted significantly by the pandemic, with a 24% decrease in revenue. Our Motive Power revenues for Q1 are now comparable to the first quarter of two years ago. Energy Systems at a 3% increase from volume and a 3% improvement from currency, net of a 1% decrease in pricing. Specialty at 18% in volume improvements along with 2% positive currency and 1% in pricing. We had no impact from acquisitions in the quarter. On a geographical basis, net sales for the Americas were up 13% year-over-year to $557 million with the 12% more volume and 1% in currency; EMEA was up 27% to $201 million from 18% volume, 10% improvement in currency, less 1% in pricing; Asia was up 3% at $57 million on 9% currency improvements, less 6% volume decline. On a sequential basis, first quarter net sales were flat to the fourth quarter. On a line of business basis, Specialty decreased 19% from a very strong Q4 due to resin shortages, which are largely behind us; Motive Power was up 1% as it rebounds from the pandemic; and Energy Systems was up 6% from organic volume. On a geographical basis, Americas and EMEA were relatively flat, while Asia was up 5%. Now a few comments about our adjusted consolidated earnings performance. As you know, we utilize certain non-GAAP measures in analyzing our Company's operating performance, specifically excluding highlighted items. Accordingly, my following comments concerning operating earnings and my later comments concerning diluted earnings per share exclude all highlighted items. On a year-over-year basis, adjusted consolidated operating earnings in the first quarter increased approximately $14 million to $75 million, with the operating margin up 50 basis points. On a sequential basis, our first quarter operating earnings dollars declined $3 million from $78 million, while the OE margin dropped 40 basis points to 9.2%, primarily due to Energy Systems results, which Dave has addressed. Operating expenses, when excluding highlighted items, were at 14.5% of sales for the first quarter compared to 16.1% in the prior year, as our revenue growth exceeded our spending. On a substantial -- excuse me, sequential basis, our operating expenses declined $1 million and 10 basis points. Excluded from operating expenses recorded on a GAAP basis in Q1, our pre-tax charges of $14 million, primarily related to $6 million in Alpha and NorthStar amortization of intangibles and $8 million in restructuring charges for the previously announced closure of our flooded Motive Power manufacturing site in Hagen, Germany. Excluding those charges, our Motive Power business generated operating earnings of 15.1% or 470 basis points higher than the 10.4% in the first quarter of last year due to easing of pandemic-related restrictions and demand, coupled with ongoing OpEx restraint. The OE dollars for Motive Power decreased over 20 -- excuse me, increased over $23 million from the prior year. On a sequential basis, Motive Power's first quarter OE decreased 50 basis points from the 15.6% margin posted in the fourth quarter due to higher lead and other input costs. Energy Systems operating performance percentage of 3.5% was down from last year's 8%, although it improved from last quarter's 2.6%. OE dollars decreased $15 million from the prior year, however, it increased $4 million from the prior quarter on higher volume. The cost of higher tariffs, freight, materials and manufacturing costs continues to create headwinds. Specialty operating earnings percentage of 10.6% was up from last year's 6.5% on higher volume, but down from last quarter's 13.2%. OE dollars increased $6 million from the prior year, but declined $6 million from a strong fourth quarter on lower revenue. Please move to Slide 14. As previously reflected on Slide 13, our first quarter adjusted consolidated operating earnings of $75 million was an increase of $14 million or 23% from the prior year. Our adjusted consolidated net earnings of $54.4 million was $15 million higher than the prior year. The improvement in adjusted net earnings reflects primarily the rise in operating earnings along with lower interest expense and a small currency gain. Our adjusted effective income tax rate of 18% for the first quarter was slightly lower than the prior year's rate of 21% and lower than the prior quarter's rate of 19%. Discrete tax items caused most of these variations. We have made no adjustments for any proposed changes in taxation announced recently. First quarter earnings per share increased 36% to $1.25, which was the top of our guidance range. We expect our weighted average shares for the first quarter -- excuse me, second quarter fiscal '22 to remain relatively constant with approximately 43.5 million outstanding. As a reminder, we now have over $55 million in share buybacks authorized, and we purchased nearly $32 million recently. This recent buyback reflects the return to our normal pattern of removing the dilutive impact of our stock comp program. Last week, we also announced our quarterly dividend, which remained unchanged from prior levels. Our balance sheet remains strong and positions us well to navigate the current economic environment. We have $406 million of cash on hand, and our credit agreement leverage ratio was 1.95 times levered, which allows over $600 million in additional borrowing capacity. Last month, we extended and amended our credit facility on favorable terms, which is now in place through 2026. We expect our leverage to remain near 2.0 times in fiscal 2022. We spent $26 million on our Hagen restructuring along with $46 million in inventory growth to support higher backlogs. And as a result, our cash flow from operations was negative $48 million in the first quarter as we expected. The balance bits [Phonetic] from the Hagen, Germany restructuring started in Q1 and we should exit the year with a $20 million annual run rate. Capital expenditures of $16 million were in line with our prior guidance. Our capex expectation for fiscal 2022 is $100 million and reflects major investment programs in lithium battery development and continued expansion of our TPPL capacity, including the NorthStar integration. We anticipate our gross profit rate to remain near 24% in Q2 of fiscal 2022. As Dave has described, we believe all three of our lines of business find their products in high demand. Near-term supply challenges are restricting our ability to execute fully on these opportunities. Our guidance range of $1.03 to $1.13 for our second fiscal quarter of FY '22 reflects the impact of these challenges along with the normal seasonality of Q2 and the added investments in product development and personnel.

sees q2 adjusted earnings per share $1.03 to $1.13. q1'22 backlog growth of $157m. qtrly adjusted earnings per share $1.25.

We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures is available on our website. Relative to the Ilim joint venture and Graphic Packaging investment, Slide two provides context around the financial information and measures presented on those entities. We will begin our discussion on Slide three. International Paper delivered solid earnings and strong cash generation in the first quarter. Our mill and converting system performed well to mitigate the significant impact of the winter storm and support a strong customer demand across all of our packaging channels. We see momentum building, continuing to build across our three businesses with very strong demand for corrugated packaging and containerboard and solid demand for absorbent pulp. And in papers, we're seeing an improved supply demand backdrop in all of our key geographies. Our capital allocation in the first quarter, we repaid $108 million of debt and we returned $331 million to shareholders, including $129 million of share repurchases. Our performance again demonstrates the agility and resilience of International Paper to perform well across many different circumstances. We're passing the 1-year mark of the global pandemic, and I could not be any prouder of the commitment of our employees to take care of each other and take care of our customers. The vast majority of our 48,000 team members work in our mills and conversion plants each and every day, and their health and safety remains our most important responsibility. We also made solid progress on the spin-off of our Printing Papers business, which we expect to complete late in the third quarter this year. Our team is also making strong progress to develop and deliver multiple streams of earnings initiatives to achieve the $350 million to $400 million in incremental earnings and accelerated growth by the end of 2023. As we work to build a better IP, we remain laser-focused on delivering superior solutions to our customers, executing well and meeting our commitments to our shareowners and our other stakeholders. Turning now to Slide four, which shows our first quarter results. We delivered EBITDA of $730 million and free cash flow of $423 million despite the $80 million pre-tax earnings impact from the winter storm in the Southern U.S. Revenue increased by more than $100 million sequentially, primarily driven by price realization in our Packaging and Global Cellulose Fibers businesses. And again, free cash flow is strong with a continued focus on running our businesses well, controlling our cost and actively managing our working capital. I'll start with the quarter-over-quarter earnings bridge on Slide five. First quarter operating earnings were $0.76. The winter storm impacted pre-tax earnings by $80 million or a $0.15 impact to operating EPS. We're still in the very early stages of the insurance process and do not have a recovery estimate at this time. Looking at the bridge, price/mix was strong driven by prior period price flow-through and packaging and cellulose fibers. Volume was essentially flat with continued strong demand for corrugated packaging and absorbent pulp. Overall papers volume continues to recover even though we saw the expected seasonal decline for papers in Brazil in the first quarter. Operations and costs were favorable. Mill and box system performance was solid and helped mitigate the impact of the winter storm, which was a cost headwind of $55 million to operations. Maintenance costs increased sequentially, and we expect to complete about 65% of our maintenance outages in the first half of the year. Input costs were unfavorable, which included a $20 million cost impact from the storm, mostly for energy and raw materials such as starch and adhesives. Overall, we're seeing higher costs for recovered fiber, energy, chemicals and distribution, which we expect to continue in the second quarter. Transportation conditions are challenging, and we're experiencing significant rail, truck and ocean transportation congestion. Higher corporate expenses were driven by a noncash foreign exchange loss on intercompany loans, and lower equity earnings are partly attributed to the reduced ownership position in GPK. Turning to the segments, and starting with Industrial Packaging on Slide six. We continue to see strong demand across all of our channels, including box, sheets and containerboard. For the quarter, volume was essentially flat. We lost 145,000 tons of containerboard production due to the winter storm. Although our mills and box plants in the region recovered quickly, the storm did impact sales in the quarter. We had nearly 30 box plants in Texas, Louisiana and Mississippi affected by the storm, which impacted our box shipments in the quarter. Price and mix was strong. Our November increase is essentially implemented fully with the $131 million first quarter realization. And I would add, this is one of the fastest implementations that we've seen. Operations and cost includes about $55 million impact from the winter storm, about half of which is due to unabsorbed fixed costs and the balance is related to repairs and higher distribution costs. Overall, mill and box plant performance was solid, and we leveraged our system to support strong customer demand across all of our channels. Maintenance outage costs increased sequentially. We did defer about $30 million of maintenance outages from the first to the second quarter due to the significant production loss resulting from the winter storm. We expect to complete about 75% of our planned maintenance outages for packaging in the first half of the year. Input costs were a significant headwind in the quarter, including about $20 million related to the winter storm due to higher energy, distribution and raw materials in our mill system and box plants. Higher recovered fiber costs were another significant headwind in the quarter. We expect continued cost pressure for recovered fiber, energy distribution in the second quarter, and we're still seeing the lingering effects in certain chemicals produced in Texas and Louisiana as suppliers recover from the winter storm. Turning to Slide eight. As we enter the second quarter, we're seeing continued strong demand across all of our channels. U.S. and export containerboard demand is strong with low inventories in all regions. Our first quarter shipments were impacted by the significant production loss resulting from the storm. We're working with our customers to recover from extensive backlogs. In our U.S. box system demand remains robust as more states start lifting restrictions. E-commerce, again grew at a strong double-digit pace in the first quarter, and we believe the majority of the accelerated consumer adoption in this channel is permanent. With states starting to reopen, we're also seeing improved demand in segments with greater exposure to restaurant and foodservice channels, such as produce and protein, although we're still not back to pre-COVID levels. Nondurables, excluding food and beverage, represents about 30% of U.S. box demand across a wide range of consumer and industrial products. This segment is benefiting from strong consumer demand in the broad manufacturing sector recovery. And lastly, demand for durable goods, which had the immediate pullback due to COVID is benefiting from a healthy housing market. We're well positioned and have the scale and footprint to serve just about every corrugated segment in a meaningful way, and our packaging team continues to focus on delivering superior packaging solutions to help our customers succeed. Turning to Slide eight. I'll provide an update on the progress we're making in our EMEA packaging business. Our objective is to bring this business back to sustainable mid-teen margins and generate returns above our cost of capital. We're well on our way to achieving our goal. In the first quarter, we improved adjusted EBITDA by nearly $20 million compared with last year. The Madrid mill is fully ramped, and we have more integration and cost opportunities available. We're integrating our world-class lightweight recycled containerboard with our box network in Southern Europe to provide customers with a broader array of packaging solutions. We've improved our footprint in the Iberian Peninsula through selective acquisitions, including two box plants in Spain acquired at the end of the first quarter. These acquisitions provide additional integration opportunities with the Madrid mill. And more importantly, they enhance our commercial capabilities in the region. We continue to make progress with our box system performance and have more opportunity ahead. All our plants have clear commercial and operational plans, and we're leveraging the skills and resources from across the company to deliver on our commitments. The map on the slide shows our packaging footprint in Europe after the sale of our Turkey packaging business, which we expect to close in the second quarter. After the sale, the EMEA packaging business will have two recycled containerboard mills, 21 box plants and two sheet plants. And again, our commitment is to bring this business to sustainable returns above our cost of capital. Moving to Global Cellulose Fibers on Slide nine. Price and mix was favorable with price realization accelerating across all pulp segments in the first quarter. Volume was moderately lower due to the shipping delays related to port congestion. Demand for fluff is solid and we have healthy backlogs. Operations and costs improved sequentially, driven by the nonrepeat of the $20 million write-off in the fourth quarter as well as solid operations and good cost management. These improvements were partially offset by about $10 million of higher seasonal energy consumption and an FX loss at our mill in Canada. Maintenance outage costs decreased as expected, and input costs increased due to higher wood costs in the Mid-Atlantic region as well as higher energy costs. Demand improved as we entered the year and the end-use demand signals for absorbent hygiene products is healthy. Turning to Printing Papers on Slide 10. Our business -- our papers business has demonstrated outstanding resilience throughout the past year. Our performance reflects the talent and commitment of our team, the scale and capabilities of our global footprint and the strength of our highly valued brands. We continue to see steady recovery in demand across all regions, which we expect will accelerate with broader return to office and return-to-school activity. I'd also add that we've seen significant improvement in supply demand dynamics both within the U.S. and outside the U.S. Looking at our first quarter performance, price and mix was stable across the segment. Volume decreased sequentially due to the lower seasonal demand in Brazil and Russia as expected. It also meant that the export supply chains are stretched in most regions. Operations and costs improved on solid operations and good cost management, as well as a favorable FX in Brazil of about $10 million. Fixed cost absorption improved with economic downtime decreasing by 40,000 tons sequentially across the system. Maintenance outages increased modestly, as expected, and input costs increased primarily due to higher wood and energy costs in North America. Looking at Ilim on Slide 11. The joint venture delivered $49 million in equity earnings in the first quarter with an EBITDA margin of nearly 35%, driven by higher average pricing. Volume decreased sequentially, primarily due to fewer shipping days because of the Chinese New Year, as well as the impact of tight shipping capacity in China. Underlying demand remained strong as we enter the second quarter. And lastly, in April, we saved a $144 million dividend payment from Ilim, which is $44 million higher than the estimate we provided last quarter. Now we can turn to the outlook on Slide 12, and starting with Industrial Packaging. We expect price and mix to improve by $75 million on realization of our March 2021 price increase. Volume is expected to decrease by $10 million on lower seasonal demand in Spain and Morocco as the citrus season winds down. Operations and costs are expected to improve by $15 million, with the full recovery of the winter storm impact partially offset by higher incentive compensation accruals related to a stronger outlook. Staying with Industrial Packaging, maintenance outage expense is expected to increase by $77 million. And input costs are expected to increase by $20 million due to higher OCC, energy, raw materials and distribution costs. In Global Cellulose Fibers, we expect price and mix to increase by $100 million on realization of prior price movements. Volume is expected to increase by $5 million. Operations and costs are expected to decrease earnings by $10 million. Maintenance outage expense is expected to decrease by $10 million, and input costs are expected to be stable. Turning to Printing Papers. We expect price and mix to increase by $25 million. Volume is expected to increase by $5 million. Operations and costs are expected to decrease earnings by $10 million due to the nonrepeat of foreign currency gain in Brazil during the first quarter. Maintenance outage expense is expected to increase by $22 million, and input costs are expected to increase by $5 million. And under equity earnings, you'll see the outlook for our Ilim joint venture. Turning to Slide 13. I want to take a moment to update you on our capital allocation actions in the first quarter. We're committed to maintaining a strong balance sheet. We have no significant near-term maturities. And in the first quarter, we reduced debt by $108 million. We also returned $331 million to shareholders, including $129 million of share repurchases, which represented about 2.6 million shares at an average price of $50.28. We acquired two box plants in Spain at the end of the first quarter. You can expect M&A to continue to focus primarily on bolt-on opportunities in North America and Europe. And lastly, in the first quarter, we monetized about $400 million of our stake in Graphic Packaging. After that transaction, we now hold about 7.4% ownership in the partnership. Turning to Slide 14. As we enter the second quarter, I'm mindful that we're still in the midst of a global pandemic, and there is still significant uncertainty in the geographies and markets that we operate. Having said that, we see momentum building in our three businesses. We continue to see very strong demand for corrugated packaging and containerboard in North America and Europe. We're also seeing solid demand for absorbent pulp with more favorable supply and demand dynamics as paper-grade pulp demand recovers. In Printing Papers, we're seeing a steady recovery in demand. And in areas where schools and offices have reopened, we're seeing a step change improvement. Overall, we're seeing a much better supply/demand backdrop. We expect price flow-through from prior price increases across our three businesses. We expect margins to improve, even as we manage through the impact of higher input costs for recovered fiber, energy and transportation. In addition, we expect productivity and other cost initiatives to offset general inflation. All of this contributes to a more favorable outlook for 2021. I just want to take a moment to reflect on what has now been a full year of living and working in a global pandemic environment. When we shared our first quarter performance last year, we talked about all the protocols we quickly put in place to keep our employees and contractors safe so that we could continue taking care of our customers. We stayed diligent about adhering to those protocols, and we will remain steadfast for as long as it takes to get fully and safely past the pandemic. We continue to operate in this environment with a view toward the short-term and long-term success and sustainability of International Paper for all of our stakeholders, with an unwavering commitment to the health and safety of our employees and contractors, to understanding and taking care of our customers' needs as they also adapt to rapid change, to supporting the critical needs in our communities and to building a better IP for all of our stakeholders. Since the pandemic began, not a day goes by that I don't think about the commitment of our employees, and especially our frontline teams for their ability to adapt well and perform at a high level across circumstances and geographies.

q1 adjusted non-gaap operating earnings per share $0.76.

I'm Rebecca Gardy, Head of Investor Relations at Campbell Soup Company. These statements rely on assumptions and estimates, which could be inaccurate and are subject to risk. As stated in the release from this quarter onwards adjusted net earnings will exclude unrealized mark-to-market gains and losses on outstanding undesignated commodity hedges until such time that the related exposure impacts operating results. Accordingly, fiscal 2021 adjusted results and guidance for adjusted EBIT and adjusted earnings per share growth rates reflect this change. Also beginning this fiscal year, the foodservice and Canadian business formerly included in the Snacks segment is now managed as part of the Meals & Beverages segment. Segment results have been adjusted retrospectively to reflect this change. On Slide four, you'll see today's agenda. Mark will share his overall thoughts on our first quarter performance, as well as in-market performance by division. Mick will discuss the financial results of the quarter in more detail, and then review our guidance for the full-year fiscal 2022. Organic net sales were down 4% for the quarter, driven by the expected lapping of prior year retailer inventory replenishment, as well as constrained supply in the current quarter. We were however, up 5% versus fiscal 2020 and consumption was, up 2% versus prior year and up 9% versus two years ago, signaling strong persistent consumer demand. This dynamic resulted in a 6 point difference in net sales versus consumption in measured channels, a relationship we do not expect to continue through the remainder of the year. Like many of our competitors and customers, we faced supply chain pressures, particularly around labor constraints and transportation capacity and our net sales results reflect those pressures. I'm very proud of how our teams navigated costs related to this volatility. Their strong execution combined with effective pricing actions across both segments, led to adjusted EBIT and adjusted earnings per share results consistent with our expectations and in line or ahead of two years ago. On Slide seven, with end-market demand remaining strong across both of our segments and the pricing actions we announced at the end of our prior fiscal year now reflected on shelf. We feel confident about the outlook for the full fiscal year. We recently announced additional inflation justified pricing actions to offset continuing increases in ingredient and packaging costs, logistics and labor. This second round of pricing should be effective in January and evident on shelf in the third quarter. This will result in some added pressure in Q2 as pricing catches up with more recent inflation, but moving into the second half we expect margin progress and earnings recovery as we use all of our available mitigation tools. To address labor challenges in our network, we have taken specific actions and see early signs of improvement, such as increased on-boarding, lower absenteeism and improved retention. We've seen a recent uptick in the volume produced across the plants and we expect to begin to rebuild our inventories in the second quarter, but not fully recover until the second half. Our ingredient and packaging spend, we are now over 85% covered, thereby reducing the variability in the upcoming quarters, while we continue to deliver on our supply chain productivity improvements and our cost savings initiatives. In addition, we've made selective supply related reductions in marketing and selling investments in the first quarter, which we expect to reverse and fully return to targeted levels as we move into the second half of the year. Labor and supply challenges are impacting certain brands to a greater extent than others creating some short-term share and consumption pressure. We expect this to be evident, particularly through the second quarter as we cycle through recovery on labor and supply. With the strength of our brands in the share gains that have been so consistent and broaden our business over the last two years. We remain very confident that share positions will improve, once we return to full capacity and investment in the second half of the fiscal year. Turning to our Meals & Beverages division, I continue to be pleased by the underlying health of the portfolio and the performance of the brands. Organic net sales were down 6% versus prior year, lapping 11% growth in the prior year and up 5% versus fiscal 2020. Consumption though flat year-over-year was, up 9% versus two years ago, reflecting the strength of demand for our products. Turning to Soup on Slide 10, our Win in Soup strategy continues to show positive results. We retained households and held share in the quarter. More people are participating and remaining in the soup category than pre-pandemic levels. Household penetration on ready-to-serve condensed eating and Swanson broth are all ahead of the prior year. Additionally, compared to prior year the dollar spent per buyer increased as our pricing actions took effect. While volume per buyer remained flat reflecting the health, relevance and sustained momentum of our brands. These compelling data points provide evidence that we are retaining our expanded consumer base, despite consumer mobility increasing, returning competition and our inflation driven higher price points. US Soup consumption grew 2% over elevated levels in the prior year. Bringing growth versus two years ago to 9%. Repeat rates and household penetration remained ahead of two years ago on Pacific Foods, ready-to-serve, condensed and Swanson broth. Condensed dollar share was down slightly in the quarter, however, we continue to be encouraged by evidence to quick-scratch cooking behavior continues. And our consumer tracking studies, more than a third of the people surveyed indicated that they cook more compared to the prior month. Additionally, we are seeing the need for quicker meal preparation as consumer shift to hybrid work arrangements, leading to the need for quicker lunches, while working from home and preparing dinners after returning from the workplace. This is driving an overall increase in our eating share interestingly with our strongest growth in condensed eating coming from millennials. As you may have noted in more recent periods, we are seeing some recovery of private label in the condensed segment. This is not unexpected given the recovery from an extended period of supply constraints. It's important to note, our two-year share gains remain very strong and we remain very confident in our overall competitive position versus private label as we move forward with continued strong support and programing. Ready-to-serve increased share in the quarter, including over 3 points of share gains among millennials. Within ready-to-serve Chunky had a very strong quarter, increasing consumption 8% on top of 2% growth in the prior year quarter and grew share by 0.6 points versus prior year. This is despite elevated promotional levels from competition. On Swanson broth, we also grew share by 1.6 points, representing the third consecutive quarter of growth as supply recovery continued. Our Pacific Foods growth engine delivered its eighth consecutive quarter of holding or growing share, driven by sustained momentum on broth, despite remaining supply challenges due to labor pressures paired with high demand. Turning to Sauces, Prego remain the number one share leader for 30 straight months. However, short-term material availability is adding pressure on supply and creating more recent pressure on shares, which we expect to improve as we fully recover on inventory in the second half. Pay share began to improve in Q1 and grew households, compared to prior year. We see pace continuing to improve throughout the year. I want to conclude my comments on Meals & Beverage by highlighting an important underlying trends. Across the Meals & Beverage portfolio, we continued to show strong performance with younger households. The percentage of buyers under the age of 35 has increased versus the prior year quarter on nearly all key brands. Specifically on US Soup, the percentage of buyers under 35 increased almost 2 points this quarter and the average age of Campbell Soup consumers are getting younger. The millennial cohort is the fastest growing segment in condensed eating, ready-to-serve and broth. Importantly, as we look beyond the current short-term volatility and begin to assess the ability for Meals & Beverages to continue to contribute growth into the future. This dynamic is a very important indicator and supports our efforts to increase relevance with a new generation of consumers. Organic net sales were, down 1%, primarily due to labor-related supply constraints, but grew 4%, compared to fiscal 2020, in-market performance was strong growing 5% over the prior year quarter and 9% on a two-year basis. This dynamic has resulted in low levels of retail inventory that we're working on and expect to recover through the second half of the fiscal year. Our power brands continue to fuel performance with in-market consumption growth of 6% this fiscal year and 13% on a two-year basis, driven by double-digit consumption growth across the majority of our brands. We are pleased to see repeat rates on all eight power brands ahead of the prior year and compared to fiscal 2020. Goldfish performed very well in the quarter, increasing share by half a point and growing consumption high single-digits versus prior year behind strong marketing activation, improved performance in multi-packs and continued successful limited addition flavor innovations resulting in improved base velocities and increased household penetration. We are winning with consumers, gaining share and driving significant consumption increases. Innovation continue to be a key growth driver with limited addition Goldfish Jalapeno Popper being the Number One velocity new item launched in the cracker category in the quarter, marking the second quarter in a row, we achieved this metric with our limited edition flavor innovations. We also continue to increase the relevance additional [Phonetic] kids audience with 60% of new buyers being households with our kids. We continued to drive share growth on other brands as well, including Snack Factory pretzel crisps by 2.5 points, Kettle Brand potato chips by more than a point and Cape Cod potato chips 2.6 points. However, as previously mentioned, labor availability on certain Snacks segments is putting pressure on share in several areas. In particular, cookies Lance crackers, Late July and Snyder's of Hanover pretzels in the quarter. We are making good progress on recovering, but do expect some of these headwinds to persist into Q2, more broadly recovering in the second half. As I mentioned earlier, we continue to be pleased with the speed and progress we have made to address the executional pressures experienced last year. Although, we will still lap a challenging Q2 as we deal with the [Technical Issues] half of the year with progress on margins and shares. Given our solid first quarter results and their consistency with our expectation [Technical Issues] our full-year guidance. As previously mentioned while we expect to still have a difficult comparison in Q2 as we lap year ago strength and begin to recover on labor and supply pressures. We remain very confident in our expectations of positive second half performance and momentum exiting the year. We look forward to sharing our strategy to unlock our longer-term full growth potential next week at our Investor Day. Turning to Slide 17, as Rebecca mentioned at the start of the call from this quarter onwards we will exclude from adjusted net earnings, unrealized mark-to-market gains and losses on outstanding undesignated commodity hedges, until such time that the related exposure impacts operating results. Our adjusted financial results and guidance reflect this change. For the first quarter as we left 8% growth in the prior-year, organic net sales declined 4%, due to the anticipated cycling of year ago retailer inventory recovery and supply pressures. The resulting year-over-year fall in [Phonetic] decline more than offset the favorable impact of net pricing in the quarter. As Mark highlighted earlier consumer demand remains strong in [Technical Issues] basis were 5% higher, compared to two years ago or the first fiscal quarter of 2020. Adjusted EBIT decreased 15%, compared to prior year, it was 1% higher on the two-year basis, despite the significant levels of inflation on ingredients, packaging, labor, warehousing and logistics. Our adjusted EBIT margin was 17.4%, compared to 19.5% in the prior year and slightly down from fiscal 2020. Adjusted earnings per share from continuing operations decreased $0.12 or 12% versus prior year to $0.89 per share, but remains well ahead of fiscal 2020. On the next Slide, I'll break down our net sales performance for the first quarter. As I mentioned, the impact of lapping the post-COVID search retailer inventory recovery and supply constraints largely related to industrywide labor challenges along with select material constraints, held back our ability to meet the continued elevated demand. The operations team continue to execute well in a challenging environment. Organic net sales decreased 4% during the quarter, driven by a 6 point volume headwind, which reflects lapping of the prior year retailer inventory recovery and the before mentioned supply constraints. Favorable price and sales allowances drove a 4 point gain in the quarter, which was partially offset by a 2 point headwind due to some spend back on promotional spending in the quarter closer to pre-pandemic levels. The impact of the sale of Plum subtracted 1 point. All in our reported net sales declined 4% from the prior year. Turning to Slide 19. Our first quarter adjusted gross margin decreased by 200 basis points from 34.5% last year to 32.5% this year. Mix had a negative impact of approximately 70 basis points on gross margin as we cycled last year's retail inventory recovery and favorable operating leverage. Net price realization drove a 190 basis point improvement, due to the benefits of our recent pricing actions, partially offset by increased promotional spending. Inflation and other factors had a negative impact of 470 basis points with the majority of the decline driven by cost inflation as overall input prices on a rate basis increased by approximately 6%. Along with other industry participants, we experienced significant inflation across all input cost categories, including ingredients, packaging, labor, warehousing and logistics. That said, our ongoing supply chain productivity program contributed 120 basis points to gross margin, partially offsetting these inflationary headwinds. Our cost savings program, which is incremental to our ongoing supply chain productivity program added 30 basis points to our gross margin. The previously described initiatives to mitigate inflation highlighted on the next page, include price increases and trade optimization, supply chain productivity improvements and cost saving initiatives and a continued focus on discretionary spending across the organization. We remain focused on inflation mitigation as we continue to expect core inflation for the year to be high single-digits with a more pronounced impact in the second half of fiscal 2022. As you saw on the previous page, the progress we made in the first quarter to mitigate these inflationary pressures reduced the impact to 130 basis points on our adjusted gross margin. Moving to the next Slide. We have achieved $15 million in incremental year-over-year savings and remain on track to deliver our cumulative savings target of $850 million by the end of fiscal year. We are working toward expanding our plan to $1 billion and we'll share more details next week at our Investor Day. Moving on to other operating items. Marketing and selling expenses decreased $38 million or 18% in the quarter on a year-over-year basis. This decrease was driven by lower advertising and consumer promotion expense or A&C and lower selling expenses. Although, A&C declined 31% as investment was moderated to reflect supply pressure, we expect it to normalize as supply strengthened throughout the year. Overall, our marketing and selling expenses represented 7.6% of net sales during the quarter and 130 basis point decrease, compared to last year. Adjusted administrative expenses increased $17 million or 12% largely, due to expenses related to the settlement of certain legal claims as higher general administrative costs were largely offset by the benefits of cost savings initiatives. Adjusted administrative expenses represented 6.9% of net sales [Technical Issues] to summarize the key drivers of performance this quarter. As previously mentioned adjusted EBIT decline 15% as the net sales declined and the 200 basis points gross margin contraction, resulted in a $36 million and $44 million EBIT headwinds respectively, partially offsetting this was lower marketing and selling expenses, contributing 130 basis points to our adjusted EBIT margin. This was a short-term action targeted in areas by supply constraints were most significant and we expect to fully return to targeted investment levels as soon as labor is in place and supply recovers. Higher adjusted administrative and R&D expenses had a negative impact of 110 basis points and lower adjusted other income had a 30 basis point impact. Overall, our adjusted EBIT margin decreased year-over-year by 210 basis points to 17.4%. The following chart breaks down our adjusted earnings per share change between our operating performance and below the line items, a $0.17 impact of lower adjusted EBIT was partially offset by a $0.02 favorable impact from lower interest expense and a $0.04 impact of lower adjusted taxes, due to the favorable resolution of several tax matters in the quarter. This resulted in better-than-expected adjusted earnings per share of $0.89, which was down $0.25 per share, compared to the prior year. Turning to the segments, in Meals & Beverages organic net sales decreased 6%, as favorable price and sales allowances in the quarter were more than offset by volume declines across US retail products, including V8 beverages, Prego pasta sauces and US Soup, as well as in Canada. Volume decreased primarily as a result of cycling the retailer inventory recovery in the prior year quarter and due to supply constraints, increased promotional spending relative to moderated levels in the prior year, partially offset the impact of recent price increases. Sales of US Soup decreased 2%, cycling 21% increase in the prior year quarter. Operating earnings for Meals & Beverages decreased 17% to $280 million, the decrease was primarily due to a lower gross margin and sales volume declines, partially offset by lower marketing selling expenses. The lower gross margin resulted from higher cost inflation, higher levels of promotional spending, higher other supply chain costs and unfavorable product mix, partially offset by the benefits of recent pricing actions and supply chain productivity improvements. Overall, within our Meals & Beverage division, the first quarter operating margin decreased year-over-year by 260 basis points to 22.1%. Within Snacks, organic net sales decreased 1% to $1 billion, as favorable price and sales allowances were more than offset by volume declines and increased promotional spending, compared to moderated levels in the prior year quarter. Declines in partner brands Pop Secret popcorn, driven by elevated prior year demand and Late July snacks due to supply pressures were partially offset by gains in Goldfish crackers and Pepperidge Farm cookies. Sales of power brands increased 30%. Operating earnings for Snacks decreased 5% for the quarter, driven by increased administrative expenses, due to the settlement of certain legal claims and a slightly lower gross margin, partially offset by lower marketing and selling expenses. The slight decline in gross margin resulted from higher cost inflation, unfavorable product mix and higher level of promotional spending, largely offset by the benefits of recent pricing actions. Supply chain productivity improvements and cost savings initiatives and lower other supply chain costs. Overall within our Snacks division first quarter operating margin decreased year-over-year by 60 basis points to 13.2%. I now turn to cash flow and liquidity. Fiscal 2022 cash flow from operations increased from $180 million in the prior year to $288 million, primarily due to lower working capital related to outflows mostly from accounts payable and accrued liabilities, partially offset by lower cash earnings. Our year-to-date cash outflows for investing activities were reflective of the cash outlay for capital expenditures of $69 million, which was comparable to prior year. In light of the current operating environment, we are reducing our planned full-year capital expenditures from $330 million to approximately $300 million for fiscal 2022. Our year-to-date cash outflows for financing activities were $220 million, the vast majority of which are $179 million, represented the return of capital to our shareholders, including a $160 million of dividends paid and $63 million of share repurchases during the quarter. At the end of the first quarter we had approximately $475 million remaining under the current $500 million strategic share repurchase program. We also have $250 million anti-dilutive share repurchase program, of which approximately $176 million is remain. We ended the first quarter with cash and cash equivalents of $69 million. Turning to Slide 28, as covered earlier, adjusted net earnings now excludes unrealized mark-to-market gains and losses on outstanding underestimated commodity hedges and the guidance for adjusted EBIT and adjusted earnings per share growth rates reflect this change. We continue to expect full-year fiscal 2022 net sales, adjusted EBIT and adjusted earnings per share performance to be consistent with the guidance we provided during our fiscal year-end earnings call. Overall, we expect accelerating inflationary pressures and higher labor-related costs to be partially mitigated with sustained in-market momentum, while at prior year results in the second quarter, we expect topline performance to improve sequentially year-over-year, as supply begins to recover. However, with respect to margin, we expect continued pressure driven by additional core inflation across commodities and higher labor-related costs without the benefit of our second wave of pricing, which will not be in place until the end of the second quarter. As we move into the second half of the year, we expect our inflation mitigation actions collectively along with the continuous recovery of labor to result in margin progress and earnings recovery through the year. For the full-year, we expect organic net sales to be minus 1% to plus 1%. Adjusted EBIT of minus 4.5% to minus 1.5% and adjusted earnings per share of minus 4% to flat versus the adjusted fiscal 2021 results. The sale of Plum is estimated to have an impact of 1 percentage point of fiscal 2022 net sales. I'm truly grateful for their continued dedication and commitment and look forward to sharing our strategy to unlock our full growth potential at our Investor Day next week.

q1 adjusted earnings per share $0.89 from continuing operations excluding items. q1 adjusted earnings per share $0.89. reaffirms full-year guidance which has been adjusted. qtrly net sales as reported (gaap) $2,236 million, down 4%. qtrly organic net sales decreased 4% cycling retailer inventory recovery in prior year. second quarter top-line performance is expected to sequentially improve year-over-year. also in the second quarter, with respect to margin, the company expects continued pressure. remains on track to deliver annualized savings of $850 million by end of fiscal 2022.

This is Emmanuel Caprais. Our adjusted non-GAAP results exclude certain nonoperating and nonrecurring items, including, but not limited to, asbestos, restructuring, asset impairment, acquisition-related items, and certain tax items. All adjustments in the quarter are detailed in the reconciliations. Before we begin, I'd like to provide a brief overview of our Q2 GAAP results compared to prior year. Q2 total revenue decreased 29% to $515 million. Segment operating income decreased 65% to $37 million and earnings per share of $0.53 decreased 29%. Free cash flow increased 205% to $169 million. Please note that our remaining discussion will primarily focus on non-GAAP or adjusted measures unless otherwise indicated. Actual results may vary materially. All such statements should be evaluated together with the safe harbor disclosures and the other risks and uncertainties that affect our business, including those disclosed in our SEC filings. I truly hope that everyone stays safe as we continue to adjust to the widespread repercussions of the COVID-19 pandemic. I'm also very grateful to our shareholders for their support. On our Q1 call, we highlighted our 2020 focus to strengthen ITT's resilience and to drive aggressive cost actions while playing offense for the future. And this is exactly what we did in Q2. We delivered a 25% segment decremental margin. We accelerated and increased our cost and spend reduction actions to $160 million. We generated record free cash flow of $169 million. We bolstered our liquidity to $1.4 billion, and we signed an LOI to acquire a niche European rail company. Building on this strong foundation, we will continue to drive operational execution that further reduces decremental margins while fueling future growth opportunities. We can only truly demonstrate our resilience through actions and results. Today, we will also give our understanding of the markets that we serve and our expectations for the balance of 2020. Before going into Q2 highlights, a word on safety. Safety is my top priority. And when I talk weekly with our facilities across the world, I'm energized by the accomplishments of our teams who diligently and effectively execute our health protocol. This enabled us to contain the global number of infections to fewer than 70. Now let's turn to our Q2 results. We focus on what we control and produce better results than expected. During the second quarter, ITT's resilience, the resolve of our teams and our pivot to play offense were on full display. From a financial perspective, we delivered solid earnings per share of $0.57, exceptional segment decremental margin of 25%, record free cash flow of $169 million representing a significant growth of 205% or $114 million. And segment working capital reduction of 210 basis points compared to prior year and 100 basis points compared to the first quarter. Operational excellence is a fundamental pillar of ITT's long-term success. And during the month of June, I was able to experience it first-hand over and over again when visiting our Seneca Falls plant and seven facilities in Europe. SFO operational improvement enabled industrial process to deliver a 13.7% adjusted operating margin. This is 120 basis point expansion versus prior year despite a revenue decline of 17%. The 13.7% margin also represents an improvement of 240 basis points over Q1. We moved quickly to take out costs and we are progressing nicely toward our long-term 15% plus margin target. IP continues to impress with strong operational execution, and as an example, the NC line at Seneca Falls achieved above 90% on-time delivery for the tenth consecutive month. Whilst in Europe, I was also pleased to see all the Kaizen projects we have under way to improve our operations. Being an assembly line efficiency workshop in KONI Oud-Beijerland or boosting output in Axtone, Stalowa Wola in Poland. Last but not least, in Barge, our Friction teams continue to improve our manufacturing processes by repurposing and driving the utilization of existing equipment. All across ITT, we drove high levels of operating efficiency at our manufacturing plants in Asia, Europe, Middle East and the Americas. And lastly, this operational excellence combined with our speed in execution enabled us to accelerate and boost our cost reduction plan, adding $25 million of new actions that increase our target to $160 million. All of the operational excellence was possible because all our leaders get our people safe through the adoption of rigorous health protocols. On customer centricity, our teams passionately serve our customers, and we're creative in satisfying increasingly demanding requirements, showing in actions, once again, that our customers are our priority. Momentum in Friction OEM share gain continued. In the first half of 2020, we outperformed the global market and each of our main regions. And based on platforms ramping in the second half, we continue to expect to outperform global markets by 700 to 1,000 basis points this year. Our end ordering unit grew new business awards by 94% in the quarter. The improvement that Logan and his team executed have put this business back on a growth trajectory. IP grew organic pump project orders by 22%. Project orders were consistent with the level reached in the first quarter. As a result, our backlog at the end of Q2 was up 3%, excluding foreign exchange compared to the beginning of 2020. The the project order performance is an emerging sign of customers' recognition of IP's operational improvement and the innovation in our products. IP customers were also delighted by Seneca Falls' 95% plus baseline pumps delivery performance during Q2. This outstanding delivery performance pairs nicely with the rest of our U.S. facilities and our Korean and Saudi plants. This level of execution mirrors the Motion Technologies' playbook where our friction business maintained 99% on-time delivery performance despite operating in areas hit hard by COVID-19. Lastly, on capital deployment. Our effective capital deployment strategies consolidated and protected our outstanding liquidity position. This will enable us to continue to invest in future growth opportunities as we pivot to play more often. Today, we have $1.4 billion of available liquidity, and we have ample capital to fund all our operational needs and investments and position us to take advantage of other strategic opportunities. And we continue to protect our cash position through daily and weekly cash reviews, and we added a record $169 million cash flow year-to-date. While we play offense for the future, we will continue to strictly control our capital expenditures. In Q2, we reduced capex by 25% compared to prior year, and our tracking to our $35 million reduction target for the full year. Our strong liquidity position enabled us to weather the present storm while we sow the seeds of future growth. We will continue to invest in smart and energy-efficient applications that will drive revenue growth in the long term. In 2020, the ITT Smart Pad is making new inroads in both aftermarket and OE customers. And at IP, we are currently testing a revolutionary energy-efficient power source for our pumps. Lastly, on capital deployment, we signed an LOI for a new niche rail acquisition as we continue to build out this long-term growth platform. All of these actions executed with speed, helped us deliver the Q2 results provided on slide four. Segment operating income margin of 12.6% despite the revenue decline. We delivered this margin through strong operational execution and fast and decisive trust actions that produce segment decremental margin of 25% and an EBIT decremental margin of 20%. We achieved 52% corporate spend reduction versus prior year. EPS of $0.57 per share was ahead of our expectations and declined 35%, excluding unfavorable FX of $0.03. And lastly, we generated $169 million of free cash flow year-to-date, representing a 205% improvement over the prior year. In summary, we delivered a solid second quarter in a difficult environment by executing decisive action early and with speed. Let's start on slide five with Motion Technologies. MT organic revenue declined 35% due to wide-ranging auto production shutdowns impacting our Friction and Wolverine businesses. In the quarter, Friction declined 42%. However, for the first half of 2020, Friction outperformed each of our major OEM auto markets. In North America, we outperformed by 1,000 basis points. In Europe, we outperformed by 400 basis points. And in China, we outperformed by 1,600 basis points. As discussed during our Q1 call, we expected Q2 top line results to be impacted by unfavorable customer order phasing. Nonetheless, we continue to project 700 to 1,000 basis points of global OE outperformance for the full year as new platform awards enter the production phase in the second half. Wolverine declined 38% in the quarter, but was able to deliver 800 basis points of outperformance for the first half. And finally, KONI and Axtone revenue decreased 9% as solid Europe OE rail growth, partially offset lower aftermarket revenue in North America and Asia. MT's adjusted segment operating income declined 57% to $24 million due to volume declines and unfavorable FX of $2 million. However, MT successfully contained decrement margins to 27% due to increased manufacturing efficiency, proactive plant shutdowns, restructuring benefits and aggressive discretionary cost actions. The 27% decremental margin improved sequentially and is also much lower than the decremental margins during the 2008, 2009 recession, reflecting the true resilience of today's MT. MT delivered solid Q2 margin of 12.2%, mainly reflecting the volume decrease. Axtone continued to expand margins both compared to the prior year and to the first quarter, and Friction China almost returned to pre-COVID-19 margin levels. Continuing restructuring actions in the second half will further bolster MT's structural competitive advantages, which are the foundation for our continued market outperformance. And these reductions will also help to improve decremental margins in the second half. It is also worthy to note that MT improved working capital by 120 basis points and produced record operating cash flow. And lastly, from an award perspective, both Friction and Wolverine continued to gain share with key conquer wins and new platform wins, both on conventional and electric vehicles. These awards continue the share gain momentum that will power MT's significant outperformance in the global markets we serve well into the future. Let's now turn to industrial process on slide six. IP delivered outstanding results considering the challenging environment. Organic revenue was down 17%. However, margins expanded 120 basis points compared to the prior year and 240 basis points sequentially. The IP revenue decline was driven by lower project revenue due to large project shipments in the prior year. Short-cycle revenue was up 4%, mostly driven by lower industrial valve activity, more than offset relatively flat aftermarket and baseline activity. Organic orders for the quarter declined 9% as 22% growth driven by general Industrial market share gains was partially offset by reduced capital investments across major markets due to COVID-19. IP's backlog at the end of Q2 was up 3% excluding foreign exchange versus the beginning of 2020, providing solid visibility into the second half of 2020. Operating income declined 9% to $26 million, as George and the IP team confined decremental margins to a near 6%. This was a major accomplishment driven by proactive measures taken in late Q3 of last year and rapid restructuring actions implemented in 2020. And as a result, IP segment operating margin grew 120 basis points to 13.7%. This operating margin performance was driven by mix, restructuring and sourcing benefits, continued strong project execution, price and government incentives, more than offsetting the impacts of volume declines and increased customer payment risks. Working capital improved 760 basis points as the IP and shared services teams were hard at work securing payments from customers and deleveraging the balance sheet. IP's resilience reflects the Motion Technologies business approach as global on-time performance and product portfolio redesign accentuate differentiation with customers. IP will continue to reduce costs in the second half as we implement new restructuring actions and execute on footprint optimization projects. Now let's turn to CCT on slide seven. CCT organic revenue declined 29% and weakness across all major end markets. The steep reduction in air traffic lowered commercial aero demand and caused a major slowdown in OE build rates that was further compounded by the specific challenges related to the 737 MAX requalification. Our Industrial Process business experienced a 7% decline and distribution inventory adjusted to lower levels of activity and medical connector surge in demand to accommodate COVID-19 patient care. Operating income declined 55% on the volume drop and margins declined to 11.1%. The primary drivers of the declines were volume impacts in COVID-19 and OE production weakness. These impacts were partially offset by strong productivity, restructuring actions, government incentives and lower materials inflation. We expect volatile market conditions to persist for the balance of the year affecting OE build rates at airframes. CCT's decremental margins of 35% improved sequentially from Q1 and reflected aggressive restructuring actions executed by the business. CCT executed a footprint move in Q2 and will continue to drive product line transfers to lower cost regions and additional restructuring for the balance of 2020 as a part of the comprehensive operational reset designed to better align with current demand expectations. So now I'll turn it to Emmanuel, our future ITT CFO. For an update of our cost actions, liquidity and balance of the year expectations, starting on slide eight. As you can see here, in 2020, we are laser-focused on what we can control. And we implemented aggressive and large restructural cost actions in all of our businesses as well as our corporate at the onset of the pandemic to protect margins and to produce strong free cash flow performance. In Q2, as a result of this focus, we increased our savings target of $260 million, exceeding the original guidance that we communicated during Q1. We have already executed a large portion of our restructuring plan, and the remaining actions will mostly take place in international regions in the second half. We are also detailing incremental actions across ITT as part of our increased cost target of $160 million. Specifically, we added annualized savings coming from our global industrial footprint optimization, mainly dealing with IP production facility. We already announced one closure and the relocation into a larger production site is scheduled for Q4 this year. We continue to prepare plans for additional consolidations. And our discretionary spending cuts were very impactful in Q2, and we will exceed our original target for the year. Finally, we reduced capex by 25% in Q2 and continue to track to our overall target of $35 million reduction. We remain flexible on our capex strategy and continue to focus the reduced capital allocation toward productivity and targeted growth projects. Overall, as a result of the great progress made to date and the decisive incremental actions we took, our 25% decremental margin in Q2 has significantly improved from Q1, and we now expect total segment decremental margin in 2020 to range between 22% and 28%. Now on slide nine. We ended the quarter with liquidity of $1.4 billion, which was significantly strengthened compared to Q1. Our balance sheet and liquidity position are key strength of ITT, and this provides us the ability to effectively deploy capital when opportunity materialize and value creation targets are achievable. From a cash flow perspective, we continue our strict routines to monitor collections and other working capital improvements on a daily basis. We scored some good wins with customers and our collections in Q2 helped generate a record $169 million of free cash flow year-to-date. This represents an increase of 205% versus the prior year. We also collected significant past due receivables early in July with key customers to continue our successful receivable harvesting actions. We optimized segment working capital by 210 basis points year-over-year, and we have more opportunities to further improve in the second half, especially regarding inventory at MT and CCT. However, we also expect demand to increase sequentially at MT and IP which will start to weigh on our second half receivables. Based on this, we are now targeting a free cash flow margin of more than 11% on for the full year, which is 160 basis points better than prior year. The next few quarters will continue to be unpredictable, even though the visibility has improved compared to 90 days ago. As a result, we will continue to suspend formal guidance until demand certainty improves. But let me provide some perspectives on how we see the year playing out for the balance of 2020. We expect gradual sequential improvement in the second half, but still expect high-teen revenue year-over-year declines, mainly driven by CCT. Despite improving passenger air traffic in Q3, we do not see commercial aero production rates materially improving sequentially. However, we expect defense revenue to pick up compared to the first half on the back of improved project order intake. We expect auto production rates to improve sequentially, reflecting a market decline of approximately 25% for the full year. We also reaffirm that our Friction OE business will outperform this global market decline by 700 to 1,000 basis points for the full year. Sequentially, in Q3, we expect MT revenue to improve more than 20% versus Q2 with further improvement expected in Q4. This MT revenue growth, combined with our aggressive cost actions will fuel solid sequential margin expansion in Q3 and Q4. We expect IP revenue to be consistent with Q2 levels in Q3 and show modest sequential growth in Q4. Finally, we expect corporate expenses in Q3 and Q4 to be similar to Q1. Overall, we have not integrated in our forecast another global lockdown like we experienced in Q2. Even though we have seen improvements in June and July from certain end markets, we expect the sequential recovery to be erratic because of COVID-19. We expect Q3 earnings per share to show mid-teens sequential improvement. The gradual improvement will come from cost actions combined with gradual market recoveries. We are now targeting segment decremental margins of 22% to 28% for the full year. And finally, from a free cash flow standpoint, we're targeting more than 11% of free cash flow margin. Q2 has been a very demanding quarter. And I'm very proud of ITTiers' achievement when it comes to our customers. We serve them even better than before by assisting them in navigating this crisis and delivering our products safely and on time, day after day. For our ITTiers, we kept our people safe by rigorous respecting health protocols. For our communities, the civil right movements have been an inspiration to us all. At ITT, we reject racism. Racism has no place at ITT, full stop. We at ITT, are upstanders and live by the principles of diversity, equity and inclusion. And we're taking concrete actions to make ITT a better workplace. And for our shareholders, we delivered record free cash flow and aggressively reduced costs to limit the impact of lower demand. We're already playing offense and using our strong competitive position to our advantage. We will continue to focus on what we control and drive of operational excellence, customer centricity and effective capital deployment. These are our value-creation drivers. As you are aware, Tom will be stepping down as ITT's Chief Financial Officer as of October. At this time, he and Emmanuel Caprais, who will be succeeding him as ITT's next CFO, are working closely on the transition. You should know that it was Tom and I who recruited Emmanuel in 2012. This is when our partnership started. I want to express my deepest appreciation to Tom for all he's done for ITT, for our customers, our ITTiers, and of course, our investors. Tom has been with ITT since 2006 and was named CFO in 2011 as we navigated the spin-off. Since that time, under Tom's leadership, among many others accomplishments, ITT's market value tripled. I'm sure that many of you have gotten to know Tom professionally during his time with ITT. He has spent a lot of time with many of you in all of his roles here. By my calculations, Tom has made more than 50 quarterly earnings calls. Also between conferences and other meetings, he has been part of more than 1,700 investor and analyst meetings during his tenure as CFO. That number is even higher when you consider all the interactions he had with many of you up until he became CFO. But for those of you lucky enough to have gotten to know Tom personally, you also know that he is not only a special finance leader, but a truly special person who cares about people and who always bring a fresh perspective. And he does it with a great sense of humor. I found his counsel and partnership during our time working together to be invaluable. When I was getting ready to start into my new role as CEO, ITT provided some provided me some coaching on the IR side. Still, I can tell you today that the best coaching was in working day in and day out with Tom. And listening to his perspective and absorb from his experience.

compname reports q2 adjusted earnings per share $0.57 from continuing operations. q2 adjusted earnings per share $0.57 from continuing operations. q2 earnings per share $0.53 from continuing operations. q2 revenue fell 37 percent to $199 million. qtrly earnings per share $0.53. qtrly organic revenue decreased 28% mainly as a result of negative global impact of covid-19. strong available liquidity of $1.4 billion as of june 30, 2020. targeting full-year 2020 adjusted decremental margins in range of 22% to 28%.

This is Alex Sherk. Our adjusted non-GAAP results exclude certain nonoperating and nonrecurring items, including, but not limited to, asbestos, restructuring, asset impairment, acquisition-related items and certain tax items. All adjustments in the quarter are detailed in the reconciliations. Before we begin, I'd like to provide a brief overview of our Q3 GAAP results compared to prior year. Q3 total revenue decreased 17% to $591 million. Segment operating income decreased 22% to $84 million. Regarding EPS, we took our net asbestos liability to a full-horizon estimate, resulting in a noncash expense equivalent to $1.20, the main driver of the $0.55 earnings per share loss. Free cash flow increased 77% to $271 million. Please note that our remaining discussion will primarily focus on non-GAAP or adjusted measures, unless otherwise indicated. Actual results may vary materially. All such statements should be evaluated together with the safe harbor disclosures and other risks and uncertainties that affect our business, including those disclosed in our SEC filings. I truly hope that everyone stays safe. And to make sure we continue to operate safely, we're implementing our ready, safe, go program across ITT based on the successful containment strategy first developed by our Asia Pacific team. Today, we will present the results of ITT'ers' relentless efforts to drive our performance and fortify our resilience. During the last few years, we at ITT have elevated the strategic standing of execution. Q3's outstanding results are the proof of this and also a testament to our strengthening momentum toward full recovery. Last quarter, we highlighted our focus on protecting our employees and supporting our communities while providing superior service to our customers with flawless execution. We also committed to delight our shareholders with record cash flow generation and timely cost actions while playing offense for the future. This is exactly what we continue to do in Q3. We delivered record ITT operating income margin of 15.4%. We grew 92% sequentially in Friction OE sales. We delivered 19% segment decremental margin and 40% segment incremental margins sequential to Q2. Lastly, we generated record free cash flow of $271 million. We are firmly on the road to recovery. ITT's execution capabilities and our unprecedented granularity delivered higher volume than expected, increased top line sequentially, and through strict fixed cost controls, produced an ITT record quarterly margin performance. We achieved our highest-ever quarterly operating income margin and our highest-ever year-to-date free cash flow. This is even more remarkable given the current macro environment. We will also provide our perspective on the markets we serve. Before going into Q3 performance, I'd like to highlight our safety record. Safety is, without a doubt, my top priority. We have made tremendous progress in all our businesses. Year-to-date, we reduced the number of incidents by 30%. Our injury frequency rate is 0.8%, and 50% of our sites have been incident-free for more than a year. I'm grateful to our teams for their accomplishments and for keeping our people safe. Now let's turn to our Q3 results. On the road to recovery, we focus on what we control and broke some records along the way. We delivered solid earnings per share of $0.82, up 44% sequentially, strong segment operating income margin of 16.2%, up 360 basis points sequentially; record operating income margin of 15.4%; and record free cash flow of $271 million, representing a growth of 77% or $118 million versus prior year. From an operational excellence standpoint, we continued our journey of betterment. Our productivity and cost actions helped to offset the impact of materially lower volumes. In the third quarter, I was very fortunate, I was able to visit many of our sites in Europe and the U.S. Let me tell you, we have many opportunities, and we will go after them. I also experienced the progress made firsthand, progress that helped us to deliver 14.1% operating margin at IP. This is the highest Industrial Process Q3 margin ever, and we continue to confidently progress toward our long-term 15% plus margin target. The breadth of the operational improvements delivered by George and his team is impressive, not only because of the quality of execution, but also because of the care they put into structurally resetting IP for the long term. We are actively shaping our manufacturing footprint and redesigning our product portfolio to establish a lasting competitive mode and superior margin performance for IP in the years to come. This 14.1% margin performance represented 120 basis point expansion versus prior year, and 40 basis points higher than Q2 this year. Our progress was also evident when I was with the MT team in Barge. Motion Technologies delivered a strong operating margin at 18.5%, up 630 basis points versus Q2 and only 30 basis points below prior year. We continue to drive productivities through our factories, and China and Mexico, in particular, keep on impressing with margins near all-time highs. At CCT, I was encouraged by the many Kaizen events running in our Valencia site. And all across ITT, we drove high levels of productivity that produce significant segment margin expansion compared to Q2. These operational excellence, combined with our speed and execution, enabled us to accelerate working capital reduction and post a year-over-year 180 basis points improvement. On the customer front, our teams continue to focus on serving our customers with utmost dedication, showing through their actions that our customer-centric approach is a way of life at today's ITT. Our Friction OE sales grew 92% sequentially, and the momentum in shared gains continued with each one of our main regions outperforming global production year-to-date, including over 1,000 basis points of outperformance in North America and China. While we still experience inventory adjustment issues in Europe with certain customers in the first half of Q3, we saw encouraging signs in auto OE production, particularly in September and October. We now expect Friction OE outperformance for the full year at the lower end of our expectations based on the timing of new platform ramps in the fourth quarter. IP grew organic short-cycle pump orders by 14% sequentially on the back of strong part, which improved gradually during the quarter and showed year-over-year growth in September. IP delivered a book-to-bill of 1. And as a result, our backlog at the end of Q3 was up 6%, excluding foreign exchange compared to the beginning of 2020. IP continues to lead in on-time delivery performance. Today, our customers know they can rely on us to deliver top-quality Goulds Pumps on time at a competitive price and consistently. This is a key differentiator. We've been talking a lot about Seneca Falls' 95% plus baseline pumps delivery performance for the last 12 months. And I want you to know that today, the rest of our facilities have been performing at an industry-leading level as well. Finally, at CCT, we have been busy playing offense and finding new ways to partner with our customers. Our elastomeric rotorcraft business has been nominated on the next U.S. military reconnaissance helicopter code named FARA. This is a major recognition for our rotorcraft business, which we created organically just a few years ago. And our composites business is finalizing a strategic partnership with a large aircraft engine manufacturer that we propel our Matrix business to new top line heights. The team at CCT has been working hard to adjust our cost structure to the new aero market conditions, and at the same time, looking for growth opportunities by showcasing our engineering prowess. I was at our Valencia facility last week, and I was impressed by our new state-of-the-art sound chamber capabilities as well as our new product pipeline. Lastly, on capital deployment. We continue to drive cash generation through working capital efficiency and strict capital expenditure focus, further strengthening our liquidity. As a result, we are raising our free cash flow margin target to a range of 13% to 15% for the full year. Today, we have $1.5 billion of available liquidity, and we have ample capital to fund all of our operational needs and investment, and position us to take advantage of other strategic opportunities. Our strong liquidity position prepares us well for what's ahead, whether it is facing headwind or surfing tailwinds. Finally, in October, we successfully terminated and transferred our U.S. pension plan. This will not only provide our pension eligible employees great service but also reduce ITT's administrative costs and eliminate any future funding requirements. Let's now look at our Q3 financial results provided on slide four. We produced 16.2% segment operating income margin. We delivered these margins through productivity and aggressive cost actions that produced segment incremental margin of 19%. We continued to drive down corporate costs and delivered an approximately 20% structural run rate reduction versus prior year. EPS of $0.82 per share declined 15% and was ahead of our expectations. And on cash, we generated $271 million of free cash flow year-to-date, up 77% versus prior year. Our trailing 12-month free cash flow margin now stands at a record 15.4%, a sequential improvement of 80 basis points. ITT'ers delivered strong Q3 results versus 2019, and these results are even stronger when we look sequentially. Switching to our sequential performance on slide five. Our segment operating income jumped 48%, an impressive growth compared to an organic revenue increase of 12%. This is the result of our business stepping up efficiency and cost actions as we continue to focus on what we control and benefit from operational leverage from a permanently lower fixed cost base. Our revenue growth was driven by a 92% increase in friction sales OE, mainly coming from outperformance in China and North America. Similarly, earnings per share grew 44% sequentially despite a onetime environmental benefit realized last quarter. Whilst recovery remains uneven across market, whichever way you choose to look at our financials, ITT's businesses delivered outstanding third quarter results. Let's start with Motion Technologies on slide six. Organic revenue declined 13% on lower order production rates and slower activity in the rail segment due to reduced passenger traffic. In the quarter, Friction OE sales were nearly flat to the prior year. This is a strong showing with China and North America growing 11% and 14%, respectively, which was offset by Europe, where we experienced destocking with some Tier one customers. Sequentially, Friction OE sales skyrocketed 92%, gradually accelerating during the quarter to show mid-single-digit year-over-year growth in September. Segment operating income declined 12% to $50 million. MT successfully improved decremental margins to 21%. And sequentially, operating income increased 107% with 36% incremental margin performance. We drove operating income recovery through productivity and restructuring actions. Motion Technologies delivered outstanding Q3 margins of 18.5%, 30 basis points lower than the prior year, but increased 630 basis points sequentially. These results were fueled by strong performance in Friction China, which produced its highest margin since Q1 2018, and Friction Mexico is now approaching pre-pandemic margin levels. The MT team delivered above our expectations given the revenue decline versus prior year. In Q4, we expect to deliver margin expansion versus prior year on the back of continuing restructuring actions and productivity as well as low single-digit organic revenue declines. These structural cost actions add to MT's many competitive advantages, material science leadership, best-in-class quality and fastest lead times, all of these together form the foundation for continued outperformance. And lastly, from an award perspective, both Friction and Wolverine continued to gain share with Conquer wins and new platform wins like the 15 new electric vehicle platform awards in the quarter. Moving on to Industrial Process on slide seven. IP clearly demonstrated the resilience of its business model considering the challenging environment. With 14.1% operating margin, IP expanded 120 basis points compared to the prior year despite an organic revenue decline of 19%. Sequentially, the growth was 40 basis points on flat revenue. The IP year-over-year revenue decline was driven by short-cycle bookings during the height of the pandemic last quarter. Lower project revenue is mainly due to large prior year chemical shipments related to the expansion of plastic production capacity in North America. Organic orders for the quarter declined 17% coming from 33% lower project bookings and 12% short-cycle decline versus prior year. Parts orders recovered gradually during the quarter and posted year-over-year growth in September. IP's book-to-bill of one in Q3 and year-to-date backlog growth of 6%, excluding foreign exchange, provides solid revenue visibility into next quarter. Operating income declined only 12% to $27 million despite significant revenue declines. Our proactive cost actions, shop floor and sourcing productivity resulted in best-in-class decremental margin of 8%. IP will continue to benefit from our footprint optimization strategy. And in October, we completed step one of our European footprint project and announced a new facility closure. Industrial Process segment operating margin of 14.1% was driven by productivity and cost control, sourcing and restructuring actions amid a decline in revenue. IP continued to fund innovation such as the new diagnostic capabilities added to our i-Alert remote monitoring platform and our product portfolio redesign projects. Let me expand on our BB2 pump redesign project as it demonstrates our strategy of playing offense. As you know, we have been hard at work improving our large chemical pump design to reduce materials content, improve manufacturability and source components from best cost regions while improving hydraulic performance. This design has generated so much interest from our customers that we booked 43% higher orders year-to-date than for the entire 2019. To date, we generated large sourcing savings, and the team has established a long-term supplier strategy that will put IP on a path to supply chain excellence for years to come. Finally, IP improved working capital by 800 basis points as we reduced AR past dues by more than 20% and inventory by 14%. We continue to see more opportunities to further reduce inventory as we consolidate footprint and optimize materials management -- materials planning management. IP finished the quarter with 19% working capital as a percent of sales. IP's outstanding performance reflects the multiyear strategy that we outlined back in 2017 and that we are faithfully executing as we advance toward our long-term margin target of 15% plus. We expect to produce a similar margin in Q4 as sequential volume increase is driven by large project shipments. Let's complete the overview of our segments with CCT on slide eight. CCT organic revenue declined 26% on weakness across our major end markets. The steep reduction in passenger traffic lowered commercial aero demand and continues to cause a major slowdown in OE build rates. We are also impacted by the specific challenges related to the 737 MAX requalification process. Our CCT industrial business experienced only a 2% decline as our distribution partners reduced excess inventory and adjust to lower levels of activity. Our BIW, oil and gas connector business, was impacted by reduced North American shale production and lingering difficulties with customer site access and service deliveries in the Middle East. However, we were able to gain share in that region on the back of better quality and delivery performance, and our year-to-date orders are up 30% year-over-year. Operating income declined 40% on the volume drop, and margin of 14% showed an improvement of 300 basis points over Q2. The primary driver of the decline versus prior year was volume impacts from aero weakness. These impacts were partially offset by shop floor productivity, especially out of the Nogales and Valencia sites, restructuring actions and benefits from product line transfers. In Q3, we continue to see aero debookings, albeit at slightly reduced levels compared to Q2, and significant disruptions coming from customers' ordering and receiving patterns. We expect weak OE build rates to persist. Additionally, lower aircraft utilization and weakened airline profitability result in a slow aftermarket recovery as less maintenance is required or gets deferred. CCT decremental margins of 28% improved sequentially from Q2 and reflect the aggressive restructuring actions executed by the business. Finally, in October, Ryan Flynn was appointed CCT President. Ryan had previously served as the President of our Asia Pacific region, where he drove critical growth initiatives. Davide Barbon, who is head of our KONI Axtone business, will now lead the Asia Pacific region, one of ITT's growth platforms. Davide returns to China, where he previously led the expansion of MT in Wuxi. As you know, last quarter, we raised our cost action target to $160 million. Let me now give you an update on our plan on slide nine. Our capex reduction plan is progressing well. We are hard at work on the remaining $125 million of cost reduction, a large portion of which is structural. To date, we have completed more than 90% of the full year headcount reduction plan. On the spending front, we are exceeding our saving expectations driven by strong cost controls and sourcing performance. We are driving footprint optimization at both IP and CCT with several new actions progressing through granular planning and internal approval stages. Overall, we expect these actions will generate more than $90 million savings of benefits -- $90 million of benefits in 2020 and additional carryover benefits in 2021, partially offset by temporary compensation actions that have been rolled back in Q1 -- in Q4. As a result, we are improving our decremental margin target, and we now expect total segment decremental margin for 2020 to range from 21% to 24%. Now I'd like to discuss the results on our net annual asbestos remeasurement on slide 10, which is excluded from our Q3 adjusted results. These events, coupled with stability in our underlying claim data, enabled us to extend the period for which we provide an estimate through 2052 from our previous rolling 10-year estimate. Since then, excluding the full horizon transition, our net liability declined 44%, and when accounting for these quarters, noncash $136 million full horizon impact, the net liability dropped 25%. This reflects our effective claims management and one firm defense strategy as well as aggressive insurance recovery actions that have improved the value of our insurance portfolio. Importantly, we now expect that our projected annual average net after-tax defense and indemnity outflows for the next 10 years will decrease to $20 million to $30 million, a reduction of 24% from the midpoint. Before Luca provides his closing remarks, let me share some perspective on how we see Q4 playing out. We expect continued sequential improvement in Q4 but still anticipate year-over-year revenue declines to range between high single digits and the low teens. We expect MT to deliver on low single-digits revenue decline as Friction revenue growth will more than offset -- will be more than offset by lower Wolverine and KONI Axtone volumes. We expect auto production rates to improve sequentially, reflecting a market decline of approximately 20% for the full year. Friction OE outperformance is now expected to be at the lower end of our range. We also expect IP revenue to show sequential growth in Q4 and year-over-year declines to a low double-digit range. Most of our expected Q4 revenue is already in backlog at the end of Q3. Despite slowly improving passenger air traffic in Q3, we do not see commercial aero production rates materially improving sequentially. As a result, we expect flattish CCT revenue from Q3 to Q4. From a segment margin standpoint, we expect to produce strong Q4 margins, well over the 15.4% generated last year driven by benefits from productivity and cost actions. With outstanding margin performance to date, we expect IP to deliver healthy full year margin expansion compared to 2019. Consequently, IP's Q4 margin will be similar to Q3 and prior year, while CCT may show a sequential reduction driven by unfavorable connector mix. We expect corporate expenses for the full year to be down approximately 40%. We also expect Q4 earnings per share to show low double-digit sequential improvement, and we are now targeting segment decremental margins of 21% to 24% for the full year. On free cash flow, we are raising our margin target to 13% to 15% for the full year as we rebuild some working capital to support our business and customers. ITT's performance is the outcome of a sound and actionable strategy, one with clear priorities and a strong focus on execution driven by unprecedented level of granularity. As a result, we generated strong levels of profitability and record free cash flow. We are managing through the storm, and ITT will emerge stronger and bolder than ever before. I look forward to continuing to share the progress we will make in our journey.

itt q3 loss per share $0.55 from continuing operations. q3 revenue fell 17 percent to $591.2 million . q3 adjusted earnings per share $0.82 from continuing operations. q3 loss per share $0.55 from continuing operations. sequentially, organic revenue increased 12 percent from q2 of 2020. compname reports q3 adjusted earnings per share $0.82 from continuing operations. q3 revenue fell 11 percent to $272 million.

My name is Aaron Howald, and I'm LP's Director of Investor Relations. All these materials are available on LPs investor relations website, www. Rather than reading these statements, I incorporate them herein by reference. Finally, in today's discussion and materials, we refer to Siding Solutions, where we would previously have said SmartSide. This is an expanded descriptor, which in addition to SmartSide also includes newly developed Trim and Siding products, with different branding. I should stress that this modification is consistent with and therefore does not require any recasting of any previously reported growth numbers for SmartSide Trim and Siding. Q2 was another remarkable quarter for LP Building Solutions. All our segments set records for sales and EBITDA in the second quarter, with over 150,000 housing starts in June, single-family mix over 70% and repair and remodel indices equally robust, we are encouraged that demand for LP's products remain very strong. EBITDA was $684 million, generating $457 million in operating cash flow and $4.74 in earnings per share. Siding Solutions growth is a significant component of these results, as slide seven illustrates. Siding Solutions includes primed and prefinished SmartSide, as well as innovative strand-based Siding products sold under other brand names. Revenue for Siding Solutions grew by 39% compared to last year. This is composed of 27% volume growth, compounded by 9% price growth. In addition to market penetration and share gains, Siding is growing through product innovation, the most innovative and value-added subset of Siding Solutions, which includes SmartSide Smooth, Shakes and ExpertFinish and LP's new builder series Siding, combined for 9% of total volume in Q2. This is compared to 6% last year and these new products contributed more than one point to the 9% increase. For LP's OSB segment, extraordinary prices generated impressive cash flows, but also overshadowed important gains in Structural Solutions volume. OSB prices have pulled back in recent weeks. We have not wavered from our strategy of growing structural solutions and supply market demand agility. In fact, in Q2, we grew Structural Solutions as a percentage of total OSB volume by five points, compared to prior year quarter. While not driving our strategy, OSB prices do of course continue to be a significant driver of LP's cash flow and share repurchases, about which Alan will update you in a few minutes. LP South America segment also had a very strong quarter with OSB and Siding price increases more than offsetting raw material cost inflation. South American sales almost doubled and EBITDA tripled compared to last year. Let me briefly update you on our capacity expansion projects, beginning with the Siding conversion in hold. While material costs particularly still, have been subject to inflationary pressures, the project is on schedule. We expect to begin SmartSide production in Houlton in late Q1 of 2022. We continue to work to accelerate the Sagola conversion and we are currently planning to start SmartSide production there in the first quarter of 2023. Finally, we are implementing projects to optimize our production and distribution processes that should result in incremental gains in production capacity across our mills. As for LP's Peace Valley OSB mill, I'm happy to announce that Peace Valley pressed its first Board of OSB in late June. We have received APA Certification in our shipping product, including TechShield Radiant Barrier, a significant contributor to Structural Solutions growth. In previous quarterly calls, I have discussed shortages of resin and adhesives as well as LP's operational responses to mitigate the impacts of these disruptions. As the broader economy continues this on even recovery, we expect intermittent supply chain challenges to continue. LP's Strategic Sourcing teams is working diligently to minimize disruptions. This includes collaborating with our operations teams to allocate any scarce inputs consistent with our transformation strategy, as we did with MDI resin in the first quarter. Most categories of the raw materials LP consumed saw significant price decreases in 2020, as demand fell in sectors of the economy more severely impacted by COVID than housing. Many of those sectors are now rebounding with the result, the demand and therefore prices are increasing. In some cases, availability has been hampered by supply chain interruptions elsewhere as was the case with certain resins. Raw material prices are now back at 2019 levels or in some cases above. Consumer and producer price indices generally trend upward. The situation is fluid, but we expect these inflationary pressures to persist for some time as the US economy recovers and grows. We recently completed environmental product declaration for SmartSide Siding. We believe that SmartSide looks and performs better than competing alternatives. We also believe the data shows that SmartSide is significantly more sustainable with a much smaller carbon footprint. In coming quarters, we plan to disclose additional information under the Sustainability Accounting Standards Board, or SASB framework. Sustainability is central to our transformation strategy at LP. We believe we have a good story to tell and we look forward to telling it. As Brad has already said, all segments set new records for revenue and EBITDA in the second quarter. Siding Solutions revenue grew by 39% and OSB and EWP prices were significantly higher in both North and South America. In fact sales for EWP and LPSA doubled compared to last year with their combined EBITDA more than triple. And Entekra delivered a record 324 units for $22 million of revenue, a tenfold increase over last year. As a result, LP generated $1.3 billion in sales, $684 million of EBITDA, $457 million of operating cash flow, and $4.74 in adjusted earnings per share. Inflationary pressures in wages, raw materials and freight, especially when compared to softer prices last year produced an EBITDA headwind of $24 million. Maintenance and other spending account for the remaining adverse $31 million. The waterfalls on slides nine and 10 show year-over-year revenue and EBITDA comparisons for the Siding and OSB segments. Siding Solutions saw volume growth of 27% and price growth of 9% for revenue growth of 39%. This generated an additional $81 million of revenue and $53 million of EBITDA and incremental EBITDA margin of 65%. Notably the 9% price increase in the quarter includes four percentage points from annual list price increases and three points on the packet that is from reduced discounts and rebates. The highest value-added subset of products, which includes ExpertFinish Smooth Shakes and Builder series punches well above its weight in terms of price accounting for just 9% of total volume, but over 100 basis points of the year-over-year price increase. The $4 million increase in selling and marketing costs represents the ongoing return to pre-COVID levels of spend consistent with our growth strategy and reflects the anniversary of reductions made last spring. With OEE flat to prior year still impressive 88%, the total Siding transformation impact is $81 million in revenue and $50 million in EBITDA. Costs associated with the Houlton conversion are making their first appearance in this waterfall with $1 million incurred in the second quarter. We have the last vestiges of the discontinued fiber sales this quarter with $10 million less revenue, but only $1 million less EBITDA. This brings us to second quarter revenue for the segment of $291 million an increase of 32% and EBITDA of $77 million, an increase of 51% for an EBITDA margin for the segment of 27%. Slide 10 shows the quarter in more detail for OSB and is obviously not to scale as OSB price increases dwarfed the other elements of the waterfall adding $554 million in year-over-year revenue and EBITDA. Volume was up about 8%, driven by Structural Solutions growth. High unscheduled downtime reduced OEE to 86% which contributed to the $18 million of unfavorable production costs. The OSB segment was also impacted by input and freight cost inflation. And lastly the restart of Peace Valley cost us $7 million in the quarter. The net result of these factors dominated as I said by price are increases in sales and EBITDA of $574 million and $519 million respectively and yet another quarter of extraordinary cash flow generation. As Brad mentioned and as you've all seen supply chain interruptions are impacting many industries. In some cases, those disruptions impact building products specifically and in others the impact is more widespread particularly when it involves precursor materials consumed upstream by our suppliers or their suppliers. Freight demand has also increased driving costs higher. All of which is reflected in the Siding and OSB waterfall charts to the tune of $8 million for raw materials and $12 million for freight across the two segments. Recall that last year saw significant drops in the same cost categories from which the housing industry benefited while demand elsewhere dropped. Now as the broader economic recovery is underway raw material prices have flattened and are climbing. On a blended unit cost basis, non-wood raw materials were down about 6% in 2020 compared to 2019, but are now up about 13% in 2021 compared to 2020. This represents an inflationary CAGR or compound annual growth rate of about 4% over the period. We expect inflationary pressures to continue and they are reflected in our third quarter guidance. One potential contributor to supply chain concerns are the fires in British Columbia and elsewhere in the West. So far, our employees and facilities are safe and we've seen minimal interruptions to inbound and outbound shipping. We will of course continue to monitor the situation closely with safety as our highest priority. Let me turn to LP's capital allocation strategy which remains to return to shareholders over time at least 50% of cash flow from operations in excess of investments required to sustain our core businesses and grow Siding Solutions at OSB Structural Solutions. In the second quarter of 2021, we returned $481 million to shareholders through a combination of $465 million in share repurchases and $16 million in dividends. Furthermore, since the end of June, we've spent an additional $140 million on buybacks which leaves $572 million remaining under the current $1 billion authorization. And since LP embarked on its strategic transformation, we've returned over $1.8 billion to shareholders, repurchasing more than 5 million shares and bringing the current share count to a bit under 95 million. In order to consistently reflect ongoing Siding growth and the decrease in share count driven by aggressive share repurchases, LP has declared a midyear increase in the quarterly dividend of 13% or $0.02 per share raising it from $0.16 a share to $0.18 per share. Slide 13 shows updated guidance for full year capital investment, as well as revenue and EBITDA guidance for the third quarter. We now anticipate spending $95 million in 2021 for the Houlton conversion an increase of $10 million of prior guidance largely due to increased costs for steel and labor. The remainder of the project costs will be incurred in early 2022. Spending for other growth capital, is expected to be $45 million and we anticipate spending about $120 million on sustaining maintenance for full-year total capital outlay of $270 million. This assumes continued easing of travel restrictions and contractor availability the reversal of, which could result in some execution risk, which brings me to the revenue and EBITDA outlook. For Siding Solutions, the third quarter should see year-over-year revenue growth of around 10%, which would be another quarterly record despite the much stronger comparative. This will however, bring the business very near to full production capacity with the result that revenue growth for the remainder of the year will be primarily driven by price increases and mix shifts. And if we assume 10% year-over-year revenue growth for the second half of this year Siding Solutions revenue growth will hit 24% for the year, which is double our long-term guidance. However, the combined effects of the Houlton conversion and other growth projects increased selling and marketing investment and input cost inflation will result in third quarter EBITDA being below last year's. But on a trailing 12-month basis, we still expect the EBITDA margin to meet our long-term guidance of 25%. For the OSB segment although prices are exceptionally volatile right now our order file gives us some near-term visibility. We also tend to lag price movements both when they are rising and when they are falling. We're therefore guiding to OSB revenue being roughly 10% sequentially lower than the second quarter. This includes the assumption that Random Lengths prices stay flat from last Friday's print throughout the remainder of the quarter. And while this is obviously, not a prediction of future OSB prices, we hope it's a useful characterization of the impact of price movements so far. And so with further caveats about certain changes in demand raw material price and availability or other unforeseeable events, we expect EBITDA for the third quarter to be at least $530 million, which will not be another quarterly record for LP but will be second only to the quarter we've just finished to report it.

compname posts q2 adjusted non-gaap earnings per share $4.74. q2 sales $1.3 billion versus refinitiv ibes estimate of $1.2 billion. q2 adjusted non-gaap earnings per share $4.74. sees siding solutions revenue in q3 of 2021 to be about 10% higher than q3 of 2020. sees osb revenue in q3 of 2021 to be sequentially lower than q2 of 2021 by about 10%. sees adjusted ebitda for q3 of 2021 to be greater than $530 million. expect capital expenditures for 2021 to be about $270 million.

I'm Hallie Miller Evercore's, Head of Investor Relations. Joining me on the call today are Ralph Schlosstein, and John Weinberg our Co-Chairman and Co-CEOs and Bob Walsh, our CFO. These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. We continue to believe that it's important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings. It's hard to believe that this is our third earnings call, for which we are not all together in the same conference room. For today's call, John is in our offices in New York City, it's his week in the office and I am in my office in North Salem, New York and Bob is with our traders in our office in New Jersey. Our business thrives on in-person collaboration and teamwork, and while we have been quite effective and successful over the last seven-plus months, operating out of 1800 offices around the globe we certainly recognize that our business and our culture operate best when we are physically together. That certainly is our ultimate goal once the virus is no longer a factor in our lives, but in the interim, we remain committed to serving our clients with distinction and to collaborating with one another, as we implement a gradual return to office around the world. The first nine months of this year have been volatile, and have had significant challenges and uncertainties, but there also have been many opportunities to advise our clients on their most important, strategic and financial needs. The strategic investments we have made to broaden and diversify our capabilities over the past several years have enabled us to serve our clients on a wide array of strategic and financial matters and resulted in solid quarterly and year-to-date results demonstrating both to our clients and our shareholders that Evercore very much is in all-weather firm that can produce good results in a wide variety of environments. There unquestionably are still uncertainties ahead; the upcoming US election, Brexit, the path of the virus and the disparity between the financial market recovery and the real economic recovery with so many of our fellow Americans, Europeans and others around the globe still unemployed or with their small businesses shuttered. However, as we see the market for merger activity improve, and we continue to see robust activity in capital advisory, restructuring, underwriting and research and trading, we have never been more confident in our ability as a firm to help our clients achieve their most important strategic financial and capital objectives. Before I comment on our financials, I want to provide a brief update on how Evercore has broadly responded to the events of this year and on what we are focused going forward. As I mentioned, we are beginning to implement a very deliberate and thoughtful return to our offices around the globe. Our transition back is occurring at a measured pace and follows all local government guidelines designed to protect communities in which we work. The health and safety of our employees and their families remains our paramount consideration, and the return of any individual has been of their own choice. Most of our colleagues, continue to work remotely and we anticipate that this will be the case for a reasonable period of time, probably measured in quarters rather than months. We remain focused on pivoting to meet the needs of our clients and leveraging our broad and diverse capabilities to advise them, and the changing economic and financial environment. The result is as follows: new M&A activity is being announced, in addition to the pre-downturn matters that have begun to reengage. We are seeing continued momentum occurring in our capital advisory business both helping clients raise equity privately and publicly and advising clients on debt opportunities. Restructuring and refinancing transactions are continuing and we are having constant dialog with our clients about their future financing needs. And finally, we are experiencing strong engagement with investors looking for Research and our Wealth Management clients seeking strong financial advice. Non-M&A activity, including underwriting has been a distinct opportunity during the past several months and has become an increasingly important part of our business in the current environment. We've been able to support clients to enhance their liquidity, raise investment capital and shore up their balance sheets. We are particularly proud of our CAPS product, which is designed to be an alternative to SPACs which we originated during the quarter and which we are in the early stages of building our convertible securities capability, including enhancing our distribution capabilities and our origination team. There was a significant increase in M&A announcements in the third quarter and that momentum seems to be continuing in the fourth quarter. Despite the many potential uncertainties which I outlined earlier as we look forward to the remainder of 2020 and into 2021, our backlogs are strong and we look forward to continuing our momentum in 2021 and in finishing this year strongly, and of course, we remain committed to maintaining our strong and very liquid balance sheet. Let me now turn to our results. We are quite pleased with our results for the third quarter and first-nine months of 2020 as the diversity of our capabilities and the entrepreneurial spirit of our team, allowed us to deliver revenues that are essentially flat year-over-year. Below average M&A transactions in March, April, May, June affected our third quarter advisory results. However, as you have seen, announced global M&A volumes nearly doubled in the third quarter compared to the second quarter and increased 38% compared to last year's third quarter in the US. In the US, announced M&A volumes increased more than three-fold versus the second quarter and increased 55% compared to last year's third quarter. Each of the three months of the third quarter both global and US announced M&A transaction volumes were higher than the monthly average of the last two years and in September, global announced monthly volume surpassed $450 billion for only the second time in the past few years. Third quarter adjusted net revenues of $408.5 million and year-to-date adjusted net revenues of $1.36 billion were both flat versus the prior year periods. As revenues from capital advisory, restructuring, underwriting and commissions and related fees largely offset the decline in revenues from lower M&A activity. Third quarter advisory fees of $271.2 million declined 16% year-over-year and year-to-date advisory fees of $966.8 million declined 11% compared to the prior year period. Based on the current consensus estimates and actual results, we expect our market share of advisory fees among all publicly reporting firms, on a trailing 12-month basis to be 8.3% compared to 8.1% at the end of June and 8.3% at year-end 2019. Third quarter underwriting fees of $66.5 million increased more than 275% year-over-year, and the year-to-date underwriting fees of $181.2 million nearly tripled versus the prior year period. The diversification of our underwriting business has contributed to a real step up in momentum. Now, we continued to invest in broadening our industry coverage and our product capabilities. We are working hard to sustain this momentum in the fourth quarter and have a meaningful and diversified pipeline of IPOs follow-ons and convertible securities. Third quarter commissions and related fees of $43.9 million declined 6% year-over-year as the heightened volume and volatility of the first six months of the year subsided. Year-to-date commissions and related fees of $153.4 million increased 12% versus the prior year period. Asset management and administration fees were $16.6 million in the third quarter and $47.1 million for the year. To date, an increase of 11% for the nine months and 7% -- I'm sorry, 11% for the quarter and 7% for the 9 months. Turning to expenses, our adjusted comp ratio for the third quarter and the first nine months of 2020 is 63.6%, the 63.6% accrual for the first nine-months reflects, as it has in past years our estimate for the full year compensation ratio, which includes an estimate of 2020 incentive compensation. This year, however, as we have pointed out on previous earnings calls there is higher level of uncertainty than in prior years about both the full-year revenues and full year market compensation. Third quarter non-compensation costs of $71 million declined 18% year-over-year and year-to-date non-compensation costs of $230.9 million declined 9% versus the prior period. Third quarter adjusted operating income and adjusted net income of $77.7 million and $52.6 million declined 8% and 13% respectively and adjusted earnings per share of $1.11 declined 12% versus the third quarter of 2019. Year-to-date, operating income and adjusted net income of $262.9 million and $182.2 million declined 18% and 25% respectively and adjusted earnings per share of $3.85 declined 23% versus the prior period. We remain committed to our historical capital return strategy in which we return earnings not needed in our business to shareholders through dividends and share repurchases. Given our solid results for the first nine months of the year, we have -- which have resulted in good cash flow generation. We are beginning to turn to that pre-COVID strategy. Consistent with that view, our Board declared a dividend of $0.61 a $0.03 per quarter increase which is a 5% increase from the prior quarter. We plan to return to our normal reassessment of the dividend in April of 2021, and to begin to restart our practice of returning our cash earnings that are not required in the business to investors through share repurchases. Bob will provide additional detail on our cash position in his remarks. We continue to see opportunities to further build out our capabilities and to expand geographically and we are building a pipeline of senior level A+ talent positions. We also remain highly focused on developing and promoting our high talent professionals from within the firm. Finally, we are especially proud of Evercore ISI's most recent showing in Institutional Investors Annual All-America Research Survey where we were recognized as the top ranked independent firm by a wide margin for the seventh year in a row and ranked number two or number three among all firms, large or small, depending upon how you count. Ed Hyman Evercore ISI's Founder and Chairman was awarded the number one position in economics, a recognition he has earned 40 times. Furthermore, Evercore ISI claimed a record 39 individual positions and tied its 2019 record of 36 team positions. After several months of muted merger activity immediately following the onset of the global pandemic I believe that absent a negative event which could certainly happen, we are in the early stages of a recovery as many of the key conditions necessary for a healthy M&A market continue to improve. The equity markets are strong for many sectors, access to financing and readily available credit remains, CEO confidence continues to improve and there appears to be greater stability in the markets. As a result of these improving conditions, we are seeing increased opportunities to serve our clients across multiple industry sectors globally. In financing, we have found multiple opportunities to help advise our clients in both equity and debt capital raises. Despite the rapid government stimulus at the onset of the pandemic and the swift recovery in the credit markets, we expect restructuring and refinancing activity to stay elevated as leverage remains high across all sectors, especially those that are distressed. Our restructuring group remains busy and continues to work through assignments and advise clients in sectors most hard hit by the pandemic. Private Capital transactions for sponsors have increased and active assignments are beginning to reemerge, again as well. While we are not yet back to pre-COVID levels, we are encouraged by the current pace of activity. Returning to our investor clients, both institutional and wealth management clients remain focused on the evolving financial markets during the quarter and we continue to provide valuable research insights and wealth management advice. We expect this focus to continue, particularly as we head into the year end. Trading activity in the third quarter however has not been as high as the first six months of the year, as volatility has subsided. I'm optimistic about the trajectory of the merger market overall, and I am pleased with our capital raising performance and our restructuring and debt advisory teams that have stepped up over these months. Let me now turn to our performance in Investment Banking. I'm encouraged to see activity levels with both corporate clients and financial sponsors broadly increasing across our platform in many sectors. As announced, M&A activity increased during the quarter, we sustained our number one league table ranking for volume of announced M&A transactions over the last 12 months, both globally and in the US, among independent firms. Among all firms we were once again number four, in the US in announced volume over the last 12 months. As I said, our restructuring and debt advisory teams remain busy. Our US restructuring group has already completed more transactions year-to-date than in all of 2019 and has been involved in nine of the 15 largest bankruptcies by total liabilities year-to-date. We believe there will be further opportunities to advise our clients throughout what we expect to be an elongated restructuring cycle. The team continues to do a great job partnering with and leveraging the expertise of our industry-focused bankers. In shareholder advisory and activism defense and our Private Capital Advisory businesses, origination activity is beginning to pick up momentum. There has been a pickup in unsolicited activity and we are pleased to be the financial advisor to CoreLogic, which is the biggest hostile situation at the moment. Our Private Funds Group has successfully adapted to the virtual environment and has been a leader in this space, successfully completing virtual fund raises for both existing clients and new clients where the relationship has been developed entirely in remote environments. Our equity capital markets business is performing extremely well. We continue to gain momentum, and we are maintaining our focus on building our team. We served as an active book runner or co-manager on six of the 11 largest US IPOs in the first nine months of 2020 and we played a key role in 30 underwriting transactions in the third quarter alone. We are very proud to have served as the sole book runner -- our first US book run mandate ever on Executive Network Partnering Corporation's $360 million CAPS IPO. This unique CAPS offering was pioneered, structured and developed here at Evercore and brings innovation to the increasingly popular SPACs market. Clients continue to look opportunistically to raise capital and we are pleased with the breadth of the conversations and activity we are experiencing across a broad range of sectors including healthcare, financials, technology and energy. We also continue to invest in broadening the business and building out the convertible origination team with important strategic hires. Although it is still early days for us in the convertible space, we have served as an active book runner for Helix Energy Solutions Group's $200 million convertible bond offering during the quarter. In our equities business our Investor and Corporate clients continue to rely on us for valuable macro and fundamental insights and our traders continue to help our clients execute in volatile markets. As Ralph mentioned earlier, we are very proud of the team's institutional investor results. I am very much encouraged by the current pace of activity and the momentum we are experiencing in our business. Let me begin with a few comments on our GAAP results. For the third quarter of 2020 net revenues, net income and earnings per share on a GAAP basis were $402.5 million, $42.6 million and $1.01 respectively. For the first nine-months of 2020, net revenues, net income and earnings per share on a GAAP basis were $1.3 billion, $130.2 million and $3.09 respectively. Our adjusted results exclude certain items related to the realignment strategy that began in the fourth quarter of 2019. At this juncture, we are finalizing all of the required communications that remain and are associated with the realignment strategy and we are working hard to complete its execution by year-end. Ultimately, we expect to incur separation and transition benefits and related costs of approximately $43 million which reflect a modest increase in the cost for our prior estimate. During the third quarter of 2020, we recorded $7.3 million as special charges, which are excluded from our adjusted results. Year-to-date we have recorded $37.6 million of special charges related to the realignment initiative. As we mentioned earlier this year, we have entered into an agreement with the leaders of our business in Mexico to purchase our broker-dealer there, which principally provides investment management services. Completion of this sale is subject to regulatory approval, which was submitted in June and is expected to occur shortly after that approval is received. In addition, leaders from our advisory business in Mexico announced earlier this month that they are departing Evercore to form a new strategic advisory firm TACTIV, which we will partner with under a new strategic alliance. We believe this alliance model best positions the team in Mexico to address client needs and build a diverse and growing array of capabilities. Our adjusted results in the third quarter and first nine months of 2020 also exclude special charges of $0.1 million and $2.1 million respectively related to accelerated depreciation expense. Turning to other revenues; in the third quarter other revenues increased compared to the prior-year period, primarily as a result of a gain of approximately $8 million on the investment funds portfolio which is used as an economic hedge against a portion of our deferred compensation program. Other revenues for the first nine months of 2020 decreased versus the prior-year period, primarily reflecting a net gain of $1 million from this portfolio compared to $9.2 million for the first nine months of 2020. Of course, this amount fluctuates as market values move and the continued strength of the market during the quarter, drove this quarter's gains. Focusing on non-compensation costs, firmwide non-compensation costs per employee approximated $39,000 for the quarter, down 17% on a year-over-year basis. The decrease in non-compensation costs per employee versus last year primarily reflects lower travel and related costs and lower professional fees. As we continue to evolve toward more normal operation, costs associated with travel, professional fees and some other expenses will begin to recur. Our GAAP tax rate for the third quarter was 23.5% compared to 28% for the prior year period. On a GAAP basis, our share count was 42.3 million shares for the third quarter, our share count for adjusted earnings per share was 47.4 million shares. Wrapping up and looking at our financial position, we held $1.1 billion of cash and cash equivalents at approximately $100 million of investment securities or $1.2 million of liquid assets as of September 30, 2020. By comparison, at September 30, 2019 we held approximately $305 million at cash and cash equivalents and $620 million of investment securities or $920 million of liquid assets. As we have discussed in the past, we hold cash and investment securities both for operations and to fund our deferred compensation obligations. At the outset of the downturn, we shifted our holdings to a highly liquid portfolio, reducing expenditures and buybacks to maximize our financial flexibility. We plan to begin to reestablish our longer-term investment portfolio, so that funds held to satisfy our deferred compensation obligations as well as a portion of our permanent capital base, generate a greater return. This investment strategy will result in shifting funds to investment securities relative to cash and cash equivalents. We continue to monitor our cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations, including deferred compensation regularly, and as Ralph noted, we will begin to return cash earnings not needed to support these needs -- to our investors. Just a couple of comments before we go to questions. Second, during our last call, we talked about the importance of diversity and inclusion at Evercore. We remain committed to pursuing our diversity and inclusion goals and I'm proud to share that during the quarter, we added diversity and inclusion as a stand-alone core value. We are committed to holding ourselves both as individuals and as a firm, accountable in this important area and we look forward to continuing to make progress. Finally, as Ralph and I shared with our employees during a recent virtual town hall that we conducted while socially distanced in the office we are all very much focused on finishing the year strongly and preparing for 2021. While there are still uncertainties ahead, we have never been more optimistic about the strength, breadth and diversity of our platform to help our clients regardless of the environment. Now, I'd like to invite you to ask questions.

compname reports third quarter 2020 quarterly diluted earnings per share $1.01. compname reports third quarter 2020 results; increases quarterly dividend to $0.61 per share. qtrly diluted earnings per share $1.01. q3 revenue $402.5 million versus $402.2 million. qtrly adjusted diluted earnings per share $1.11. cash position and balance sheet continue to remain strong, and capital return strategies remain on track.

Our chief financial officer, Ray Young, will review the drivers of our performance as well as corporate results and financial highlights. Then Juan will discuss our outlook. Our team delivered a super fourth quarter. Adjusted segment operating profit was $1.4 billion, 23% higher than the fourth quarter of 2020. Our trailing four-quarter adjusted EBITDA was $4.9 billion, $1.25 billion more than a year ago. And our trailing four-quarter average adjusted ROIC was 10%, meeting our objectives. That performance represented a strong finish to an outstanding 2021. For the full year, our adjusted earnings per share was $5.19, also a record. And full year adjusted segment operating profit was $4.8 billion. This excellent performance was reflected across the company. The Ag Services and Oilseeds team's actions to improve their business portfolio and strengthen their operating model continued to enable superior performance in a strong market environment. AS&O delivered full year 2021 OP of $2.8 billion, with each subsegment performing at or near historic highs. Carbohydrate solutions executed phenomenally well to deliver full year operating profits of $1.3 billion. And the team is continuing the evolution of carbohydrate solutions from the sale of our Peoria dry mill and the announcement of the sustainable aviation fuel MOU; to our agreement with LG Chem and the continued growth of our exciting biosolutions platform, which delivered new revenue wins with an annualized run rate of almost $100 million; to the project we announced earlier this month to further decarbonize our operations by connecting two other major processing facilities; to our vacate of carbon capture and storage capabilities. The nutrition team once again delivered industry-leading revenue and OP growth, with full year revenues up 16% and full year OP of $691 million, representing a 20% year-over-year increase. We also continued to enhance our nutrition business with strategic investments targeted at growing areas of demand, including soya protein, which will expand our participation in alternative proteins; PetDine, which substantially enhance our presence in pet food and treats; Deerland, which continued the expansion of our functional probiotics and enzymes portfolio within our global health & wellness business; and FISA, which enhance our flavor footprint by opening up new growth opportunities in Latin America and the Caribbean. Last month, at our Global Investor Day, we unveiled our strategic plan and reiterated our balanced financial framework for value creation, including using our strong cash flows to deliver both growth investments and distributions to shareholders. We are confident in our plan [Audio gap] which is why we are pleased to announce an 8% increase in our quarterly dividend to $0.40 per share. We are proud of our record of 90 uninterrupted years of dividends and more than 40 years of consecutive annual dividend increases, and we are pleased to continue to follow through on our commitment to shareholder value creation. It's been a great year, and we're excited about what's to come. Our continued actions to build a better ADM and dynamically align it with the global trends of food security, health and well-being, and sustainability, and the steadfast advancement of our productivity and innovation initiatives will help propel our 2022 results. I will talk in more detail about the upcoming calendar year shortly. The Ag Services and Oilseeds team capped off really a truly impressive year, successfully navigating through supply chain challenges to deliver results largely in line with the extremely strong prior-year quarter. The Ag Services team performed well in an environment of continued strong global demand, including significantly increased export volumes for customers outside of China. Global trade was substantially higher year over year, driven by solid risk management and improved results in global ocean freight. Overall, Ag Services delivered strong results, just slightly off the outstanding fourth quarter of 2020 when we benefit from exceptionally high export margins. Crushing executed well on the continued solid demand environment for both soybean meal and vegetable oil. Lower results in EMEA versus a very strong fourth quarter of 2020 and approximately $250 million in net negative timing impacts versus negative $125 million in the prior-year quarter drove overall results lower year over year. The majority of those negative timing effects are expected to reverse in the first half of 2022. The refined products and other teams delivered substantially higher results versus the prior-year period, driven by strong volumes and margins in North America for refined oils and improved biodiesel margins in North America and EMEA, which more than offset weaker South American results due to the reduced biodiesel mandate. Equity earnings from Wilmar were higher year over year. Looking ahead, we expect a strong first quarter from Ag Services and Oilseeds, higher than the first quarter of 2021 and in line with the just-ended fourth quarter. Carbohydrate solutions' fourth quarter results were more than double the prior-year quarter. In Starches and Sweeteners subsegment, including ethanol production from our wet mills, results were lower versus the fourth quarter of 2020, driven by higher input costs, including energy costs in EMEA as well as lower wheat milling volumes, partially offset by continued strong ethanol margins. Volumes for North America sweeteners and starches were largely flat year over year. Vantage corn processor results were again substantially higher year over year, driven by historically strong industry ethanol margins as a result of strong demand relative to supply as well as increased sales volumes due to production at the two dry mills that were idle in the previous year period. As we look ahead, we believe the first quarter for carbohydrate solutions should be similar to or slightly above the strong first quarter of 2021. The nutrition business closed out a year of consistent and strong growth, with fourth quarter revenues 19% higher year over year, 21% on a constant currency basis, with 26% higher profits year over year, and sustained strong EBITDA margins. Human Nutrition had a great fourth quarter, with revenue growth of 21% on a constant currency basis and substantially higher profits. Flavors continued its growth trajectory, driven primarily by improved product mix in EMEAI and continued strong performance from North America, partially offset by weaker APAC results. In specialty ingredients, overall profits for the fourth quarter were in line with the year-ago period as strong demand for plant-based proteins offset the impact of onetime insurance proceeds in the fourth quarter of 2020. Health & wellness was higher versus the prior-year quarter as the business continued to deliver growing profits in bioactives and fermentation. Animal nutrition revenue was up 21% on a constant currency basis, and operating profit was much higher year over year, driven primarily by continued strength in amino acids. Now looking ahead, we expect nutrition to continue to grow operating profits at a 15%-plus rate for calendar year 2022, with the first quarter similar to the first quarter of 2021 with continued revenue growth offset by some higher costs upfront in the year and the absence of the onetime benefits we saw in the first quarter of the prior year. Now let me finish up with a few observations from the Other segment as well as some of the corporate line items. Other business results were substantially higher, driven primarily by higher captive insurance underwriting results as the prior-year quarter included larger intracompany insurance settlements. For calendar year 2022, we expect other business results to be similar to 2021. Although for the first quarter, we expect a loss of about $25 million due to insurance settlements currently planned. Net interest expense increased year over year on higher short-term borrowings. In the corporate lines, unallocated corporate costs of $276 million were lower year over year due primarily to increased variable performance-related compensation expense accruals in the prior year, partially offset by higher IT offering in project-related costs and transfers of costs from business segments into centralized centers of excellence in supply chain and operations. We anticipate calendar year 2022 total corporate costs, including net interest, corporate unallocated, and other corporate, to be in line with the $1.2 billion area, consistent with what I discussed at Global Investor Day with net interest roughly similar, corporate unallocated a bit higher, and corporate other a bit lower. The effective tax rate for the fourth quarter of 2021 was approximately 21%, compared to 8% in the prior year. The calendar year 2021 effective tax rate was approximately 17%, up from 5% in 2020. The increase for the calendar year was due primarily to changes in geographic mix of earnings and current year discrete tax items, primarily valuation allowance and return to provision adjustments. Looking ahead, we're expecting full year 2022 effective tax rate to be in the range of 16 to 19%. Our balance sheet remains solid, with a net debt-to-total capital ratio of about 28% and available liquidity of about $9 billion. I hope most of you were able to join us on our Global Investor Day last month. There, we showed that we have consistently advanced our strategy from our work to improve ROIC through capital cost and cash; to our strategic growth and margin enhancement accomplishments, including the creation of a global Nutrition business; to today's focus on productivity and innovation. Let me take a few moments to talk about how we see the 2022 environment. In Ag Services and Oilseeds, we see a continued favorable global demand environment. Due to a short growth in South America, with the magnitude of the shortfall still to be determined, we expect global ag commodity buyers will rely relatively more on the U.S. market for their needs, assuming we have a normal U.S. crop later this year. On the oilseeds side, we're starting 2022 with strong soy crush margins. And as we discussed at Global Investor Day, we believe that increasing demand for meal as well as vegetable oil as a feedstock for renewable green diesel should continue to support the positive environment this year, with our soy crush margins in the range of 45 to $55 per metric ton. Assuming these dynamics play out, we believe that Ag Services and Oilseeds in 2022 has the potential to deliver operating profit similar to or better than 2021. For carbohydrate solutions, we are assuming the demand and margin environment for our starch and sweetener products will be steady versus 2021. We expect the industry ethanol environment to continue to be constructive, supported by the recovery of domestic demand to pre-COVID levels, energy costs driving higher exports, and better clarity on the regulatory landscape. With this in mind, we're assuming higher ADM ethanol volumes and EBITDA margins to average $0.15 to $0.25 for the calendar year. In addition, we are expecting our biosolutions platform to deliver another year of solid growth as we continue to evolve the carbohydrate solutions business. Putting it all together, we expect carbohydrate solutions to deliver full year operating profit slightly lower than their outstanding 2021. In nutrition, we're expecting continued growth in demand for our unparalleled portfolio of nutrition ingredients and systems, along with the benefits of accretion from our recent acquisitions. With these dynamics, we expect 15-plus percent OP growth in 2022, revenue growth above 10%, and EBITDA margins above 20% in human nutrition and high single digits in animal nutrition, consistent with targets we set out at our Global Investor Day. So as we look forward in 2022, we see a positive demand environment across our portfolio. And then we add to that thing we can do better. Our execution was great in 2021, but we're always identifying opportunities for improvement. And we intend to do even more to meet this growing demand in 2022. Put it all together, and we're optimistic for another very strong performance in 2022 as we progress toward our strategic plans next earnings milestones of six to $7 per share.

compname reports outstanding results: fourth quarter earnings per share of $1.38, $1.50 on an adjusted basis; full year 2021 earnings per share of $4.79, $5.19 on an adjusted basis. announcing 8% increase in quarterly dividend.

I'm Hallie Miller, Evercore's Head of Investor Relations. Joining me on the call today are Ralph Schlosstein, and John Weinberg, our Co-Chairman and Co-CEOs; and Bob Walsh, our CFO. At this time, it is uncertain how long our business will be negatively affected by COVID-19 and the associated economic and market downturn. These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings. Let me start by saying that it is a pleasure to be doing my first call with John as Co-Chairman and Co-CEOs of Evercore. Our new titles formalize what we have been doing for several years already, and along with Roger, whose role has not changed at all, contrary to some reports in the press, we greatly look forward to a very successful future for Evercore. I am sure you will agree that the challenges of the past quarter have been myriad and significant. First, the rapid spread of COVID-19 pandemic drove lockdowns around the world and has inspired a race to develop diagnostics, treatments and vaccines. The pandemic and lockdown then gave rise to an unprecedented global economic downturn, record levels of unemployment and in response, fiscal and monetary stimulus that has been applied with unprecedented size and rapidity. Financial markets became predictably volatile, first down and then up, but they currently are reasonably healthy, in stark contrast to the health of the real economy. And in the midst of all this, a much needed call for a higher level of equality and social justice in our society, and a significantly greater commitment to diversity and inclusion in the workplace. My partnership with John and Roger, and more broadly the culture within our Firm, has helped us navigate this challenging environment and to stay focused on both our clients and our people. Before I comment on our results, I want to provide an update on how, we as a Firm, have responded to these events in the first half from both an operational and a business standpoint. The vast majority of our team continues to work remotely that we are beginning to return to working in some of our offices. This transition back to the office, in contrast to our move to working remotely, is happening at a measured pace consistent with local government directives designed to protect the communities in which we work, and our own policies to protect our people and their families. We have embraced new technologies that allow us to communicate with our clients and our colleagues, despite our physical distance and we remain focused on the needs of our clients, helping them by leveraging our broad and diverse capabilities. This focus has resulted in a number of things. First, M&A assignments that made strategic sense before the downturn have continued to be announced, or if announced, have been completed. Capital raising and assignments, both in the equity and debt markets have been occurring at levels dramatically higher than that at any time in our history. And we have seen an unprecedented surge of restructuring and refinancing transactions often on a highly expedited basis. And finally, on our invest -- on our research and in our Wealth Management business, a greater engagement with investing clients than at any time in our history. John will cover our performance in greater detail in his remarks. Following the tragic events in Minnesota, we also saw a much needed call for a higher level of social justice and more extensive commitment to diversity and inclusion in the workplace, in the US and elsewhere, a call that we strongly embrace. We have taken the time to reflect on calls for social justice and have thought hard about racism and prejudice that's still persist in our society today. We have come away with the awareness and commitment that we need to strengthen our own diversity and inclusion efforts here at Evercore. We are a market leader for our business accomplishments and we will expand the same energy and focus on our diversity and inclusion initiatives, not just to make ourselves better, but to try and have a more positive impact on our communities and the world in which we live. As we look to the second half of the year, we are following a set of operating principles that are very similar to those that we discussed with you three months ago. First, we remain committed to ensuring the health, wellness and safety of our team and their families, and to achieving our diversity and inclusion goals. Second, our teams are focused on addressing the immediate needs of our corporate, institutional investor and wealth management clients, while helping them be better positioned for the eventual economic recovery. Third, we are sustaining our operating infrastructure to support flexible and efficient working arrangements as we plan and implement our return to office on a thoughtful and disciplined basis. And finally, we remain committed to maintaining our strong and liquid balance sheet. Our results for the second quarter and the first half reflect both the momentum that we had in M&A before the onset of the pandemic, and our ability to pivot to meet our clients' changing needs in currently challenging economic and financial markets. As a general matter, previously announced M&A transactions continued toward completion and the broader advisory capabilities that we have built and strengthened over the last several years have allowed us to continue to serve our clients on their most pressing financial and strategic issues. Let me turn specifically to the numbers. Second quarter adjusted net revenues of $513.9 million, decreased 4% versus the second quarter of 2019. For the first six months of 2020, adjusted net revenues of $948.9 million, decreased 1% versus the prior year. Although our revenues from Investment Banking, that is advisory fees, underwriting fees and commissions, increased by 2% versus the prior period. Second quarter advisory fees of $336.5 million declined 24%, compared to the second quarter of 2019, which was an unusually strong quarter. In fact, our third best quarter for advisory fees in our history. Advisory fees for the six months of 2020 were $695.6 million, a decline of 10%, compared to the prior year period. We expect our market advisory share -- our market share in advisory fees, among all publicly reported firms, on a trailing 12-month basis to be 8.2%, compared to 8.3% at year-end 2019. Second quarter underwriting fees of $93.6 million, increased more than 450%, compared to the second quarter of 2019. Underwriting fees in the second quarter were higher than our underwriting fees for all of 2019, which was a record year in underwriting fees for us. For the first six months of the year, underwriting fees were $114.7 million, an increase of more than 160% versus the prior year period. Third quarter underwriting fees are already off to a strong start and we are working hard to sustain this momentum. Commissions and related fees of $54.1 million, increased 11% versus the second quarter of 2019. For the first six months of 2020, commissions and related fees of $109.5 million, increased 21% versus the prior year period. Asset management and administration fees from our consolidated businesses were $15.2 million, an increase of 4%, compared to the second quarter of 2019. For the first six months of 2020, asset management and administration fees from our consolidated businesses were $30.5 million, an increase of 5% from the prior year period. Turning to expenses, our compensation ratio for the second quarter is 65%, and our compensation ratio for the first six months of 2020 is 63.6%. A word of explanation about the compensation ratio, the 63.6% accrual in the first half reflects, as it has in past years, an estimate for the full-year compensation ratio, which includes an estimate for 2020 incentive compensation. Given the uncertainty about revenues for the remainder of the year and the uncertainty about the level of market compensation for our younger employees in 2020, we have significantly more uncertainty about the full-year compensation ratio than at this time in prior years. Our intention is to pay our younger employees at market rates as we always have, and to pay our more senior employees in a way that fairly balances the short-term and longer-term interests of our shareholders. The short-term interest being higher earnings this year and the longer-term interest being keeping the team together that has produced more than $2 billion of revenue in 2018 and 2019 and investing in new talent for our future growth. So, we are doing our best to have our six-month compensation ratio be within the range of possible outcomes for the full-year, although the uncertainty about both revenues and market compensation for our employees is considerably higher than in prior years. Non-compensation costs of $77.1 million in the second quarter declined 11% from the second quarter of 2019. For the first six months, non-compensation costs of $159.9 million, declined 4%. Bob will comment on this further in his remarks. Adjusted operating income and adjusted net income of $102.7 million and $71.8 million, declined 26% and 29%, respectively, and adjusted earnings per share of $1.53, declined 26%, all versus the second quarter of 2019. For the first six months of 2020, adjusted operating income, and adjusted net income of $185.3 million and $129.6 million, declined 21% and 29%, respectively, and adjusted earnings per share of $2.74, declined 27% versus the prior six-month period. We remain focused on our capital return and management strategy. Year-to-date, we returned $206 million to shareholders through dividends and repurchase of 1.9 million shares at an average price of $76.22. We have offset the dilution associated with equity grants for the year. So any additional share repurchases in 2020 will be dependent on our second half revenues and earnings, balanced by our intention to maintain our strong liquidity position. Our Board declared a dividend of $0.58, consistent with prior quarters, and reflective of our results for the quarter. Our Board and management will continue to evaluate the dividend on a quarterly basis, as the effect of the pandemic on revenues becomes more clear. Although the current expectation, absent any extraordinary steep decline in revenues and a significant reduction in our cash position, is that our current dividend will be maintained. The volatile market environment has created opportunities across products, geographic regions, and industry sectors. As the quarter began, merger activity was muted as clients managed through the dislocation of the sudden impact of the COVID-19 pandemic. We were fortunate to have the opportunity to assist our clients with broad-based debt advisory assignments, equity issuance, as well as advising them on restructuring challenges. Our restructuring group has been especially busy. We believe opportunities to assist our clients will continue as accommodative credit markets are giving companies time to address their liquidity needs and recover. We believe there is significant opportunity in several sectors, including energy, consumer, retail and industrials. In the capital markets, there has been extensive opportunity to assist clients in raising capital in both the debt and equity markets, in both the private and public arenas. We had our strongest period ever in equity underwritings, and while we do not participate materially in public debt capital raises, we had the opportunity to assist clients on a number of innovative liability management assignments. The momentum in our debt advisory and equity capital markets businesses has continued into the third quarter. Private capital transactions for sponsors slowed considerably in the beginning of the quarter, but it's picked up more recently as issuers have become comfortable conducting diligence virtually. Activism assignments similarly slowed early in the quarter, but the pace of business has started to recover more recently. Investor clients remains focused on financial markets throughout the quarter, both institutional and wealth management, and trading activity remained high. Significantly, during the quarter, the level of announced M&A activity slowed dramatically, as clients appropriately turned inward driving many of the activities I just summarized. Announced M&A volumes were down 41% in the first six months of 2020, and the number of announced transactions is down 15%. The second quarter was particularly weak, announced global M&A volumes were down more than 50%, compared to last year's second quarter and the number of announced transactions declined 29%. Several of the key conditions necessary for a healthy M&A market were absent in the most -- in most sectors of the economy during the quarter and remain generally absent today. However, the basis of recovery may be forming. The equity markets are currently strong for many sectors. Access to financing and readily available capital and credit began to improve throughout the quarter. And CEO confidence began to slightly improve as the quarter closed, but granted from a low pace. Dialogues and discussions with clients around strategic opportunities have begun to slowly pick up during the last few weeks and processes involving financial sponsors are beginning anew. I am, for the moment, guardedly optimistic about the merger market overall. When the markets began to show sustained stability, CEO confidence will grow, which will drive an increase in strategic activity. Until then, we will continue to actively communicate and engage with our clients to help them navigate the current challenges and to be there with them during the eventual recovery. Let me now turn to our performance in Investment Banking. Our revenues during the second quarter and first six months of 2020 held up well despite increasingly challenging conditions. We sustained our number one ranking for volume of announced M&A transactions over the last 12 months, both globally and in the US among independent firms. Among all firms, we are once again number four in the US in announced volume over the last 12 months, and we ranked number three among all firms in the US based on number of transactions for the first six months of 2020. We continue to work hard to increase our share of the market. We were pleased to continue to advise on some of the most important M&A assignments of the first half, including three of the 10 largest global M&A transactions, and four of the five largest M&A transactions in the United States. Our restructuring and debt advisory teams are extremely busy. Our US restructuring team has worked on the same number of assignments in this first half as it did for the entire year of 2019. We are pleased that we ranked number one among all firms in number of announced restructuring deals and number of completed restructuring deals in the US in the league tables for the first half of the year, and we've been involved in seven of the 10 largest bankruptcies by total actual liabilities year-to-date. These accomplishments stem from our model of integrating our restructuring and debt experts, and our industry-focused bankers. Our deep expertise in restructuring and debt matters was central to our ability to work with a number of large new client. Two recent examples include we were an advisor to Boeing on a $25 billion offering of senior notes, and an advisor to Ford on its $8 billion debt financing. Deep expertise was also a catalyst for our work in specialized markets, for example, PIPEs, where we advised on four of five announced PIPE deals before the financing markets reopened. Our underwriting business has performed extremely well in the market. We served as an active bookrunner or co-manager on six of the 10 largest IPOs in the first half of 2020. We completed our largest ever active bookrun transaction when we advised PNC on the secondary offering of its 22% stake in BlackRock. At the time of the announcement, this deal was the largest deal year-to-date. We advised Danaher on its upsized $3.1 billion offering which was split between common stock, and convertible preferred stock. And we were an active bookrunner on select quote [Phonetic], the first non-healthcare IPO in the COVID environment. While these large assignments contributed meaningfully to our quarterly results, we also participated in many more transactions across a broad range of sectors, demonstrating our ability to work in diverse areas and markets. And while issuance is up across the board, we also more than doubled our overall share in the first six months, compared to the same period last year. Our shareholder advisory and activism defense and our private capital advisory businesses and assignments are already in progress and we move toward completion in many. We are proud to advise on the first-ever proxy contest, to have decided in a virtual annual meeting. It was a successful outcome for our client, and our Private Funds Group completed the first fully virtual fund-raise, which was oversubscribed and attracted both current and new investors. In our equities business, our connectivity with investor and advisory assignment remains elevated as they have become to rely on us for valuable insights during a period of significant market dislocation and our traders continue to help our clients execute in volatile markets. Our people have responded to the challenges of the current environment and have served our clients with distinction. The results I just summarized are testament to their teamwork and their commitment to our clients and to one another. We will remain open to opportunistically adding other high-quality individuals who can bring value to our clients. Finally, as we look toward the second half of the year, we are aware of the many headwinds and uncertainties ahead. Despite the challenges of working apart, our results so far in 2020 demonstrate the power of a team working extremely well together with a consistent focus on clients. It is this kind of collaboration that defines us. And it's a key ingredient to our ongoing success. I very much and looking forward to continuing to lead Evercore through this downturn and eventual recovery in partnership with Ralph, and of course, Roger. I truly believe that our best opportunities are ahead of us, and I'm excited by the prospects and direction of our Firm. Starting with our GAAP results. For the second quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $507.1 million, $56.4 million, and $1.35, respectively. For the first half of 2020, net revenues, net income and earnings per share on a GAAP basis were $934 million, $87.6 million, and $2.08, respectively. Consistent with prior periods, our adjusted results exclude certain items that principally relate to our acquisitions and dispositions and also include the full share count associated with those acquisitions. Specifically, we adjusted for costs associated with the vesting of Class J LP Units, granted in conjunction with the ISI acquisition. For the first half, we expensed $1.1 million related to the Class J LP units. The Class J LP units have been fully expensed. Our adjusted results for the quarter also exclude certain items related to the realignment strategy that began in the fourth quarter of 2019. As we noted last quarter, we expect to incur separation and transition benefits and related costs of approximately $38 million, $8.2 million of which was recorded as special charges in the second quarter of 2020. These charges are excluded from our adjusted results. Year-to-date, we have recorded $30.3 million as special charges related to the realignment initiative. As we mentioned on our last call, we have entered into an agreement with the leaders of our business in Mexico to purchase our broker-dealer there, which principally provides investment management services. Completion of this sale is subject to regulatory approval. We have requested that approval in June and closing is expected to occur shortly after approval is granted. We continue to review additional opportunities in smaller markets. These opportunities could result in further charges in 2020 if pursued to completion. And separately, we completed the sale of a Trust business, which was part of the ECB during the second quarter. Our adjusted results for the quarter and first six months also excluded special charges of $0.4 million and $1.9 million, respectively, related to accelerated depreciation expenses. Turning to other revenues. Second quarter other revenue increased compared to the prior-year period, primarily as a result of gains of $15.5 million in the investment funds portfolio, which is used as an economic hedge against a portion of our deferred cash compensation program. Other revenues for the first six months of 2020 decreased versus the prior year, primarily reflecting a net loss of $6.8 million on this investment fund portfolio. This amount will, of course, fluctuate and a significant market rebound during the quarter drove the quarterly gains. While the quarter gain -- though the quarter gains were not enough to more than offset the first quarter market decline. With regard to non-compensation costs. Firmwide non-compensation costs per employee were approximately $43,000 for the second quarter, down 13% on a year-over-year basis. The decrease in non-compensation costs per employee versus last year primarily reflects lower travel and related expenses and professional fees. As we mentioned on our last call, we began a thorough review of our non-compensation costs before the COVID-19 pandemic. We continue to adapt our operations in response to the current downturn and remain focused on reducing our non-compensation costs, including cutting non-essential costs related to travel, research and subscriptions, and deferring certain capital projects, so we are well positioned throughout the downturn, as well as into the inevitable recovery. Our GAAP tax rate for the second quarter was 24.5%, compared to 24.8% in the prior-year period. On a GAAP basis, the share count was 41.9 million for the second quarter. Our share count for our adjusted earnings per share was 47 million shares, down versus the prior-year period, driven by share repurchases and a lower average share price. Finally, with regard to our financial position, we hold $1 billion of cash and cash equivalents, and approximately $100 million in investment securities as of the end of the quarter, as we had transitioned nearly all liquid assets to cash and cash equivalents in the first half. Our current assets exceed current liabilities by approximately $950 million. As Ralph noted, we continue to monitor our cash levels, liquidity, regulatory capital requirements, debt covenants and all of our other contractual obligations regularly and carefully. We'd now be pleased to answer any questions.

compname reports quarterly dividend of $0.58 per share. compname reports second quarter 2020 results; quarterly dividend of $0.58 per share. qtrly net revenues of $507.1 million decreased 5%. qtrly diluted earnings per share $1.35. qtrly adjusted earnings per share $1.53. evercore - m&a activity remains limited, uncertainty and market volatility have led to delays or, in some cases, terminations of transactions in quarter. in conjunction with employment reductions, expects to incur separation & transition benefits and related costs of about $38 million. $30.3 million of separation and transition costs has been recorded as special charges in first six months of 2020. observed initial decline in equity underwriting activity during early stages of covid-19 pandemic. restructuring, debt advisory and capital markets advisory businesses remain very active.

Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the Company's current expectations. And there can be no assurance that Company's actual future performance will meet management's expectations. With that out of the way we'd like to turn the time over to Mr. Bob Whitman, our Chairman and Chief Executive Officer. We appreciate you joining us today. Really happy to have the opportunity to talk with you. We're really pleased that our second quarter results were strong and even stronger than expected. We believe this again emphasizes the strength, quality, and durability of Franklin Covey's value proposition and of our strong subscription business model. Specifically in the second quarter, as you can see in Slide 3, revenue was strong driven particularly by the strength and growth of All Access Pass and related sales. Gross margins increased 559 basis points compared to last year's already strong second quarter. Our operating SG&A declined by $2.4 million. Adjusted EBITDA increased to $5.1 million, which is the level $1.1 million or 26% higher than the $4 million of adjusted EBITDA achieved in last year's strong pre-pandemic second quarter and so the level significantly higher than our expectation of achieving between $1.5 million and $2 million in adjusted EBITDA for the quarter. Our cash flow was also strong. Net cash provided by operating activities year-to-date increased 26% or $4.5 million to $21.9 million, ahead of the $17.4 million achieved in last year's second -- year-to-date second quarter. And finally, we ended the quarter with approximately $55 million in liquidity, which is up from the $39 million in liquidity we had at the start of the pandemic one year ago. So we're pleased to be in this position. Like to discuss these results in more detail in just a moment, but first some context. This strong and stronger-than-expected performance reflects the continuation and acceleration of four key trends we've discussed in the past three quarters and which continued in this quarter. Specifically, as indicated in Slide 4, these trends are first that the growth of All Access Pass sales has been very strong. Second that All Access Pass related services have continued to be strong and are now even higher than the very strong levels we had pre-pandemic. Third, our international operations have continued to rebound. And fourth, despite continued uncertainty during the first half of the year trends in our education business are really encouraging. I'd like to provide a little more detail on each of these trends. First, as expected, the growth of All Access Pass and related sales which accounts for 83% of our enterprise sales in North America continued to be very strong. As shown in Chart A in Slide 5, you can see total Company All Access Pass pure subscription sales grew 13% in the second quarter to $17.5 million, have grown 14% year-to-date for the first six months and 15% for the total 12 months, the period which is the entirety of the pandemic to date, to $67 million. In addition, as shown in Chart B, total Company All Access Pass amounts invoiced have been growing even faster growing 16% in the second quarter to $22.5 million and 30% year-to-date to $38.4 million. Importantly, much of this 30% year-to-date growth in All Access Pass invoiced amounts has been added to the balance sheet and will establish the foundation for accelerated sales growth in future quarters. Importantly, to us All Access Pass performance has been strong across all the key elements, which we pay attention to. The number of All Access Pass sales to new logos increased meaningfully both in the second quarter and in the latest 12 months. Second, the sale of All Access Pass related services which is delivered primarily live online was also very strong in the second quarter. Chart A in Slide 6 shows the strong booking trend for All Access Pass add-on services, almost all of which are now being delivered live online. As you can see in Chart C, with the beginning of the pandemic in March of last year bookings of services delivered live on-site at client locations were necessarily canceled and the year-over-year dollar volume of services declined with delivered engagements down $6.9 million in North America in the third quarter. However, in the fourth quarter of fiscal 2020 new bookings increased levels nearly equal to those achieved in the fourth quarter of the prior year in '19. These strong bookings in turn drove an increase in the dollar volume of services actually delivered. As a result instead of being up $6.9 million as in the third quarter, the dollar volume of services delivered in the fourth quarter was off only $1.1 million. This same positive trend continued in the first quarter and accelerated in the second quarter with a result that in the second quarter sales were actually higher and year-to-date actually services revenue in North America has exceeded the levels achieved in last year's second quarter and first six months period pre-pandemic. As shown in Chart B, 92% of our services are now being delivered to clients live online and this is important because with 92% of services now being delivered live online our momentum can continue regardless of when and whether organizations return to their offices. Third, as shown in Slide 7, performance in our international operations has also strengthened in the second quarter. Sales in China, Japan, Germany and among other international direct offices and licensee partners continued to improve, continuing the trend established in both the fourth and first quarters. At the start of the pandemic, we had rescheduled substantially all live on-site training engagements in these countries. Since these countries were just starting to sell All Access Pass and therefore did not have a strong base of durable subscription revenue to cushion them, sales in these countries declined significantly compared to the third quarter of fiscal '19 and actually the decline started a little earlier in China in the middle of last year's second quarter with the onset of the coronavirus there. As shown in last year's fourth quarter while still operating well below the levels achieved in the prior year's fourth quarter, sequential sales and sales as a percentage of the prior year in these countries began to improve significantly. Year-over-year sales improved further in the first quarter. We expect sales in these operations to continue to strengthen in the second quarter and we're pleased that they did. As shown in the second quarter, international sales were ahead of our expectations and just 14% lower than in last year's second quarter with most of this decline -- year-over-year decline represented in Japan and UK, which have had a series of ruling shutdowns in their economy, which we expect will strengthen. Finally, as shown in Slide 8, in the Education Division, despite an educational environment which has continued to be very challenging, we've seen a strengthening in the trends of our education business both in the second quarter and year-to-date. This strengthening includes, number one, the number of Leader in Me schools which have renewed or are ready to renew their leader in Me membership increased to 1,059 during the second quarter compared to 725 schools at the same time last year. And second, the number of new Leader in Me schools who have contracted by the end of the first quarter were in the process of contracting and is almost equal to that achieved in last year's second quarter pre-pandemic. Just note that there are also some positive trends in the education market overall despite the challenges, which we all know about. We expect these will help our education business during the remainder of this fiscal year and into next fiscal year. These trends include, one, increasing confidence among those in educational communities that most schools will be opened in the fall of this year, not certain but more confident. Second, that is shown in Slide 9 and as shown on Slide 9, the three COVID-19 stimulus bills passed by Congress in March last year, December and this March dedicated nearly $200 billion toward stabilizing budgets in K-12 schools with a disproportionate amount of that help coming to Title One schools where Leader in Me is often the strongest. And three, the third trend is that social-emotional learning for students called SEL which plays to the strength of Leader in Me continues to gain momentum. Its importance is being talked about everyday in the press. It's becoming increasingly required by districts. Just one more note. To take advantage of the stimulus funding and SEL movement, or social emotional learning, our education team has added to its positioning efforts, helping the schools to take on the issues of learning recovery and the student and teacher mental wellness as these become the pressing topics the education community is trying to address and the Leader in Me is really designed to deliver on. Early indicators suggest this expanded positioning is working well. And so we believe these businesses and market trends will work in our favor. There is still be a difficult environment this year, but we're confident in the future of our education subscription business. We've been conservative about our expectations this year and feel good about our ability to meet those. With this context, I'd like ask -- turn the time to Steve Young and ask him to dive a bit deeper into our performance for the second quarter. I'm pleased to be on the line with you today to talk a little bit more about our second quarter results. So as shown in Slide 10, our performance for the second quarter was stronger than expected and showed positive momentum in almost every front. Our adjusted EBITDA for the second quarter was $5.1 million, an increase, as Bob said, of $1.1 million or 26% compared to last year's second quarter, an amount substantially exceeding our expectation of achieving second quarter adjusted EBITDA of between $1.5 million and $2 million. These results are even more notable given that last year's second quarter was itself very strong. Our cash flow and liquidity positions also increased significantly. As shown in Slide 11, our net cash generated for the quarter of $5.2 million was $4.2 million higher than the $1 million of net cash generated in last year's second quarter. This reflects strong growth in adjusted EBITDA and significant growth in All Access Pass contracts invoiced resulting in our balance of billed and unbilled deferred revenue increasing by almost $13.2 million or 16% to $95.9 million in the second quarter. As shown in Slide 12, our cash flow from operating activities for the second quarter increased $4.5 million or 26% to $21.9 million compared to the $17.4 million in last year's second quarter. This strong cash flow reflects that an additional benefit of our subscription model is that we invoice upfront and collect the cash from invoiced amounts faster than we recognize all of the income. As a result, we ended our fiscal year in August with more than $40 million of total liquidity, comprised of $27 million of cash and $15 million on an undrawn revolving line, which was an amount higher than at the start of the pandemic. We are pleased that we added further to this liquidity during this year's first half. We ended the second quarter with $55 million of total liquidity, comprised of $40 million in cash, which means we had no net debt and with our $15 million revolving credit facility still undrawn and available. So this good performance was driven by, first, strong revenue. As shown in Slide 13, our second quarter revenue of $48.2 million was driven by very strong performance in our North America operations and the continued outstanding performance of All Access Pass. Where as shown in Chart A of Slide 14, companywide All Access Pass subscription sales grew 13% in the second quarter, 14% year to date and 16% for the last 12-month pandemic period. And in addition to the All Access Pass subscription revenue recognized in the quarter, Chart B shows that we also achieved a very strong 16% growth in All Access Pass amounts invoiced to $22.5 million in the second quarter and grew 30% year-to-date to $38.4 million. Most of the significant growth in All Access Pass amounts invoiced was not recognized in the quarter but was added to the balance sheet as deferred revenue. This will, of course, be recognized and help accelerate our results in future quarters. These new invoiced amounts included strong sales of new logos, a continued quarterly and last 12-month revenue retention rate of greater than 90%, as shown in Chart C a large number of All Access Pass expansions and as shown in Chart D a significant volume of multi-year All Access Passes, which increased our unbilled deferred revenue significantly over last year's amount. Sales of services were also very strong in the second quarter. Services revenue in North America grew $7.7 million in the second quarter compared to $7.1 million in the prior year. Second, as shown in Slide 15, the strong All Access Pass sales drove significant growth in our gross margin percentage again in the second quarter. As shown, our gross margin percentage in the second quarter increased 559 basis points to 77.5% from 71.9% in the second quarter of last year. As shown also, our gross margin percentage has increased 459 basis points year-to-date and 392 basis points for the last 12 months. In the Enterprise Division, driven by the significant growth of the All Access Pass and related sales, our gross margin percentage increased to 81.7% compared to 76.1% in last year's second quarter, an increase of 562 basis points. Third, our operating SG&A in the second quarter was $2.4 million lower than last year's second quarter and $6.8 million lower than the first half of last year. And finally, the combination of these factors resulted in adjusted EBITDA growing to the $5.1 million, an increase of $1.1 million or 26% compared to the just over $4 million of adjusted EBITDA achieved in last year's strong second quarter and significantly higher than our expected amount. The strong second quarter also resulted in adjusted EBITDA for the first six months of this year, reaching $8.8 million, a level only $200,000 less than the first half of fiscal 2020 which of course was pre-pandemic. Importantly, as noted, we also had strong invoiced and multiyear sales in the second quarter because most of these new invoice sales were subscription sales. These amounts were not recognized in the quarter, but went on to the balance sheet and added to our balance of billed and unbilled deferred revenue which will add to and be recognized in future quarters. As a result, as shown in Slide 16, our total balance of billed and unbilled deferred revenue increased to $95.9 million, reflecting growth of $13.2 million or 16% to our balance of $82.7 million at the end of last year second quarter. As noted last year approaching $100 million of billed and unbilled deferred revenue is a big landmark for our subscription business and helps to provide significant stability and visibility into our future performance. This strong combination of factors continues to drive our expectation that we will generate very high growth in adjusted EBITDA and cash flow in fiscal 2021 and on an ongoing basis. So we're pleased with the second quarter result and, Bob, turn the time back over to you. Just continuing, as shown in Slide 17, as reviewed last quarter, we expect to generate adjusted EBITDA of between $20 million and $22 million in fiscal 2021 and we are pleased to be off to a very strong start toward this objective. Achieving that range in adjusted EBITDA would represent an approximately 50% increase in adjusted EBITDA compared to the $14.4 million of adjusted EBITDA we achieved in fiscal 2020. And also as we've noted previously, our target is to see adjusted EBITDA now increase by approximately $10 million per year every year thereafter to at least to approximately $30 million in fiscal 2022, to $40 million in 2023 and so on. And these targets reflect our expectation that we'll be able to achieve at least high single-digit revenue growth each year, which is growth of approximately $20 million per year. But on an average approximately 50% of that amount of growth in revenue will flow through to increases in adjusted EBITDA and cash flow. As we also said previously, we fully expect to achieve an adjusted EBITDA to sales margin of approximately 20% over the next few years as adjusted EBITDA approaches $60 million and to become $1 billion market cap company even at the adjusted EBITDA multiple of around 15% that is conservative relative to our adjusted EBITDA growth rate, which is more like 35%. And this of course doesn't reflect the multiple of -- that we'd ever get a multiple of revenue which is often achieved by companies with similarly successful subscription-based business models. So looking forward, as we've discussed, substantially all our growth has been and is being driven by growth in All Access Pass and related sales. This strong growth in All Access Pass and related sales has continued strong through the pandemic you've heard and we expect it to continue to drive significant growth in the future. Like to just briefly highlight three factors that we expect will continue to drive significant growth in our subscription business and which will drive the very significant growth in sales and profitability in the coming quarters and years. As shown in Slide 18, these are first driven by growth in All Access Pass. We expect substantially all of the Company's sales to be subscription and subscription-related within the next three to four years. Second, we expect that the already significant lifetime customer value of an All Access Pass holder will actually continue to increase. And third that as we continue to aggressively grow our salesforce and our licensee network, the volume of new high lifetime value All Access Pass logos will accelerate. Just like to touch on each of these three quickly. First, as indicated in Slide 19 driven by growth in All Access Pass-related sales we expect that substantially all of the Company's sales will be subscription and subscription-related within three to four years. As this almost complete conversion to subscription and related revenue occur we expect virtually the entire Company to be able to generate the same kinds of growth in revenue, gross margins, revenue retention and customer impact we've seen in our subscription business over the past five years. We expect this almost total transition to be driven by the following three things. One -- first, by the continued strong growth of All Access Pass and related sales in the Enterprise Division in North America where All Access Pass already accounts for 83% of sales. As shown in Slide 20, All Access Pass and related sales represented only 13% or $13.7 million of total sales in North America in 2016 when we first introduced All Access Pass. The dramatic, sustained, compounded growth since then has resulted in All Access Pass and related increasing to $94.3 million for the latest 12 months through this year's second quarter. And with annual All Access Pass-related sales growth expected to continue to grow at more than a double-digit pace and with our historical legacy sales now at very low levels and expect to remain flat or decline a little bit further, we expect All Access Pass and related sales to increase to more than 90% of total North America enterprise sales over the next few years. The second major driver to becoming almost totally subscription and related is the conversion of the majority of our international operations to All Access Pass and related in the coming years. In addition to the 83% of North America enterprise sales, which were already All Access Pass, the growth in penetration of All Access Pass has also progressed rapidly in our English-speaking international direct offices. As you can see in Slide 21 from having almost no subscription sales in these offices just five years ago, All Access Pass and related sales for latest 12 months now account for 74% of total sales in the UK and 69% in Australia for the last 12 months. Both these offices are well in their way toward the same 90% penetration we expect to achieve in North America. As you know, our largest international direct offices are in China and Japan, both of which are in the early stages of conversion to All Access Pass but accelerating. Having made the conversion to All Access Pass in the US and Canada, the UK and Australia, we know what the play is. We are confident the China and Japan will also convert the vast majority of their revenue to All Access Pass and related in the coming years. And then the final driver of increased subscription penetration is the other area of the company is our education division, which accounts for 22% of sales. Slide 22 shows within our K-12 business, 70% of our sales were subscription -- were pure subscription for the latest 12-month period through this year's second quarter. Slide 22 also shows the significant increase in subscription sales in our K-12 business over the past years and we expect both our K-12 and higher ed businesses to continue to advance toward the same 90% subscription that we are close to in North America, which we're on the way to in the UK and Australia and which we will achieve also in China and Japan. With this combination of the 82% and everything else moving, we expect virtually the entire business to reflect the higher growth, higher margin, higher retention properties for subscription operations in the coming years as you've seen. And the impact will be what we've already seen in North America and on the total business. I'd now like to ask Paul Walker to address the other two elements behind our expected accelerated growth in our subscription business. For the second factor that we expect will continue to drive significant growth in profitability as shown there in Slide 23, point number two, is that the already significant lifetime customer value of our All Access Pass holders has increased and will continue to increase in the future. As shown in Slide 24, All Access Pass has, first there at the top, a relatively large and increasing pass size of $38,000, up from $31,000 just a year ago. Second, the pass has an annual revenue retention rate of greater than 90% which was the case even throughout the pandemic. Third, a services attachment rate of 44% and I think important to note that that's up from just 17% a few years ago. The combination of All Access Pass, the pass itself and the related attached services now total approximately $55,000 per pass-holding customer and that numbers continue to increase. And then fourth as shown here, the blended gross margin on the pass and the related services combined have a gross margin of greater than 85%. These strong economics are driving a very significant lifetime customer value. In fact, this customer value is quite a bit higher than we had under our previous legacy pre-subscription model. For example, as shown in Slide 25 a prior client, an example client, spending $10,000 in a given year under our legacy model, typically spend about twice that or $20,000 over three years and has a gross margin of about 70%. In contrast, a typical All Access Pass customer today spends approximately $55,000 on a combination of their pass and the related services in their first year, $49,500 in their second year and $44,500 in their third year for a three-year total of $149,000 between the pass and the related services. Stated a minute ago, whereas the old model was about a 70% gross margin, this new blended margin on All Access Pass and related is greater than 85%. That's the second reason. The third reason is indicated here -- as indicated here in Slide 26, the third factor for driving our expectation of significant revenue and profitability growth is that as we continue to aggressively grow our sales force and our licensee network, the volume of new All Access Pass logos will accelerate. The combination of one, our high and growing lifetime customer value; second, our less than one-to-one cost of acquiring a new customer and third our approximately one-year payback on the investment in hiring a new client partner makes the economics of growing our sales force extremely compelling. As shown in Slide 27, over the past five years we've added 74 net new client partners in our direct offices. More than half of these client partners are only midway through their five-year ramp-up to $1.3 million in annual sales volume. We expect these ramping client partners to generate significant revenue growth over the next few years as they complete their ramp and we also have a lot of headroom to add additional client partners. As shown in Slide 28, this is just the US and Canada example alone where we currently have 179 client partners across both enterprise and education. We have room to add at least an additional 435 client partners in the coming years. We expect that the combination of ramping the existing client partners and hiring at least 30 net new client partners each year will allow us to add a significantly increasing number of new logos, which in turn will generate very significant and increasing lifetime customer value. And so we believe that the combination of these three factors will continue to drive significant growth in sales and profitability in the quarters and years to come. And I'll turn it to Steve Young to address our guidance now. And I'll keep the ball. So our guidance for FY '21 as discussed in past quarters is we expect to generate adjusted EBITDA between $20 million and $22 million and we affirm that guidance. This result would be an approximately 50% increase compared to the $14.3 million of adjusted EBITDA achieved last year. This expected growth reflects everything that Bob and Paul talked about, including the continued strong performance of our North America operations. Underpinning this guidance for the year are the following expectations that we talked about last quarter and that are still consistent with our year-to-date results. First, that a significant portion of the deferred revenue on the balance sheet and a portion of the contracted unbilled deferred revenue will clearly flow through to recorded sales as expected. Second, that the All Access Pass will continue to achieve, one, strong growth in both sales and invoiced sales, high revenue retention rates, strong sales of new logos and continued growth in pass expansion and multi-year contracts. We also expect that All Access Pass add-on sales will continue to be strong. Third, that net sales in Japan, China and among our licensees will continue to strengthen. The increase in the All Access Pass sales which we expect to achieve in these countries will, of course, result in a portion of the new sales to be added to the balance sheet as deferred revenue. And four, that in education we expect to continue to achieve strong retention of both schools and revenue among existing Leader in Me schools. And despite the fact that the environment could be challenging and budget-constrained for education in the remainder of FY '21, we still expect to achieve growth in a number of new Leader in Me schools beyond the 320 schools achieved in FY '20. So that's our overall guidance that we are affirming that guidance. For the third quarter of fiscal 2021 we expect that adjusted EBITDA will be between $4 million and $4.5 million compared to the adjusted EBITDA loss of $3.6 million in last year's pandemic-impacted third quarter. Please note that among -- that the amount of adjusted EBITDA expected in Q3 is not only more than $7.5 million higher than last year, it is also higher than the adjusted EBITDA result of $3.1 million achieved in the third quarter of FY '19. So that's our guidance. Now our general targets for years beyond 2021. As we said before, building on the $22 million of adjusted EBITDA that we expect to achieve this year and driven substantially by the expected continued growth of All Access Pass, our target is to have adjusted EBITDA increase by around $10 million per year to around $30 million in FY '22 and to around $40 million in FY '23. These targets reflect our expectations of being able to grow at least high single-digit revenue growth and approximately 50% of that growth in revenue will flow through to increases in adjusted EBITDA. While changes in the world's business outlook and many other factors could impact our expectations, we wanted to share these as our current internal targets and assumptions. So that's our guidance, Bob, and turn the time back over to you. We're delighted to be where we are and grateful and really excited about what's ahead of us. At this point, we'll open it to questions.

q2 sales $48.2 million versus refinitiv ibes estimate of $48.6 million. affirms previously announced guidance & continues to expect adjusted ebitda to total between $20 million to $22 million in fiscal 2021.

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.

q4 earnings per share $0.86. q4 revenue $150.6 million versus refinitiv ibes estimate of $150.8 million. q4 operating earnings per share $0.85. recorded net interest income of $93.4 million in q4 of 2020.

Actual results may differ materially from those contemplated in these statements. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we will also discuss non-GAAP financial measures in talking about our performance. Well, we delivered another quarter of strong domestic results with our Las Vegas Strip and regional segments, reaching all-time adjusted property EBITDA records in the third quarter. I remain in awe of what our talented teams have accomplished this year given the ongoing COVID pandemic. We are emerging from it a stronger company with a sharpened focus on operational efficiencies and providing the best experiences for our guests as we carry out the vision to become the world's premier gaming entertainment company. I continue to express my sincere pride and gratitude of the tremendous effort of our employees, who are the foundation upon which we built our strategic plan and long-term vision. As a reminder, our strategic plan consists of the following four key elements: investing in our people and planet, providing unique experiences for guests by leveraging data-driven consumer insights and digital capabilities, delivering operational excellence at every level, and allocating our capital responsibly to yield the high returns to our shareholders. On last earnings call, we discussed the meaningful steps our company has taken to simplify our story and monetize our real estate. We have reached a number of milestones in this regard. In August, we announced a transaction with VICI and MGP to redeem the majority of our operating partnership units and deconsolidate MGP within our financial reporting structure. In September, we acquired the other 50% interest in CityCenter, monetizing its underlying real estate and are now proud owners of 100% of its operations. In October, we monetized MGM Springfield's underlying real estate as well. And these transactions grant us the financial flexibility to take foothold of front-footed actions to invest in our core business and to maximize growth and pursue opportunities that align to our long-term vision. For example, this quarter, we announced an agreement to acquire the operations of the Cosmopolitan of Las Vegas, a high-quality resort with enviable product offerings, strong brand awareness and complementary customer base making it an ideal addition to our Las Vegas Strip portfolio. We also believe that the synergies we have identified are highly achievable. Now I've mentioned in the past that we are happy with the amount of exposure we currently have in Las Vegas. As such, we are currently in the early stages of a process to sell the operations of the Mirage. Doing so will allow us to maintain our existing Las Vegas exposure, while focusing on the complementary and diverse nature of our offerings in our hometown. I spent the early part of my career at Mirage, I've been a part of that team's opening of the property in 1989. It's a stored property with great brand recognition and a strong customer and loyal following. The campus also sits on approximately 77 acres that provides attractive development opportunities to capture large amounts of foot traffic. Mirage has served us well over the years, and we are certain it will remain a success with a new operator in the future. They're an integral part of what makes that property so special, and I know they will remain strong ambassadors of the brand during this transition. We also remain keen on diversifying our business and further expanding our operations globally. To that end, in September, we announced that our MGM Orix consortium had achieved a milestone in Japan having been selected as a Osaka's partner to build and operate a world-class integrated resort. We are now working with Orix in the city to submit an area development plan to the central government in the coming months and are hopeful and confident that we'll be awarded a license next year. regional markets of significance. This includes the commercial gaming license in New York, for which we believe MGM is well-positioned given our existing operations at Empire City. Moving on to BetMGM. Our sports betting and iGaming venture continues to build on its success every quarter. In the third quarter, BetMGM launched in three new states: Arizona, South Dakota and Wyoming. And within a short nine-day period, BetMGM is now live in 16 markets and is well on its way to 20 by the end of the first quarter of 2022. In the three months ending August, BetMGM commanded 23% share nationwide in both U.S. sports and betting and iGaming. And in the month of August, we believe BetMGM was competing for first place driven by iGaming in which BetMGM remains the clear leader with a 32% market share. We're in the middle of the NFL season and the market remains competitive, however, the team has performed exceptionally well, focusing on ROI-positive marketing spend, and we are encouraged to see early signs of a more rational environment as the season progresses. BetMGM continued momentum through this year has been extraordinary, and we expect full year 2021 net revenues associated with BetMGM will be in excess of $800 million. Finally, we think about opportunities for organic growth in our core business. We have a great network of premier properties across the U.S. that we believe we can better leverage to drive customer choice, increase loyalty and maximize wallet share over time. For example, we recently launched a new tailgating experience at Mandalay for events at Allegiant Stadium. We've hosted Bruno Mars and Lady Gaga's concert of Park MGM, and completed our room remodels at Bellagio's main tower, as well as the pyramid at Luxor with additional remodels ongoing at Aria suites and villas. We also continue to focus on targeting strategies that draw on our competitive advantage to acquire and drive sustainable growth from high-value customers in our business. Over the years, we will invest in customer-centric products and services to execute these strategies, which we will be enabled by advanced marketing practices and enhanced physical and digital experiences. I must say it's simply great to be in Las Vegas right now. We've kicked off the quarter exceptionally strong, anchored by a great fourth of July holiday, better than pre-pandemic casino spend levels, and pent-up demand for the city's wide-scale entertainment relaunch that drew large crowds in the town, especially on the weekends. While the Delta variant impacted our group business during the quarter, we have been able to offset with leisure and casino customers. With cases on the downswing, we have built -- quickly, we built momentum into October. And the level of demand in the marketplace, especially on the weekends, has simply been incredible, October will be another all-time record month. Groups are still coming to town. We have a healthy amount of group room nights on the books through the rest of the year. And we look ahead -- and as we look ahead, we feel good about our group business coming together, anchored by the back half of this year and what's already on the books for '23 and 2024. With the relaunch of large-scale entertainment in July, these offerings are driving visitation to Las Vegas. Allegiant Stadium brings fans to the Strip for events, and we've had some of the best weekends around these events. The Raiders estimate that roughly 60% of tickets are sold to out-of-state fans. And with the majority of the 50,000 to 60,000 people walking to and from Allegiant Stadium over the Hacienda Bridge between Mandalay Bay and Luxor, we are seeing significant broad-based uplift at both properties on event days and even more so on Raiders games. We're also driving our own destiny with a fantastic line of events across our venues, which have been met with great enthusiasm whether it was the McGregor fight at T-Mobile, which by the way, produced our second highest single day for table games win in the company's history, or the debut of our new Americas Got Talent Show At Luxor this week. We continue to demonstrate that the city, and MGM Resorts is a leading destination for exceptional entertainment. Turning to our regional properties. As I mentioned earlier, our regional operations delivered another all-time record EBITDAR and margin quarter driven by continued strength in our rated gaming spend levels as we yield to our higher net worth customers. With the easing of statewide restrictions, we have begun to strategically reintroduce entertainment and F&B at all of our regional properties. And I'm gratified that our customers can once again enjoy the quality experience for which MGM is known. On the cost side, our team continues to focus on productivity across labor, player reinvestment and other streamlining initiatives, and this gives us great confidence in our ability to sustain strong margins as we head into 2022. I'll conclude with some final thoughts on Macau. The market continues to operate well below pre-pandemic levels as varying forms of travel restrictions have limited visitation to the region. The obvious catalyst to Macau's recovery is a sustained resumption of frictionless travel between Macau, Hong Kong and Mainland China, which heavily relies on the higher vaccination rates that will take some time. When the market does rebound more meaningfully, we believe MGM China is well-positioned given its strength in premium mass. Macau remains an important part of our business, and we have high conviction in the future success of this region. We will continue to work with the government, and we are highly confident in ultimately getting our license renewed. Ongoing discussions with the government give us a greater confidence in our belief that the process will be both judicious and fair. We look forward to further promoting the long-term development of Macau's gaming industry and to supporting the government's tourism and diversification goals for the region. I certainly join Bill in gratitude to our entire team for outstanding results this quarter. What a difference in performance and momentum as we have moved through the course of the year. And now with only 60 days until the start of 2022, I could not be more excited about our prospects for the year ahead, and it's all due to the heroic efforts of our thousands of colleagues here at MGM Resorts. Now let's talk about our third quarter results in some detail. Our consolidated third quarter net revenues were $2.7 billion, a 19% sequential improvement over our second quarter results. Our net income attributable to MGM Resorts was $1.4 billion driven by a $1.6 billion net gain from the consolidation of CityCenter. Our third quarter adjusted EBITDAR improved sequentially to $765 million, led once again by our domestic operations. 12 of our 18 domestic properties achieved either all-time or third quarter EBITDAR records, and 15 achieved either all-time or third quarter margin records. This performance was driven by strong leisure, transient and domestic casino demand. We have demonstrated our ability to improve and expand our operations while maintaining cost discipline, all against the backdrop of ramping nongaming revenues and a stabilizing workforce complement. Our Las Vegas Strip net revenues were $1.4 billion, just 8% below the third quarter of 2019. Adjusted property EBITDAR for the Strip was $535 million, 21% above the third quarter of 2019. Hold had a $20 million positive impact on our EBITDAR this quarter. So Hold Adjusted Strip EBITDAR was approximately $514 million. Our Strip margins were 39% in the third quarter, a 943 basis point improvement over the third quarter of 2019 and a slight decline on a sequential basis over the second quarter of 2021. This was driven by a combination of effective casino marketing efforts and continued cost discipline across the business. Availability of labor also improved sequentially each month in the third quarter, and our payroll per FTE remained in line with the third quarter of 2019. We continue to attract strong casino demand and drive healthy performance in the third quarter. Here are a few data points. Third quarter Strip casino room nights were 27% greater than in the third quarter of 2019. Casino revenues per casino room night was up 10% above the third quarter of 2019. And not surprisingly, our slot handle was an all-time quarterly record. All of this translated into third quarter casino revenues increasing to 26% above the third quarter of 2019, contributing 31% of our total Strip revenues in the third quarter, and that compares to our casino revenue mix of 22% back in 2019. Our Strip hotel occupancy was 82% in the third quarter, improving from 77% in the second quarter. And for the first time since reopening, the third quarter's room rates ran higher than pre-pandemic levels, with ADR 10% above that of the third quarter of 2019 or 5% when we exclude Circus Circus. We finished a strong October with occupancy of 92%, the highest since reopening, and we expect November and December to be strong but also to follow seasonal slowdowns as we typically do every year heading into the holidays. As we ramp staffing and our nongaming revenues increasingly become larger contributors to our overall business, I expect margins to come in a bit in our Las Vegas operations. Our customers demand, and are willing to pay for the breadth of offerings we provide here at MGM Resorts. And while healthy margins are an important feature of our business model and financial health, we are focused on growing our absolute EBITDAR dollars, a goal well supported by future upside from the recovery in group events and international visitation. We expect our margins to stabilize well above pre-pandemic levels, resulting from our efficiency and cost-saving efforts. Finally, it's important to note that we closed the CityCenter transactions toward the end of the quarter. And as a result, we started consolidating CityCenter within our Las Vegas Strip results beginning on September 27. Our third quarter Strip numbers include four days of Aria and Vdara's results. Led by Anton Nikodemus and his team, the CityCenter joint venture reported quarter to date ended September 26, adjusted EBITDA of approximately $120 million, with 40% margins. Had CityCenter been consolidated for the full quarter, our Las Vegas Strip EBITDAR would have been approximately 22% higher than what we reported in the third quarter. Its magnitude and growth potential makes CityCenter a difference maker for us financially. Our third quarter regional net revenues were $925 million, just 1% below that of the third quarter in 2019. We delivered adjusted property EBITDAR of $348 million, which was 29% above 2019 levels and 9% above what we achieved in the second quarter of 2021. Our regional casino business further strengthened in the third quarter with our slots and table games volumes improving sequentially by 6% and 11%, respectively, from the second quarter this year. We measure rated player spend levels through theoretical win or theo per day, net of promotions. Our net theo per day for our rated customers reached record levels in the third quarter, led by our younger demographic despite fewer trips as compared with their visitation pre-COVID. Unlike the younger crowd, visitation and spend from our -- from our 65-plus demographic has not yet fully recovered but we're encouraged with the resiliency in this segment's demand, especially through the Delta variant outbreak. Our third quarter regional margins of 38% were another all-time record growing 886 basis points over the third quarter of 2019. While our strong EBITDAR margin has benefited from elevated casino spend, and importantly, also validates the great work that our teams have put into maximizing the effectiveness of our operating model and rethinking how we run our business. Disciplined customer reinvestment is a key component of this, where we track marketing efficiency across all of our properties against specific goals. With the return of more nongaming amenities, we'll continue to exercise prudence in our marketing reinvestment strategies, taking a test-and-learn approach to ensure intended returns on any increases in reinvestment. We're also rightsizing labor in the near term, which has had a near-term favorable impact on our margins, but it's also caused capacity constraints in certain segments of our operations. Overall, I believe our regional margins will stabilize well above 2019 levels. Moving on to BetMGM. Our 50% share of BetMGM's losses in the third quarter amounted to $49 million, which is reported as a part of the unconsolidated affiliates line of our adjusted EBITDAR calculation. Net revenues associated with BetMGM operations were $227 million in the quarter, exhibiting a 17% sequential growth from the second quarter, led by the continued strength in iGaming. This was partially offset by heavier customer acquisition and reactivation spend from BetMGM's successful Arizona launch and the return of football, resulting in September first-time deposits growing to over five times, five times that of September 2020. We know that an omni-channel customer is worth more than a single channel customer. We're particularly excited about the mutually beneficial advantages of our omnichannel strategy with BetMGM, and we remain its top partner for driving new players. In the third quarter, 16% of BetMGM's new players were attributed to MGM, meaning they were active with MGM in the last 12 months. This percentage has remained in a relatively stable range while BetMGM has significantly broadened its reach, illustrating our ability to continually optimize the conversion of M life members to BetMGM. The BetMGM team previously disclosed during their April Investor Day that MGM-sourced players have much lower customer acquisition costs and over five times the marketing ROI when compared to non-MGM-sourced players. What's also encouraging is that in New Jersey, our most mature market, based upon preliminary data, we found that MGM-sourced omni customers are spending more on property at Borgata than they did when they were exclusively land-based. And clearly, the benefit goes both ways. In the third quarter, 42% of our new M life sign-ups have come from BetMGM, which plays a crucial role in our database expansion, a database, which currently stands at over 37 million members. Finally, in Macau, third quarter marketwide gross gaming revenues sequentially declined 26% from the second quarter and was 27% of the third quarter 2019. MGM China's third quarter results were also sequentially lower from the second quarter with net revenues of $289 million and adjusted property EBITDAR of $7 million. Hold adjusted EBITDAR was a $2 million loss. While the latest hurdles surrounding the local outbreaks in Macau negatively impacted travel in September and most of October, the situation has now largely been contained. And with quarantine-free travel having resumed on October 19, the market has seen daily visitation rebound from less than 1,000 in the first 18 days to over 26,000 for the remainder of the month. Our third quarter corporate expense, excluding share-based compensation, was $105 million, which included approximately $18 million of transaction costs for both MGM and MGP. We expect that our net corporate expense will run at a similar level in the fourth quarter, heavily driven by our ramping Japan effort, as well as our investments in IT and digital. In the near term, we also expect to incur incremental costs related to our recently announced transactions. We believe repurchasing our shares is an attractive use of capital. In the third quarter, we repurchased 17.2 million shares for $687 million, and we purchased an additional 1.8 million shares for $80 million in the fourth quarter through today. That's $1.1 billion of share repurchases year to date, or approximately 5% of our market cap, and that is this year since March. Over the past few months, we announced some significant deals that simplify our corporate structure, further bolster our liquidity position and advance our vision to be the world's premier gaming entertainment company. We closed the CityCenter transactions in the third quarter. In October, we closed the MGM Springfield transaction for cash proceeds of $400 million. Our transaction with VICI is on track to close in the first half of next year, subject to regulatory approval, at which point we will bring in an additional $4.4 billion in proceeds. In September, we announced an agreement to acquire the operations of The Cosmopolitan of Las Vegas for $1.625 billion. This represents a multiple of approximately eight times adjusted EBITDA, inclusive of expected operational synergies, and revenue growth opportunities that we have identified. The transaction is expected to close in the first half of next year, subject to regulatory approvals. As of September 30, our liquidity position, excluding MGM China and MGP, was $6.4 billion, or $9.6 billion when adjusted for the Springfield, VICI and The Cosmopolitan transactions. So our approach to capital allocation is critical. And our approach to capital allocation will be as follows. First, we'll maintain a strong balance sheet with adequate liquidity. Second, we will return cash to our shareholders. And finally, when assessing potential growth opportunities, we'll invest where we have clear advantages, and will exercise discipline in measuring prospective returns for our shareholders. But as you can all tell, we have a lot going on.

qtrly consolidated net revenues of $2.7 billion, an increase of 140% compared to prior year quarter. qtrly mgm china net revenues of $289 million, an increase of 517% compared to prior year quarter.

You can access this announcement on the Investor Relations page of our website, www. aam.com, and through the PR newswire services. You can also find supplemental slides for this conference call on the Investor page of our website as well. For additional information, we ask that you refer to our filings with the Securities and Exchange Commission. Information regarding these non-GAAP measures as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website. With that, let me turn things over to AAM's Chairman and CEO, David Dauch. Joining me on the call today are Mike Simonte, AAM's President; and Chris May, AAM's Vice President and Chief Financial Officer. To begin my comments today, I'll review the highlights of our third quarter 2021 results. I'll then touch on some exciting business development news, including electrification announcements with REE and our largest customer, General Motors. And lastly, we'll discuss the ongoing supply chain challenges and our financial outlook. After Chris covers the details of our financial results, we will then open up the call for any questions that you may have. AAM delivered solid operating performance in the third quarter of 2021 despite unprecedented supply chain challenges that impacted industry production in the third quarter. When we reported second quarter earnings, our expectation was that the worst of the shortage was behind us. This turned out not to be the case. Production volatility stemming from the semiconduct -- chip shortage took another leg down, which eventually forced OEMs to idle production at many facilities, including their full-size truck plants that were largely protected previously. However, the AAM team did a great job in managing these obstacles and factors under our control, resulting in solid financial performance. AAM sales for the third quarter of 2021 were $1.21 billion, down approximately 14% compared to $1.41 billion in the third quarter of 2020. The decrease in our revenues on a year-over-year basis primarily reflects the impact of the semiconductor supply chain disruptions of nearly $245 million. North American industry production was down approximately 25% according to third-party estimates. Light truck production was down 20% year-over-year and volumes on our core platforms decreased significantly from a year ago. The industry is at a point where a lack of inventory has begun to impact retail sales. Days supply on key products that we support were at or below 30 days with certain platforms in single digits and large SUVs closer to 20 days. Once the supply chain issues are resolved, which will take some time, we foresee an extended recovery to meet customer demand and replenish dealer inventories. AAM is in a great position to benefit from the strong demand in light trucks, especially pickups and SUVs and the replenishment of crossover vehicles. AAM's adjusted EBITDA in the third quarter of 2021 was $183 million or 15.1% of sales. This compares to $297 million last year. Excluding the impact of metal markets and currency, our EBITDA margins would have approximated 19%. This is a testament to our optimization efforts and our strong cost control, yielding strong EBITDA conversion. AAM's adjusted earnings per share in the third quarter of 2021 was $0.15 per share compared to $1.15 in the third quarter of 2020. As for cash flow, we continue to generate positive free cash flow in the third quarter. AAM's adjusted free cash flow was approximately $69 million. Earlier this year, we announced a development agreement with REE. We are pleased to share that we have secured an initial platform business award with our partner, and AAM plans to supply REE with high-performance electric drive units for its highly modular and disruptive REEcorner technology that enables full flat EV chassis for multiple applications. This is a great electrification opportunity for AAM and its validation of our innovative industry-leading advanced electric drive technology, and we're excited to build upon this win with REE going forward. Investors and other interested parties may have an opportunity to see our will and drive units and other EDU portfolio on display at trade shows beginning in January of 2022. In addition, AAM announced today that we will be supplying track right differentials for the new GMC Hummer EV. These differential subassemblies distribute power generated by the electric drive motor to the left and right wheels. This enhances the experience for drivers looking for exceptional vehicle performance, both on and off road. We are very happy to support GM on this great product, and we look forward to spy GM for their future electric driveline needs. Our strategy and approach to the market continues to take hold. Our opportunity to succeed in full electric drive units, subassemblies and components are well displayed with these two announcements. As we all know, electrification is coming fast, and it's a great growth opportunity for AAM. We have a strong product portfolio in EDUs and e-beam axles, gearboxes, subassemblies and components. As such, our technology is guarding interest around the globe from new and established OEMs from small cars to light commercial vehicles. We are in numerous discussions with manufacturers, and our business prospects look very positive. Because of our deep driveline experience, we believe we have an edge among the competition, especially when it comes to systems integration and NVH. Before I transition to Chris, I want to talk about the industry supply chain challenges and our financial guidance. What the industry has and continues to experience is unprecedented. A lack of semiconductor availability continues to drive high production volatility with very minimal warning. Additionally, rising commodity costs, labor shortages, logistical challenges and port delays continue to stress the value chain. We are hoping to see semiconductor stabilization over the next successive quarters, but it's difficult to ascertain when the industry will return to normal as global demand for chips remain strong and new capacity will take time to come online. We expect this issue will continue well into 2022 and possibly into 2023. That said, our priority at AAM is to execute our game plan, which means to produce high-quality products, deliver on time and be cost-efficient to support our customers and protect the continuity of supply regardless of the operating conditions, and we're doing just that. One of the management's top priority is to diligently optimize the cost structure and improve efficiency, and we are doing that. Now let's discuss our financial guidance. Operating uncertainty continues in the fourth quarter, especially with the availability of semiconductors and rising commodity prices. And as such, we have updated our guidance. For the full year, we now target revenue in the range of $5.15 to $5.25 billion, adjusted EBITDA in the range of $830 million to $850 million and adjusted free cash flow of approximately $400 million. In conclusion, we had a good and solid operating quarter. We did what we do best, that is we delivered operational excellence. The team delivered positive adjusted earnings and adjusted free cash flow under a very difficult operating environment. We are confident that our strong operating fundamentals should support solid financial performance, especially as volumes recover over time. In the meantime, we continue to secure our core truck, SUV and crossover business and generate strong cash flow to fund our electrification future. In addition, we will continue to invest in advancing our electrification platform technology and our overall EV portfolio to serve multiple vehicle segments. Our goal is to be the electrification supplier of choice for the broader OEM community, and we are making primary index-related inputs to metal materials that we purchase. You may recall, we hedged this risk with our customers by passing through the majority, but not all of these index-related changes. The metal portion of this column reflects these elevated pass-throughs on a year-over-year basis. For the first three quarters of 2021, metal markets in a foreign currency have increased our revenues by approximately $212 million, and we expect this to be well over $300 million for the full year. Now let's move on to profitability. Gross profit was $165.6 million, or 13.7%, of sales in the third quarter of 2021 compared to $249.8 million in the third quarter of 2020. Adjusted EBITDA was $183.2 million in the third quarter of 2021 or 15.1% of sales. This compares to $297.1 million in the third quarter of 2020. You can see a year-over-year walk down of adjusted EBITDA on Slide 8. The return of COVID volumes added approximately $16 million, but was more than offset by the negative impact from the production volatility stemming from the semiconductor disruptions in the amount of $83 million. Last year, we also had a $22 million benefit from an ED&D recovery and a customer settlement that did not recur in 2021. But even through all these disruptions in the quarter, AAM still delivered $17 million of net performance. As I just mentioned in our sales highlights, we are facing significant year-over-year increases in commodity metal markets. The retained portion impacting this quarter plus foreign currency was $31 million. You can see on our EBITDA walk, the dynamic this has on our margin calculations. If you exclude the impact of this pass-through dynamic, our margins would have been significantly higher, as noted on our walk. Let me now cover SG&A. SG&A expense, including R&D, in the third quarter of 2021 was $90.5 million, or 7.5% of sales. This compares to 4.7% of sales in the third quarter of 2020. The AAM's R&D spending in the third quarter of 2021 was $34.7 million compared to $18 million in the third quarter of 2020. Recall, we received significant engineering and development recovery last year of approximately $15 million. The third quarter of 2021 incurred a sequential quarterly increase in R&D, in line with our expectations. We will continue to focus on controlling our SG&A costs, while at the same time, investing in technologies and innovations to achieve our pivot to electrification. We do expect R&D spend to increase in the coming quarters as we launch new programs and continue to pursue meaningful opportunities in the electric vehicle business as we experienced significant customer interest in our new products and technology. Now let's move on to interest and taxes. Net interest expense was $47 million in the third quarter of 2021 compared to $50.5 million in the third quarter of 2020. We expect this favorable trend to continue as we benefit from continued debt reductions. In the third quarter, we redeemed $100 million of our 6.25% notes due 2025 and refinanced the remaining $600 million balance. In the third quarter of 2021, we reported an income tax benefit of $13.6 million compared to a benefit of $22.5 million in the third quarter of 2020. As we near the end of 2021, we expect our effective tax rate to be approximately 10% to 15%. We would also expect our cash taxes to be in the $25 million to $30 million range. Taking all these sales and cost drivers into account, our GAAP net loss was $2.4 million, or $0.02 per share, in the third quarter of 2021 compared to an income of $117.2 million, or $0.99 per share, in the third quarter of 2020. Let's now move on to cash flow and the balance sheet. Net cash provided by operating activities for the third quarter of 2021 was $89.8 million compared to $249.5 million last year. Capital expenditures net of proceeds from the sale of property, plant and equipment for the third quarter of 2021 was $33.2 million. Cash payments for restructuring and acquisition-related activity for the third quarter of 2021 were $9 million. The net cash outflow related to the recovery from the Malvern fire we experienced in September of 2020 was $3.5 million in the quarter. However, we anticipate the Malvern fire to have a neutral cash impact for the full year as timing of cash expenditures and cash insurance proceeds aligned over time. In total, we would expect $55 million to $65 million in cash payments for restructuring and acquisition costs in 2021. Reflecting the impact of this activity, AAM generated adjusted free cash flow of $69.1 million in the third quarter of 2021. From a debt leverage perspective, we ended the quarter with net debt of $2.6 billion and LTM adjusted EBITDA of $930.2 million, calculating a net leverage ratio of 2.8 times at September 30. We are focused on improving the balance sheet and delivering on our goal to improve our leverage this year. We have made meaningful progress in reducing our gross debt outstanding and reducing our leverage ratio by more than a full turn as of the end of the third quarter. Before we move on to the Q&A portion of the call, let me close out my comments with some thoughts on our 2021 financial outlook. We expect adjusted EBITDA to be in the range of $830 million to $850 million. Just as a reminder, investors need to consider the impact of the metal market pass-throughs as it relates to our margin calculations when comparing from period to period. In periods and environment such as this, it is meaningful. We expect to generate approximately $400 million of adjusted free cash flow in 2021, or nearly 50% adjusted free cash flow to adjusted EBITDA conversion. We expect our capital expenditures at less than 4% of sales as our capital reuse and optimization efforts continue to deliver results. Our updated outlook is based on the latest and best information we have regarding customer production schedules. We continue to assume our customers will prioritize building full-size pickup trucks and SUVs through the end of the year with minimal disruptions. However, the operating environment remains choppy with multiple factors posing a risk to the supply chain. As volumes begin to normalize, we should be in a great position to leverage that environment to generate profits and cash flow. This in turn will be used to support our highly advanced research and development initiatives in electrification and solidly position us for future profitable growth aligned with our capital allocation priorities. We have reserved some time to take questions. So at this time, please feel free to proceed with any questions you may have.

q3 adjusted earnings per share $0.15. q3 loss per share $0.02. q3 sales $1.21 billion. for fy 2021 targeting sales in range of $5.15 billion - $5.25 billion. for fy 2021 targeting adjusted ebitda in range of $830 million - $850 million. adjusted ebitda in q3 unfavorably impacted by lower sales as result of semiconductor shortage by about $83 million. sales for q3 of 2021 were unfavorably impacted by semiconductor chip shortage by approximately $245 million.

Actual results may differ materially from those contemplated in these statements. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we'll also discuss non-GAAP financial measures in talking about our performance. Over the past few months, we've had the honor and the privilege of welcoming back guests back to our properties at a remarkable pace, both in Las Vegas and our regional markets. It's been rewarding to see our guests taking in all the world-class gaming and entertainment experiences that only MGM Resorts can provide, and it's been equally gratifying to witness the tremendous effort of our employees delivering these experiences. We have an amazing team of people here at MGM Resorts, the best in the business. I can't say enough how critically important they have been, will continue to be to our success as we carry out our vision to be the world's premier gaming and entertainment company. In fact, investing in our people and our planet is the foundation upon which we've built our strategic plan for the company's long-term vision. Our strategic plan consists of the following four priorities: investing in our people and our planet, providing unique experiences for our guests by leveraging data-driven customer insights and digital capabilities, delivering operational excellence at every level, and allocating our capital responsibly to drive the highest returns for our shareholders. In driving our vision, we have long discussed our goals of simplifying our corporate structure and monetizing our real estate premium valuations to become asset light. We've been busy on this front. And over the past 90 days, we've meaningfully advanced this strategy. In May, we announced an agreement to sell and lease back MGM Springfield, underlying real estate to MGM Growth Properties. We followed that news in July with an agreement to purchase Infinity World's 50% interest in CityCenter and then to subsequently sell and lease back the underlying real estate to Blackstone at an unprecedented cap rate for gaming asset. And we're very excited to become the full owners of Aria and Vdara operations soon. He's been a great partner for many years, and we wish him the very best in the future. And finally, as you know, we have spent significant time and effort working on the best solutions for our stated goal of de-consolidating MGP. This is a great win for MGM and MGP, and we're excited by our new long-term partnership with VICI. Again, I'm incredibly proud of our finance, operating and legal teams, who have been accomplishing an astonishing amount in a short order to get these transactions across the finish line. Combining these transactions grant us greater financial flexibility by the means of $11.6 billion in domestic liquidity and importantly, they allow us to intensify our focus on maximizing growth in our core business and pursuing opportunities that align to our long-term vision. In terms of such opportunities, we remain committed to our sports betting and iGaming joint venture, BetMGM, which continues to impress. Having expanded its net revenues and its leadership position in the second quarter, BetMGM is the No. 2 operator in the space nationwide, and in the second quarter, it commended 24% share of its live markets. BetMGM remains a clear leader in iGaming, having reached a 30% market share in the second quarter, and we also continue to see the benefits of customer acquisition cross pollinization between MGM and BetMGM. In the second quarter, 15% of BetMGM's new players came from MGM and 31% of MGM M life sign-ups came from BetMGM. We'll strategically invest in our digital capabilities and customer growth strategies, driving innovation and a deeper customer loyalty throughout technology led customer-centric experiences, products and services. These efforts will be led by Tilak Mandadi, who we recently hired as our chief strategy, innovation and technology officer. Tilak is a visionary, a results-driven leader who has spent several decades of experience at both Disney and American Express, where he led similar initiatives. Tilak will also be leading our relationship with BetMGM joining its board of directors. He's another fantastic addition to our senior leadership team and complementary to the deep bench we've now built with recent additions of Jonathan as CFO, and Jyoti Chopra as our chief people, inclusion and sustainability officer. I have no doubt that will be invaluable to the company's future. We'll also increase our diversification into Asia through the footprint expansion in Macau and the integrated resort opportunity in Japan. As a matter of fact, we officially submitted our RFP as a sole bidder for the Osaka license a couple of weeks ago, which starts the clock on a three-month review process. We and our local partners, ORIX, remain excited by the opportunity, which we expect will yield very attractive returns. We look forward to Osaka reviewing our proposal, and hopefully, I'm confident, we'll ultimately be named Osaka's designee operator early this fall. And lastly, we continue to study key regional markets of significance, including commercial gaming license at Empire City in New York. We reported a great second quarter at our domestic properties, driven by pent-up consumer demand and high domestic casino spend, as well as our ability to yield our business and maintain our cost discipline efforts. In fact, we delivered all-time record margins in both Las Vegas and regional segments, as well as all-time record EBITDA quarters at our regional properties. Further, 11 of our 17 domestic properties had all-time record quarters and slot gross win. And that momentum continued into July with another record month that exceeded June. I can't tell you enough under these circumstances how pleased and proud I am of our entire team. We have righted the ship, and we're going full steam ahead. In Las Vegas, our weekend volumes are back to normal, driven by leisure and domestic casino customers with ADRs now surpassing 2019 levels. The weekday while improving continued to lag the weekends in the second quarter due to lower level of group business. That being said, June kicked off a series of citywide events coming to town such as World Of Concrete and Surfaces, and we anticipate a return of groups here in the third and fourth quarter. Feedback from meeting participants have been very positive. Our lead volumes in the year for the year, production is now close to normal levels, which we expect will help midweek occupancy uplift in the back half of the year. We continue to believe that full convention business recovery will be post '21 event, solidifying itself in the second half of 2022, and we remain pleased with how our '22 and '23 group calendar is shaping up, as well as contract commitments for the future. In July, we relaunched entertainment with a great line of events that was met with overwhelming demand and now with Allegiant Stadium hosting large-scale entertainment, we can now drive more meaningful compression, especially at the mid to south end of the strip. Consider the entertainment programming a few weekends ago, we had Garth Brooks at Allegiant Stadium, we had a McGregor fight at T-Mobile and Bruno Mars at Park MGM, selling over 98,000 tickets within our properties distance situated to capture significant amount of this foot traffic. While our conviction in the long-term viability of our business remains stronger than ever, the recent rising number of COVID cases and the subsequent actions taken by the CDC and local regulators and our reinstituted mask mandates here in Las Vegas of note is a reminder that the pandemic is not completely behind us. In Las Vegas, we continue to facilitate vaccinations among our employee base and have partnered with the Governor's Office to host multiple vaccination clinics including one at T-Mobile Arena, another on the strip at The Park, and we're using the full weight of our business and resources as part of this effort, including significant incentive offers to both guests and employees, who get vaccinated or bring friends and family to get vaccinated. We've also invested in ongoing educational employee campaigns, as well as providing easy access to all three vaccines on pop-up clinics at all of our properties. In July, we implemented a mandatory COVID testing program for all of our Las Vegas employees, who have not proven proof of vaccination. We've taken the virus very seriously, and as always, the health and safety of our guests and employees is our top priority. At this time, it's too early to speak to any meaningful impact to our business, but we are monitoring the situation closely. And we'll continue to proactively work safely to accommodate guests and our properties. July, as I mentioned before, was the best month this year and by far in terms of operating performance, we ultimately feel great about our long-term positioning in Las Vegas. The last few months have inevitably proven that the city remains resilient to a top destination for both business and specifically for tourism. Our regional properties that I mentioned earlier, delivered their best quarter to-date yet in terms of EBITDA. We are encouraged by the stability of demand we saw at our properties as restrictions further eased into July, and I'm also pleased that our focus on cost and productivity across labor, player reinvestment and other streamline initiatives remain a key priority for our regional teams. And finally, on Macau, in the second quarter, we delivered sequential improvements over the first, amid a choppy GGR environment that remains well below pre-pandemic levels. Despite this, MGM China, given our strength in premium mass, continued to outperform our former position in the marketplace. We believe the rate of Macau's recovery will continue to hinge on broader sentiment as we pace the vaccinations rollout throughout the regions, which will ultimately lead to sustainable easing of travel restrictions. With the Guangdong outbreak quickly contained, July was off to a better start when we saw visitation and business volumes striking a pickup again. And while the region had felt some additional speed bumps in recent days, with the government's expeditions efforts to contain the outbreak and border restrictions easing over time, we expect gradual growth demand for travel to Macau throughout the end of the second half of the year. We remain committed to elevating our footprint in Macau and will soon be increasing our upscale suite inventory. We have finalized the construction and fitting in the South Tower suites and MGM Cotai and are pleased with the final product, which we believe will be well received by our premier mass clients. We are now in soft opening in order to make final adjustments to our product and to achieve a level of service that meets our high-quality of standards. We expect to officially open it later this month, and further, we completed the gaming space refresh in MGM Macau and are now looking at remodeling our villas. At both properties, we're enhancing our F&B options focused on the gaming floors, and over time, we have the ability to build out another hotel tower at MGM Cotai, along with meaningful entertainment assets to diversify our offerings. I am confident in Macau's longer-term growth prospects and firmly believe our investment in premium product positions us well for a broader recovery. With that, I'll turn this over to Jonathan to discuss our second quarter in more detail. Let's first discuss our second-quarter results. Our consolidated second quarter net revenues were $2.3 billion, significantly better sequentially over our first-quarter results. Our net income attributable to MGM Resorts was $105 million, and our second-quarter adjusted EBITDAR improved sequentially to $607 million -- $617 million, once again, heavily driven by our domestic operations. Our Las Vegas strip net revenues in the second quarter were $1 billion, 31% below the second quarter of 2019 and 28% below, excluding Circus Circus Las Vegas, which was sold at the end of 2019. Despite the lower top line, we delivered far superior EBITDAR results. Our second-quarter adjusted property EBITDAR was $397 million, which is 5% below the second quarter of 2019 and just 1% lower, excluding Circus. Hold had a $6 million negative impact to our EBITDAR this quarter, so Hold-adjusted strip EBITDAR in Las Vegas was $403 million. Our strip margins improved almost 1,100 basis points to an all-time record of 39.5%. And this does not include the results of CityCenter, which generated $120 million of EBITDAR at a 46% margin. As Bill mentioned in his remarks, our margin improvement was driven by a combination of strong leisure and casino demand, continued cost control and the operating leverage inherent in our business. Naturally, with limited convention business and entertainment, we are driving more visitation from customers that we know. And our second-quarter casino room mix was 9 points above pre-COVID levels. Furthermore, our second-quarter casino revenues were 15% above 2019 levels and contributed to 35% of our overall net revenues in the second quarter. This compares to roughly 22% in all of 2019. We're seeing particular strength in the slot customer. Our second-quarter slot handle was 23% greater than that of the second quarter of 2019 on an apples-to-apples basis, excluding Circus Circus. And for the first time since being impacted by COVID, we are now attracting the older 65-plus demographic to our strip properties at levels commensurate with what we were seeing pre-pandemic. Our second-quarter occupancy was 77%, an improvement from 46% in the first quarter with weekends and weekdays at 94% and 70%, respectively. June occupancy was 83%, with weekends and weekdays at 96% and 79%, respectively. July occupancy was 86%. As pent-up demand -- as pent-up leisure demand stabilizes longer term, we believe this will be offset by ramping group business, and I echo Bill's comments that we're very pleased with the current trajectory of that segment's rebound. I'll close on Las Vegas with some thoughts on margins. Longer term, we believe that the 40% margins we achieved this past quarter will stabilize a bit lower as casino spend and overall business mix normalizes, and also as we ramp up staffing to more sustainable levels in order to serve our guests more fully. However, I know that we have further upside in overall profit dollars as our top line continues to rebound with group business and entertainment. I'm also confident that our focus on operational excellence and cost efficiency efforts will allow us to achieve strip margins well above 2019 levels long term. Now, on to our regional operations. Our second-quarter regional net revenues of $856 million were aided by the continuing easing of statewide restrictions, and we're just 6% below that of the second quarter in 2019. We delivered adjusted property EBITDAR well over 2019 levels, 22% to be exact, to $318 million. Much like in Las Vegas, we're driving success in casino, with second-quarter casino revenues outpacing 2019 levels by 8%, primarily due to slots and our higher-end customer base. Our 50 to 64 age demographic, of which I'm a proud member, is now at 2019 levels, and we're attracting more of the 65-plus age demographic. Our second-quarter regional margin of 37% was also an all-time record, growing 855 basis points over the second quarter of 2019 and sequentially by 316 basis points over the first quarter. Our regional margin growth is a continued testament to all the great work that our teams have put into maximizing the effectiveness of our operating model and rethinking how we run our business. This ranges from marketing reinvestment to procurement, from energy utilization to labor management. And the breadth of our efforts gives me confidence that we will deliver on the $450 million of cost savings domestically, which we previously identified. Our margins of the regions will likely normalize a bit lower from second-quarter levels longer-term as casino spend adjusts over time and as we reintroduce F&B and entertainment, especially in our destination markets. We also expect to rightsize labor in the near term, which has certainly had a favorable impact on our margins, but it's also become a bottleneck in certain segments of our operations, negatively impacting our EBITDAR. Still, similar to Las Vegas, I know that we can achieve regional margins well above 2019 levels longer term. Our joint venture BetMGM is clearly the No. iGaming and has solidified its No. 2 position nationwide in U.S. sports betting and iGaming. Net revenues associated with BetMGM operations grew 19% sequentially from the first quarter to $194 million in the second quarter. This was driven by growth in both iGaming and online sports betting verticals as a result of increased customer acquisition and strong retention that yielded more first-time deposits and actives. These results are especially impressive during the quarter with arguably minimal exogenous catalysts, no major state launches, a seasonally low sports calendar and a further reopening of brick-and-mortar casinos. Our share of BetMGM's losses in the second quarter amounted to $46 million, which is reported as a part of unconsolidated affiliates line of our adjusted EBITDA calculation. We remain excited about BetMGM's strong positioning in this fast-growing marketplace and both partners remain committed to its long-term success. Finally, in Macau, marketwide GGR sequentially improved 7% in the second quarter, but still remained depressed at only 35% of second-quarter 2019 levels. Nevertheless, as Bill mentioned earlier, MGM China outperformed the market, with its GGR having recovered to 43% of pre-pandemic levels. MGM China's second-quarter net revenues were $311 million, up slightly from the first quarter. Adjusted property EBITDAR of $9 million also improved quarter over quarter from $5 million in the first quarter. Hold adjusted EBITDAR was $13 million on 2.75% VIP win in second quarter compared to 3.29% in the first quarter. Mass Hold was also lower sequentially. Our second-quarter corporate expense, excluding share-based compensation, was $90 million, which included $6.5 million in transaction costs. We expect that our quarterly net corporate expense will run a bit higher going forward as we ramp our investments in IT, our digital offerings and our IR efforts in Japan. In the near term, we also expect to incur incremental costs related to our recently announced transactions. We were active share repurchasers in the second quarter, having repurchased 5.6 million shares for $220 million. We believe our shares are attractively valued and we've purchased an additional 6.8 million shares for $263 million in the third quarter through today, bringing us to $615 million of share repurchases year to-date. Bill talked about our recent milestones in simplifying our story and becoming asset light. We sold MGM Springfield's underlying real estate to MGP for $400 million at a 13.3 times rent multiple or a 7.5% cap rate. We also transacted on CityCenter, effectuating a high watermark on the sale of real estate assets at an 18.1 times rent multiple or a 5.5% cap rate and acquiring ownership of 100% of the operations of ARIA and Vdara at an implied multiple of 8.9 times based on CityCenter's 2019 adjusted EBITDA from resort operations of $425 million. CityCenter's second-quarter results demonstrate the premium quality of the property, the excellence of its management team and its cash flow generating potential with adjusted EBITDA of $120 million, 13% above the second quarter of 2019 and with margins of 46%. And finally, we announced today the transaction with VICI, whereby we will receive $43 per unit or approximately $4.4 billion in cash for a majority of our MGP OP units. As part of the agreement, we'll hold an approximately 1% stake in the newly combined company valued at nearly $400 million. We will enter into an amended and restated master lease with VICI, with initial year's rent at $860 million. The transaction values MGP at an implied 17.5 times pro rata EBITDA multiple for a 5.8% cap rate. So it's been a busy and a productive quarter. We expect to close on CityCenter by the end of the third quarter and Springfield by the end of the year, and our transaction with VICI will likely take us into the first half of next year to close, and all of these transactions are subject to regulatory approvals. The end result is a cleaner, more focused company, a streamlined reporting structure and a stronger deployable cash position to maximize shareholder value and advance our vision to be the world's premier gaming entertainment company. As of June 30, our liquidity position, excluding MGM China and MGP, was 6.5 billion and 11.6 billion adjusted for the aforementioned announcements. On last quarter's call, I highlighted our approach to capital allocation, and it is certainly worth reiterating today. First, we'll maintain a strong balance sheet with adequate liquidity. Second, we'll return cash to shareholders, which we have done convincingly thus far this year. We will continue to take a disciplined and programmatic approach to shareholder -- share repurchases for the balance of the year. And third, when assessing potential growth opportunities, we'll invest where we have clear advantages. And will exercise discipline in measuring prospective returns for our shareholders. As we evaluate uses of our shareholders' capital over time, these priorities will act as a blueprint for our decision-making process. We're very pleased, obviously, with all we've accomplished thus far this year. Our strategic actions, together with the improving domestic backdrop, continued focus on operational excellence, and strong conviction in Macau's recovery, positions us very well for the future. There's a lot to be excited about when we think about our path on delivering our long-term vision. We remain focused, disciplined and ultimately transparent.

qtrly mgm china net revenues of $311 million, an increase of 836% compared to prior year quarter. qtrly consolidated net revenues of $2.3 billion, an increase of 683% compared to prior year quarter.

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, 2019, and other reports that it may file from time to time with the Securities and Exchange Commission. Before we begin, I want to again recognize our entire MFA team. This has obviously been a very challenging year and despite what the world has thrown at us, our team continues to persevere regardless of the circumstances. Their dedication and commitment has been extraordinary. From a financial-results standpoint, the third quarter of 2020 was unquestionably the most normal quarter of 2020, but that's not really saying very much. Financial markets continue to be awash in liquidity and the interest rate environment continues to feature historically low rates and muted volatility. Yet the third quarter of 2020 was also very much the story of market uncertainty. Between the looming election still not decided, government stimulus measures or not, the second wave of COVID-19 diagnoses, and the possibility of future lockdowns, shutdowns, or other economically restrictive measures, it's clear that we are not out of the woods and it seems almost impossible to fathom what the upcoming holiday season will be like, given this backdrop. Recall that MFA entered the third quarter of 2020 only four days out of forbearance with a fortified balance sheet and substantial liquidity. Given our experience over the prior four months, we were understandably not inclined to immediately and aggressively pursue new investments and to add leverage. But that decision was even easier, given the investment environment, which was challenging both in terms of investment availability and relative cheapness. However, as we mentioned in our second-quarter earnings call, we saw significant opportunities to improve our earnings capability through liability management, and I'm happy to report that we have made substantial progress on this front. While the results of these efforts are largely absent from our third-quarter financial results, they will be somewhat in evidence in the fourth quarter and very much in evidence in 2021. What is apparent in our third-quarter financial results is the continued price appreciation of our whole loan portfolio that we fought so hard to retain through the crisis months earlier in the year, contributing to both material economic book value appreciation on carrying value assets and income on fair value assets. In addition, our abilities to actively manage residential mortgage credit assets, a capability that we began to develop as early as 2013 has also been reflected in our financial results as we achieved better-than-expected results on credit-sensitive assets, resulting in reversals of prior credit reserves which flow through income. Overall, we are pleased with our progress since July 1 of this year. We have taken definitive steps to enhance our go-forward earnings capability and have a clear path to continue this success over the next several quarters. Our asset-based liabilities are still largely of a very durable nature. We continue to actively manage credit-sensitive assets to achieve good results, and we look forward to continuing to enhance shareholder value. Please turn to Page 4. We reported GAAP earnings of $0.17 per share for the third quarter. Unlike the prior two quarters of this year, our third-quarter income was influenced by more normal factors and less by one-time noisy elements. These results were largely driven by unrealized gains on our whole loan assets, as well as the reversal in a credit loss provision on whole loans held at carrying value. GAAP book value was up modestly, but economic book value was up over 10% for the quarter as our carrying value whole loans continued to retrace the writedowns that began with the onset of the pandemic. Our leverage at September 30 was still quite low at 1.9 to 1 and two-thirds of our asset-based financing was non-mark-to-market. We caught up on all preferred dividends in the third quarter and we paid a $0.05 common dividend on October 30. Please turn to Page 5. Our portfolio, which is also shown in the appendix on Page 20, is primarily comprised of residential whole loans, which have experienced substantial value appreciation since the liquidity-induced sell-off in March and April. Housing prices are very strong, particularly, in suburban neighborhoods outside of major cities. This is obviously a good trend for our credit-sensitive assets, but we've been able to take advantage of this in real time, recording over $90 million of REO sales during the third quarter, which is a record quarter for us. Please turn to Page 6. We have also taken advantage of, one, the extremely low-rate environment; two, the paucity of non-QM product available for securitization; and three, the demand for short, high-quality assets by executing two non-QM securitizations totaling approximately $960 million, one in early September and the other closing just last week. As you can see on this page, AAA yields on bonds sold were 1.48% and 1.38%, respectively, and the blended cost of debt sold was between 165 and 180 basis points below the cost of borrowing we replaced. Also noteworthy is that while some of this replaced financing was non-mark-to-market, the securitized debt is similarly non-mark-to-market, non-recourse, and term. So we actually increased the amount of this more durable financing while substantially lowering the cost. Bonds sold generated cash of approximately 94% and 95% of UPB on the two transactions, which produced a little over $200 million of additional liquidity. Please turn to Page 7. We are also happy to report that we have fully paid off the $500 million 11% senior secured term note from Apollo and Athene. This so-called rescue financing was critical to our forbearance exit, negotiation of non-mark-to-market financing on our loan portfolio, and to fortify our balance sheet. Obviously, this was high-cost debt, but critically, the loan terms permitted repayment without penalty or any yield maintenance provision. Also noteworthy is the fact that we did not refund this debt with cheaper debt. The liquidity generated by our portfolio was largely the source of these funds. And clearly, the ROE in this investment of paying down this debt was a compelling one. The results of this paydown will be partially realized in the fourth quarter but will be fully reflected in financial results in subsequent quarters to the tune of approximately $0.03 per share per quarter. I can honestly tell you that when we closed on this loan on June 26, I did not expect that we would be announcing its full payoff on our third-quarter earnings call. Please turn to Page 8. So although we have made good progress on the securitization front, we still have additional wood to chop. A rated SFR securitization will transition current financing on these assets to cheaper debt while producing additional liquidity. Similarly, we still have approximately $1.5 billion of non-QM loans that will hopefully lend themselves to similar securitization executions as we achieved on our first two deals. And finally, we have three outstanding nonrated NPL securitizations that can be called and relevered. And at current market levels, this would offer us additional liquidity while also lowering [Audio gap] Please turn to Page 9. We announced today that our board has authorized a $250 million common stock repurchase program. This authorization replaces a scale existing authorization for only about $20 million of stock. As many of you likely recall, MFA has historically not pursued aggressive share repurchases. This was primarily because even when our stock traded at a discount to book, it was rarely a considerable discount to book value. With our stock trading around 60% of economic book value, we feel that the current market price represents a substantial disconnect versus value. MFA's economic book value calculation is relatively straightforward. Our assets, primarily residential whole loans with a small mortgage-backed securities portfolio, are not difficult to value. We own neither a large MSR book nor an operating company, both of which are inherently more difficult to value with precision. A share repurchase at current market levels is substantially accretive to both book value and earnings. And just to be clear, there's no conflict of interest in this action. As an internally managed mortgage REIT, we believe that our motivation is completely aligned with shareholders. Buying back MFA stock does not reduce any management fee. And finally, to address available liquidity to execute this stock buyback, our cash liquidity as of last Friday after paying off the balance of the Apollo-Athene loan and the October 30 dividend was approximately $641 million. Our net income to common shareholders of $79 million or $0.17 per share primarily reflects the continued recovery in residential mortgage asset valuations, a net reduction in our CECL credit loss reserves, and lower operating and other expenses as we have put forbearance negotiations behind us. However, our results continue to include some items that we don't expect to reoccur in future periods. For this reason, we continue not to present core earnings metric. Net interest income for the quarter was $10.1 million and reflects the following: firstly, higher net interest spreads for both our residential whole loan and securities portfolios. The net interest spread on our loans held at carrying value rose to 1.24% for the quarter as our overall cost of funds declined post forbearance and due to the positive impact of the non-QM securitization transaction that closed in early September. It should also be noted that interest income for the quarter was impacted by an increase in the amount of nonaccrual loans. In particular, at September 30, 2020, non-QM loans with a UPB of approximately $175 million were on nonaccrual status. Under our nonaccrual accounting policy, we stopped recognizing interest income in the period where the loans become 90 days delinquent and reversed any income recognized in the prior period. Accordingly, no interest income was recognized on these loans in the third quarter. In addition, as loans with a UPB of approximately $145 million became 90 days delinquent during the third quarter, interest income was adjusted by approximately $1.7 million to reverse income accrued on these loans in prior periods. Secondly, interest expense for the third quarter on the $500 million loan from Apollo and Athene was approximately $14 million. Excluding this expense and the cash borrowed that was held on our balance sheet for the entire quarter on a pro forma basis, the net spread generated by our interest-earning assets for the third quarter would have been approximately 1.15%. As Craig has also noted, we reduced our CECL allowance on our carrying value loans to approximately $106 million, primarily reflecting adjustments to macroeconomic assumptions used for credit loss modeling purposes but also partially due to lower loan balances. This reversal and other net adjustments to our CECL reserves positively impacted net income for the quarter by approximately $27 million. We continue to take a cautious approach in making our estimates for credit losses given the uncertainty in the U.S. economic outlook due to the ongoing COVID-19 pandemic and given the current political environment. Our loans held at fair value performed strongly for the quarter. Net gains of $76.9 million were recorded, including $58.9 million of market value increases and $18 million of cash income. In the second and third quarters of 2020, our portfolio of loans held at fair value has recovered more than 80% of the market value declines that were recorded in the first quarter of 2020. Finally, our operating and other expenses were $27.3 million for the quarter, down significantly from the prior quarter as we did not incur any further expenses related to exiting from our forbearance arrangement. However, it should also be noted that expenses this quarter included a one-time severance accrual of approximately $3.6 million related to a workforce reduction. In addition, we anticipate that all else remaining equal, our compensation expense going forward should be approximately $1 million lower each quarter as a result of actions taken to rightsize our workforce. Going forward, we anticipate that annualized G&A expenses to equity should run at about 2% each quarter. Turning to Page 11. Non-QM origination volume is gaining momentum and market demand for paper is strong. This increased demand partially due to improved execution in the securitization market in addition to the overall low-yield environment. We were able to purchase approximately $40 million in the third quarter and have a growing acquisition pipeline. We successfully closed our first non-QM securitization in the third quarter and the second subsequent to quarter-end. In total, nearly $1 billion of our non-QM portfolio has been securitized to date. Financing of our non-QM portfolio is very stable as over three-quarters of our non-QM borrowings are now financed with multiyear non-mark-to-market leverage. We will continue to be a programmatic issuer of securitization, which will further increase the percentage of our non-mark-to-market funding, providing stability in addition to lowering our cost of funds. Turning to Page 12. The significant percentage of borrowers in our non-QM portfolio have been impacted by the pandemic. Many of our borrowers are owners of small businesses that were affected by shutdowns across the nation. We instituted a deferral program at the onset of the pandemic in an effort to help our borrowers manage through the crisis. Through our servicers, we granted almost 32% of the portfolio temporary payment relief, which we believe help put our borrowers in a better position for the long-term payment performance. Subsequent to June, we've reverted to a forbearance program instead of a deferral as the economy opened up. The forbearance program instituted are largely now determined by state guidelines. And for clarity, deferral program, tax on the payments missed and the maturity of the loan has a balloon payment. Forbearance requires the payments missed to be repaid at the conclusion of the forbearance period. If those amounts are unable to be paid in one-month sum, we allow the borrower to spread the amounts over an extended period of time. Over the third quarter, we saw a much lower level of delinquencies than one might have expected given the high percentage of deferrals granted and have seen improvement in those levels subsequent to quarter-end. Current state of affairs is unique as although we have seen economic stress and high unemployment, home values have been increasing as low levels of supply, combined with low mortgage rates, have supported the market. In addition, our strategy of targeting low 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 13. Our RPL portfolio of $1.1 billion has been impacted by the pandemic, which continues to perform well. 80% of our portfolio remains less than 60 days delinquent. Although the percentage of portfolio, 60 days delinquent in status, 20%, over 23% of those borrowers continue to make payments. Prepay speeds in the third quarter rebounded from the slower speed seen in the second quarter. This portfolio exhibited a similar percentage impacted by COVID as the non-QM portfolio, and we are working with our servicers to ensure positive outcomes post forbearance. Turning to Page 14. Our asset management team continues to drive performance of our NPL portfolio. The team has worked through the pandemic 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 third quarter ended 2019, therefore owned for more than one year. 35% of loans that were delinquent at purchase are now either performing or paid in full. 44% have either liquidated or REO to be liquidated. We have significantly increased activity or activity liquidating REO properties, selling 67% more properties versus the third quarter a year ago. 21% are still in nonperforming status. Our modifications have been effective as three-quarters are either performing or paid in full. We are pleased with these results as they continue to outperform our assumptions at the time of purchase. Turning to Page 15. We saw an improvement in delinquencies and an increase in paydowns on the fix-and-flip portfolio in the third quarter as the strong housing market supported by record-low mortgage rates and large monitoring and fiscal stimulus positively influenced home sales and credit conditions in the quarter. MFA's fix-and-flip portfolio declined $164 million to $699 million in UPB at the end of the third quarter. Principal paydowns were $175 million as project completions and the pace of home sales increased in the quarter. The quarterly paydown is equivalent to about 59% CPR on an annualized basis. We advanced about $18 million of rehab draws and converted $7 million to REO and made no new investments in the quarter. The average yield on the fix-and-flip portfolio in the quarter was 5.41%. And importantly, all of our fix-and-flip financing is non-mark-to-market debt with the remaining term of 21 months. The total amount of seriously delinquent fix-and-flip loans declined $39 million in the quarter. Due to lower delinquencies, lower fix-and-flip holdings in general, and improved credit conditions, loan loss reserves on the fix-and-flip portfolio declined $7 million in the quarter. We have maintained strong relationships and an ongoing dialogue with our originating partners throughout the pandemic and started acquiring new fix-and-flip loans in the month of October. Turning to Page 16. As previously noted, seriously delinquent fix-and-flip loans declined $39 million in the quarter as we sell out $51 million of loans either pay off in full or cured to current of 30-day delinquent pay status. While we completed foreclosure on $7 million of loans and $19 million became new 60-plus day delinquent loans. We are pleased with the improvement and believe it is due to the efforts of our asset management team, as well as a strong housing market where the pace of home sales has increased recently, which is helpful for fix-and-flip loans where the payoff is often dependent on the sale of a property. Approximately two-thirds of the seriously delinquent loans are either completed projects or bridge loans where limited or no work is expected to be done, meaning these properties should be in generally salable conditions. In addition, approximately 20% of the seriously delinquent loans are already listed for sale, potentially shortening the time until resolution. We believe that our experienced asset management team gives us a tremendous advantage in loss mitigation. And combined with the term non-mark-to-market financing of our fix-and-flip portfolio, we believe we will be able to patiently work through our delinquent loans to achieve acceptable outcomes. In addition, we believe recent macroeconomic trends have been helpful for loss mitigations as fiscal and monetary policies continue to be supportive of the housing market. Turning to Page 17. Our single-family rental loan portfolio continues to perform really well through these challenging times. In addition to benefiting from strong fiscal and monetary support, it continues to benefit from short- to medium-term demographic trends as the push for people to move out of apartments in densely populated cities to single-family homes for more space, as well as long-term trends toward increased rental percentage of single-family households supports this asset class. The portfolio yields have remained relatively stable and was a healthy 5.65% in the third quarter. After rising modestly in the second quarter, delinquencies have stabilized, and 60-plus-day delinquency declined 10 basis points to 4.9% at the end of the third quarter. Prepayments have remained relatively muted due to strong prepayment protection, a three-month CPR of 12% in the third quarter. We made no new SFR investments in the quarter but have maintained strong relationships with our origination partners throughout the pandemic and resumed SFR loan acquisitions in October. Finally, as Craig alluded to earlier, we are exploring a possible securitization of a portion of our SFR portfolio, which could meaningfully lower our cost of funds given current market condition. I believe that MFA has made great strides since July 1 of this year. Significant asset price appreciation, which drove earnings and book value, substantial progress in moving our asset-based financing from expansible, durable debt to equally durable but materially cheaper securitized debt and, most recently, the payoff of $500 million of 11% debt. Considerable market uncertainty still exists, and the world continue to face challenges around the pandemic, politics, and monetary and fiscal policy. MFA is well-positioned to weather these uncertainties, respond to opportunities as they arise, and we are taking proactive steps to further position our company to thrive in the future.

compname announces $250 million stock repurchase program. q3 earnings per share $0.17. compname announces $250 million stock repurchase program. compname announces repayment of $500 million loan from apollo and athene. qtrly net interest income $10.1 million versus $56.9 million.

You can obtain the release by visiting the media section of our website at cnoinc.com. We expect to file our Form 10-Q and post it on our website on or before November five. You'll find a reconciliation of the non-GAAP measures to the corresponding GAAP measures in the appendix. We delivered another strong quarter with operating earnings per share up 7% over the prior year period, excluding significant items and COVID impacts in both periods. Our results reflect ongoing deferral of medical care, which continue to boost our health margins, solid variable investment income results and robust share repurchase activity. Our sales metrics exceeded pre-pandemic levels in a number of areas. Total life and Health NAP was up 1% over the third quarter of 2020 and up 1% relative to 2019 levels. As the pandemic continued to pressure an already tight labor market, we experienced a slowdown in new agent recruiting. Premium collections remained strong, exceeding pre-pandemic levels. As expected, our underlying margins excluding COVID impacts, performed well. Our capital and investment portfolio remain conservatively positioned with ample liquidity. We ended the quarter with an RBC ratio of 388% and $366 million in cash at the holding company. This is after returning $131 million to shareholders through a combination of share repurchases and dividends. We continue to execute well against our strategic priorities, specifically, successfully executing on our strategic transformation, growing the business profitably, launching new products and services, expanding to the rise to slightly younger, wealthier consumers within the middle-income market and deploying excess capital to its highest and best use. Turning to slide five and our growth scorecard. Four of our five growth scorecard metrics were up compared to 2020. Relative to 2019, all five metrics were up for the second consecutive quarter. As a reminder, pre-pandemic, we have delivered five consecutive quarters of growth in all five of our scorecard metrics. Life sales were up modestly compared to 2020 fueled largely by continued momentum in our direct-to-consumer channel. Relative to 2019, life sales were up 22%. Overall, health sales were essentially flat year-over-year but down 16% relative to 2019. Total collected life and health premiums were down 2%. This reflects continued solid growth in Life NAP and persistency of our customer base offset as expected by lower Medicare Supplement premiums. Annuity collected premiums were up 17% year-over-year and up 2% relative to the third quarter of 2019. Client assets in our brokerage and advisory grew 30% year-over-year to $2.7 billion, fueled by new accounts, which were up 16%, net client asset inflows and market value appreciation. Sequentially, client assets grew 2%. Fee revenue was up 41% year-over-year to $28 million, reflecting growth within our broker-dealer and registered investment advisor, higher fees generated by Web Benefits Design, our worksite technology platform and the inclusion of DirectPath results, which is our worksite enrollment and advisory services business. Turning to our consumer division on slide six. I continue to be pleased with how we're executing on our transformation to leverage synergies between our agent and direct-to-consumer businesses. Consumer segment life and health sales were down 2% over the prior period but up 8% over 2019. Life sales were essentially flat in the quarter. Direct-to-consumer life sales were up 13% on top of 23% growth in the prior period. Life sales generated by our exclusive field agents were down 15%. Health sales were down 5%, largely reflecting continued weakness in Medicare Supplement sales. As discussed in previous quarters, our market is experiencing a secular shift away from Medicare Supplement and toward Medicare Advantage. We continue to invest in both our Medicare Supplement and Medicare Advantage offerings to ensure we are well positioned to meet our customer's needs and preferences. In 2022, we will be launching a new Medicare Supplement product that we believe is more aligned with consumer preferences. We've also made several enhancements to our Medicare Advantage platform, myhealthpolicy.com and our product offerings to position us well for this Medicare annual enrollment period. Specifically, we expanded our carrier partners and product offerings. We now have nearly 3,000 exclusive field agents certified to sell Medicare products, which is up 14% from last year, and we boosted our D2C capabilities through enhanced lead acquisition and sales capabilities. As I mentioned, annuity collected premiums were up a healthy 17% as compared to the prior year and up 2% versus 2019. The number of new accounts grew 6% and the average annuity policy rose 10%. We continue to maintain strict pricing discipline on our annuities to balance sales growth and profitability. Participation in crediting rates are reviewed regularly to reflect current macro environment conditions. Client assets in brokerage and advisory grew 30% year-over-year to $2.7 billion in the third quarter. Combined with our annuity account values, we now manage $13 billion of assets for our clients. This has fundamentally shifted the relationship we have with our customer base. Unlike some insurance products, which can be transactional in nature, investment products typically create deeper and longer-lasting customer relationships. Over the last several years, we have shifted our agent recruiting strategy to focus more heavily on targeted recruiting approaches and boosting the productivity levels of our existing agent base. This has periodically resulted in fewer new agent recruits. However, the new agents we appoint are more likely to succeed and stay with us over time. Until recently, we haven't felt much impact from the tight labor market. In the third quarter, however, our total producing agent count was down, largely due to fewer first year agents. Our veteran agent retention and productivity remains strong. The number of agents that have been with us for at least three years has remained consistent through the third quarter and is up 1% year-to-date. Productivity among these veteran agents is up 5% over the prior period and up 13% year-to-date. These more seasoned agents typically generate higher premiums for policy and drive cross-sales of other products, including annuities and health products. We remain committed to prioritizing agent retention and productivity. However, we also want to attract new agents. Therefore, we are experimenting with various pilots and programs to jump-start our new agent recruiting, but expect these near-term headwinds to continue. Turning to slide seven and our Worksite division. Worksite sales were up sharply in the third quarter as compared to 2020. However, sales remained well below 2019 levels. The emergence of the delta variants caused a number of on-site enrollments to be postponed or canceled. We expect the pace of worksite recovery to improve as workplaces reopen and COVID disruption subsides. The workplace, as we know, continues to evolve. As more companies shift to permanent hybrid work arrangements, we continue to explore new approaches to improve access to existing employer groups and their employees. At the same time, pilots and programs to target new employer groups and offer new products and services remain a key strategic priority for us. Retention of our existing customers remain strong and employee persistency within these employer groups continues to be stable. Our producing agent count was down 5% year-over-year and down 11% sequentially due to the tight labor market. Asian count remains down more than 45% from pre-COVID levels. Our recently launched field agent referral program, which is modeled after our consumer division program is generating promising results in its early stages. Retention and productivity levels among our veteran agents who have been with us for more than three years remains very strong. These agents have been the driving force behind recent sales activity. The integration of our fee-based businesses continues to run smoothly. Fee revenue nearly doubled in the quarter due to both organic growth within WBD, our website technology platform and DirectPath, our worksite enrollment and advocacy services business. Our average client size in these businesses increased 15%, and our average per employee per month rates were up double digits. Market feedback on our unique combination of worksite products and services remains positive, and we are realizing meaningful cross-sale success. Turning to slide eight. Our robust free cash flow enabled us to return $131 million to shareholders in the third quarter, including $115 million in share buybacks. This is the highest level of capital return in the past six years. Our capital allocation strategy remains unchanged. We intend to deploy 100% of our excess capital to its highest and best use over time. While share repurchases form a critical component of our strategy, organic and inorganic investments, also play an important role. Turning to the financial highlights on slide nine. We generated operating earnings per share of $0.72 in the quarter, which is down $0.07 year-over-year as reported, down $0.05, excluding significant items and up $0.04 or 7% excluding significant items and adjusting for the net favorable COVID impacts on insurance product margin. We had $3 million pre-tax or $0.02 per share of unfavorable significant items in the current period and none ended prior year period. And we had $23 million or $0.14 per share of net favorable COVID impacts in the current period as compared to $42 million or $0.23 per share in the prior year period. The results for the quarter reflect solid underlying insurance margins, ongoing net favorable COVID-related impacts, strong alternative investment performance and prepayment income and continued disciplined capital management. Over the last four quarters, we have deployed more than $400 million of excess capital on share repurchases, reducing weighted average shares outstanding by 9%. The operating return on equity was 11.5% for the 12 months ending September 30, 2021. The sum of expenses allocated to products and not allocated to products, excluding significant items, was flat to the first quarter of 2021 as expected. In general, our expenses continue to reflect both expense discipline and operational efficiency on the one hand and continued targeted growth investments on the other. Turning to slide 10. Insurance product margin, excluding significant items, was down $21 million or 9% in the third quarter as compared to the prior year period, driven by the $19 million year-over-year change in COVID impacts. The year-over-year decrease in net COVID impacts primarily reflects a decrease in the favorable benefit in our Med Supp product. Sequentially, the net favorable COVID benefit was essentially flat with the offsetting changes in the impact on our health and life products. Page 10 of our financial supplement summarizes those impacts by quarter. The sequential decline in our annuity margin reflects volatility related to the indexed annuity FAS 133 accounting for our embedded derivative reserve, which had a favorable impact in the second quarter and an unfavorable impact in the third quarter. Excluding COVID impact, insurance margin was essentially flat year-over-year, both in total and by major product grouping. This is in line with expectations, reflecting the underlying stability of the book of business. Turning to slide 11. Investment income allocated to products was up slightly as growth in the net liabilities and related assets was mostly offset by a decline in yield. Investment income not allocated to products, which is where the variable components of investment income flow through increased $7.2 million or 16%, reflecting solid performance within our alternative investment portfolio and higher prepayment income. Our new money rate of 3.55% for the quarter was up 17 basis points sequentially, reflecting increased allocation to direct investments and an increase in market yields. Our new investments comprised $849 million of assets with an average rating of A minus and an average duration of 13 years. Turning to slide 12. At quarter end, our invested assets totaled $28 billion, up 5% year-over-year. Approximately 95% of our fixed maturity portfolio is investment-grade rated with an average rating of single A. This allocation to A-rated holdings is up 20 basis points sequentially. The BBB allocation comprised 39% of our fixed income maturities, down 180 basis points year-over-year and 40 basis points sequentially. During the quarter, we established a $3 billion funding agreement backed note program and in early October, we issued an inaugural $500 million funding agreement backing five-year notes. The program provides a new vehicle for us to leverage our core investment competencies to generate incremental earnings at an attractive return on the underlying capital. It is complementary to our existing Federal Home Loan bank program because they both improved the company's financial flexibility and draw on similar investment capabilities with slightly different duration and asset allocation strategies. The combination of the two provides CNO with greater funding diversification and earnings potential. We expect the FABN program will provide roughly 100 basis points of annualized pre-tax spread income, net of expenses on the notional amount of the notes outstanding. We'll report the net spread income in NII, not allocated products, just as we currently report the net spread income associated with our Federal Home Loan Bank program on page 17 of our quarterly financial supplement. Turning to slide 13. We continue to generate strong free cash flow to the holding company in the third quarter with excess cash flow of $166 million to 179% of operating income, which reflects the solid operating results in the quarter, the continued up in quality bias in our investment portfolio and our decision to increase dividends out of the operating companies to bring the RBC ratio down into our targeted range. Turning to slide 14. At quarter end, our consolidated RBC ratio was 388%, which represents approximately $70 million of excess capital relative to the low end of our targeted range. Our Holdco liquidity at quarter end was $366 million, which represents $216 million of excess capital relative to our $150 million minimum Holdco liquidity target. Turning to slide 15. We are not projecting beyond year-end, given the ongoing uncertainty of how the pandemic will evolve from here, particularly as we enter the winter months. That said, we will share our expectations for the fourth quarter based on our most recent internal forecast. First, we expect modest growth in Total Life and Health NAP and total collected premiums. This reflects our continued positive momentum, particularly in our direct-to-consumer business, coupled with the challenges of a very tight labor market and for our worksite business, ongoing delays in office reopenings and in businesses, allowing on-site enrollments. We expect continued net favorable COVID impacts on our insurance product margin, but at a lower level than recent quarters. We expect net investment income allocated to products to remain relatively flat as growth in assets is offset by lower yields, reflective of both the lower interest rate environment and our up in quality shift in asset allocation. We expect net investment income not allocated to products to trend down as compared to recent quarters in light of market conditions in the third quarter; recall that our alternative investments are reported on a one quarter lag. We expect fee income to be up sequentially and year-over-year as we grow our third-party Medicare Advantage distribution and improve the unit economics of that business. Growth in web Benefits Design earnings and the inclusion of Direct Path will also contribute to growth in fee income. We expect the sum of our allocated and non-allocated expenses ex significant items to be generally in line with recent quarters. Finally, we expect dividends out of the operating companies to be lower than in recent quarters as we absorbed the impact of the revised C1 factors on our consolidated RBC ratio. As mentioned previously, that will reduce our RBC by approximately 16 points, all else equal, which translates to about $80 million of capital. For the time being, we are not reducing our target RBC ratio, but we will manage the low end of the 3.75% to 400% target range. And we will move closer to our $150 million minimum Holdco liquidity target. I'm pleased with our results for the third quarter, which reflects solid execution against our strategic objectives. Although uncertainty surrounding the pandemic remains, I am confident that we are well positioned to successfully navigate whatever lies ahead. The earnings and cash flow generating power of the company remains strong, and our team is laser-focused on building upon our progress in delivering long-term growth and value creation for our shareholders. Finally, please continue to take care of yourself, including getting vaccinated if you are able. Stay healthy and stay safe.

q3 operating earnings per share $0.72. qtrly book value per share was $42.11, up 15% from 3q20. qtrly total revenues $968.3 million versus $1,013.5 million.

There are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results. During our call today, we'll make reference to non-GAAP financial measures. Our first quarter results reflect an exceptional performance by our company and our entire team as the momentum that began in the third quarter of last year continued throughout our business. On a companywide basis, we achieved an all-time EBITDAR record of $292.6 million. While this is up considerably from the prior year, we also exceeded our first quarter 2019 performance by more than 30% and surpassed our previous record by over 20%. Companywide margins for the quarter were 38.8%. This is nearly 1,200 basis points better than the first quarter of 2019 and 220 basis points higher than the previous record we set in the third quarter of 2020. We also achieved new EBITDAR records in each of our two largest operating segments. In the Las Vegas Locals segment EBITDAR exceeded our previous record by 11% and was up 22% over 2019. And when excluding The Orleans, which is heavily reliant on destination business, our same-store locals EBITDAR was up 46% from 2019 levels. Operating margins in our Las Vegas Locals segment were nearly 50% for the quarter, 360 basis points higher than the record we set just two quarters ago. In our Midwest and South region, EBITDAR grew nearly 40% over 2019 beating the previous record by almost 20%. Segment margins were nearly 40% this quarter and overall gaming revenues were up more than 2% from 2019 levels. Most important, this operating segment -- this operating strength was broad-based as 15 of our 17 properties in this segment grew EBITDAR at a double-digit pace over their 2019 performance. Throughout the quarter, strengthening consumer confidence, limited entertainment options and our disciplined operating strategy, all contributed to produce record results across our portfolio. Starting in January and February, business returned to the levels we saw in the third quarter. But it was March where we really benefited from improving trends. From February to March, daily rated play increased over 18% across all age and worth segments and was up nearly 25% in our 65 and up segment. As vaccinations continue to roll out, customers are clearly growing more comfortable with resuming their pre-pandemic activities including regular visits to our properties. We also experienced an impressive increase in unrated play, which grew more than 33% on a comparable basis from February to March, a reflection of a strengthening consumer confidence across the country. This strong unrated play is providing us the opportunity to grow our database as we leverage our enhanced tools and capabilities to identify high-value unrated players on our gaming floors and then enroll them into our B Connected loyalty program. In the first quarter, new player sign-ups rose 35% over the fourth quarter. But beyond the sheer increase in quantity, it is the quality of these guests that is far more impressive. On an overall basis, the worth of our first quarter sign-ups was over 50% higher than the first quarter of 2019. Across the business, the strong trends of March are continuing into April. Rated guest counts are running well ahead of the third and fourth quarters of 2020 and unrated play remains at very high levels. While we are very encouraged by April's business trends as other entertainment options become increasingly available, we do expect unrated play levels will normalize. But even as unrated play normalizes, we are confident we can keep delivering strong performances as we pursue additional growth opportunities within our growing rated customer base. One of these opportunities is the 65-and-over segment. While we have seen strong growth from this demographic in the last several months, many are still on the sidelines. And as our country continues to make progress against the pandemic, we are confident that more of these guests will return to our properties as the year progresses. We also see opportunities to grow our destination business. While business from local guest segments remain strong, guest counts from destination travelers remain well below pre-pandemic levels. The softness has been particularly noteworthy at The Orleans, which draws a significant amount of business from destination travelers. This has also impacted our downtown Las Vegas segment, where visitation from our core Hawaiian customers has been severely restrained by travel restrictions. As COVID vaccinations continue to roll out and restrictions lift, we expect visitation among our rated destination customers to improve. We also expect to see improvements in midweek business as restrictions on conventions and meetings are eased and capacity limits are increased. Over the last several weeks, we've started to see the first indications that this destination business is returning. Hotel reservations have increased to their highest level in more than a year. And our booking window is rapidly improving. At the same time, we are experiencing growing demand for non-gaming amenities. We are encouraged by the opportunity for growth on the non-gaming side of the business and we'll take a thoughtful and disciplined approach in reintroducing these amenities. We remain committed to our disciplined operating strategy that has delivered outstanding results over the last several quarters. On top of organic growth opportunities within our portfolio, we continue to make progress with our strategic growth initiatives. For example, our interactive gaming presence and offerings continue to expand. After introducing Stardust as our social casino brand last year, we have now entered the world of real money online gaming launching our first Stardust online casinos in Pennsylvania and New Jersey last week. We're also excited by the performance and the ongoing potential of our partnership with FanDuel Group. Together, we have established market-leading sports betting products in Pennsylvania, Illinois, Indiana, Iowa and Mississippi with significant future opportunities yet to come in states like Ohio, Louisiana, Missouri and Kansas. And with our recently announced partnership with the NFL, FanDuel's brand will be significantly enhanced through its association as one of the League's official sports wagering partners for this coming football season. FanDuel will have rights to include endgame and postgame highlights directly into its Sportsbook app further separating our partner from the competition in a crowded sports betting landscape. We are also making good progress on the Wilton Rancheria Tribes Resort near Sacramento, California. Construction is now under way on the Sky River Casino and the project is set to go vertical next month. I had the pleasure of joining the Tribal council, community leaders and hundreds of tribal members for groundbreaking in early March. This was a true celebration by the entire Wilton community as they saw their vision of self-sufficiency finally come to life. We are proud to call the Wilton tribe our friends and are honored to be their partners in this project. We look forward to joining them and opening the doors with Sky River Casino in the second half of 2022. Before concluding, I wanted to take a note -- to take note of our company's ongoing progress on our corporate responsibility initiatives. Last week, we were honored to be recognized as the highest rating gaming company in Forbes Magazine's listing of America's Best Employers for diversity. We are a company that takes pride in promoting a welcoming culture for all team members. Being recognized by Forbes as a leader in workplace diversity is a great honor and reflects our ongoing efforts to create and support an environment where team members feel valued and appreciated. We also released our company's first comprehensive environmental, social and governance report last week. While our company has been committed to the principles of ESG for decades, this report is the first time we have compiled this information into a single document. Within this report, you will see detailed data on the progress we are making to conserve natural resources, reduce our carbon footprint, enhance the lives of our team members, build strong communities and promote good corporate governance. We are pleased with our performance against key ESG benchmarks to-date and look forward to sharing our continued progress with you in the future. In conclusion, this was truly an outstanding quarter for our company. Our business model is allowing us to make the most of an improving environment by delivering exceptional EBITDAR growth and margin improvement throughout the portfolio. Throughout the country, our property leaders are successfully maintaining higher margins and a disciplined operating philosophy as restrictions lift and visitation grows, and we continue to make significant progress on our strategic initiatives. Throughout all of this, our team members have kept their commitment to delivering personal and memorable service to our guests. That service is what makes Boyd Gaming stand out from the competition, and it will continue to draw customers back to our properties as the pandemic recovery continues. Together we are achieving new heights as a company and it is an honor to be part of such an incredible team. Before I provide comments on the quarter, I want to point out that we have included our 2019 results and the financial tables accompanying today's release. We believe that 2019 is a more relevant comparison period to this year's results since our entire property portfolio was closed during the second half of March of last year. As Keith noted, this was an incredible quarter for our company. As you have seen from our results in the third and fourth quarter of last year, our operating strategy delivers on growing EBITDAR with enhanced margins. And this was also the case in January and February. January and February were very good months, and resembled third quarter of last year in terms of business levels and margins. Compared to 2019, revenues were down nearly 11% during the February year-to-date period, while companywide EBITDAR after corporate expense rose 34% and margins improved nearly 1,200 basis points. The month of March was even stronger. March benefited from our more efficient operating model, but was enhanced by stronger revenues particularly from higher-margin unrated play. In March revenues were down just 6% from 2019 levels, while companywide EBITDAR margins after corporate expense approached 44%. During the first quarter, guest counts and spend both increased from the levels we saw in the third and fourth quarter of last year. We saw improvements across all age and worth segments including the 65-and-over age segments. In terms of gaming revenues, our Midwest and South segment rose more than 2% from 2019. While on the Las Vegas Locals segment, gaming revenues were up approximately 4% from 2019. In addition, we are experiencing increased demand for non-gaming amenities and growing demand for hotel capacity from both rated and unrated customers. Looking forward, we believe there is continued opportunity to grow our business among upper age segments of our database that have yet to fully return, as well as destination business. And we have the opportunity to build relationships with higher worth customers we have added to our database during the last several quarters. Our enhanced tools and capabilities combined with a more disciplined operating philosophy have allowed us to execute our business with much greater efficiency. This philosophy will continue to be our focus, as customer demand continues to return and we successfully -- selectively restore additional amenities. We believe that our operating strategy is sustainable, and we are confident that we can maintain a significantly more efficient business model over the long run. Touching on a few additional points from the quarter. We generated over $200 million in cash during the quarter, resulting in approximately $730 million of cash on the balance sheet at quarter end. And we currently have no borrowings outstanding under our $1 billion revolving credit facility. As we continue to grow out of this pandemic, we believe, it is most prudent to maintain our financial flexibility with respect to our cash balances and our free cash flow. In terms of our online business, we continue to be excited by the opportunity represented by sports and iGaming. As we previously indicated we expect to generate over $20 million in EBITDAR from online this year. And we are on track to achieve that result. We believe our strategic partnership and equity stake in FanDuel is the right approach, generating positive cash flow in a highly promotional capital-intensive and competitive landscape. And as more states legalize sports betting and FanDuel leads the way as one of the long-term winners in this space, our 5% equity stake will only continue to grow in value for our shareholders. We are also continuing to expand our online gaming presence under the Stardust brand that leverages our customer database and geographic distribution. We just launched the Stardust brand in New Jersey and Pennsylvania. And we continue to explore opportunities to expand and grow our capabilities and presence online, particularly in the iGaming space. So in summary, this was a great quarter. January and February were good. March was exceptional and that strength is continuing into April. Going forward, we will stay firmly committed to our operating strategy, driving increased EBITDAR, as a result of a continued operating discipline and a tight focus on the right customer. And finally, our strategic partnership with FanDuel and our online iGaming business will be growing components of our business. Matt that concludes our remarks and we're now ready to take any questions.

boyd gaming - as economic conditions improve, vaccinations roll out, seeing increased visitation, growing spend-per-visit across every customer segment.

We expect to file our Form 10-Q and post it on our website on or before August 6. You'll find a reconciliation of the non-GAAP measures to the corresponding GAAP measures in the appendix. Turning to slide 4, we reported operating earnings per share of $0.66, which represents 20% growth over the prior period, or 60% growth excluding significant items in both periods. Sales activity remains strong and we have exceeded pre-pandemic levels in a number of areas. Total Life and Health NAP was up 35% over the second quarter of 2020 and up 10% relative to 2019 levels. Our results also benefited from ongoing deferral of medical care which boost our health margins, solid alternative investment performance, and continued share repurchase activity. Premium collections remain strong in our underlying margins excluding COVID impacts performed well as expected. Our capital and liquidity remain conservatively positioned. We ended the quarter with an RBC ratio of 409% and $336 million in cash at the holding company while also returning $105 million to shareholders through a combination of share repurchases and dividends. We continue to execute well against our strategic priorities, specifically, successfully implementing our strategic transformation that we initiated in January 2020, growing the business profitably, launching new products, and services, expanding to the right to slightly younger wealthier consumers within the middle-income market, and deploying excess capital to its highest and best use. Turning to slide 5 and our growth scorecard: As was the case for 6 consecutive quarters prior to the pandemic, all 5 of our scorecard metrics were up year-over-year. Life sales remained strong, fueled by continued momentum in both our direct to consumer and exclusive field agent channels. Overall health sales were up almost 90% over the prior period which reflected the first full quarter of the pandemic when state home restrictions were first Instituted. Total collected life and health premiums were up 1%. This reflects continued solid growth in Life NAP and persistency of our customer base offset as expected by lower Medicare Supplement premiums. Annuity collected premiums were up 42% year-over-year, relative to the second quarter of 2019 annuity collected premiums were up 1%. Client assets in brokerage and advisory grew 33% year-over-year to $2.6 billion fueled by new accounts, which were up 13%, net client asset inflows and market value appreciation. Sequentially client assets grew 8%. Fee revenue was up 50% year-over-year to $31 million, reflecting growth in 3rd party sales, growth within our broker dealer, and registered investment advisor, and the inclusion of DirectPath results. Turning to our Consumer division on Slide 6: We continue to leverage our cross-channel sales program. Our hybrid sales and service model which blend virtual engagement with our local field, exclusive field agents has led to significant improvements in lead conversion rates, customer acquisition costs, and sales product. Life and health, sales were up 32% over the prior period, and 19% over the same period in 2019. Life sales climbed 8% for the quarter to over $50 million reflecting the 6th consecutive quarter of year-over-year growth. Direct to consumer life sales were level with the record production in the prior period. Life sales generated by our exclusive field agents were up 23% and comprised over 40% of our total life sales. Leads from our direct to consumer business supported this growth. Within our health product lines supplemental health and long-term care sales saw healthy growth over both the second quarter of 2020 and the second quarter of 2019. These results benefited from initiatives that enable our products to be sold through multiple channels. Our 3rd-party Medicare Advantage party sales were up 20% in the second quarter. Medicare supplement sales remain challenged. Med sales were up modestly over the first quarter. However, as discussed in previous quarters, our market is experiencing a secular shift away from Medicare supplement and toward Medicare Advantage. We continue to invest in both our Medicare supplement and Medicare Advantage offerings to ensure we are well positioned to meet our customers' needs and preferences. Consistent with the first quarter, roughly 50% of our Consumer Division life and health sales were completed virtually. Consumer selecting to engage virtually held steady, even as communities reopened and vaccination rates increase. This is a profound change in how we connect with consumers and further validate the transformation we initiated in January of 2020. It will continue to have significant implications for our business going forward. Among other things, this change, expand our agents' ability to interact with customers across a broader geographic area. As I mentioned annuity collected premiums were up 42% as compared to the prior year and up 1% versus 2019. The number of new annuity accounts grew 16% and the average annuity policy size rose 14%. Our portfolio of index annuity products continues to be well received by our middle market consumers. Our recently launched guaranteed lifetime income annuity plus was a key contributor to our second quarter annuity sales growth. Of course, we continue to maintain strict pricing discipline on our annuities to balance sales growth and profitability. Participation rates and other terms are reviewed regularly to reflect current macro environment conditions. Client assets and brokerage and advisory grew 33% year-over-year and 8% sequential to $2.6 billion in the second quarter. Combined with our annuity account values, we now manage $12.7 billion of assets for our clients. This has fundamentally shifted the relationship we have with our customer base. Unlike some insurance products, which can be transactional in nature, investment products tend to create deeper and longer-lasting customer relationships. We continue to reap the benefits of the shift in the agent recruiting strategy that we initiated several years ago. We now rely more heavily on targeted recruiting approaches, including personal referrals. This has periodically resulted in fewer new agent recruits. However, the new agents we appoint are more likely to succeed and stay with us over time. Relative to the year-ago period, our producing agent count increased 7%. Sequentially, our producing agent count was down slightly but overall, our agent force remained stable. Our securities licensed registered agent force was up 6%. Improvements in agent productivity had became more important driver of our sales growth then agent count in recent quarters and we have significant runway for future growth. Turning to slide 7 in our worksite Division: It looks like sales were up sharply in the second quarter as compared to the year-ago period. We expect to approach 2019 sales levels when access to workplaces improves. Ongoing pilots and programs to target new employer groups, offer new services, and capture new business continue to progress retention of our existing customers also remained strong with continued stable levels of employee persistency our producing agent count was up 15% year-over-year and 7% sequentially. Recall that we slowed our agent recruiting during the pandemic due to workplace restrictions. As a result agent count remains down nearly 40% from pre-COVID levels. To help boost recruitment and support a return on to pre-COVID production levels, we are rolling out a field agent referral program. This program is designed similarly to our successful Consumer Division program. Relative to 2019 levels, our veteran agent count is up 7%. Retention in productivity levels among our veteran agents who have been with us for more than 3 years remains very strong. These agents have been the driving force behind our recent sales momentum and are expected to be instrumental in helping to rebuild our overall agent force. Few revenue generated from our business is more than doubled in the quarter due to the DirectPath acquisition feedback has been strong surrounding the unique combination of products and services we can now bring to the worksite market. We are realizing early cross sale successes between Web Benefits Design and DirectPath and the pipeline continues to grow. Along with strong client retention, these business has also generated double-digit increases over both 2020 and 2019 in various metrics. Turning to slide 8: Our robust free cash flow enabled us to return $105 million to shareholders in the second quarter, including $87 million in share buybacks. We also raised our dividend 8% in May and 9 consecutive annual increase. Our capital allocation strategy remains unchanged. We intend to deploy 100% of our excess capital to its highest and best use over time. While share repurchases form a critical component of our strategy, organic, and inorganic investments also play an important role. Turning to the financial highlights on Slide 9: Operating earnings per share were up 20% year-over-year and up 60% excluding significant items. The results for the quarter reflect solid underlying insurance margins, ongoing net favorable COVID related impacts, strong alternative investment performance, and continued disciplined capital management. Over the last 4 quarters, we have deployed $337 million of excess capital on share repurchases reducing weighted average shares outstanding by 7%. Return on equity improved 90 basis points in the 12 months ending June 30, 2021 compared to the prior year period. The sum of expenses allocated to products and not allocated to products. Excluding significant items increased by about $6 million sequentially driven by incentive compensation accrual adjustments related to earnings outperformance in the first half of the year. The increase in expenses over the prior year period also reflects lower a management expenses in 2020 due to COVID related restrictions and the June 30, 2020 conclusion of a transition services agreement related to the long-term care reinsurance transaction completed in 2018. In general, our expenses continue to reflect both expense discipline and operational efficiency on the one hand and continued targeted growth investments on the other hand. Turning to slide 10: Insurance product margin in the second quarter was up $17 million or 8% excluding significant items. Net COVID impacts were $21 million favorable in the quarter as compared to $6 million unfavorable in the prior year period. Excluding COVID impacts, margins in the quarter remained solid and stable across the product portfolio. The net favorable COVID impacts in the quarter reflect continued favorable claims experience in our healthcare products, particularly impacting Medicare supplement and long-term care due primarily to continued deferral of care. This was partially offset by the unfavorable impact of COVID related mortality in our life products. The favorable COVID impact in the quarter exceeded our expectations as the outlook that we provided on our April earnings call assume that healthcare claims would begin to normalize in the second quarter, including an initial spike in claims due to pent-up demand that did not materialize in the quarter. Regarding our annuity margin, recall that in the second quarter of 2020, we saw a favorable mortality in our other annuities block unrelated to COVID, which translated to $10 million of positive impacts. As we noted at the time, this resulted from a handful of terminations and large structured settlement policy, which we expect from time to time in this block, but not on a regular basis. Turning to slide 11: Investment income allocated to products was essentially flat in the period as growth in the net liabilities and related assets was mostly offset by a decline in yield. Investment income, not allocated to products, which is where the variable components of investment income flow through increased $40 million, reflecting a solid gain in the current period and our alternative investment portfolio and a loss on that portfolio in the prior year period. Recall that we report our alternative investments on a 1/4 lag. Our new money rate of 3.38% for the quarter was lower sequentially reflecting a continuation of our up in quality bias from the first quarter and continued spread tightening in general, partially offset by higher average underlying Treasury rate in the second quarter versus the first quarter. Our new investments comprised $1.1 billion of assets, with an average rating of single A and an average duration of 16 years. This higher level of new investment reflected reinvestment of maturing assets and a higher level of prepayment activity in the period. Our new investments are summarized in more detail. Turning to slide 12: At quarter end, our invested assets totaled $28 billion, up 8% year-over-year approximately 96% of our fixed maturity portfolio is investment grade rated with an average rating of single A. This allocation to single A rated holdings is up 200 basis points sequentially. The BBB allocation comprised 39.4% of our fixed income maturities, down 140 basis points. Both year-over-year and sequentially. We are actively managing our BBB portfolio to optimize our risk-adjusted returns to the extent suitable and attractive opportunities develop, we may over time balance recent up an quality bias with a modest increase in allocation to alternatives asset-backed securities closed or investment grade emerging market security. Turning to slide 13: We continue to generate strong free cash flow to the holding company in the sector with excess cash flow, $114 million or 128% of operating income for the quarter and $432 million or 119% of operating income on a trailing 12 month basis. Turning to slide 14: At quarter end, our consolidated RBC ratio is 409%, which represents approximately $45 million of excess capital relative to the high end of our target range of 375% to 400%. Our Holdco liquidity at quarter end was $336 million, which represents $186 million of excess capital relative to our target, minimum Holdco liquidity of $150 million. Even after returning $105 million of capital to shareholders in the quarter, our excess capital grew by approximately $22 million from March 31 to June 30 of this year. This primarily reflects the strength of our operating results in the quarter and the recent up in quality bias in our investment portfolio. Turning to slide 15: While uncertainty related to COVID continues, we believe it is very unlikely that any future COVID scenario would cause our capital and liquidity to fall below our target levels. For that reason, we are no longer running a formal adverse case scenario as we had been doing through the first quarter of this year. Instead, we are updating a single base case scenario or forecast with upside and downside risks to that forecast. In our most recent forecast, we expect a continuation of the sales momentum we've seen in the past 5 quarters, we expect a modest net favorable COVID related mortality and morbidity impact on our insurance product margin for the balance of 2021 and the modest net unfavorable impact in 2022. This assumes that COVID deaths do not worsen in the second half of this year and that healthcare claims begin to normalize after a brief spike beginning in the 3rd quarter due to pent-up demand from deferral of care. When and if a spike actually occurs and when our health product claims actually normalize is highly uncertain. So far, we have seen some intra-quarter volatility in our health claims during the pandemic, but nothing that has persisted long enough to establish a trend. On the mortality side impacting our life products, the number of COVID deaths we will see for the next several quarters is also uncertain, given the recent rise in infections largely from the Delta variant and the potential for material impacts from additional variants. Certainly, one of the biggest risks to our forecast is how exactly COVID will evolve from here. But again, we believe, however it evolves, it represents an earnings event for us, favorable or unfavorable, not the capital or liquidity of that. Assuming no shift in interest rates, we expect net investment income allocated to product to remain relatively flat in this base forecast as growth in assets is offset by lower yields reflective of both the lower interest rate environment and are up in quality shift in asset allocation. In general, we expect alternative investments to revert to a mean annualized return of between 7% and 8% at some point and over the long term, but the actual results will certainly be more variable with likely more upside potential than downside in the near term given the current economic outlook. We expect fee income to be modestly favorable to the prior year as we grow our 3rd party Med Advantage distribution and improve the unit economics of that business. Growth in web Benefits Design, earnings, and the inclusion of DirectPath will also contribute to fee income. We expect the sum of our quarterly allocated and not allocated expenses tax significant items for balance of the year to be generally consistent with levels reported in the first quarter of this year, allowing for some quarterly volatility. And finally as COVID related uncertainty diminishes which is certainly will at some point, we expect to manage our capital and liquidity closer to target levels, reducing our excess capital over time. We are pleased with the healthy results we've generated this quarter and in the first half of the year. The strength of our diversified business model and the steady execution of our strategic priorities and organizational transformation underpin that success. The consumer division has met or exceeded pre-pandemic performance and our worksite Division is making meaningful progress. As we enter the second half of the year, we remain squarely focused on maintaining our growth momentum, building upon our competitive advantages, and managing the business to optimize profitability, cash flows, and long-term value for our shareholders. Please continue to take care of your health, including vaccinations for those that are eligible.

q2 operating earnings per share $0.66. qtrly total revenues $1,073.1 million versus $1,014.2 million.

My name is Kevin Maczka, I'm Belden's vice president of investor relations and treasurer. Roel will provide a strategic overview of our business and then Jeremy will provide a detailed review of our financial and operating results, followed by Q&A. Additionally, during today's call, management will reference adjusted or non-GAAP financial information. As a reminder, I'll be referring to adjusted results today. Demand trends continue to improve in the first quarter and I am pleased to report total revenues and earnings per share that exceeded the high-end of our guidance ranges. We are benefiting from the ongoing recovery in the global economy and our leadership position and secular growth markets. Solid execution by our global teams resulted in meaningful growth and margin expansion. First quarter revenues increased 16% year-over-year to $536 million compared to our guidance range of $490 million to $505 million. Organic growth is a key priority and revenues increased 8% year-over-year on an organic basis. The upside relative to our expectations was broad-based, with contributions from both the Industrial Solutions and Enterprise Solutions segments. As a reminder, in January, we completed the Bolton acquisition of OTN Systems, a leading provider of proprietary networking solutions tailored for specific applications in harsh mission critical environments. This was our first Industrial Automation acquisition in years, and it's proven, switching devices and network management software are complementary to Belden's leading industrial networking offering. We are very pleased with the integration and the performance of the business to date. Incoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially. This resulted in a healthy book-to-bill ratio of 1.3 times. EBITDA increased 32% year-over-year to $80 million. EBITDA margins expanded 180 basis points from 13.1% in the year ago period to 14.9%. EPS increased 40% year-over-year to $0.94 compared to our guidance range of $0.60 to $0.70. We are off to a great start in 2021, and we are increasing our full year guidance to reflect the better-than-expected performance in the first quarter and an improved outlook for the remainder of the year. For the full year 2021, we are increasing the high-end of our revenue and earnings per share guidance ranges by $130 million and $0.50 respectively, largely due to strength in the Industrial Automation and broadband and 5G markets. Belden's senior leadership team and I are laser-focused on driving solid and sustainable organic growth. To that end, we are pursuing a number of compelling strategic initiatives to capitalize on the opportunities in our markets and accelerate growth. I would like to briefly highlight a few of them for you now. First, we are significantly improving our portfolio and aligning around the favorable secular trends in our key strategic markets, including Industrial Automation, Cybersecurity, Broadband and 5G and Smart Buildings. We think these markets are secular growers and we are uniquely positioned to win in each of them. In our largest market, Industrial Automation, we are extremely bullish and we continue to see a number of compelling demand drivers. The U.S. manufacturing PMI reading hit the highest levels in nearly four decades in March. So market conditions are clearly improving. Longer-term, all roads lead to more automation whether it is the increasing cost of labor, increasing capacity requirements or the needs to pandemic-proof operations with social distancing protocols. Belden is extremely well positioned and highly differentiated in the marketplace and we expect to deliver solid growth in this market going forward. In Broadband and 5G, we think the secular trends are undeniable. Broadband networks will need to be upgraded continuously to support high-definition video consumption, streaming, virtual reality, work from home, virtual learning, etc. Demand is only accelerating and there is clear momentum behind providing high-speed broadband access to every household. There is no doubt that we have sustainable competitive advantages in this market and we are ideally suited to support both MSO and telco customers as they upgrade and expand their networks. As part of our improving end market alignment, we have been taking significant steps to reduce challenged businesses -- to remove the challenged businesses from the portfolio and exit less attractive markets, and we are not done. As you know, we initiated a process last year to divest approximately $200 million in revenues associated with certain undifferentiated copper cable product lines. These are primarily stand-alone product lines that are low growth and low-margin, and we do not believe they can meet our growth or margin goals in the future. We believe that exiting these product lines will further improve our end-market exposure. In this case, we are essentially exiting the oil and gas markets and reducing our exposure to certain less attractive Smart Buildings markets. We expect to complete multiple transactions in 2021 associated with these product line exits. We remain on track and we look forward to updating you as we close these transactions. Next, we are committed to supporting our customers by driving innovation. As a result, we are making targeted investments to strengthen our product roadmap. We are particularly focused on driving innovation in our end-to-end industrial networking solutions and accelerating development of our best-in-class cybersecurity cloud platform. We are also improving the software content of our offerings, including embedded software within various hardware products and developing fiber connectivity solutions to be used across a number of industrial and enterprise applications. These innovations are important to our customers and our shareholders as they will further strengthen our product offering and enhance our competitive advantage. We are also sharpening our commercial excellence in a number of important areas, such as solution selling, customer innovation centers, and digital transformation. Beyond individual product sales, Belden is uniquely positioned to offer differentiated solutions to our customers, including cable, connectivity, networking and software products and services. Through our solution selling and strategic accounts programs, we are increasingly capitalizing on these opportunities by engaging with customers as one Belden, rather than separate businesses. One of the ways we are doing that is through customer innovation centers or CIC's. CICs are newer initiative designed to improve customer intimacy and support solution selling. This will allow us to not only support our customers but co-innovate with them, create solutions that solve their complex networking problems and deliver superior service and support. The CIC model is unique to Belden and reflects our commitment to leading in our key markets. We are very excited about the potential here. In April, we announced the opening of a state-of-the-art CIC in Stuttgart, Germany. We have plans to open other CICs around the world over the next 12 months to 18 months. We are hosting a virtual grand opening of the Stuttgart facility on May the 12th, and I invite each of you the register for this event on our website to participate in a virtual-guided tour which will highlight our new capabilities. Finally, digital transformation is another important and ongoing initiative for many companies including Belden. We want to improve the customer experience and make working with Belden as easy as possible, and we know that certain customers want to interact with us exclusively through digital and mobile means. We are upgrading our capabilities in these areas and our teams have made significant progress. To summarize, we are committed to driving improved organic growth rate, and I'm excited about the numerous opportunities we have to do that. I will now ask Jeremy to provide additional insight into our first quarter financial performance. I will start my comments with results for the quarter followed by a review of our segment results and a discussion of the balance sheet and cash flow performance. As a reminder, I will be referencing adjusted results today. Revenues were $536 million in the quarter, increasing $73 million or 16% from $464 million in the first quarter of 2020. Revenues were favorably impacted by $33 million from currency translation and higher copper prices and $4 million from acquisitions. After adjusting for these factors, revenues increased 8% organically from the prior year period. Incoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially and accelerating as the quarter progressed. This resulted in a healthy book-to-bill ratio of 1.3 times, with particular strength in Industrial Automation and Broadband and 5G. Gross profit margins in the quarter were 36%, decreasing 90 basis points compared to 36.9% in the year ago period. As a reminder, as copper costs increase, we raise selling prices, resulting in higher revenue with minimal impact to gross profit dollars, as a result, gross profit margins decreased. In the first quarter, the pass-through of higher copper prices had an unfavorable impact of approximately 180 basis points. Excluding this impact, gross profit margins would have increased 90 basis points year-over-year that. This exceeded our expectations for the quarter and we are especially pleased with the performance given the current inflationary environment. We expect that inflationary pressures will likely persist throughout the year and we are proactively addressing through additional price recovery and productivity measures to support gross profit margins. EBITDA was $80 million, increasing $19 million or 32% compared to $61 million in the prior year period. EBITDA margins were 14.9% compared to 13.1% in the prior year period, an improvement of 180 basis points year-over-year. The pass-through of higher copper prices had an unfavorable impact of approximately 70 basis points in the quarter. Excluding this impact, EBITDA margins would have increased 250 basis points year-over-year, demonstrating solid operating leverage on higher volumes. Net interest expense increased $2 million year-over-year to $16 million as the result of foreign currency translation. At current foreign exchange rates, we expect interest expense to be approximately $61 million in 2021. Our effective tax rate was 19.9% in the first quarter, consistent with our expectations. For financial modeling purposes, we recommend using an effective tax rate of 20% throughout 2021. Net income in the quarter was $42 million compared to $31 million in the prior year period. And earnings per share was $0.94, increasing 40% compared to $0.67 in the first quarter of 2020. I will begin with our Industrial Solutions segment. As a reminder, our Industrial Solutions allow customers to transmit and secure audio, video and data in harsh industrial environments. Our key markets include discrete manufacturing, process facilities, energy and mass-transit. The Industrial Solutions segment generated revenues of $310 million in the quarter, increasing 23% from $251 million in the first quarter of 2020. Currency translation and higher copper prices had a favorable impact of $20 million year-over-year. And acquisitions had a favorable impact of $4 million. After adjusting for these factors, revenues increased 14% organically. Within this segment, Industrial Automation revenues also increased 14% year-over-year on an organic basis, with growth in each of our primary market verticals. Cybersecurity revenues increased 8% year-over-year in the first quarter, with nonrenewal bookings our best leading indicator of revenues increasing 74%. We continue to secure large strategic orders with new industrial and enterprise customers and significantly expand our engagements with existing customers. Industrial Solutions segment EBITDA margins were 16.6% in the quarter, increasing 250 basis points compared to 14.1% in the year ago period. The year-over-year increase primarily reflects operating leverage on higher volumes. Turning now to our Enterprise segment. Our Enterprise Solutions allow customers to transmit and secure audio, video and data across complex enterprise networks. Our key markets include Broadband, 5G and Smart Buildings. The Enterprise Solutions segment generated revenues of $226 million during the quarter, increasing 7% from $212 million in the first quarter of 2020. Currency translation and higher copper prices had a favorable impact of $13 million year-over-year. After adjusting for these factors, revenues increased 1% organically. Revenues in Broadband and 5G increased 9% year-over-year on an organic basis. The ever increasing demand for more bandwidth and faster speeds is driving increasing investments in network infrastructure by our customers. This supports continued robust growth in our fiberoptic products, which increased 23% organically in the first quarter. Revenues in the Smart Buildings market declined 6% year-over-year on an organic basis consistent with our expectation. Enterprise Solutions segment's EBITDA margins were 12.4% in the quarter, increasing 80 basis points compared to 11.6% in the prior year period. Our cash and cash equivalents balance at the end of the first quarter was $371 million compared to $502 million in the prior quarter and $251 million in the prior year period. We are very comfortable with our current liquidity position. Working capital turns were 6.7 compared to 10.3 in the prior quarter and 5.6 in the prior year period. Days sales outstanding of 54 days compared to 50 in the prior quarter and 57 in the prior year period. Inventory turns were 5.0 compared to 5.2 in the prior quarter and 4.6 in the prior year. Our debt principal at the end of the first quarter was $1.53 billion compared to $1.59 billion in the prior quarter. The sequential decrease reflects current foreign exchange rate. Net leverage was 4 times net debt to EBITDA at the end of the quarter. This is temporarily above our targeted range of 2 to 3 times, and we expect to trend back to the targeted range as conditions normalize. Turning now to Slide 8, I will discuss our debt maturities and covenants. As a reminder, our debt is entirely fixed at an attractive average interest rate of 3.5%, with no maturities until 2025 to 2028, and we have no maintenance covenants on this debt. As I mentioned previously, we are comfortable with our liquidity position and the quality of our balance sheet. Cash flow from operations in the first quarter was a use of $42 million compared to a use of $52 million in the prior year period. Net capital expenditures were $11 million for the quarter compared to $19 million in the prior year period. And finally, free cash flow in the quarter with a use of $53 million compared to a use of $71 million in the prior year period. End market conditions are improving, and I am encouraged by a robust recent order rates and solid execution. We are increasing our full year 2021 guidance to reflect better-than-expected performance in the first quarter and an improved outlook for the remainder of the year, while considering the continued uncertainty related to the global pandemic. We anticipate second quarter 2021 revenues of $535 million to $550 million and earnings per share of $0.88 to $0.98. For the full year 2021, we now expect revenues of $2.13 billion to $2.18 billion compared to prior guidance of $1.99 billion to $2.05 billion. We now expect full year 2021 earnings per share to be $3.50 to $3.80 compared to prior guidance of $2.90 to $3.30. We expect interest expense of approximately $61 million for 2021 and an effective tax rate of 20% for each quarter and the full year. This guidance continues to include the contribution of the copper cable product lines that we are in the process of divesting, which contributed approximately $200 million in revenue and $0.20 in earnings per share in 2020. We will update our guidance accordingly as we complete these divestitures. Again, demand trends are improving, and our recent order rates are encouraging. As a result, we are increasing our volume outlook for the year by $90 million. Our revised full year guidance implies consolidated organic growth in the range of 6% to 9% compared to our prior expectation of approximately 1% to 4%. Relative to our prior guidance, we expect higher copper prices and current foreign exchange rate to have a favorable impact on revenues of approximately $40 million in 2021, but a negligible impact on earnings. For the full year 2021, the high-end of our guidance implies total revenue and earnings per share growth of 17% and 38%, respectively. Before we conclude, I would like to reiterate our investment thesis. We view Belden as a compelling investment opportunity. We are taking bold actions to drive substantially improved business performance and you are seeing that in our better-than-expected first quarter performance and increased full year outlook. We are positioning the company for accelerating organic growth and robust margin expansion. We are also committed to delevering, enabled by strong free cash flow generation, and we intend to return to our targeted leverage range as soon as possible. I'm confident that we have the management team, strategy and business system to successfully execute our strategic plans and drive strong returns for our shareholders. Stephanie, please open the call to questions.

sees q2 adjusted earnings per share $0.88 to $0.98. sees fy adjusted earnings per share $3.50 to $3.80. q1 adjusted earnings per share $0.94. sees q2 revenue $535 million to $550 million. sees fy revenue $2.13 billion to $2.18 billion.

This is Kasey Jenkins, Vice President of McCormick Investor Relations. We'll begin with remarks from Lawrence Kurzius, Chairman, President and CEO; and Mike Smith, Executive Vice President and CFO. During our remarks, we will refer to certain non-GAAP financial measures. These include information in constant currency as well as adjusted gross margin, adjusted operating income, adjusted income tax rate and adjusted earnings per share that exclude the impact of special charges, transaction and integration expenses related to the acquisitions of Cholula and FONA. In our comments, certain percentages are rounded. Actual results could differ materially from those projected. It is important to note, these statements include expectations and assumptions which will be shared related to the impact of COVID-19 pandemic. It is now my pleasure to turn the discussion over to Lawrence. Starting on slide 4. Our first quarter results were outstanding. As we said in our year-end earnings call in January, we have confidence in our strategies and are well positioned to deliver another year of differentiated growth in 2021. Following an extraordinary year in 2020, in 2021 we expect strong underlying base business performance and recent acquisitions to drive significant sales growth as well as strong operating income growth, even considering extraordinary COVID-19 cost and business transformation investments highlighting our focus on profit realization. During the first quarter, we delivered double-digit sales, adjusted operating income and earnings growth. We expect growth to vary by quarter in 2021 given 2020's level of demand volatility and the pace of COVID-19 recovery. But importantly, we have started the year with outstanding first quarter performance, giving us confidence in an even stronger outlook for 2021. As seen on slide 5, we have a broad and advantaged global flavor portfolio with compelling offerings for every retail and customer strategy across all channels. The breadth and reach of our portfolio across segments, geographies, channels, customers and product offerings creates a balanced and diversified portfolio to drive consistency in our performance, as evidenced again by our first quarter results. The sustained shift in consumer behavior to cooking and eating more at home continued to drive substantial increases in our Consumer segment demand in all regions as well as increases in our packaged food company customers in our Flavor Solutions segment. On the other hand, in our Americas and EMEA regions, we continued to experience reduced demand from our restaurant and other foodservice customers given the pressure on away-from-home consumption driven by continued COVID-19 government imposed restrictions which in several areas increased during the first quarter. Notably, our APZ region had substantial growth in both segments, driven not only by lapping the significant disruption last year caused by the COVID-19 related lockdown in China, but also by the sustained increase in at-home consumption and an increase in away from home consumption as restrictions have eased and the recovery momentum is building. Finally, with the addition of our Cholula and FONA acquisitions, we have further extended the reach and breadth of our portfolios, with new product offerings, channels and customers and are excited about their contributions to our first quarter and beyond. These impacts continue to demonstrate the strength and diversity of our offering, and we are confident our balanced portfolio will continue to differentiate McCormick and sustainably position us for growth. After that, Mike will go more in depth on our first quarter results and provide an update on our 2021 guidance. Starting with our outstanding first quarter results, as seen on slide 6. Total sales grew 22%, including a 2% favorable impact from currency. In constant currency, we grew total sales 20%, with increases in both segments. Base business growth, new products and acquisitions, our three long-term growth drivers, all contributed to the increase. In addition to our top line growth, adjusted operating income increased 35%, including a 3% favorable impact from currency, and adjusted operating margin expanded by 160 basis points. Growth from higher sales, favorable mix and CCI-led cost savings more than offset COVID-19 related costs and higher planned brand marketing investments. Our first quarter adjusted earnings per share was $0.72 compared to $0.54 in the prior year, driven by our strong operating performance, partially offset by a higher adjusted tax rate. Turning to our first quarter segment business performance. Starting on slide 7. In our Consumer segment, we grew sales by 35%; on constant currency, 32%, with double-digit increases across each of our three regions. Our Americas constant currency sales growth was 30% in the first quarter, with incremental sales from our Cholula acquisition contributing 5%. The momentum Cholula carried in from last year continues to be strong, with consumption growing at twice the category rate. Excluding Cholula, our total McCormick US branded portfolio, as indicated in our IRI consumption data and combined with unmeasured channels, grew 15%, which reflects the strength of our categories as consumers continued to cook more at home. For the first time in several quarters, our sales increase was higher than our US IRI consumption growth. We are realizing the benefit of our capacity expansion at the end of last year. The difference between shipments and consumption is attributable to beginning to catch up on the undershipment of consumption across all quarters of last year that resulted in depleted retailer and consumer pantry inventories. Demand has remained high as the steps we've taken to increase supply are beginning to show. As we mentioned in our January earnings call, after experiencing real pressure on our US manufacturing operations throughout 2020 due to elevated demand levels, we ended the calendar year with considerable incremental capacity and restoration plans for products which had been suspended. Throughout our first quarter, we removed products from suspension and continued to see service levels improve, which, combined with our overshipping consumption, indicates we are beginning to rebuild the inventory pipeline. As we've said previously, inventory replenishment will progress throughout the year. We continue to work with all our customers on improving shelf conditions and estimate more than half the suspended products are now back on shelf. The level of restoration is very customer specific. Focusing further on our US branded portfolios. In spice and seasonings and all other categories, excluding dry recipe mixes, we grew first quarter consumption at double-digit rates and again increased our household penetration and repeat buy rates. In the first quarter, we continued to gain share in categories less impacted by supply constraints, including snacks and broths, barbecue sauce, wet marinates and Asian products. The categories most impacted affected by supply constraints, spice and seasonings and dry recipe mix, we know there is a high correlation between our share performance and the shelf conditions resulting from product suspension or allocation. Products that have had strong supply and remained on shelf have performed well, and as suspended products are restocked on shelf, we're seeing similar performance. We anticipate regaining share as conditions continue to improve. All of our key categories continued to outpace the center of store growth rates favorably impacting not only the McCormick brand, but smaller brands as well such as Stubb's, Lawry's, Simply Asia, Thai Kitchen, Zatarain's and Kitchen Basics. And in e-commerce, we had strong double-digit pure-play growth, with McCormick branded consumption outpacing all major categories. We continue to use our strong category management capabilities in working with our customers as inventory is replenished throughout the supply chain to optimize category shelf sets, drive both growth for our customers and for McCormick. We are well positioned for success in 2021 and have implemented efficient long-term solutions and strengthened our supply chain resiliency to support continued growth. Now turning to EMEA, which continued its momentum with outstanding performance in the first quarter. Our constant currency sales rose 26%, with broad-based growth across the region. Each of our markets drove double-digit total branded consumption growth, with market share gains across the region. Spices and seasonings consumption was strong in all markets, driving market share gains across total EMEA region. And our Vahine brand in France again had strong consumption growth and outpaced the homemade desserts category. In the UK, both Frank's RedHot and French's Mustard also had strong consumption and gained share. Since the beginning of the pandemic, our EMEA supply chain has been very well positioned to meet the elevated demand and this has contributed to our ability to grow share across the region. In EMEA, our household penetration and rate of repeat buyer increased again in the first quarter for the fourth consecutive quarter across our major brands and markets compared to last year, and we continue to work closely with our customers to ensure that elevated consumer demand will be met, even obtaining incremental placement for our branded portfolio as other manufacturers and private label faced supply challenges. We're excited with our growth trajectory in EMEA following challenging market conditions in the past. In the Asia-Pacific region, our constant currency sales grew 55%. During the first quarter of last year, China's consumption was disrupted by the COVID-19 related lockdown. Recovering from that disruption increased sales in the first quarter of 2021 versus last year. Notwithstanding that recovery, the region still had double-digit growth, driven by strong China consumer and branded foodservice demand, partially fueled by the Chinese New Year holiday as well as strong consumer consumption in the rest of the region. For instance, in Australia, we continued to see elevated consumption in the brands where we gained household penetration last year such as Frank's RedHot, Gourmet Garden and Grill Mates. Across all regions, we know second quarter consumption will start to be compared to the highly elevated levels from last year. And while we do not expect consumption at those same levels, we do expect continued and long-lasting growth from the increase in consumers' cooking more at home. Constant currency sales in our Flavor Solutions segment grew 3%, driven by our Americas and APZ regions. In the Americas, we drove constant currency sales growth of 2%, driven by our FONA and Cholula acquisitions as well as growth with our consumer packaged food customers or our at-home base. With strengthened base business as well as new product momentum, we continued to shift our portfolio to more value-added and technically insulated products, not only with the combination of FONA's flavor portfolio, but also with considerable growth from snack seasonings in the US and Mexico as well as flavors from both savory and beverage applications. Demand from our away from home customer base, the branded foodservice and restaurant customers declined and continue to be impacted by the COVID-19 environment. Sales in our EMEA region were comparable to the first quarter of last year for Flavor Solutions, with demand declines in our away from home customer base, offset by strong sales for our consumer packaged food customers. This growth was driven by a significant increase in new product growth versus last year as well as continued strength in the base business, partially from our customers' promotional activities. Our sales growth in the Asia Pacific region was outstanding, up 18% in constant currencies. Both China, excluding the recovery impact from last year's lockdown, and Australia delivered double-digit growth from quick service restaurants or QSR customers. This growth was driven by significant momentum in limited time offers as well as strength in the core business. I mentioned our results related to Cholula and FONA. And now I'd like to provide a brief update on their integration status. , For both acquisitions, our integration activities are progressing according to our plan. We continue to deliver on opportunities quickly and aggressively to drive growth and are pleased with our momentum on capturing our synergy opportunities. We remain on track to achieve synergies according to plan. As expected, our integration of the business has been straightforward. As of March 1, all functions have been integrated into our McCormick processes, and importantly, we are now servicing customers from our McCormick US distribution center. From a consumer commercial perspective, we are expanding distribution and are fueling growth, with robust brand marketing investments. We'll be activating both digital, where Cholula was underpenetrated, and in-store merchandising in the next few weeks for our exciting Cinco de Mayo campaign. In Flavor Solutions, we're also expanding distribution with new and existing branded foodservice customers and are leveraging Cholula's authentic Mexican flavor for increased menu participation, particularly in Cinco de Mayo menu offers. The employees of FONA have been part of building a great business, and we are excited to be working with them to collectively integrate the business and drive plans to capitalize on growth opportunities. Our functional integration is very much on track and is using a best of both approach to ensure we optimize our operating model, similar to the approach we have with our RB Foods integration. The alignment of our organization is well under way, and we have had significant commercial collaboration yielding quick wins and identifying long-term strategic opportunities. Customer reaction has been extremely positive. They were impressed with our early collaboration and excited about the increased customer value proposition created by the combination of McCormick and FONA, a more comprehensive product offering, broader technical platform, deep technical and flavor talent and best-in-class customer collaborations. And we were excited with FONA's performance starting the year, with great results and a robust momentum across the business. For both Cholula and FONA, we are pleased with our progress so far and our contribution to our results. Our enthusiasm for these acquisitions and our confidence that we will deliver on our acquisition plans, accelerate growth of these portfolios and drive shareholder value has only increased over the last few months. Now I would like to briefly comment on the conditions we're seeing in our markets, their potential impact and our 2021 organic growth plans, starting on slide 10. Local demand for flavor remains the foundation for our sales growth. We are capitalizing on the growing consumer interest in healthy flavorful cooking, trusted brands as well as digital engagement and purpose-minded practices. These long-term trends have only accelerated during the pandemic, and our alignment, combined with the breadth and reach of our portfolio, sustainably positions us for continued growth. These underlying trends, current market conditions and our robust 2021 plans position us well to successfully execute on our growth strategies in both segments. Turning to slide 11. Starting with our Consumer segment, around the world, we continue to experience sustained elevated consumer demand, which is real incremental consumption and reflects the trend of consumers cooking more at home. Across our APZ region, consumer demand continues to be strong. In China, consumer consumption remains strong, and we continue to see recovery in foodservice, which, in China, is in our Consumer segment, with approximately 90% of restaurants open during the Chinese New Year period. In Australia, even with restaurant restrictions eased and away from home demand increasing, at-home consumption has remained elevated. And as I mentioned earlier, we are retaining households that came into our brands last year. And we're also realizing growth with our away from home customer. In many of our largest markets in EMEA, restrictive COVID-19 measures are still in place, further fueling at-home consumption, and we are seeing sustained levels of demand. In the Americas, as restrictions are easing and vaccinations are continuing, consumption remains elevated. Consumers are continuing to come to our brand, having a good experience and buying our products again. Consumers are cooking more from scratch and adding flavor to their meal occasions is a key long-term trend which has accelerated during the pandemic. As we've shared previously, our proprietary consumer survey data, supported by external research indicates consumers are enjoying the cooking experience as it provides a creative outlook, reduces stress and connects the family. And consumers feel meals prepared at home are safer, healthier, better tasting and cost less. In our recent consumer survey from February, these positive sentiments are not only still true but have strengthened. Consumers' interest in cooking has increased in recent months versus the end of last year because they want to cook versus have to cook. For example, approximately 50% of the consumers surveyed indicated they are cooking more now because they want to try new recipe, ingredient, cooking method or tool or simply just cook from scratch, and approximately 40% also indicated they're trying to recreate restaurant meals at home. Importantly, over two-thirds of consumers surveyed claim they would maintain or increase their current level of cooking at home even if life were to return to normal next week, whatever normal may be. We continue to believe that consumer behavior and sentiment driving an increased and sustained preference for cooking at home will continue globally and persist beyond the pandemic, further driving consumer demand for our products in 2021 and beyond, fueled by robust brand marketing, differentiated new products and our strong category management initiatives. Our category management initiatives are designed to continue to strengthen our category leadership by driving growth for both us and our customers. In the US, in 2020 we began our initiative to reinvent the in-store experience for spices and seasonings consumers by introducing new merchandising elements to improve navigation and drive inspiration, transforming and at times confusing shelves with three shoppable sections. Our rollout has continued in 2021, with plans to implement in thousands of stores, and the early indication is positive, with the category and McCormick branded growth outpacing the rest of the market in transformed stores. We are also investing in e-commerce to drive McCormick and category growth. In the first quarter, we delivered over 90% global e-commerce growth, with particular strength in omnichannel. We are investing in content, retail research and innovation specifically for e-commerce, trialing new items of packaging in the direct-to-consumer channel first. For example, in the Americas we've launched unique flavor inspiration products such as Frank's RedHot Everything Bagel Seasonings, and in China we are launching a ready to eat chili paste on our direct to consumer platform. In EMEA, following the successful launch of the innovative street food seasonings the last year, we are now accelerating online growth with variety, bundle packs and multi-buy offers on our main e-commerce channels. Turning to global brand marketing. We continue to increase our investments across our entire portfolio as evident in our 17% increase in the first quarter and plan for another significant increase in the second quarter. Our investments have proven to be effective, and we will continue to connect with consumers online, turning real-time insights into actions by targeting messaging focused on providing information and inspiration. We expect our brand marketing investments, combined with the valuable brand equities and strong digital consumer engagement will continue to drive growth with existing consumers and the millions of consumers gained in 2020. Highlighting some of our first quarter investments in the Americas and EMEA regions on slide 12. Starting with the Americas. We continued our advertising campaign, It's Gonna Be Great, with a focus on consumers' continuing traditions and preparing the families' signature holiday dishes even if their celebrations look different. Our Frank's Super Bowl campaign integrated across digital, social, online, video and TV featured fan favorite Eli Manning promoting Frank's RedHot as approachably hot and was our best Super Bowl campaign yet garnering record high impressions. As part of our Zatarain's Bold Like That campaign, we partnered with New Orleanian author and poet Cleo Wade to promote virtual Mardi Gras celebrations with authentic New Orleans flavors, #Zatarain'sPorchParty, and recognizing virtual celebrations replace live Mardi Gras events, we supported Culture Aid NOLA, an organization which distributes food to hospitality workers impacted by pandemic restrictions. Turning to EMEA, where we have invested a substantial portion of our brands' marketing, our digital marketing and promotional activities included our holiday campaign featuring a festive gold cap limited edition packaging which drove strong holiday results in our major markets. In the UK, with our New Year flavor resolutions campaign, we inspired consumers with recipes and products to flavor their healthy kick, whether it be through the heat of Frank's or spicing it up through Schwartz. And in France, we're giving families another reason to celebrate in 2021. In 2020, birthday celebrations were not just a piece of cake. So with the inspiration of our Half-py Birthday marketing campaign, consumers can celebrate their half birthdays, complete with Vahine's launch of a decimal comma-shaped candle to top their cakes made with our Vahine baking products. Looking at just a few of our second quarter plans, in the Americas we'll inspire restaurant quality cooking with our It's Gonna Be Great campaign. Our Vahine brand in EMEA is sponsoring a prime-time French baking program which will showcase our homemade dessert line. In both regions, we launched Easter campaigns, bringing the family together with baking and crafting ideas. Finally, our plans include support of our robust new product launches. New products are integral to our growth. In our Consumer segment, new product innovation differentiates our brands and strengthens our relevance with our consumers. Our 2020 launches have made exceptional trials and are providing significant momentum into this year. And in 2021, we have a robust global pipeline of new product launches, and I'm happy to share some of our first half launches as seen on slide 13. We're meeting consumers at the intersection of flavor and health. We're launching Just 5 dry recipe mixes in the US, dips and dressing mixes in flavors like French onions and Homestyle Ranch, the clean and short ingredient statements, five simple ingredients delivering a classic flavor experience. And in France, we are expanding our range of organic products in our Vahine homemade dessert line. When it comes to heat, we're continuing to broaden our French portfolio globally. In the US, we're expanding French green sauces, with a milder tangy Buffalo flavor and a garlic Buffalo flavor or combining savory garlic with spicy eats. Also in the US, we have just launched Cholula wing sauces in two flavors: Mexicali Cilantro Lime and Caliente Spicy Arbol Peppers in a unique bottle with the iconic wooden cap. And in the UK, we're launching Frank's craft additions, capitalizing on interest in Frank's heat with differentiated flavors such as roasted Jalapeno and raw [Phonetic] Habanero. We are responding to consumers' demand for convenience and flavor. In the US, our launch of frozen appetizers, providing hot chicken bites and Buffalo chicken dips with Frank's flavor that are ready in minutes is gaining momentum with one of our best new product starts. We're excited at the launch of new Grill Mates all-purpose grilling seasonings for consumers who want to respect the need. Simple course ground seasonings for the open flame that cling to the meat and lock in juiciness. Finally, our innovation is not only all about flavor but also staying relevant with our consumers through our packaging innovation. We're continuing the rollout of our first choice bottle with its consumer preferred transparent and functional design, modern look and a reinforcement of fresh flavor into our Eastern European markets. These markets have predominantly been sachet markets for spices and seasonings and perceive the bottle packaging as a premium offering. And in Canada, we're beginning the relaunch of our gourmet line in the First Choice bottle as well as adding new flavor varieties. In the UK, not only are we building on our Schwartz recipe mix momentum with the introduction of flavorful line extensions. We're also advancing on our sustainable packaging commitment with sachet packaging that is 100% recyclable. Schwartz will be the first brand in the UK dry recipe mix category with recyclable packaging. And in France, with the redesign of our Ducros grinder. Its appearance not only has greater consumer appeal, but it also reduces our carbon footprint. Turning to Flavor Solutions. In this segment, we have a diverse customer base, and have seen various stages of recovery. From a food at home perspective, our Flavor Solutions' growth varies by packaged food customer. Overall, we are carrying our growth momentum with these customers into 2021, driven by strength in their iconic core products as well as new products and bigger-bet innovation in 2021. Overall, the sell-in of our new product launches and big bet innovations from these customers slowed in 2020 due to the focus on keeping core items on shelf. There are still new product launches, and in many cases they are smaller expansions of the core and more channel oriented. Moving into 2021, we're excited about the momentum of the 2020 launches, but even more excited about the robust 2021 pipeline. Our customers have bigger bet innovations in their plans. I would look forward to collaborating with them and driving growth from those launches. The key enablers driving our success and developing winning flavors for our customers is our insight on consumer and culinary trends. We've been at the forefront forecasting emerging flavors for 21 years. Through the McCormick flavor forecasts, we have a history of identifying the top trends in ingredients, catering to future of flavor, many of which have stood the test of time, whether it was Ma Turmeric or pumpkin pie spices, the flavor of Chipotle or dishes with [Indecipherable]. In April, we'll be launching our newest addition that will shake up the way we cook, flavor and eat. We'll feature new trends, flavors and recipes that will not only flavor our Consumer segment innovation, but also drive wins with our Flavor Solutions' customer. In our away from home portion of this segment, as I mentioned earlier, we are seeing growth from our restaurant and other foodservice customers in our APZ region as restrictions have eased. The QSR demand momentum continues to strengthen, particularly as they continue to expand their menu options with limited time offers and are increasing promotional activities. Branded foodservice demand as it relates to entertainment, stadium for hospitality venues, for instance, is recovering at a slower pace. In EMEA and the Americas, during the first quarter our restaurants and other foodservice customers were still impacted by government imposed COVID-19 restrictions in many markets. There is now optimism with many of these customers related to restrictions' easing and reopening plans. Focus has shifted from adapting operating model to the supply chain preparedness for the second half of the year. We're collaborating with our customers to ensure a strong recovery with pent-up demand being met. We expect the recovery of some of our branded food customers will start to begin, similar to what we've seen in APZ. As QSR customers are oriented less to dine-in, their recovery will be at a faster pace than the rest of the restaurant and foodservice industry. We have positive fundamentals in place to navigate through this period and are excited about the recovery momentum. Across our entire Flavor Solutions portfolio, we were advantaged by our differentiated customer engagement and plan on driving further wins for both us and our customers in fiscal 2021. With our customer intimacy approach, we will continue to drive new product wins, collaborate on opportunities and solutions, manage through recovery plans and, importantly, further strengthen our customer partnerships. When we collaborate with our customers and our technical innovation center, we have a high win rate. Since we could not connect in person during 2020, we adapted to new ways of collaborating through creative, digital and virtual solutions. The interactive experience for our customers build their excitement, awareness and confidence in our unique capabilities in an engaging and inspiring way. We continue to not only strengthen our engagement in 2020, but we also proved we could maintain a high win rate whether physically in our innovation centers or not, and have carried that momentum into 2021. In our Flavor Solutions segment, the execution of our strategy to migrate our portfolio to more technically insulated and value-added categories will continue in 2021. The top-line opportunities gained from our investments to expand flavor scale, our momentum in flavor categories as well as opportunities from our FONA acquisition, we expect to realize further results from this strategy. Lastly, we continue to be recognized for our efforts for doing what's right for people, communities and the planet, our purpose-led performance. Following being named by Corporate Knights in their 2021 Global 100 Most Sustainable Corporations Index as number one in the packaged food and processed foods and ingredients sector, McCormick was also recently named to Barron's 2021 100 Most Sustainable Companies list for the fourth consecutive year. As we continue our sustainability journey, I'm excited to announce that later this week we will begin using 100% renewable electricity in all our Maryland and New Jersey-based facilities. This includes our manufacturing operations, distribution centers, offices and technical innovation center and will result in an 11% reduction in our global greenhouse gas emissions. Moving to slide 16. In summary, we continue to capture the momentum we have gained in our Consumer segment and with our Flavor Solutions' at home customers, have positive fundamentals in place to navigate through the Flavor Solutions away from home recovery and are excited about our Cholula and FONA acquisitions, all of which bolster our confidence for continued growth in 2021. Our fundamentals, momentum and growth outlook are stronger than ever. Our achievements in 2020, our effective strategies, our robust operating momentum and the breadth and reach of our portfolio reinforce our confidence in delivering another strong year of growth and performance in 2021. Following an extraordinary year in 2020, our 2021 outlook reflects both our strong underlying base business performance and acquisitions driving significant sales growth as well as strong operating income growth, even considering extraordinary COVID-19 costs and our business transformation investments which highlights our focus on profit realization. Our top-tier long-term growth objectives remain unchanged and we're positioned for continued success. I'll now provide some additional comments on our first quarter performance and an update on our 2021 outlook. As Lawrence mentioned, our first quarter results were outstanding. Starting with our top line growth. As seen on slide 18, we grew sales 20% in constant currency during the first quarter. Our volume and product mix, acquisitions and pricing each contributed to the increase. Our organic sales growth was 16%, driven by our Consumer segment, and incremental sales from our Cholula and FONA acquisitions contributed 4% across both segments. The Consumer segment sales grew 32% in constant currency, with double-digit growth in all three regions. The sustained shift in consumer consumption continues to drive increased demand for our consumer product, fueled by our brand marketing, new products and category management initiatives and resulted in higher volume and mix in each region. On slide 19, Consumer segment sales in the Americas increased 30% in constant currency versus the first quarter of 2020, with 5% of the increase from the acquisition of Cholula. The remaining increase from higher volume and product mix was broad based across majority of categories and brands as well as private label products, with particular strength in the McCormick, Frank's RedHot, French's, Zatarain's, Lawry's, Simply Asia and Gourmet Garden brands. In EMEA, constant currency Consumer sales grew 26% from a year ago, with double-digit growth in all countries and categories across the region. The most significant volume and mix growth drivers were Schwartz and Ducros branded spices and seasonings. Vahine homemade dessert products, packing products and our Kamis branded products in Poland. Consumer sales in the Asia Pacific region increased 55% in constant currency, driven primarily by the recovery from the disruption in China consumption last year, as Lawrence mentioned. Excluding that recovery impact, the region had double-digit growth due to strong China consumer and branded foodservice demand, partially driven by the timing of Chinese New Year and related holiday promotions as well as continued strength in Australia. Turning to our Flavor Solutions segment on slide 22. We grew first quarter constant currency sales 3%. In the Americas, Flavor Solutions constant currency sales grew 2%, driven by the FONA and Cholula acquisitions, a 7% increase, as well as pricing to offset cost increases. Volume and product mix declined due to a reduction in demand from branded foodservice and other restaurant customers, partially offset by higher demand from packaged food companies, with particular strength in snack seasonings and savory flavors. In EMEA, constant currency sales were comparable to last year as pricing actions offset cost increases. Volume and product mix declined due to lower sales to branded foodservice and other restaurant customers, partially offset by sales growth with packaged food companies, with strength in snack seasonings. In the Asia Pacific region, Flavor Solutions sales rose 18% in constant currency, driven by higher sales to QSRs in China and Australia, partially due to our customers' limited time offers and promotional activities as well as the China recovery impact from last year's COVID-19 related lockdown. As seen on slide 26, adjusted operating income, which excludes transaction and integration costs related to the Cholula and FONA acquisitions as well as special charges, increased 35% or, in constant currency, 32%, in the first quarter versus the year ago period. The Consumer segment adjusted operating income grew 59% to $190 million. The 54% constant currency growth from higher sales, favorable mix and CCI-led cost savings more than offset COVID-19 related costs and a 17% increase in brand marketing. In the Flavor Solutions segment, adjusted operating income declined 4% to $73 million with minimal impact from currency. Higher sales and CCI-led cost savings were more than offset by unfavorable manufacturing costs. As seen on slide 27, adjusted gross profit margin expanded 60 basis points in the first quarter versus the year ago period due to favorable mix, both within the Consumer segment and due to the sales shift between segments. In addition, CCI-led cost savings were partially offset by COVID-19 related costs. Our selling, general and administrative expense as a percentage of net sales was down year-on-year by 100 basis points from the first quarter of last year. Leverage from sales growth drove the decline, partially offset by the increase in brand marketing I mentioned a moment ago. With the gross margin expansion and SG&A leverage, adjusted operating margin expanded 160 basis points from the first quarter of 2020. Turning to income taxes on slide 28. Our first quarter adjusted effective tax rate was 22.7% compared to 18.4% in the year ago period. The first quarter adjusted tax rate in 2020 was significantly impacted by a favorable discrete item related to a refinement of our entity structure. Income from unconsolidated operations increased 28% in the first quarter of 2021 due to strong underlying performance of our joint venture in Mexico. At the bottom line, as shown on slide 30, first quarter 2021 adjusted earnings per share were $0.72 as compared to $0.54 for the year-ago period. The increase was due to our higher adjusted operating income performance, partially offset by a higher adjusted income tax rate. On slide 31, we summarize highlights for cash flow and the balance sheet. Our cash flow from operations was an outflow of $32 million for the first quarter of 2021 compared to an inflow of $45 million in the first quarter of 2020. This change was primarily due to a lower level of cash generated from working capital associated with increased sales, higher incentive compensation payments and the payment of transaction and integration costs related to our recent acquisitions. In February, we raised $1 billion through the issuance of five year 0.9% notes and 10 year 1.85% notes. We took the opportunity in a low interest rate environment to optimize our long-term financing following our Cholula and FONA acquisitions. We also returned $91 million of cash to our shareholders through dividends and used $49 million for capital expenditures this quarter. We expect 2021 to be another year of strong cash flow, driven by profit and working capital initiatives, and our priority is to continue to have a balanced use of cash: funding investments to fuel growth, returning a significant portion to our shareholders through dividends and paying down debt. Now I would like to discuss our 2021 financial outlook on slides 32 and 33. With our broad and advantaged flavor portfolio and robust operating momentum and effective growth strategies, we are well positioned for another year of differentiated growth and performance. In our 2021 outlook, we are projecting top line and earnings growth from our strong base business and acquisition contribution, with earnings growth partially offset by incremental COVID-19 costs and ERP investments as well as a higher projected adjusted effective tax rate. We also expect there will be an estimated 2 percentage point favorable impact of currency rates on sales, adjusted operating income and adjusted earnings per share. At the top line, due to our first quarter results and robust operating momentum, we are increasing our expected constant currency sales growth to 6% to 8% compared to 5% to 7% previously, which continues to include the incremental impact of the Cholula and FONA acquisitions at the projected range of 3.5% to 4%. We anticipate our organic growth will be primarily led by higher volume and product mix, driven by our category management, brand marketing, new products and customer engagement growth plans. As Lawrence mentioned earlier, we expect sales growth to vary by region and quarter in 2021, given 2020's level of demand volatility and the pace of the COVID-19 recovery, but importantly, we continue to expect we will drive overall organic sales growth with the full year in both of our segments. We're now projecting our 2021 adjusted gross profit margin to be comparable to 2020 due to increasing inflationary pressure, mainly due to transportation costs. But our inflation expectation for the full year remains a low single-digit increase. Our adjusted gross margin projection reflects margin accretion from the Cholula and FONA acquisitions as well as unfavorable sales mix in both segments and COVID-19 costs. Our estimate for COVID-19 costs remains unchanged at $60 million in 2021 as compared to $50 million in 2020 and weighted to the first half of the year. As a reminder, fiscal 2021's COVID-19 costs are largely from third-party manufacturing costs. Reflecting the increase in our sales outlook, we are also increasing our expected constant currency adjusted operating income growth. Our adjusted operating income growth rate reflects expected strong underlying performance from our base business and acquisitions projected to be 11% to 13% constant currency growth compared to 10% to 12% previously. This is partially offset by a 1% impact from increased COVID-19 costs compared to 2020 and a 3% impact of the estimated incremental ERP investment. This results in total projected adjusted operating income growth rate of 7% to 9% in constant currency, increase from 6% to 8% previously. This projection reflects the inflationary pressure I just mentioned as well as our CCI-led cost savings target of approximately $110 million. We also continue to expect a low single-digit increase in brand marketing investments, which will be heavier in first half of the year. We also reaffirm our 2021 adjusted effective income tax rate projected to be approximately 23%. This outlook versus our 2020 adjusted effective tax rate is expected to be a headwind to our 2021 adjusted earnings-per-share growth of approximately 4%. We are increasing our 2021 adjusted earnings per share expectations to growth of 5% to 7%, which includes a favorable impact from currency. This increase reflects our higher adjusted operating profit outlook and the impact from optimizing our long-term financing, which I mentioned earlier. Our guidance range for the adjusted earnings per share in 2021 is now $2.97 to $3.02 compared to $2.91 to $2.96 previously. This compares to $2.83 of adjusted earnings per share in 2020. This growth reflects strong base business and acquisition performance growth of 11% to 13% in constant currency, partially offset by the impacts I just mentioned related to COVID-19 costs, our incremental ERP investments and the tax headwind. Based on the expected timing of some expense items such as COVID-19 costs and brand marketing investments as well as a low tax rate in the first half of last year, we expect our earnings growth to be weighted to the second half of the year. Our first quarter performance was a strong start to the year, and we are optimistic for the balance of the year, though we recognize we are lapping a very strong earnings performance in the second quarter of 2020 while also making investments to drive growth in 2021. In summary, we are projecting strong underlying base business performance and growth from acquisitions in our 2021 outlook, with earnings growth partially offset by incremental COVID-19 costs, the ERP investments as well as a higher projected effective tax rate. Now that Mike has shared our financial results and outlook in more detail, I would like to recap the key takeaways, as seen on slide 34. Our first quarter results, with double-digit sales, adjusted operating income and earnings growth bode an outstanding start to the year and bolster our confidence in a stronger 2021 outlook. We have a strong foundation and a balanced portfolio, which drives consistency in our performance. We are confident the sustainability of higher at-home consumption will persist beyond the pandemic and we are well positioned to capitalize on accelerating consumer trends as well as prepared for away from home consumption recovery. Cholula and FONA have both started the year with strong momentum in results. Our enthusiasm for these acquisitions and our confidence that we will deliver on our plan has only strengthened over the last few months. Our fundamentals, momentum and growth outlook are stronger than ever. Our 2021 outlook reflects another year of differentiated growth and performance while also making investments for the future. We are confident we will continue on our growth trajectory in 2021 and beyond.

q1 sales rose 22 percent. q1 adjusted earnings per share $0.72 excluding items. sees fy sales up 8 to 10 percent. operating income in 2021 is expected to grow by 5% to 7% from $1.00 billion in 2020. expects to drive organic sales growth in both its consumer and flavor solutions segments in 2021. sees fy 2021 adjusted earnings per share $2.97 to $3.02 excluding items.

Our featured speakers today are Mark Parrell, our President and CEO; Michael Manelis, our Chief Operating Officer; and Bob Garechana, our Chief Financial Officer. Alec Brackenridge, our Chief Investment Officer, is here with us as well for the Q&A. Also, as Marty mentioned, we are pleased to have Alec Brackenridge, EQR's Chief Investment Officer, available during the Q&A period. For those of you who do not know Alec, he's a 28-year veteran in this company. He literally started work here the day we went public in 1993 and took over as our CIO in 2020. As you can see from the release, he and his team have done exceptional work of late on the transactions side. All of our operating metrics continue to improve at a faster rate than we assumed earlier in the year. We are seeing demand levels well above 2019 in all our markets. And this has allowed us to continue growing occupancy, while at the same time raising rates. This resulted in the company materially raising annual same-store revenue, NOI and normalized FFO guidance. While our quarter-over-quarter same-store revenue and NOI results remained negative, the decline was less than what we expected, and our sequential same-store revenue and NOI showed positive growth for the first time since the pandemic began. As we have discussed on prior calls, improvement in our reported quarter-over-quarter same-store numbers will lag the recovery in our operating fundamentals as we work these now higher rents and lower concessions through our rent roll. We believe that our business is set up for an extended period of higher-than-trend growth beginning in 2022 as we recapture revenue loss due to the pandemic and continue to benefit from strong demand and growing incomes in our target demographic. Also, the more diverse portfolio we are creating should improve long-term returns and dampen volatility going forward. On the investment side, we are active buyers and sellers in the second quarter and expect to continue being active capital recyclers. Consistent with what I've said on prior calls, we are allocating capital to places that are attractive to our affluent renter base, including the suburbs of our established coastal markets as well as Denver and our two new markets of Austin and Atlanta. We are making these trades with no dilution, even given higher pricing levels for the properties we are targeting because we are able to sell our older and less desirable properties at low cap rates and at prices that exceed our pre-pandemic value estimates. Earlier this month, we reentered the Texas market after an 11-year absence by acquiring two well-located new assets in Austin, Texas. These properties are located in a desirable area with high housing costs that is equidistant between Downtown Austin and the Domain Hub on the north side. We acquired these two properties for $96 million, and approximately, a 3.9% cap rate and about $195,000 per unit. We expect to acquire a mix of urban and suburban assets in the Austin market. During the second quarter and in July, we acquired two properties in Atlanta. SkyHouse South in Midtown for $115 million with a 3.6% cap rate. This is a deal we did previously disclose. And a few days ago, we acquired a second property in Atlanta in the bustling Midtown West neighborhood. We acquired this new property for $135 million, and it is about half occupied. And once it completes lease-up, we expect it will stabilize at a 4.1% cap rate. We also continued adding to our Denver presence by purchasing an asset in the suburban Central Park area of Denver for $95 million. This property is located just west of the large and growing Fitzsimons medical campus and draws residents attracted to its access to abundant outdoor amenities. We expect this property, which is also in lease-up currently, to stabilize at a 4.2% cap rate. We're also pleased to add to the portfolio of property each in the suburbs of Boston and Washington, D.C. The Boston property is located in Burlington, Massachusetts, and is a new asset that we acquired for $134.5 million at a 4.1% cap rate. This property is in a difficult-to-build suburb of Boston with high single-family housing costs and good access to high-paying jobs. The D.C. asset is located in Fairfax, Virginia, and is a 2016 asset that we acquired for $70 million at a 4.3% cap rate. This property is well located with both good highway and good metro access and proximity to the growing job base in Northern Virginia. Both the Burlington and Fairfax assets are located in submarkets, where our existing assets have performed particularly well. Year-to-date, we have bought $645 million of properties and expect to close on another $850 million in acquisitions, a good number of which are in various states of advanced negotiation by the end of the year. We'll fund these buys with an approximately equivalent amount of dispositions, mostly from California of older and less desirable assets, which we sold or are under contract to sell at significantly above our pre-pandemic estimate of value. We've put into service and began leasing our newly developed property in Alameda island, a short ferry ride to the city of San Francisco. Built on the side of a former naval base, this property has terrific views of the skyline and an evolving restaurant and bar scene that we think is attractive to our clientele. Over the next few months, we'll complete our other two current development projects, including the Alcott in Central Boston, the largest development project in the company's history. Early leasing efforts on this project and our development project in Bethesda, Maryland, are going well. And our current estimates are that these three projects will stabilize at a development yield of approximately 5%, considerably higher than prevailing acquisition cap rates. These properties will be meaningful contributors to NFFO starting in late 2022. We see development as a good complement to our acquisition activities as we spread more of our footprint to the suburbs of our established markets as well as to our new markets. We expect a significant amount of our development activity going forward to be done through joint venture arrangements. This allows us to leverage our partners in place sourcing and entitlement teams in locations like our new markets where we do not currently have a development presence. You're doing an exceptional job during this particularly busy leasing season, and we're all very proud and grateful. As evidenced by our revised guidance, the pace of recovery has been very strong. Let me highlight a few of the overall trends. So first, we continue to see very good demand for our apartment homes. Our national call center in Ella, our AI leasing agent, are responding to record high levels of inbound interest for our apartments, which is converting into high volumes of self-guided tours. This overall level of demand continues to drive applications and move-in activity that is exceeding move-out, and ultimately, is delivering stronger-than-expected recovery in occupancy. Portfoliowide, physical occupancy is currently 96.5%, which is back to 2019 levels. San Francisco and Seattle are still trending slightly below 2019, and Southern California markets are slightly above. At this point, we expect to run the portfolio above 96% through the remainder of the third quarter. This strength in occupancy is allowing us to push rate and drive revenue growth. Overall, we are more than halfway through the typical peak leasing season, and the momentum has been very strong, providing us the opportunity to raise rates, reduce concessions and grow occupancy. These fundamentals are delivering RV recovery. From March to December of 2020, pricing trend, which includes the impact of concessions, declined approximately $500 per unit. From January 2021 to today, pricing trend has grown $660, and is now not only above prior year levels in all markets but every market, except for San Francisco is also above 2019 peak pricing trend levels. Today, the portfolio is approximately $100 higher per unit than our peak 2019 levels. Our priority has been to test price sensitivity in every market by raising rates and reducing both the value and quantity of concessions being granted. At the end of the first quarter, about 20% of applications were receiving on average four weeks in concessions. As of July, we are now running with less than 3% of our applications receiving on average just over two weeks, and we expect this to continue to drop-off even further. To give you perspective, the total dollar of concessions granted peaked in the month of February at just north of $6 million for the same-store portfolio. For July, we will be at $1.5 million for the month, and August should be less than $750,000. Last week, only 12 properties had any concessions being offered. The percent of residents renewing has stabilized around 55%, which is very much in line with historical averages but below the record high 60% levels that we had in 2019 and early 2020. As we progress through the remainder of the year, our focus will continue to be to push rates in our markets and manage our renewal negotiations. Both markets are recovering nicely with concession use nearly nonexistent in our New York portfolio and declining rapidly in San Francisco. New York is seeing stronger demand right now, and we think it is primarily due to greater clarity around employer return-to-office plans. New York employers, particularly the banks and financial firms have called their employees back to the office, and you could feel it in the economic activity in many areas of Manhattan. We see it in our portfolio after nine consecutive weeks of record application volume. In San Francisco, however, the return to office and reopening is a little more ambiguous. Employers have been slower to call employees back in, with many initially targeting after Labor Day. Adding to the uncertainty in San Francisco is the reintroduction of strong recommendations for indoor masking and some delays in reopening, which were announced last week. The situation in San Francisco is likely to lead to a delayed leasing season in that market and a slower full recovery of occupancy. That said, occupancy is 95.4% today in San Francisco and is growing as is pricing trend. At this pace, we expect the San Francisco pricing trend to be back to pre-pandemic levels by the end of the third quarter. Meanwhile, we are seeing some indicators that we could see an extended leasing season with a second wave of demand in New York, Boston and Seattle. Our leasing teams in these markets have been dealing with prospects that are looking for move-in dates in late August and September and hearing from them that these moves are in connection with their need to be back in the office, or in the case of Boston, back on campus. This demand is more robust than historical patterns, which could suggest an extended peak leasing season in those markets, and matches up nicely with our lease expirations, which are more weighted toward the back of the year than usual. Finally, I want to take a minute and give you an update on the government assistance program for renters. As we've discussed on previous calls, approximately $50 billion in rental assistance for those impacted financially by the pandemic was made available in the various relief bills. We are laser-focused on accessing the rental relief funds and are working very closely with our eligible residents to apply for this relief. Processing to date has been relatively slow in our markets, but we were able to recover approximately $5 million in the quarter. Bob will provide some color on our expectations for collections for the remainder of 2021 in his remarks. This pace of recovery would not be possible without them, and they remain relentless in taking care of each other and serving our customers. As Michael just discussed, the recovery is well underway and is exceeding our prior expectations for the same-store portfolio. The continued strong operating momentum from this leasing season has led us to raise our annual same-store revenue guidance from negative 6% to negative 8% to negative 4% to negative 5%, an improvement at the midpoint of 250 basis points. Strong expense controls and favorable real estate tax outcomes, which I will talk about in a moment, also allowed us to reduce our same-store expense guidance range to an increase of 2.75% to 3.25%, resulting in an NOI range of negative 7.5% to negative 8.5%, which is a 400 basis point improvement at the midpoint relative to our prior guidance. Drivers of our revenue guidance increase of 250 basis points are roughly 150 basis points of improving operating fundamentals that Michael just outlined; 60 basis points or $15 million for the full year in related lower bad debt, primarily due to anticipated rental assistance collections; and the remaining 40 basis points is due to improved performance in our nonresidential business. Before I move on to expenses, a quick comment on our bad debt assumptions. The back half of the year has about $10 million of additional assumed rental assistance collections on top of the $5 million we've already received. We feel very confident about this amount because we either received it in July, or after some real digging, can see that it is far along in the approval process. There are other resident accounts being worked on, but they are not as far along. Given the lack of transparency and the relative slow processing speed to date, it is difficult to handicap how much will successfully get processed and whether we will receive these funds in 2021 or it will spill over into 2022. On the expense side, we have also seen improvements versus prior expectations, which led us to center the midpoint of expense guidance at 3%, which was the low end of our prior guidance range. This reduction is in part due to the modest growth experienced in second quarter 2021 even with a really challenging comparable period from second quarter of 2020. While some expense categories experienced a typically high percentage growth change quarter-over-quarter due to this comparability issue, overall expenses were less than originally anticipated. Key categories driving the current period and anticipated full year lower were real estate taxes and payroll. Reduction in growth expectations for real estate taxes is primarily driven by lower than forecasted accessed values in some key markets. Lower payroll growth expectations are primarily driven by our progress in optimizing staffing utilization as well as higher-than-usual staffing vacancies. We expect that 2021 will be our third consecutive year of low payroll growth, having delivered a three-year average below 1%, while keeping other controllable expenses like repairs and maintenance in check. As a result of these same-store guidance changes, we raised the midpoint of our normalized FFO from $2.75 to $2.90. A couple of closing comments on the balance sheet and debt capital markets. With the impact of the pandemic on our operations increasingly in the rearview mirror, it is clear that our balance sheet has held up remarkably well. Despite unprecedented pressure on operations, our credit metrics have remained well within our stated net debt-to-EBITDA leverage policy of between 5.5 times to 6.5 times. The debt capital markets are also incredibly attractive at the moment for issuers like us. This creates opportunities to term out commercial paper with treasuries and credit spreads at or near record lows, the potential of which has been incorporated into our revised guidance range.

sees fy 2021 same store noi change down 8.5% to down 7.5%.

The Kimco management team participating on the call today include Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; David Jamieson, Kimco's Chief Operating Officer; as well as other members of our executive team that are also available to answer questions during the call. Reconciliations of these non-GAAP measures can be found in the Investor Relations area of our website. Also, in the event our call was to incur technical difficulties, we'll try to resolve as quickly as possible. And if the need arises, we'll post additional information to our IR website. I'll begin by giving a quick overview of our accomplishments in 2020, and our strategic focus for 2021 and beyond. Ross will follow with updates on transactions, and Glenn will close with our key metrics and guidance for 2021. For all of us, 2020 was a year that will not soon be forgotten. COVID, the political landscape, social unrest and the responses to these events; all converged in a way that will forever change our way of life. 2020 was also a year that demonstrated in volatile times the best companies are the ones that are able to withstand economic challenges, mitigate risk and take advantage of opportunities. In the shopping center sector, this requires a strong balance sheet; a resilient, well-located portfolio; and a superior management team. I'm happy to report that while we are not immune to the volatility of 2020, Kimco's open-air grocery-anchored shopping centers and mixed-use assets performed well. And we have stayed strong, confident and positive about the opportunity in the coming year. Our portfolio withstood all that the pandemic threw at us, as our 2020 vision strategy to reposition our portfolio will validate. Our grocery-anchored essential services and mixed-used assets concentrated in the strongest markets in the U.S. proved resilient. In 2020, we saw continued improvement in both the percentage of ABR coming from essential retailers and grocery-anchored centers. Growing the portfolio from 77% of ABR from grocery-anchored properties to 85% plus remains a strategic focus across the organization. We are encouraged by the progress and the increasing level of opportunities in the pipeline we are currently evaluating. As part of these efforts, we are pleased to share today the upcoming opening of Amazon Fresh at our Marketplace at Factoria in Bellevue, Washington. During the fourth quarter, we executed 92 new leases, totaling 406,000 square feet, which exceeded the amount achieved in the fourth quarter of 2019. The true test of a portfolio's quality and durability is leasing and the ability to drive rent. At that point, new leasing spreads remained positive, rising 6.8% during the fourth quarter. We anticipate that our range between economic and physical occupancy will continue to widen, as a precursor to future cash flow growth. With the help of our nationwide network of relationships, tenants, brokers and our in-house team, we are experiencing robust demand from our essential retailers, who continue to take advantage of the COVID surge that allows them to boost cash reserves, invest in existing stores and expand their store portfolio to better serve their customers. We are also laser-focused on keeping our existing tenants and continue to do everything we can to help them overcome the pandemic and to be positioned [Indecipherable]. Our tenant assistance program or TAP helps small businesses navigate the new round of PPP funding. After successfully helping our small shop tenants navigate the first round of PPP funding, we believe we have aligned with best-in-class partners to continue to aid our small business tenants in accessing capital at their most critical time of need. Our strong balance sheet, well-positioned portfolio and tenant initiatives are all the result of our best-in-class team and approach. Specifically, our leasing team is proactive in its efforts to work with current and prospective tenants. And our finance, planning, technology, investor relations and legal teams effectively navigated numerous obstacles and kept us focused without skipping a beat. So, where do we go from here? First, our highest priority is leasing, leasing, leasing. The good news is we have visible growth in the portfolio and meaningful free cash flow to fund our leasing strategy. This has provided us the confidence to provide an outlook for 2021. We anticipate the first half of the year to remain challenging, especially for those categories dramatically impacted by the pandemic-induced shutdowns. It is worth highlighting that our team pushed this portfolio to all-time high occupancies pre-pandemic. And we are determined to get back to that level and exceed it. While anticipating the speed at which we will recover NOI is challenging, we do expect rents to hold up, especially in our well-located boxes that are in high demand from categories that include grocery, off price, home goods, home improvement, furniture, health, wellness, medical and beauty. Interesting to note, we are starting to experience a rebound in both restaurant demand and value fitness retailers. Finally, on our long-term strategic focus. We continue to believe that streamlining the portfolio over the past five years will result in meaningful long-term value creation for our shareholders. We are focused on the highest and best use of our real estate and believe the 80-20 rule applies to our assets and gives us tremendous flexibility and adaptability to create value in the future through our entitlement initiatives. Specifically, 80% of our real estate consists of parking lots, that are not generating any revenue; and 20%, the single-storey buildings. With our focus on clustering our assets in dense areas with significant barriers to entry, our assets are in an ideal position for growth as the surrounding areas have gone vertical. Our entitlement team is sharing our ESG accomplishments with all local municipalities, as part of our efforts to show that we will be good stewards of their neighborhoods and that we want to work together to make sure our assets continue to evolve alongside the community. We believe it is important that our approach to real estate evolve with changing circumstances, because that is exactly what our tenants are doing. The best-in-class tenants are looking at their real estate differently. And in many cases, their real estate team is now integrated in the entire supply chain. Distribution, fulfillment, e-commerce and store decisions are all integrated on how to best service the customer. The store which is optimized for distribution and fulfillment continues to shine as the most economic way to get goods and services into customers' hands. Best Buy CEO, Corrie Barry, at the CES Conference, was very clear when she said, physical stores are expected to play a massive role in the company's fulfillment efforts. Target also stated that more than 95% of sales are fulfilled by the stores. I continue to share the words from our largest tenant; the role of the physical store is poised to become broader than ever with the location serving as fulfillment epicenters that quickly and easily get customers whenever they need. Put another way, the convergence of retail and industrial is accelerating and we are positioning the Kimco portfolio to take advantage of this new utilization by partnering with our retailers to ensure that Kimco assets are optimized to gain market share and to make the stores of Kimco even more valuable. In closing, Kimco's open-air grocery-anchored portfolio provides consumers a safe and easily accessible destination for goods and services. Our diverse tenant mix and targeted geographic presence in the strongest growth markets, supported by our well-capitalized balance sheet and our entrepreneurial approach, positions us to unlock value for all stakeholders in the years to come. As Conor discussed, 2020 was a challenging year. But there are signs of life in the transactions market with deal flow starting to pick back up. The overall transaction volumes from March through year-end were down close to 85%, but there were several late 2020 deals that showcased the general theme we have seen occurring. The majority of transactions have been with the essential-based retail anchors, notably grocery. For the most part, size is good. But too big can result in the inability to finance the large or non-essential based tenancy, thus requiring a much bigger equity check to those deals. For the smaller grocery assets, the financing community has remained resilient. But again, rolling cash flow uncertainty for the chunkier assets have made those a bit more challenging. Multiple grocery-anchored deals have transacted at sub 6% cap rates in Denver, South Florida, California, Washington DC, North Carolina and throughout the major primary and secondary markets in the U.S. While we are bullish on that asset side, which represents the core products within our portfolio, there is no shortage of capital chasing those deals. As we discussed on last quarter's earnings call, the limited supply of attractively priced high-quality assets versus our current cost of capital has led us to tailor our investment program. As it relates to our structured investment program, we made two small investments on a pair of very high-quality shopping centers during the quarter. A $25 million mezzanine financing on a strong South Florida shopping center and a $10 million preferred equity investment on a densely located center in Queens, New York; both of which will generate an accretive return versus our cost of capital, with a chance to possibly acquire in the future. Additionally, as we have done many times, recently, we were able to leverage our strong tenant relationships, particularly with those that are real estate rich, to uncover another unique investment that represents significant dislocation in value. To that point, we completed a sale leaseback transaction in which we acquired two Rite Aid distribution centers in California for approximately $85 million. These distribution centers service all 540 plus stores for the pharmacy chain in the State of California. Rite Aid is releasing these back on a long-term basis with annual rent bumps and zero landlord obligation. This investment will provide an attractive return with an IRR well in excess of our cost of capital and enhance the NAV for the company. We continue to evaluate new opportunities selectively and believe our tenant relationships, flexible structuring and conviction in our product type puts us in an enviable position to capture upside in a period of dislocation. This is an important long-term complement to our business with the one constant being our approach of owning high-quality assets at a positive spread to our current cost of capital, while mitigating potential downside risk. Furthermore, we believe this approach will create a future pipeline of opportunistic acquisitions with a right of first refusal or right of first offer when our cost of capital returns. With that, I will pass it along to Glenn for the financial summary. With our fourth quarter operating results, we delivered further improvement compared to the sequential third quarter, with higher rent collections and improvement in credit loss. For the fourth quarter 2020, NAREIT FFO was $133 million or $0.31 per diluted share as compared to $151.9 million or $0.36 per diluted share for the fourth quarter 2019. The reduction was mainly due to rent abatements and increased credit loss of $21.2 million and lower net recovery from a $5.7 million. This reduction was offset by lower preferred dividends of $3.1 million and a $7.2 million charge for the redemption of preferred stock in the fourth quarter of 2019. Now, although not included in NAREIT FFO, during the fourth quarter 2020, we did record a $150.1 million unrealized gain on the mark-to-market of our marketable securities, which was primarily driven by the change in value of our $39.8 million shares of Albertsons stock. Our stake in Albertsons is valued in excess of $650 million today. For the full year 2020, NAREIT FFO was $503.7 million or $1.17 per diluted share as compared to $608.4 million or $1.44 per diluted share for the prior year. The change was primarily due to increases in rent abatements, credit loss and straight line reserves, aggregating $105.8 million and the NOI impact of disposition activity during 2019 and 2020 totaling $24.7 million. In addition, during 2020, we incurred a $7.5 million charge for the early extinguishment of debt. These reductions were offset by lower financing costs of $15.7 million and an $18.5 million charge for the redemption of $575 million of preferred stock during 2019. Although we continue to be impacted by the effects of the pandemic, our operating portfolio was showing signs of improvement, as Conor discussed earlier. All our shopping centers remain open, and over 97% of our tenants are open and operating. Collections have continued to improve. We collected 92% of fourth quarter base rents, and this compares to third quarter collections of 90%. The furloughs granted during the fourth quarter were just under 2%, down from 5% during the third quarter. At year-end 2020, 8.2% of our annual base rents were from tenants on a cash basis of accounting. And 50% of that has been collected. As of year-end, our total uncollectible reserve was $80.1 million or 46% of our total pro rata share of outstanding accounts receivable. Now, turning to the balance sheet. We finished the fourth quarter with consolidated net debt to EBITDA of 7.1 times. And on a look-through basis, including pro rata share of JV debt and preferred stock outstanding, the level was 7.9 times. This represents further progress from the 7.6 times and 8.5 times levels reported last quarter, with the improvement attributable to lower credit loss. On a pro forma basis, if our Albertsons investment was converted to cash, these metrics would improve by a full turn to 6.1 times and 7 times respectively. Levels better than we began last year. We ended 2020 with a strong liquidity position, comprised of over $290 million in cash and $2 billion available on our untapped revolving credit facility. We have only $140 million of consolidated mortgage debt maturing during 2021. And our next bond does not mature until November 2022. Our consolidated weighted average debt maturity profile stood at 10.9 years, one of the longest in the REIT industry. In addition, our unsecured bond credit spreads have improved significantly. By way of example, our 10-year green bond issued in July 2020 at 210 basis points over the 10-year treasury is currently trading in the area of 90 basis points over treasury. This spread is the lowest among all our peers. Regarding our common dividend, we paid a fourth quarter 2020 common dividend of $0.16 per share. As such, we expect our Board of Directors to declare the common dividend during the first quarter of 2021, reflecting a more normalized level that at least equals our expected 2021 taxable income. While the pandemic and its effects on certain of our tenants continues, we are comfortable establishing NAREIT FFO per share guidance for 2021. Our initial NAREIT FFO per share guidance range is $1.18 to $1.24. This is also a wider range than we have historically provided, taking into account the potential variability of credit loss levels due to the ongoing pandemic. Other assumptions include flat to modestly higher corporate financing costs and G&A expenses, as well as minimal net neutral acquisition and disposition activity. This 2021 guidance range assumes no transactional income or expense, no monetization of our Albertsons investment and no additional common equity issued. Lastly, keep in mind that our 2021 first quarter results will be relative to a pre-COVID first quarter in 2020. Notwithstanding the expected optics of the first quarter results, our NAREIT FFO per share guidance range of $1.18 to $1.24 reflects growth over 2020 at both the low and high end of the range. Before we start the Q&A, I just want to let you know that the line up for people in the queue is very deep. So, in order to make this efficient, again, just a reminder, that you may ask a question and then have one follow-up. With that, you can take the first caller.

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.

I'm Jason Feldman, Vice President of Investor Relations. craneco.com in the Investor Relations section. Another exceptional quarter with solid results across the board. Even in this environment of persistent inflationary pressures, random supply and logistics issues and continued various COVID recovery conditions globally. We finished the third quarter with record adjusted earnings per share from continuing operations of $1.89 up 103% compared to last year along with extremely strong adjusted operating margins of 16.8%. We delivered adjusted core sales growth of 19% with a number of strong leading indicators reflected in core order growth of 31% and core backlog growth of 13% compared to last year. Based on this performance, we are raising our adjusted earnings per share from continuing operations guidance by $0.35 to a range of $6.35 to $6.45, which is effectively our 5th guidance increase this year. Remember that our original guidance for 2021 was $4.90 to $5.10 and that guidance included $0.44 of earnings contribution from Engineered Materials. That means we have effectively raised guidance more than $1.80 on a comparable basis since January. Compared to 2020 on a like-for-like basis excluding Engineered Materials in both periods, our current guidance midpoint of $6.40 compares to 2020 earnings per share of approximately $3.52 reflecting more than 80% year-over-year earnings per share growth. Absolutely stellar performance by any measure. While uncertainty will continue related to COVID variance, sporadic supply chain constraints, inflation and overall global resource challenges, we have a high level of confidence in our revised guidance based on our team's outstanding performance driving customer satisfaction and proactively and effectively managing inflation and the supply chain. For context, we were approximately price cost neutral in the third quarter. Let me put our performance in perspective another way. The midpoint of the updated guidance at $6.40 is well above our prior peak pre-COVID adjusted earnings per share of $6.02 in 2019, but with some notable differences this year compared to 2019. Again, the $6.02 in 2019 included earnings contribution from Engineered Materials, which is now classified as discontinued operations and excluded from our '21 guidance. Second, many of our end markets are also still in the early stages of recovery and still remain well below the pre-COVID peak levels with the exception of Crane Currency and our defense business. And thinking about 2022 and beyond, it is worth noting that the commercial side of our Aerospace Electronics business in 2021 will still be approximately $150 million in sales and approximately $80 million in operating profit below 2019 levels this year, and the recovery to pre-COVID levels in this business alone will add about $1 per share to EPS. At Payment & Merchandising Technologies, Crane Payment Innovations will be $200 million below pre-COVID levels in 2021 with more than half of that amount in our very high margin Payment Solutions business. This business continues to benefit from very favorable long-term macro drivers that are accelerating given Global Human Resource and constraints, labor shortages, and wage inflation helping our customers drive productivity and security by automating their payment and transaction processes. In the Process Flow Technologies, we saw the inflection to positive core growth in the second quarter on the process side of the business with sustainable and improving demand across our strongest end-markets including chemical. So let me reiterate the message that we have been consistently communicating. We are innovating and developing new products and solutions to provide value for our customers. We are executing on numerous growth initiatives across our businesses and we operate with a consistent cadence and discipline of the Crane Business System to drive growth, productivity, and cost savings. We have demonstrated an ability to balance those objectives extremely well, delivering on margins and free cash flow while maintaining 100% of our investments in strategic growth initiatives throughout the entirety of the pandemic. We are and we will continue to drive above market growth. Paired with the market recovery in our consistent execution, we're very excited about our growth prospects, strong top line growth and solid operating leverage driving substantial growth in free cash flow incredibly delivering on expectations. I discussed at our February Investor Day event how Crane was at an inflection point for accelerating growth after years of organic investments and consistently excellent execution. In the first quarter you saw substantial evidence of that inflection and the related themes from Investor Day reading through. At our May Aerospace & Electronics Investor Event we showed you numerous examples of how we continue to effectively drive above market growth and our expectation of a 7% to 9% sales compound average growth rate over the next ten years. Also in May, we announced the sale of Engineered Materials as part of our strategic portfolio management process to improve our overall growth profile while continuing our simplification journey, and today you can see even more evidence of that inflection in our core sales growth as well as in our orders and backlog. Consistently executing on our investor thesis, that being we are well positioned for accelerating organic growth as our end markets continue to recover. We are outgrowing our end markets because of our consistent and ongoing investment in technology, new product development, and commercial excellence. Solid execution continues to leverage that growth into earnings and strong free cash generation, which creates substantial flexibility for capital deployment. A continued evidence of the value we create through acquisitions with stellar performance at Crane Currency, Cummins Allison, and instrumentation and sampling. Inflection, we have clear momentum with increasing traction from our growth initiatives. We will continue to generate substantial and sustainable value for all of our stakeholders. Despite our impressive track record of the results, we believe there is unrecognized value in our stock and the strength of our medium and long-term outlook. And that was one of the key factors behind our newly announced $300 million share repurchase authorization. You should view this as both a return of cash to shareholders following consistently outstanding operational performance and strong free cash generation, as well as a sign of management and the Board's conviction that we have a lot of runway for growth ahead of us. I have an easy job today because I think our results speak for themselves. Even in these challenging times, we have continued to execute. At Aerospace & Electronics, sales of $169 million increased 7% compared to last year. Segment margins improved 370 basis points to 19.3%. In the quarter, total aftermarket sales continued to gain momentum and increased 24% compared to last year after 3% of growth last quarter. The strength was driven by commercial aftermarket with spares, repair, and modernization and upgrade sales all up substantially. On the military side, spares and repair both improved in the 10% range but military modernization and upgrade sales were lower. Commercial OE sales increased 31% in the quarter following 4% growth last quarter. As expected, defense OE sales declined in the teens. On a year-to-date basis, defense OE sales are down 6% after three years of double-digit growth. Given our strong position in major project -- projects that we have already won that will be ramping up over the next few years we remain confident in our ability to grow our defense business at a high single-digit CAGR from 2021 through 2030. The fourth quarter of last year marked the trough for both sales and margins at Aerospace & Electronics. While the delta variant had some short-term impact on demand, the overall momentum in the industry continues. Specifically, we expect near-term relaxation of international air travel rules and rising global vaccination rates to drive higher levels of air travel in the months and quarters ahead. Looking ahead to next quarter we expect segment sales to be similar to the third quarter with margins in the low teens. The sequential margin decline in the fourth quarter is primarily related to shipment timing and mix with very high commercial aftermarket sales in the third quarter relative to the fourth quarter. On a full-year basis at Aerospace & Electronics, we should close the year with sales just down very slightly compared to last year and with margins above 7.16% both well ahead of our original guidance for this year. As we enter 2022, we expect sales will continue to improve as air travel recovery progresses and the expected timing of a recovery to pre-COVID levels continues to get pulled forward. And remember that our confidence in our outlook for this business is about more than just a market recovery. We are seeing continued accelerating growth resulting from years of consistent investment in technology. For example, during the third quarter we were selected for a $60 million program over a 15 year life with our advanced high accuracy, high performance, pressure sensing technology for a newly targeted adjacent multiplatform turbofan engine application. In this particular case, we replaced an incumbent supplier who had the business for many years. Another example of winning because of the strength of our technology and capabilities, just as we described at our May Aerospace & Electronics Investor Day, which by the way, that is still available to stream on our website today. This is a new targeted application of our historic Sensing technology, a huge win for our team, and just the beginning. And our investments will continue to take us beyond our historical core markets, expanding our addressable market and aligning our business with accelerating secular trends. For example, within the last month we were awarded a $20 million contract for a low Earth orbit satellite constellation using a version of our multi-mix microwave technology with most production sales expected in 2023. We also remain extremely excited about our positioning in investments related to the long-term trends in this industry, most notably electrification. That gave us the confidence to share our 7% to 9% sales CAGR target at last May's Investor Day event. We continue to make substantial progress advancing the technology that will be the critical enabler for a more electric world for more electric and hybrid electric military ground vehicles to electric propulsion aircraft, electric urban air mobility vehicles, and advanced radar and guidance systems. All of these applications require greater levels of electrification and a greater need for integration of power conversion, sensing, and thermal management systems, all that are core technology competencies in our business. We continue to work closely with nearly every major participant in this emerging space and have already been selected for numerous prototyping demonstrator programs. We are seeing the tangible benefit from our investments materialize in these awards. Process Flow Technologies, sales of $299 million increased 19% driven by a 16% increase in core sales and a 3% benefit from favorable foreign exchange. Process Flow Technologies operating profit increased by 60% to $46 million. Operating margins increased 410 basis points to $15.5%, primarily reflecting higher volumes, favorable price cost dynamics and strong execution and productivity. Sequentially, FX-neutral backlog increased 3% and with FX-neutral orders down 5%. Compared to the prior year, FX-neutral backlog increased 14% and FX-neutral core orders increased 20%. During the first quarter, order growth was strongest in our shorter cycle commercial business. Then in March, orders at our core process business inflected positive on a year-over-year basis, and that trend has continued for the last six months. We continue to see clear evidence of improving end demand and in some cases ongoing release of pent-up demand. Through the third quarter, order growth is still a little stronger in our commercial business, but process orders are not far behind with growth in the mid-teens range. As orders convert to sales in these core process markets later into 2022, we continue to expect strong operating leverage. Trends in activity in the process markets are similar to last quarter. Broadly, we are seeing signs of new capital projects moving through the pipeline and we expect to see more projects converting to orders in 2022. By vertical, chemical remains strong driven heavily by continued consumer demand, and general industrial markets also improved further along with industrial activity and production. For pharmaceuticals we are seeing a number of projects we started after being put on hold, given the intense focus on vaccine production over the last 18 months. Many of these restarted projects are related to diabetes treatment, oncology drugs and biologics. Refinery and power markets remain fairly flat. From a geographic perspective, year-to-date orders have been strongest in North America. MRO orders are stable at approximately pre-COVID levels. Project related orders are up substantially compared to last year, and based on our project funnel we expect further pickup next year. In Europe, MRO activity slowed in the third quarter consistent with normal seasonality and summer shutdowns. Adjusted for seasonality, MRO activity is close to normal pre-COVID levels and project activity has progressively improved over the last several months with project orders above 2019 levels. In China, we are seeing some new project delays related to government requirements for new energy assessment approvals. No cancellations, but project progress has slowed given these new requirements. While the markets continue to improve, we are also very excited about progress with our growth initiatives in Process Flow Technologies. In February we discussed a breakthrough innovation to our triple offset valve line, the FK-TrieX. This product just launched a few months ago, but we are already seeing great momentum with chemical and petrochemical customers that quickly recognize the value this new valve design offers. Bidirectional shut off, superior fugitive emissions control, high flow, a self-cleaning design and lower weight. We installed our first valve during the third quarter at a US chemical plant in a polymer application. Typically it takes years after launch to get customer approvals for a new valve design, but we believe we are on track for $5 million of sales next year, growing to $30 million within five years. Also on the process side, our tough seat metal seated ball valve launched earlier this year focused on slurry and high cycle applications with a superior design that gives a valve a 50% longer life. We are on track for about $3 million of sales this year, which should double in 2022. We also have exciting developments in our municipal pump business, our chopper pump which we introduced in 2018 reduces clogging and cut -- cuts maintenance costs by 75%. That value proposition is driving 30% growth this year, and we are adding about 10 new customers each month to our existing base of approximately 250 municipalities. Taken together, these growth initiatives and many others across the segment are driving above market growth. For Process Flow Technologies overall, our full year outlook continues to improve with full-year margins in the mid 14% range, full year core sales growth in the low double digits, a 4% FX benefit, and the $5 million of contribution from acquisitions that we saw in the first quarter. For the fourth quarter, that implies a modest sequential decline in sales and margins given typical and expected seasonality and associated mix. At Payment & Merchandising Technologies, sales of $366 million in the quarter increased 31% compared to the prior year, driven by 29% core sales growth and a 2% benefit from favorable foreign exchange. Sales increased substantially across both Crane Currency and Crane Payment Innovations, although Payment Innovation sales are still well below pre-COVID run rates. Segment operating profit increased 87% to $83 million. Operating margins increased 680 basis points to 2.26%. Continued impressive performance again at Crane Currency and with Crane Payment Innovations now recovering and contributing meaningfully. For Crane Payment Innovations, similar trends to the last quarter and across the business we are seeing accelerating results from growth initiatives. Starting with retail, our solutions provide productivity through automation, security and hygiene, and that value proposition is resonating now more than ever. Retailers in the service industry in general are struggling with labor availability and inflationary wage pressure and they are investing in productivity. Our solutions provide immediate value and have high proven ROIs and those returns are even more attractive in the current environment. We continue to see broad based strength across the space including traditional self checkout systems from the large OEMs and we are also seeing momentum with some retailers partnering directly with us on customized self checkout and kiosk based solutions. For customized self checkout solutions, our current funnel of opportunities is now approximately $185 million, double the size it was at the end of 2020. Our semi-attended system solutions like Paypod and Pay Tower are also getting traction with an increasingly wide range of retailers including categories that have not historically been active with automation such as convenience stores. To put this higher demand into perspective, our funnel of Paypod opportunities today is approximately $13 million, more than four times the size it was at the end of 2019 and more than twice the size it was at the end of last year. In gaming, the North American and Australian Casino markets are nearly back to pre-COVID levels of activity. We are now seeing the European and Latin American casinos beginning to recover lagging about 9 to 12 months behind North America. This is good news for 2022. We continue to gain share in this market given the strength of our technology as customers realize the benefits of our easy tracks connectivity solution. The combination of our traditional bill and coin products along with easy tracks and now with the back office and service offerings from the Cummins Allison acquisition give us the most comprehensive cash management solution in the gaming world. This combination of products and services is also helping our customers substantially improve efficiency and driving incremental revenue by enhancing communication and coordination between the back office and front of the house environments. The Cummins Allison business has also benefited from customer labor shortages as CITs, casinos and retailers continue to invest in advanced larger scale back office coin and bill counting and sorting units. Cummins Allison has products with differentiated technology as well as a service offering, which most of our competitors in North America do not have. At Crane Currency, we continue to see strength in both domestic and international markets and we continue to gain share both with our technology and banknote offerings. In the United States, we expect continued elevated levels of demand for currency for another few years and we continue working to secure our position on the new series of banknotes that will be rolled out over the next several years. In our international business, our expanding portfolio of micro optic security products has helped us double the rate of new denominations secured compared to prior years with 15 new denominations won to date this year from a wide range of countries across the Caribbean, Northern and Eastern Europe, Asia, Africa and the Middle East. When our technology is specified in a new denomination it typically drives recurring revenue from reprints from more than ten years. We are winning as central banks realize that our technology is more secure and difficult to counterfeit and because it is completely customizable and can be integrated into innovative and stunning banknote designs, such as the new Bahamas $100 banknote. With our latest products, we also have successfully demonstrated that our technology can be used on any substrate including polymer expanding our addressable market. We are also very excited about the progress we have made with our Product Authentication and brand protection business. We believe that our micro-optic technology is the best solution for a high-end authentication applications and far superior to the foils and holograms typically used to prevent counterfeiting for consumer goods. We recently signed a long-term agreement with Octane5, one of the leaders in the high growth brand licensing management software and security solutions market. Today, Octane5 supplies some of the world's most iconic and valuable brands with product security and licensing solutions, and with our partnership we have already won a few blue-chip customers with well-known global consumer brands that we hope to share with you more next year. This is an extremely exciting potential opportunity that opens a new $800 million addressable market to us. As we have explained all year, we do expect margins to moderate further in the fourth quarter for Payment & Merchandising Technologies given both timing and mix. We now expect full year margins in the 22% range at or above the high end of our long-term target range of 18% to 22%. Full year core sales growth is now expected to be in the high teens with a 3% favorable FX benefit. For the fourth quarter sales should still increase on a year-over-year basis in the mid-single digit range on tough comparisons, but with a substantial sequential decline given the currency shipment timing that we have discussed and explained consistently over the last several quarters. No surprises here, fully expected. Given the sequential decline in sales, margins are likely to moderate to the high-teens range in the fourth quarter before rebounding to the 20s again next year. Turning now to more detail on our total company results and guidance. We have had extremely strong cash flow performance year-to-date with free cash flow of $286 million compared to $177 million last year. As a reminder, on May 24th we announced that we had signed an agreement to sell our Engineered Materials segment for $360 million. That process is ongoing and we continue to work on obtaining regulatory approvals. When the transaction closes we expect proceeds net of tax to be approximately $320 million. Our balance sheet is in extremely good shape. We currently have no short-term or pre-payable debt remaining. And at the end of the third quarter, we had approximately $450 million of cash on hand. By the end of the year we expect adjusted gross leverage toward the bottom end of the two to three times range target for our current credit rating, and we estimate that by year-end we will have approximately $1 billion of additional capacity. While we continue to be active in pursuit of acquisitions across both Process Flow Technologies in Aerospace & Electronics as all -- you all know, valuations today are quite lofty and we will remain both financially and strategically disciplined. Over the long term, we continue to believe that we will be able to add the most value through acquisitions. However, we will also maintain discipline about our balance sheet efficiency. As I mentioned last quarter, during periods where our acquisition capacity exceeds the size of our likely an actionable M&A pipeline, we will consider returning excess cash to shareholders rather than maintaining an inefficient balance sheet. As Max mentioned, we announced Board authorization for $300 million share repurchase program. We believe this program properly balances two objectives, maintaining balance sheet efficiency while preserving ample financial flexibility for the volume of M&A activity we believe is actionable, while also providing an attractive return of cash to shareholders. We believe that share repurchases are advantageous at this time given our very high confidence in our medium and long-term outlook, paired with our current stocks -- current discount to both trading peers and fully synergized acquisition multiples. We will continue to evaluate all capital deployment and strategic portfolio options to drive shareholder return with strict financial discipline and a focus on long-term sustainable value creation. Turning to guidance, as Max explained we are raising our adjusted earnings per share guidance by $0.35 to a range of $6.35 to $6.45 reflecting continued excellent execution and stronger end markets. There are four major moving pieces in the higher and narrower guidance range. First, we now expect a tax rate of approximately 17.5% compared to our prior guidance of 20.5%. The lower tax rate is a roughly 23% -- $0.23 per share benefit compared to prior guidance. The lower tax rate primarily reflects discrete items related to the expiration of the statute of limitations on audits in certain jurisdictions. We continue to expect a tax rate of approximately 21% on a normalized basis. Second, we now expect corporate cost of approximately $90 million, $10 million or $0.13 per share higher than our prior guidance. The higher corporate costs reflect a number of factors including a charge related to a foreign pension plan that we are restructuring and a higher professional service cost level particularly legal costs related to M&A due diligence and other matters. Third, the core operational improvement reflected in the guidance is approximately $0.25 per share compared to the prior guidance. This improvement reflects strong leverage on sales now forecast at $50 million higher, with full year core sales guidance up 300 basis points to a range of 10% to 12%, partially offset by FX translation down 100 basis points to an approximate 2.5% benefit. Fourth, in addition to raising the midpoint of our guidance range we narrowed the range from $0.20 per share to $0.10 per share, reflecting both how close we are to the end of the year as well as ongoing supply constraints that are likely to cap further upside this year. Our revised guidance continues to reflect the same cadence of earnings progression that we have discussed since the beginning of the year. Specifically, we continue to expect a step down on earnings per share next quarter given order and shipment timing particularly at currency and with the fourth quarter following its usual pattern of seasonality -- seasonally weakest quarter across most of our businesses. Overall, there is little change to our fourth quarter expectations after adjusting for the changes in assumptions related to corporate expense and our tax rate, but the third quarter was certainly better than we expected given extremely strong operational performance and robust demand. We also increased free cash flow guidance to a range of $340 million to $365 million, up 17.5 million from prior guidance at the midpoint, reflecting higher earnings and lower capex now forecast at $60 million. Overall, an excellent year continuing to unfold with outstanding execution from all of our teams driving exceptional results, growth margins, free cash flow, and we remain excited about continued tailwinds in 2022 and 2023 as end markets continue to recover. Before we turn to Q&A, a quick note about our 2022 Investor Day. We typically host our Annual Investor Day event the last week of February. For 2022 we are moving this event given certain scheduling issues and our desire to maximize the likelihood that we can host the event in person. We are targeting the week of March 28, and we will provide more details as our plans solidify over the next few months. Operator, we are now ready to take our first question.

compname reports q3 non-gaap earnings per share of $1.89 from continuing operations excluding items. compname reports third quarter 2021 results; raises and narrows 2021 earnings per share guidance; announces new $300 million share repurchase authorization. q3 non-gaap earnings per share $1.89 from continuing operations excluding items. raises fy earnings per share view to $6.35 to $6.45 from continuing operations excluding items. q3 sales rose 21 percent to $834 million. announced new $300 million share repurchase authorization.

I am Jason Feldman, Vice President of Investor Relations. After which, we will respond to questions. craneco.com in the Investor Relations section. We finished the second quarter with record adjusted earnings per share from continuing operations of $1.83, up 205% compared to last year and record adjusted operating margins of 17.6%. We delivered core sales growth of 19% with a number of strong leading indicators reflected in core order growth of 45% and core backlog growth of 7% compared to last year. Based on this performance, we are raising our adjusted earnings per share from continuing operations guidance by $0.30 to a range of $5.95 to $6.15, which is effectively our fourth guidance increase so far this year. Please allow me to take a moment to put this in perspective. The midpoint of the updated guidance at $6.05 is above our prior peak pre-COVID adjusted earnings per share of $6.02 in 2019. While we expect to exceed that $6.02 prior peak this year, there are some notable differences this year compared to 2019. In particular, the $6.02 in 2019 included earnings from Engineered Materials, which is now classified as discontinued operations and excluded from our 2021 guidance. As we have mentioned previously, this is about $0.44 of earnings per share now excluded in discontinued ops. Further, most of our end markets are still in the very early stages of recovery and remained well below their pre-COVID peak levels. The only real exceptions to this are Crane Currency and our defense business. And thinking about 2022 and beyond, it is worth noting that the commercial side of our Aerospace & Electronics business will still be almost $200 million below 2019 levels this year and a recovery to pre-COVID levels in this business alone would add more than $1 per share to EPS. At Payment & Merchandising Technologies, the core non-currency business will be slightly more than $200 million below pre-COVID levels, with more than half of that amount in our very high margin core Payment Solutions business. Throughout the recovery and beyond, this business will continue to benefit from very favorable long-term macro drivers, helping our customers drive productivity and security by automating the payment and transaction process, with many of those trends strengthening with ongoing labor shortages and wage inflation. And in Process Flow Technologies, we are just beginning to see an inflection to positive core growth on the process side of the business over the last month or two. And while sales growth has just barely inflected positive, we haven't had a backlog in our process valve business this high since 2014 and sales will certainly follow. So, how are we driving earnings above 2019 levels without a full market recovery yet? Message is the same, execution on our growth initiatives, together with the consistent cadence and discipline of the Crane Business System to drive growth, productivity and cost savings. And as mentioned many times before, we have delivered on margins and free cash flow while maintaining 100% of our investments in strategic growth initiatives throughout the entirety of the pandemic, because of their importance in our ability to sustainably drive long-term, profitable growth. These initiatives will continue to drive above market growth. Paired with the market recovery and our consistent execution, we are very excited about our growth prospects, strong top line growth, solid operating leverage driving substantial growth in free cash flow, credibly delivering on expectations. I discussed at our February Investor Day event how Crane was at an inflection point for accelerating growth after years of organic investments and consistently excellent execution. In the first quarter, you saw substantial evidence of that inflection and the related themes from Investor Day reading through. At our May Aerospace & Electronics investor event, we showed you numerous examples of how we continue to effectively drive above-market growth, expecting 7% to 9% compound average growth over the next 10 years. Also in May, we announced the sale of Engineered Materials as part of our strategic portfolio management process to increase our overall growth profile while continuing our simplification journey. And today, you can see even more evidence of that inflection in our core sales growth as well as in our leading indicators, including orders and backlog. Consistently executing on our investor thesis, that is, we are well positioned for accelerating organic growth as our end-markets continue to recover. We are outgrowing our end-markets because of our consistent and ongoing investment in technology, new product development and commercial excellence. Solid execution continues to leverage that growth into earnings and strong free cash generation, which creates substantial flexibility for capital deployment and continued evidence of the value we create through acquisitions with stellar performance at Crane Currency, Cummins Allison and I&S. Inflection, we have clear momentum with increasing traction from our growth initiatives. We will continue to generate substantial and sustainable value for all our stakeholders. At Aerospace & Electronics, sales of $158 million were flat with the prior year. Adjusted segment margins, however, improved 420 basis points to 19.6%. In the quarter, total aftermarket sales turned positive, growing 3% after a 29% decline in aftermarket sales last quarter. Commercial OE sales increased 4% in the quarter after a 32% decline last quarter. Defense OE sales declined 4% in the quarter and are flat on a year-to-date basis. We continue to believe that the fourth quarter of last year marked the trough for both sales and margins at Aerospace & Electronics. We expect sales to continue to improve slightly on a sequential basis throughout the rest of this year as the pace of the recovery continues to improve and our expected timing of a recovery to pre-COVID levels continues to get pulled forward. More specifically, we are seeing North American airlines bring a substantial number of aircraft back into service to meet expected domestic demand levels, with the in-service fleet now at about 90% of mid-2019 levels. On the international side, traffic continues to improve, albeit a little more slowly, with substantial room for recovery-further recovery as global ASKs are now a little better than 50% of 2019 levels. In general, pent-up demand will drive recovery faster than expected as COVID restrictions continue to ease. And our confidence in our outlook for this business is about more than just a market recovery. We are seeing accelerating growth resulting from consistent and continued investment in technology. Our growth investments over the last decade have not wavered and we are seeing the benefits of those investments today. These investments also continue to expand our addressable market and align our business with accelerating secular trends, most notably electrification. And we are delivering on truly breakthrough innovations that are critical enablers to our customers' growth strategies and that are transforming the growth trajectory of our business, really exciting opportunities in our power conversion business, sensing and fluid and thermal management. Taken together, and as we explained at our Aerospace Investor Day in May, we expect a long-term overall compound annual growth rate of 7% to 9% through 2030. Process Flow Technologies sales of $311 million increased 30% driven by a 22% increase in core sales and an 8% benefit from favorable foreign exchange. Process Flow Technologies operating profit increased by 83% to $49 million. Adjusted operating margins increased 450 basis points to 15.7%, reflecting the higher volumes, strong execution and benefits from last year's cost actions. Sequentially, trends improved across the board with FX-neutral backlog up 5% and FX-neutral orders up 8%. Compared to last year, FX-neutral backlog increased 11% and FX-neutral core orders increased 28%. During the first quarter, order growth was strongest in our short-cycle commercial business. However, orders at our core process business inflected positive on a year-over-year basis in March and that trend continued throughout the second quarter. We are also seeing clear evidence of improving end demand and in some cases, the start of released pent-up demand. We expect the recovery to be led heavily by the chemical end market, which is continuing to show signs of strengthening around the world. And remember that the chemical market is our most important market, where we have the strongest position and the most differentiated offering, and generated more than 35% of sales on the process side of this business. We are seeing continued strength in MRO sales, and project activity is clearly picking up for necessary debottlenecking activities as well as larger capacity expansions, particularly for specialty chemical applications. We are seeing this most significantly right now in the United States and China with Europe projects likely to pick up next year. General industrial activity has also strengthened but primarily in the United States. Conventional power and oil and gas markets remain fairly sluggish. However, remember that collectively, upstream oil and gas and conventional power are a small part of this business and less than 10% of segment sales. As orders convert to sales in these core process markets later this year and into 2022, we expect very strong operating leverage. For the shorter-cycle non-residential and municipal end markets, we are seeing a continuation of the strength that we saw during the first quarter. For Process Flow Technologies overall, our outlook continues to improve. We now expect high single-digit core sales growth, with approximately 5% of favorable foreign exchange on a full year basis. Full year margins should be somewhere between where they were in the first and second quarters. At Payment & Merchandising Technologies, sales of $328 million in the quarter increased 31% compared to the prior year driven by 26% core sales growth and a 5% benefit from favorable foreign exchange. Our Currency business core sales increased in the mid-teens range with the Crane Payment Innovations business inflecting to a positive 34% of core growth, but still well below pre-COVID levels. Segment operating profit increased 285% to $78 million. Adjusted operating margins increased 1,500 basis points to 23.7%. Really impressive performance again in the quarter, as expected, and now with our legacy payment business beginning to contribute meaningfully, paired with the ongoing superior performance at Crane Currency. For the payment business, with the phased economic reopening, we continued to see very strong growth in the gaming and retail end markets. And during the second quarter, vending started to recover as well. Transportation, particularly parking, remained softer, although we have seen some substantial fare collection project activity during the quarter. At Crane Currency, we continue to see strength in both the domestic and international markets, and we continue to gain share both with our technology and bank note offerings. As we explained last quarter, we do expect margins to moderate further over the course of the year given timing and mix, with full year margins likely toward the high-end of our long-term target of 18% to 22%, with core sales growth this year now approaching mid-teens with a 4% favorable foreign exchange benefit. And like our high-margin Aerospace business, the recovery has just begun at payment-Crane Payment Innovations. Turning now to more detail on our total company results and guidance, we had extremely strong cash flow performance in the quarter, generating $141 million in free cash flow compared to $102 million in the second quarter of last year. Year-to-date, free cash flow was $184 million compared to $62 million last year. During the second quarter, we also received approximately $9 million from the sale of a property in Arizona following receipt of $15 million last quarter from the sale of another property. These proceeds are excluded from free cash flow given required classification as an investing activity. However, one of these sales was directly enabled by our ongoing restructuring efforts as we moved operations from this facility to other locations. And the other reflects our proactive approach to identify underutilized assets. Since 2017, we have received proceeds from real estate and other asset sales made possible by restructuring activities of approximately $56 million, which means that much of our restructuring has been self-funded. As a reminder, on May 24, we announced that we had signed an agreement to sell our Engineered Materials segment for $360 million. That process is ongoing, and we continue to work on obtaining regulatory approvals. When the transaction closes, we expect proceeds, net of tax, to be approximately $320 million. Our balance sheet is in extremely good shape. During the second quarter, we repaid the term loan originated in April of 2020 in full using cash on hand and some commercial paper. As we discussed in May, we believe we will have approximately $1 billion of M&A capacity by the end of this year. Valuations today are quite lofty, and we will remain disciplined. But I am confident that over time, we will continue to find attractive transactions where we can deploy our capital to create value for shareholders. We will also maintain discipline about our balance sheet efficiency. During periods where acquisitions are less actionable, we will consider returning excess cash to shareholders rather than maintaining an efficient-inefficient balance sheet. However, over the long term, we continue to believe that we will be able to add the most value through acquisitions. The adjusted tax rate in the quarter was 18.4%, which included an excess tax benefit of approximately $4 million or $0.07 per share related to stock options exercised during the quarter. For the full year, we now expect an adjusted tax rate of 20.5% rather than the previous 21% guidance. As Max explained, we are raising our adjusted earnings per share guidance by $0.30 to a range of $5.95 to $6.15, reflecting the strong second quarter performance and our expectation that end markets and execution will be ahead of where we forecasted them earlier this year. Remember that our original guidance for 2021 was $4.90 to $5.10, and that guidance included $0.44 of earnings contribution from Engineered Materials. That means we have effectively raised guidance about $1.50 on an operational basis since the beginning of the year. While uncertainty remains related to COVID variants and sporadic supply chain constraints, overall we have a high level of confidence in our revised guidance based on our team's outstanding performance, driving incremental price and proactively and effectively managing inflation and their supply chain. Our revised guidance also reflects the same cadence of earnings progression we have discussed since the beginning of the year. Specifically, we continue to expect a step-down in earnings per share next quarter given timing and with fourth quarter following its usual pattern as the seasonally weakest quarter across most of our businesses. Our revised guidance assumes core sales growth of 7% to 9%, which is 200 basis points higher than our prior May 24 guidance. Favorable foreign exchange is also now expected to contribute 3.5%, up 100 basis points from late May. Free cash flow guidance was increased to $320 million to $350 million, up $20 million from prior guidance, reflecting higher earnings and slightly lower capex at $70 million. Corporate expense is now expected to be $80 million, up $3 million compared to prior guidance. Overall, an excellent year continuing to unfold with outstanding execution from all of our teams driving exceptional results, growth, margins, free cash flow and we remain excited about continued tailwinds in 2022 and 2023 as end markets continue to recover. Operator, we are now ready to take our first question.

crane co raises 2021 earnings per share guidance. q2 earnings per share $1.83 from continuing operations excluding items. raises fy earnings per share view to $5.95 to $6.15 from continuing operations excluding items. raises fy gaap earnings per share view to $6.05 to $6.25 from continuing operations. revised fy guidance assumes core sales growth of +7% to +9%.

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.

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 second quarter of 2021 was a difficult period for mortgage investors, particularly for those invested in agencies, strong economic data and early fed chatter about tapering, pushed mortgage spreads wider and a rally in rates, coupled with the flattening curve, caused prepayment levels to remain elevated, while never completely immune to general mortgage market trends, MFA's investment strategy intentionally mitigates many of these interest rate risks. Through asset selection that emphasizes credit versus interest rate sensitivity and shorter-duration assets that again limit interest rate risks, our portfolio performed quite well during the second quarter of 2021, and our book value was stable. On the credit side, continued very strong housing trends have bolstered the value of the underlying assets, securing the mortgages that 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 second quarter as our asset acquisitions exceeded runoff for the first time since late 2019. This progress is due to continued growth from many of our origination partners as well as our ability to analyze and source new investment opportunities. With financial markets awash in liquidity, sourcing attractive investment opportunities have been very challenging this year. But we are starting to fire on all cylinders, and we feel good about our continued growth prospects. Please turn to Page 4. We reported GAAP earnings of $0.13 per share for the second quarter, largely driven by a solid increase in net interest income. Contributions from credit loss reserve reversals were more modest this quarter versus Q1, $8.8 million versus $22.8 million as were unrealized gains on fair value loans, $6 million in Q2 versus $31 million in Q1. GAAP book value was $4.65, up $0.02 from March 31, and economic book value was $5.12, up $0.03 from March 31. Economic return, both GAAP and economic for the second quarter, was 2.6%. And this follows economic returns in Q1 of 3.6% and 5%, respectively. Our leverage ticked up slightly over the quarter to 1.8 to one versus 1.6 to one, and we paid $0.10 dividend to shareholders on July 30, which is a 33% increase from the dividend paid in April. Please turn to Page 5. Digging into the numbers a little more. Our efforts to lower interest expense through securitizations had a visible impact on our second-quarter earnings as interest expense declined by $4.5 million or 15% from the first quarter. And the larger of the two securitizations executed in the second quarter had limited impact on the full quarter because it priced on June 10. Net interest income for the second quarter increased by $8 million or 16% versus the prior quarter. We continue to make excellent progress in liquidating REO properties as we capitalize on strong housing trends. And for borrowers who are still negatively impacted by COVID, we've been able to offer modifications and/or repayment plans to allow them to stay in their homes, restore their payment status to current and retain the equity in their homes. Please turn to Page 6. We expect that this transaction will significantly increase our purchase of business purpose loans and by providing a strong capital base and expertise in securitization we will also further enhance Lima One's already existing profitability and growth potential. Please turn to Page 7. Again, continuing the theme of aggressively taking advantage of available market opportunities, we executed 2 additional securitizations on over $850 million of UPB at attractive levels in the second quarter. As you can see on this page, AAA yields on bonds sold for the Non-QM1 deal was 112 basis points and 110 basis points on the RPL1 deal. And the blended cost of debt for both deals is in the 130s. We expect to complete at least two additional securitizations in the third quarter. Please turn to Page 8. We illustrate our investment portfolio and summarize our after-tax financing on this slide. Our investment portfolio grew by $300 million in the second quarter, which is a milestone of sorts as it is the first quarter in the last six quarters that our portfolio has increased. New loan acquisitions in the second quarter were $857 million, which is more than two times the last three quarters combined. The composition of our portfolio has not changed materially since March 31, other than for the addition in Q2 of agency-eligible investor loans, which Bryan will discuss shortly. On the financing side, you can see that two-thirds of our asset-backed financing is nonmark to market with over 70% of the nonmark-to-market financing in the form of securitizations as we continue to term out and reduce the cost of nonmark-to-market debt. As Craig has already noted, MFA delivered solid results for the second quarter, highlighted by higher net interest income on our residential whole loan investments. Before diving into the details, I want to point out two important changes that impact the way our results are presented this quarter. Firstly, we changed the way we present interest income on residential whole loans on which we have elected the fair value option at acquisition. Prior to this quarter, we presented the coupon payments received, along with noninterest income from fair value loans in other income on our income statement. We now present interest income on loans accounted for at fair value as part of net interest income. While noninterest income, which primarily reflects market value changes, continues to be presented in other income. Secondly, as we noted in our last earnings call, starting this quarter, we decided to elect the fair value option for all acquisitions of the purchased performing loans. This includes acquisitions of Non-QM, fix and flip, single-family rental, and agency-eligible investor loans. Purchase performing loans acquired prior to this quarter continue to be accounted for at carrying value, so we will continue to present the economic book value metric to capture the impact of fair value changes for these loans. Further, we can now present interest yield and net interest spread information for all loans in our portfolio, which should make our results easy to review and more comparable to our peers. In addition, we believe that using fair value accounting is the best way to properly capture the impact of Lima One's origination and servicing activities for loans originated by Lima and held on MFA's consolidated balance sheet. Turning now to the details of our Q2 2021 results. Net income to common shareholders was $58.5 million or $0.13 per share. The key items impacting our results are as follows: net interest income of $59 million was $8 million or 16% higher sequentially. As Craig also noted interest expense again declined primarily due to the ongoing efforts to use securitization and other forms of more durable and lower-cost financing. Interest income on our loan portfolio was also approximately $5 million higher, primarily driven by higher prepayments and lower delinquency levels on purchase credit deteriorated and purchased nonperforming loans. Similarly to the prior quarter, interest income from our securities investments included approximately $8 million of accretion on an MSR term note investment that was redeemed at par but that we have taken an impairment charge on in Q1 of 2020. Our net interest spread increased to an impressive 3.02% this quarter. And while additional securitizations will continue to meaningfully benefit funding costs, overall spread levels should moderate in future periods as prepayment speeds declined in line with seasonal factors. We reduced our overall CECL allowance on carrying value loans to $54.3 million, reflecting lower loan balances and adjustments to estimated levels of future unemployment and home price appreciation used in our credit loss modeling. This reversal and other net adjustments to our CECL reserves positively impacted net income for the quarter by $8.9 million. After the significant increase in CECL reserves taken in Q1 2020 when uncertainty related to COVID-19 economic impacts were at their highest, we reduced our CECL reserves by approximately $90 million in the subsequent five quarters. Actual charge-off experience continues to remain very modest, with approximately $1.6 million of net charge-offs taken in the six-month period ended June 30, 2021. Pricing on loans held at fair value continues to be firm. Net gains of $6 million were recorded, primarily reflecting the impact of market value changes. Finally, our operating and other expenses were $22.8 million for the quarter, in line with the previous quarter. And with that, I will now turn the over to Bryan Wulfsohn. Turning to Page 10. Housing has continued to push higher over the quarter. The pace of annual home price increases have reached levels not seen in over 40 years. Historically low rates, demographic trends, and a severe lack of supply have all contributed to the rise in prices. Unemployment rate has broken through 6% and is expected to continue to move lower with the economy reopening. All of these factors, combined with monetary and fiscal support have played a part in keeping mortgage credit performance strong and bode well for the continued credit performance in the near term. Turning to Page 11. Non-QM origination volume increased over the quarter as rates offer to borrowers have been dropping. We purchased over $370 million over the second quarter, which is an increase of 85% over the previous quarter. Prepayment speeds increased over the quarter with the drop in rates to Non-QM borrowers. The 3-month average CPR for the portfolio was 40. We executed on the securitization in the second quarter, bringing the total amount of collateral securitized to approximately $1.75 billion. We expect to bring another securitization of Non-QM loans in the third quarter. These securitizations have lowered our financing costs, and at the same time, have provided additional stability to our borrowings. Securitization, combined with nonmark-to-market term facility has resulted in over 70% of our Non-QM portfolio to be financed with nonmark-to-market leverage. We expect to continue to be a programmatic issuer of securitization as it is currently efficient form of financing for our portfolio. Turning to Page 12. COVID impacted our borrowers significantly as many of our borrowers are owners of small businesses that were affected by shutdowns across the country. We instituted a deferral program at the onset of the pandemic in an effort to help our borrowers manage through the crisis. Through our servicers, we granted almost 32% of the portfolio temporary payment relief, which we believe help put our borrowers in a better position for long-term payment performance. Subsequent to June of 2020, we reverted to a forbearance program instead of a deferral as the economy opened up. The forbearance program instituted is largely now determined by state guidelines. In the second quarter, we saw serious delinquency rates improved by 0.1% and 30-day delinquencies drop by 1.4%. In addition, almost 40% of those delinquent loans made a payment in June. Many delinquent borrowers are on repayment plans, which will cause them to cure their delinquency status over the next six to 12 months. As the economic recovery continues, the portfolio's credit performance should continue 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 on their equity. Turning to Page 13. Updated letter agreements between the treasury and the GSEs relating to the 2008 senior preferred stock purchase agreement restricted the percentage of loans purchased by the GSEs backed by investor properties and second homes to 7%. This change created a dislocation in the marketplace, acquiring originators to look for alternative outlets for their loans backed by investor properties. We were able to source over $300 million of this product in the second quarter from our existing originator relationships at attractive prices. We expect to execute on our first securitization of this collateral in the third quarter with more to follow should the opportunity persist. 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 market environment. Turning to Page 14. Our RPL portfolio of $1 billion has been impacted by the pandemic but continues to perform well. Eighty-one percent of our portfolio remains less than 60 days delinquent. And although the percentage of 60 -- the portfolio 60 days delinquent in status was 26%, a quarter of those borrowers continue to make payments. Prepayment speeds in the second quarter moderated a bit, but continue to be elevated at a three-month CPR of 15 as mortgage rates continue to be historically low and more borrowers gained equity with the increase of home prices. While 30% of our RPL borrowers were impacted by COVID, we have worked with our servicers to provide assistance to borrowers and have seen improvement in delinquency levels over the quarter. Turn to Page 15. 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 page shows the outcomes for loans that were purchased prior to the year ended 2019. Thirty-eight percent of loans that were delinquent at purchase are now either performing or paid in full. Forty-seven percent are either liquidated or REO to be liquidated. Our sales of REO properties have continued at an accelerated pace at advantageous prices. We have been able to cut the REO portfolio in half since the pandemic began. Fifteen percent are still in nonperforming status. Our modifications have been effective as almost three-quarters are either performing or paid in full. We are pleased with these results as they continue to outperform our assumptions at the time of purchase. Turning to Page 16. We closed the previously announced acquisition of Lima One on July 1. We're very excited about this transaction, and I would like to give a shout-out to the entire MSA and Lima One teams that work diligently and collaboratively toward closing this transaction quickly. Lima One is a leading nationwide originator of business purpose loans, or BPLs, with a strong brand recognition in the BPL borrower community. They serve the needs of short- and long-term borrowing strategies in the BPL space by offering a diverse set of products, including fix and flip and new construction loans, longer-term rental loans, and small balance multifamily value-add and bridge loans. Lima's originated over $3 billion since inception and has shown that they can reliably originate over $1 billion annually with a clear path to grow significantly beyond that. The acquisition enhances our position as a significant capital provider to the BPL space, which we believe offers some of the most attractive opportunities to deploy capital in the residential mortgage space. This acquisition will provide MFA with reliable access to high-quality high-yielding assets that are difficult to source in the marketplace. At closing of the acquisition, we added $152 million of business purpose loans to our balance sheet. The integration of Lima One into the MFA family has been smooth and efficient. The working relationship we've built over the last four years across our organizations has been a tremendous asset in the integration and allowed Lima One to continue to originate high-quality loans and service customers without any issues. One of the key initiatives has been to quickly use MFA's balance sheet and reputation to substantially improve the financing of Lima's assets and origination going forward. We've already refinanced expensive financial, a BPL securitization, and subordinated debt that Lima needed to put in place during 2020, which will save over 500 basis points in financing costs over time. And we are in the process of adding additional financing lines to meet the expected growth of business going forward. Turning to Page 17, where we will discuss the fix and flip portfolio. Our portfolio declined modestly by about $32 million in the second quarter as principal paydowns continue to exceed loan acquisitions. Limited acquisitions last year led to our current seasoned loan portfolio where we see completed projects getting sold quickly into a strong housing market, leading to high repayment rates. We expect this trend to change going forward as purchase activity has picked up meaningfully. Second-quarter loan acquisitions more than doubled from the first quarter as we acquired $68 million in UPB and $118 million in max loan amount in the quarter. As a reminder, fix and flip loans financed 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 project. Third-quarter acquisitions are on track to increase even further as we've already added in excess of $150 million max loan amount of fix and flip loans and fuel others. With the acquisition of Lima as well as other seller relationships, we expect purchase activity to be strong going forward and expect the fix and flip portfolio to grow again in the third quarter. The fix and flip portfolio delivered strong income in the second quarter with average portfolio yield of approximately 6.4% in the quarter. The housing market continues to be extremely strong with record-low mortgage rates and low levels of inventory supporting annual home price depreciation 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 on our loans, and the efforts of our experienced asset management team continues to lead to acceptable outcomes on our delinquent loans. Sixty-plus day delinquent loans continue to decline and dropped $29 million to $120 million at the end of the second quarter. And what is really encouraging is that we continue to see a solid amount of loans pay off in full out of 60-plus. The loans paid off in full from serious delinquency we often collect default interest, extension fees, and other fees of payout. For loans where there is meaningful equity in the property, these can add up. Since inception, we have collected approximately $4.8 million in these types of fees across our fix and flip portfolio. Sixty-plus day delinquency as a percentage of UPB declined 4% to 28% and remains elevated. But keep in mind that we have purchased over $2.1 billion of fix and flip loans and had over $1.5 billion pay off in full. 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. As our purchase activity was limited last year and performing loans paid off, the delinquency percentage increase as one would naturally expect as our portfolio shrank. As we now grow our portfolio again and continue to have positive outcomes on seriously delinquent loans, we expect those in dollar amount as well as the percentage delinquency to continue to decline going forward. And so far in the third quarter, we continue to see positive delinquency trends. Finally, the fix and flip loan reserves continued to trend down in the second quarter, declining by $2.1 million, primarily due to improved economic expectations and a strong housing market. Turning to Page 18. Our single-family rental 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 remained solid and 60-plus day delinquency declined 90 basis points to 4.9% at the end of the second quarter. Purchase activity increased significantly from the first quarter as we purchased $102 million of single-family rental loans in the second quarter and grew the single-family rental portfolio for the second quarter in a row. The pace of acquisitions has continued to accelerate into the third quarter, and we have already added approximately $100 million in the month of July. The acquisition of Lima One will significantly bolster our ability to source single-family rental loans. And we believe that we will be able to continue to grow our acquisition volume as well as our single-family rental portfolio in the near future. Over two-thirds of our single-family rental portfolio is financed with nonmark-to-market financing and over 15% through securitizations. We priced our first single-family rental securitization in the first quarter of 2021, where the weighted average coupon of bond sold was only 106 basis points. Going forward, we expect to programmatically execute single-family rental securitizations to finance our rental loans with the next deal expected in the fourth quarter. We are pleased with the results of the second quarter of 2021 and even more excited about the future at MFA. Our investment initiatives are picking up steam as our asset acquisitions outpace runoff for the first time since late 2019. We're continuing to execute our strategic plan to lower and term out borrowing costs, and we're beginning to see the results of this activity in our income statement. The strength of the housing industry has obvious positive implications for our mortgage credit investments. And our acquisition of Lima One is an important initiative that will enhance our ability to deploy future capital in the BPL sector and grow our future earnings power.

q2 earnings per share $0.13. qtrly net interest income increased on a sequential quarter basis by over 16% to $59.0 million.

A table providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA Healthcare is included in today's release. With the effects of the pandemic moderating in the second quarter, we experienced a strong rebound in demand for our services. COVID admissions in the quarter were down to 3% of total, as compared to 10% in the first quarter. Volumes across all categories grew significantly compared to last year. And notably, we grew inpatient admissions and outpatient surgeries over 2019. The growth was supported by an improved payer mix, which resulted from an increase in commercial volumes. On a year-over-year basis, revenues grew 30% to $14.4 billion. Inpatient revenues increased 20%, driven by a 17.5% admission growth. Outpatient revenues grew an impressive 59%, reflecting the resurgence in outpatient demand across most categories. To highlight a few areas, outpatient surgeries were up 53%, emergency room visits grew 40%, cardiology procedures increased 41%, and urgent care visits were up 82%. Compared to 2019, overall inpatient admissions grew almost 3% with commercial admissions growing 8%. Outpatient surgeries grew approximately 3.5%. Emergency room visits were only down 5.5% with the month of June basically flat. Acuity, however, in our emergency rooms was up, with moderate growth in the most acute categories. We were able to leverage the increased revenue into higher margins. Adjusted EBITDA margin improved compared to last year, excluding the government stimulus income and sequentially in comparison to the first quarter. Diluted earnings per share, excluding losses and gains on sales of facilities and losses on retirement of debt, increased 35% to $4.37. As noted in our release, earnings per share in the second quarter of 2020 included a $1.73 per diluted share benefit from government stimulus income. This benefit was reversed in the third quarter of 2020 as a result of the decision we made to return our entire share of provider relief funds from the CARES Act. Once again, our teams delivered on our operating agenda. As we look to the rest of the year, we have raised our annual guidance to reflect the performance of the company over the first half of the year and the belief that the current levels of demand should prolong over the remainder of the year. We continue to invest aggressively in our strategic plan, which revolves around building greater clinical capabilities to serve our communities while also developing more comprehensive enterprise resources to support caregivers and differentiate our local networks. We believe this operating model will continue to create value for our patients, deliver market share growth, and produce solid returns for our shareholders. I will discuss our cash flow and capital allocation activity during the quarter, then review our updated 2021 guidance. As a result of the strong operating performance in the quarter, our cash flow from operations was 2.25 billion, as compared to 8.7 billion in the second quarter of 2020. In the prior-year period, cash flow from operations was positively impacted by approximately 5.8 billion due to CARES Act receipts. And this year, we had approximately 850 million more income tax payments in the quarter than the prior year due to the deferral of our second-quarter 2020 estimated tax payments. Capital spending for the quarter was 842 million, and we have approximately 3.8 billion of approved capital in the pipeline that is scheduled to come online between now and the end of 2023. We completed just under 2.3 billion of share repurchases during the quarter. We have approximately 5 billion remaining on our authorization. And consistent with our year-end discussion, we are planning on completing the majority of this in 2021, subject to market conditions. Our debt to adjusted EBITDA leverage was 2.65 times, and we had approximately 5.6 billion of available liquidity at the end of the quarter. During the quarter, we closed on the acquisition of Meadows Regional Hospital in Vidalia, Georgia. We also closed on the Brookdale Home Health and Hospice transaction as of July 1st, 2021. We have a number of other development transactions in our pipeline to expand our regional delivery networks, including over 15 surgery center additions through both de novo development and acquisitions, as well as a number of urgent care and physician practice acquisitions. We also anticipate the closing of our previously announced facility divestitures in Georgia later this quarter, and we plan to use the proceeds from this transaction for other capital allocation purposes. We expect full-year adjusted EBITDA to range between 12.1 billion and 12.5 billion. We expect full-year diluted earnings per share to range between $16.30 and $17.10 per share. And our capital spending target remains at approximately 3.7 billion. As Sam mentioned, our revised guidance considers the strong results in the first half of the year and our belief in the company's ability to continue this performance for the remainder of the year. If you could give instructions to the callers on the queue.

sees fy earnings per share $16.30 to $17.10.

In the fourth quarter, Cullen/Frost earned $101.7 million or $1.60 per share, compared with earnings of $117.2 million and $1.82 a share reported in the same quarter a year ago. For the full year, Cullen/Frost earned $435.5 million or $6.84 a share compared with earnings of $446.9 million or $6.90 a share reported in 2018. The lower interest rate environment impacted our results, as you would expect. However, our team continues to execute our strategy of pursuing consistent above-average organic growth across our enterprise and we are investing for the long term, while maintaining our quality standards. Our return on average assets was 1.21% in the fourth quarter compared to 1.48% in the fourth quarter of last year. Average deposits in the fourth quarter of $27.2 billion were up 2.6% compared to the fourth quarter of last year, while average loans were up 5.4%. Our provision for loan losses was $8.4 million in the fourth quarter compared to $8 million in the third quarter of this year and $3.8 million in the fourth quarter of 2018. Net charge-offs for the fourth quarter were $12.7 million compared with $6.4 million in the third quarter and $9.2 million in the fourth quarter of last year. Fourth quarter annualized net charge-offs were 34 basis points of average loans. Non-performing assets were $109.5 million at the end of the fourth quarter compared with $105 million in the third quarter and $74.9 million in the fourth quarter of last year. Overall delinquencies for accruing loan at the end of the fourth quarter were $58.2 million and that was 39 basis points of period end loans. And those numbers remain well within our standards and comparable to what we've experienced in the past several years. And overall, our credit quality remains good. Total problem loans, which we define as risk grade 10 and higher were $511 million at the end of the fourth quarter compared to $487 million in the third quarter of this year and $477 million in the fourth quarter of last year. The increase in the fourth quarter related primarily to the energy portfolio. Energy related problem loans were $132.4 million at the end of the fourth quarter compared to $87.2 million for the third quarter and $115.4 million in the fourth quarter of last year. The energy-related problem loan total is mostly attributable to three borrowers with whom we've been working for several quarters. Energy loans in general represented 11.2% of our portfolio at the end of the fourth quarter, up from the previous quarter but well below our peak of more than 16% in 2015. Our focus for commercial loans continues to be on consistent, balanced growth, including both the core component, which we define as lending relationships under $10 million in size as well as larger relationships, while maintaining our quality standards. The balance between these relationships went from 52% larger and 48% core at the end of 2018 to 57% larger and 43% core at the end of 2019. The movement toward larger loans in 2019 was mostly due to activity in the fourth quarter, where some quality new energy relationships were added after exiting a number of credits during the year. New relationships increased 4% versus the fourth quarter of a year ago. The dollar amount of new loan commitments booked during the fourth quarter was up sharply, increasing 75% from a year ago and 44% from the prior quarter. Even excluding the strong energy growth we saw in the fourth quarter, new loan commitments grew 42% versus a year ago and 20% from the prior quarter and represented good increases in both C&I and CRE. That said, quality deals are hard to come by. In 2019, we booked just 3% more loan commitments compared to 2018 despite looking at 16% more deals. In CRE, we saw our percentage of deals lost to structure increase from 63% in 2018 to 69% in 2019. Our weighted current active loan pipeline in the fourth quarter was up by about 9% overall compared to the prior quarter and was driven by a 20% growth in C&I opportunities. Of the 10 new financial centers that we've opened so far in the Houston region, four were opened in the fourth quarter. We expect to open one more Houston area financial center in the current quarter on our way to a total of 25 new financial centers and we've already hired more than 150 of the approximately 200 employees we expect to staff this expansion. Those new financial center openings benefit both commercial and consumer banking. Let's look at our consumer business. We added almost 13,000 net new customers -- consumer customers in 2019, an increase of 48% from a year ago. That represented a 3.8% increase in the total number of consumer customers, all of it representing organic growth. In the fourth quarter 32% of our account openings came from our online channel which includes our Frost Bank mobile app. This channel continues to grow rapidly. In fact, online account openings were 30% higher compared to the fourth quarter of 2018. The consumer loan portfolio averaged $1.7 billion in the fourth quarter, increasing by 1.2% compared to the fourth quarter last year. Frost Bankers have done a great job expanding our presence in growing markets. Our overall strategy of sustainable organic growth is serving us well. The interest rate environment continues to present challenges to our industry, but we remain focused on the fundamentals and growing our lines of business in line with our quality standards. 2019 had its share of challenges but also had its share of achievements. Besides adding the new financial centers in Houston that I mentioned, we also expanded into a completely new market where we opened our first financial center in Victoria, Texas and we completed our corporate headquarters move to the new Frost Tower in downtown San Antonio and the culmination of a process that began six years ago. Our commitment to customer service was confirmed when Frost received the highest ranking in customer satisfaction in Texas in J.D. Power's U.S. Retail Banking Satisfaction Study for the 10th consecutive year and received more Greenwich Excellence and Best Brand awards for small business and middle market banking than any bank in the nation for the third consecutive year. That's a tribute to the dedication of everyone at Frost who works hard every day to take care of our customers and implement our strategies and that dedication is what sets Frost apart from other financial service companies. I'll make a few comments about the Texas economy before providing some additional information about our financial performance for the quarter and I'll close with our guidance for full year 2020. All of the Texas macroeconomic numbers I'll mention here are sourced from the Dallas office of the Federal Reserve. Texas job growth was a very strong 4% in November and the Dallas Fed now estimates 1.9% Texas job growth for full year 2019. December statewide unemployment of 3.5% uptick slightly from the historically low 3.4% level seen in each of the six months through November. In terms of employment growth by industry, as of November, construction had the strongest employment growth in Texas with 11.5% growth for the month and growth of 5% for the year-to-date period through November. Financial activities was the industry with the second fastest job growth at 3.5% year-to-date through November. Energy was the only sector that showed meaningfully negative Texas job growth, down 2.7% year-to-date through November. According to the Dallas Fed surveys, activity in the Texas services sector accelerated again in the fourth quarter and revenue growth in this sector has remained in positive territory every month since December of 2009. Looking at individual markets, Houston economic growth remains above the historical average and the Dallas Fed stated that as of November data suggests continued moderate growth ahead. Job growth in the Houston region accelerated to a 2.8% rate in the three months through November, compared to a more modest 1.6% rate for the full year through November professional and business services and education and health services led Houston job growth over the three months through November growing at 8.2% and 7.7% respectively over the same period a year earlier. Regarding the DFW Metroplex the Dallas Business Cycle Index maintained by the Dallas Fed expanded at a 5% annual rate in the fourth quarter compared to 4.8% in the third quarter, while the Fort Worth Business Cycle Index expanded at a consistent 4.1% rate in the second half of the year. For the DFW Metroplex, November job growth remains strong at a 4.8% annualized rate, and area unemployment remained near multi-year lows at 3.2% in Dallas and 3.3% in Fort Worth. The Austin economy has also remained healthy in November and the Dallas Fed's Austin Business Cycle Index has now been in expansion territory for more than 10 years with index growth remaining at or above the region's historical 6% average for the past nine years. In the three months ending in November, Austin area job growth moderated to 2.4%. Austin's unemployment rate remained at 2.7% in November for the fourth consecutive month. The San Antonio region posted strong economic growth in November with the Dallas Fed San Antonio Business Cycle Index, continuing to grow above its long-term average. The San Antonio Business Cycle Index grew at a 5.5% rate in November and San Antonio job growth was 4.7% for the three months through November with area unemployment remaining at 3.1%. Permian Basin payrolls remained flat through November and the unemployment rate has ticked up in recent months. While the rig count has generally declined in recent months, oil production has continued to increase. Permian region job declines in the mining, manufacturing and government sectors were offset by job growth in the leisure and hospitality, professional and business services, information and trade, transportation and utility sectors for the year-to-date period through November, resulting in overall flat performance for jobs in the region. Despite the lack of job growth in the Permian region, November unemployment remained low at 2.4% for the second consecutive month. Our net interest margin percentage for the fourth quarter was 3.62%, down 14 basis points from the 3.76% reported last quarter. The decrease primarily resulted from lower yields on loans and balances at the Fed as well as an increase in the proportion of balances at the Fed as a percentage of earning assets, partially offset by lower funding costs. The taxable equivalent loan yield for the fourth quarter was 4.88%, down 28 basis points from the third quarter, impacted by the lower rate environment with September and October Fed rate cuts. The total investment portfolio averaged $13.6 billion during the fourth quarter, up about $197 million from the third quarter average of $13.4 billion. The taxable equivalent yield on the investment portfolio was 3.37% in the fourth quarter, down 6 basis points from the third quarter. Our municipal portfolio averaged about $8.4 billion during the fourth quarter, up about $193 million from the third quarter. The municipal portfolio had a taxable equivalent yield for the fourth quarter of 4.8%, flat with the previous quarter. At the end of the fourth quarter, about two-thirds of the municipal portfolio was PSF insured. During the fourth quarter, approximately $1.4 billion of our treasury securities that were yielding about 1.51% matured. As insurance against the potential backdrop of flat to down rates for an extended period of time, we made the decision to add duration to our investment portfolio. During the fourth quarter, we purchased about $1.5 billion in securities to replace the treasuries that matured. During the quarter, we purchased $500 million in 30 year treasuries yielding about 2.27%, approximately $700 million in agency mortgage-backed securities yielding about 2.37% and about $300 million in municipal securities with a TE yield of 3.3%. As a result of the maturities and purchases I just mentioned, the duration of the investment portfolio at the end of the quarter was 5.4 years compared to 4.3 years last quarter. Looking at our funding sources, the cost of total deposits for the fourth quarter was 29 basis points, down 10 basis points from the third quarter. The combined cost of -- the cost of combined Fed funds purchased and repurchase agreements which consists primarily of customer repos decreased 32 basis points to 1.21% for the fourth quarter from 1.53% in the previous quarter. Those balances averaged about $1.42 billion during the fourth quarter, up about $126 million from the previous quarter. Moving to non-interest expense; total non-interest expense for the quarter increased approximately $21.1 million or 10.6% compared to the third quarter -- excuse me, the fourth quarter last year. Excluding the impact of the Houston expansion and the operating costs associated with our headquarters move in downtown San Antonio, non-interest expense growth would have been approximately 6.3%. So again, regarding the estimates for full year 2020 earnings, we currently believe that the FactSet mean of $6.13 is reasonable. Our assumptions do not include any rate cuts in 2020.

compname reports q4 earnings per share $1.60. q4 earnings per share $1.60.

These statements are based on our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our annual report on Form 10-K for the year ended December 31, 2021, which we expect to be filed this Friday, February 18. I'll also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non-GAAP financial measures. You'll find a reconciliation of our non-GAAP measures on our website. I'd like to start today by looking at some of our fourth quarter and full year 2021 highlights. For the full year 2021, we generated adjusted EBITDA of $13 billion, which was a significant increase over 2020 and in line with our expectations. DCF attributable to the partners of Energy Transfer, as adjusted, was $8.2 billion, which resulted in excess cash flow after distributions of approximately $6.4 billion. On an incurred basis, we had excess DCF of approximately $5 billion after distributions of $1.8 billion and growth capital of approximately $1.4 billion. On January 25, we announced a quarterly cash distribution of $0.175 per common unit or $0.70 on an annualized basis, which represents a 15% increase over the previous quarter and represents the first step in our plan to return additional value to unitholders. Operationally, we moved record volumes through our NGL pipelines and NGL refined products terminals for the full year 2021, primarily driven by growth in volumes through our Nederland terminal and on our Mariner East pipeline system. In addition, NGL fractionation volumes reached a new record during the fourth quarter, largely driven by growth in volumes leading our Mont Belvieu fractionators. At our Nederland terminal, we completed expansions in early 2021 that brought our companywide total NGL export capacity to more than 1.1 million barrels per day which we believe is the largest in the world. On December 2, 2021, we completed our acquisition of Enable Midstream Partners, which provides increased scale in the Mid-Continent and Ark-La-Tex regions and improved connectivity for our natural gas, crude oil, and NGL transportation customers. The combination of Energy Transfer's and Enable's complementary assets will allow us to continue to provide flexible reliable and competitive services for our customers as we pursue additional commercial opportunities utilizing our improved connectivity and expanded footprint. We continue to expect the combined company to generate more than $100 million of annual run rate cost savings synergies, of which we expect to achieve 75 million in 2022. In addition, we are in the process of identifying and evaluating a number of commercial and operational synergies that are expected to enhance the operational capabilities of our systems by capitalizing on improved efficiencies and increasing utilization and profitability of our combined assets. Before moving to a growth project update, I want to briefly touch on the recent winter weather conditions seen across many of our assets. This bout of winter weather was less severe and significantly less disruptive than winter storm Uri last year, and commodity prices remained much more stable throughout as a result. As we always do, we have procedures in place to provide layers of protection and risk mitigation, including engineering controls and winterization processes and preplanning and prepositioning of resources to assure, we are able to respond when needed. Our extensive experience with operating pipelines, processing plants and storage facilities combined with a significant amount of preparation allows us to operate reliably throughout extreme weather conditions, and this is due to the consistent and extraordinary efforts of our employees. I'll now walk you through recent developments on our growth projects. Starting with Mariner East Pipeline system. Construction of the final phase of the Mariner East pipeline is complete and commissioning is in progress which will bring our total NGL capacity on the Mariner East pipeline system to 350,000 to 375,000 barrels per day, including ethane. Energy Transfer's Mariner East pipeline system now includes multiple pipelines across the state of Pennsylvania, connecting the prolific Marcellus and Utica shales to markets throughout the state and the broader region, including Energy Transfer's Marcus Hook terminal on the East Coast. For full year 2021, NGL volumes through the Mariner East pipeline system and Marcus Hook terminal are up nearly 10% over 2020. With our expanded network, we will see volumes continue to grow. In our Pennsylvania Access project, which allows refined products to flow from the Midwest supply regions into Pennsylvania, New York, and other markets in the Northeast started flowing refined products in January. At our expanded Nederland terminal, NGL volumes continued to increase during the fourth quarter, including export volumes under our Orbit ethane export joint venture, which have remained strong. For the full year 2021, we loaded nearly 26 million barrels of ethane out of the facility. For 2022, we expect to load a minimum of 40 million barrels of ethane and project this to increase to up to 60 million barrels for 2023. We also expect our LPG export volumes at Nederland to continue to grow in 2022. And in total, our percentage of worldwide NGL exports has doubled over the last two years, capturing nearly 20% of the world market, which was more than any other company or country exported during the fourth quarter of 2021. At Mont Belvieu, we recently brought online a 3 million-barrel high-rate storage well, which increases our total wells to 24 and our NGL storage capabilities at Mont Belvieu to 53 million barrels. Turning to our Cushing south pipeline. In early June, we commenced service on the 65,000 barrels per day crude oil pipeline, providing transportation service from our Cushing terminal to our Nederland terminal, which also provides access for Powder River and DJ Basin barrels to our Nederland terminal via an upstream connection with our White Cliffs pipeline. This pipe is already being fully utilized. And as we mentioned on our last call, we are moving forward with phase 2, which will nearly double the pipeline's capacity to 120,000 barrels per day. Phase 2 is expected to be in service by the end of the first quarter of 2022 and is underpinned by third-party commitments. As a reminder, minimal capital spend was required for this phase. Next, construction on the Ted Collins link is progressing and is now expected to be completed late in the first quarter of 2022. The Ted Collins link will increase market connectivity for our Houston terminal. It will also give us the ability to fully load and export WTI barrels as well as low gravity Bakken barrels out of the Houston market, demonstrating Energy Transfer's unique capability to provide a neat Bakken barrel to markets along the Gulf Coast. Our Permian Bridge project, which connects our gathering and processing assets in the Delaware Basin with our G&P assets in the Midland Basin, was placed into service in October and continues to be significantly utilized. This project allows us to move approximately 115,000 Mcf per day of rich gas out of the Midland Basin and to utilize available processing capacity more efficiently, while also providing access to additional takeaway options. In addition, an expansion is underway, which will bring the top line's total capacity to over 200,000 Mcf per day in the first quarter of 2022. And due to significantly increased producer demand, we now plan to build a new 200 MMcf per day cryogenic processing plant in the Delaware Basin. The Grey Wolf plant is supported by new commitments and growth from existing customer contracts and is expected to be in service by the end of 2022. In addition, to provide incremental revenue to our midstream segment, once in service, the volumes from the tailgate of the plant will utilize our gas and NGL pipelines for takeaway, providing three revenue streams. Now in order to address the growing need for additional natural gas takeaway from the Permian Basin, we are diligently evaluating a takeaway project that would utilize existing Energy Transfer assets along with new build pipeline providing producers with firm capacity to the premier markets of Katy, Carthage, Gilles, and Henry Hubs. This pipeline project would include the construction of a new approximately 260-mile pipeline from the Midland Basin to our existing 36-inch pipeline Southwest of Fort Worth, parallelly existing right of way. From there, it would interconnect with our existing assets with available capacity for delivery through our vast pipeline network to markets at Carthage as well as the Katy, Beaumont, and the Houston Ship Channel and other markets along the Gulf Coast, including deliveries to the Gilles and Henry Hub. We view this project as an ideal solution for natural gas growth out of the Permian Basin that we can complete much more quickly than our competitors' options at significantly less cost about following an existing right of way along the majority of the route. In addition, it is aligned with our strategy of identifying and repurposing underutilized assets in order to maximize the value of our uniquely positioned existing asset base. Customer discussions are underway as we pursue this project. Given the proposed route and our ability to utilize existing assets, we believe we could complete construction of project in two years or less once we have reached FID. Turning to the Gulf Run Pipeline, which will be a 42-inch interstate natural gas pipeline with 1.65 Bcf per day of capacity. Gulf Run is backed by a 20-year commitment from Golden Pass LNG and will provide natural gas transportation between the Haynesville Shale and the Gulf Coast, connecting some of the most prolific natural gas-producing regions in the U.S. with the LNG export market. Pipeline construction is underway and is expected to be completed by the end of 2022. Lastly, in July of 2021, we announced the signing of a memorandum understanding with Republic of Panama to study the feasibility of jointly developing a proposed Trans-Panama Gateway Pipeline. We anticipate working closely with Panama to successfully bring this project to fruition. Panama's geographic location and favorable investment climate make this an attractive project. We continue to believe this project will create the most liquid and attractive LPG supply hub in the world and are excited about the opportunity it presents. Now for an update on our alternative energy activities. In January of 2022, we announced that we expanded our Alternative Energy Group through the hiring of a vice president of alternative energy. This role is responsible for developing alternative energy and carbon capture projects for Energy Transfer, along with various ESG initiatives, including the development of carbon capture offset programs that are accretive to our operations. In addition to the two solar projects we announced in 2021, we are also continuing to explore several opportunities for solar, wind, and forestry carbon credit projects on our existing acreage in the Appalachian region. We remain in discussions with other large renewable energy developers. On the carbon capture front, we continue to pursue our carbon capture project at Marcus Hook that would involve capturing CO2 from the flue gas and delivering it to the customers for use in the food and beverage industries. This project looks financially attractive based upon preliminary cost estimates and design feasibility studies. We are also pursuing several carbon projects related to our assets, including projects involving the capture of CO2 from processing and treating plants for use in enhanced oil recovery for sequestration. We continue to believe that our franchise will allow us to participate in a variety of projects involving carbon capture or other innovative uses as we continue to reduce our carbon footprint. Lastly, we published our annual corporate responsibility report to our website in December. Now let's take a closer look at our fourth quarter results. Consolidated adjusted EBITDA was $2.8 billion, compared to $2.6 billion for the fourth quarter of 2020. DCF attributable to the partners, as adjusted, was $1.6 billion for the fourth quarter, compared to $1.4 billion for the fourth quarter of 2020. For the fourth quarter, we saw higher transportation volumes across all of our segments, including record volumes in the NGL and refined products segment as well as a $60 million adjusted EBITDA contribution from the acquisition of Enable for the month of December. On January 25th, we announced a quarterly cash distribution of $0.175 per common unit or $0.70 on an annualized basis. This distribution will be paid on February 18 to unitholders of record as of the close of business on February 8. This distribution represents a 15% increase over the previous quarter and represents the first step in our plan to return additional value to unitholders while maintaining our leverage ratio target of four to four and a half times debt to EBITDA. Future increases to the distribution level will be evaluated quarterly with the ultimate goal of returning distributions to the previous level of $0.305 per quarter or $1.22 on an annualized basis while balancing our leverage target, growth opportunities and unit buybacks. Turning to our results by segment and starting with NGL and refined products. Adjusted EBITDA was $739 million, compared to $703 million for the same period last year. This was primarily due to higher transportation and terminal services margins related to increased throughput at our Nederland terminal in the fourth quarter of 2021 as well as increased fractionation in refinery services margin. NGL transportation volumes on our wholly owned and joint venture pipelines increased to a record 1.9 million barrels per day, compared to 1.4 million barrels per day for the same period last year. This increase was primarily due to increased export volumes feeding into our Nederland terminal from the initiation of service on our propane and ethane export projects, higher volumes from the Permian and Eagle Ford regions as well as increased volumes on our Mariner East pipeline system. And our fractionators also reached another record for the quarter. With average fractionated volumes of 895,000 barrels per day compared to 825,000 barrels per day for the fourth quarter of 2020. For our crude oil segment, adjusted EBITDA was $533 million, compared to $517 million for the same period last year. This was primarily due to higher crude oil transportation volumes out of the Permian Basin improved volumes through our Nederland terminal and improved performance on our Bakken and Bayou Bridge pipelines as a result of recovering volumes in the fourth quarter of 2021 and the addition of the Enable assets. For midstream, adjusted EBITDA was $547 million, compared to $390 million for the fourth quarter of 2020. This was primarily due to a $147 million increase related to favorable NGL and natural gas prices. In addition, our midstream segment also benefited from growth in the Permian, South Texas, and Northeast, and the acquisition of the Enable assets in December 2021. Gathered gas volumes were 14.8 million MMBtus per day, compared to 12.6 million MMBtus per day for the same period last year due to higher volumes in the Permian, South Texas, and Northeast regions as well as addition of the Enable assets in December of 2021. Permian Basin volumes continue to be strong and Midland volumes remain at or near record highs. As a result, we are expanding our Permian Bridge project and constructing our new Grey Wolf processing plant in the Delaware Basin. In our interstate segment, adjusted EBITDA was $397 million, compared to $448 million in the fourth quarter of 2020. While volumes are beginning to improve, we did experience contract expirations at the end of 2020 on Tiger and FEP. And due to very mild temperatures throughout the Midwest, we experienced lower demand on our Panhandle and Trunkline systems during the fourth quarter. However, these decreases were partially offset by increases on Rover and Tiger due to more favorable market conditions and to significant volume growth out of the Haynesville. These results also include the Enable assets in December of 2021. We have seen steady growth recently in the interstate segment with the fourth quarter up more than 10% over the third quarter of 2021 even without the impact of Enable. For our Intrastate segment, adjusted EBITDA was $274 million, compared to $233 million in the fourth quarter of last year. This was primarily due to increased firm transportation volumes from the Permian and South Texas, the recognition of certain revenues related to winter storm Uri and an increase in retained fuel revenues due to higher natural gas prices as well as the addition of the Enable assets in December of 2021. Now turning to our 2022 adjusted EBITDA guidance. With expectations for continued strong performance from our existing business as well as the addition of the Enable assets, we expect our full year 2022 adjusted EBITDA to be $11.8 billion to $12.2 billion. And moving to our 2022 growth capital expenditures. We expect growth capital expenditures, including expenditures related to the recently acquired Enable assets to be between 1.6 billion and $1.9 billion, balanced primarily across the midstream NGL refined products and interstate segments. This number includes approximately $200 million of 2021 planned capital that has been deferred into 2022 as well as growth capital related to the recently acquired Enable assets, in particular, Gulf Run pipeline. In addition, this includes newly approved projects in the Permian Basin that support growing natural gas production through new gathering and processing capacity, improved efficiencies and reduced emissions. These projects include construction of a new processing plant optimization of the Oasis pipeline and modernization and debottlenecking of the existing system. The majority of these new projects are expected to provide strong returns and be completed at a six times multiple on average. Now looking briefly at our liquidity position. As of December 31, 2021, total available liquidity under our revolving credit facility was slightly over $2 billion, and our leverage ratio was 3.07% for the credit facility. During the fourth quarter, we utilized cash from operations to reduce our outstanding debt for approximately $400 million. And for full year 2021, we reduced our long-term debt by approximately $6.3 billion. We expect to generate a significant amount of cash flow in 2022, which will be strategically allocated in a manner that best positions us to continue to improve our leverage, invest in the growth of the partnership and return value to our unitholders. As we approach our leverage target range, we have taken our first steps toward returning additional capital to our equity holders through distribution growth, which we will continue to evaluate on a quarterly basis. In addition, we have increased our growth capital spend, as I mentioned earlier on the call, with this capital focused on strong returning projects that will be in service in less than 12 months. And we expect to continue to pay down debt throughout the year with excess cash flow from operations. During the fourth quarter, we continue to see volumes recover across many of our systems, including another record quarter for volumes in our NGL and refined products segment. Looking ahead, we are excited about the opportunities in front of us. We will continue to explore and implement commercial synergies around the recently acquired Enable assets. And we continue to see growth across our NGL business segment, driven by increasing demand, both domestically and internationally. We have entered 2022 with a much stronger balance sheet than 2021, and we'll continue to place emphasis on financial flexibility and pay down debt in 2022 while continuing to position ourselves to return value to our unitholders. Given the volume growth expected out of the Permian Basin, we have some attractive new projects underway that will address new demand, enhance the efficiency and flexibility of our existing asset base, and generate attractive returns above our target threshold. We also continue to make progress on the alternative energy front, which can further enhance and effectively grow our Energy franchise. Operator, please open the line up for our first question.

outlook for 2022 adjusted ebitda which is expected to range between $11.8 billion and $12.2 billion.

Additional information on these factors can be found in the company's SEC filings. And, now, I will hand the communications to Gerrard. I'm pleased to join you today to discuss the transformation of our business model, our competitive differentiation and our solid start to 2021. I'll begin on Slide 3 by recapping our investment thesis and our key financial metrics for 2021, which we are reaffirming today. We are continuing to make solid progress in transforming our business model to generate strong returns on invested capital, significant free cash flow growth, and leverage our competitive differentiation to grow the top line. In the first quarter, we delivered 4% revenue growth underpinned by market share gains in ATMs and self-checkout solutions. I'll provide additional color about key market trends in just a minute, but I'll simply say that our growth in Q1 gives us the confidence to reiterate our 2021 revenue outlook of $4 billion to $4.1 billion. Our return on invested capital continues to improve. To date, the main contributor has been our DN Now work streams, which includes services modernization, G&A efficiencies from enhancing our digital and cloud-enabled capabilities and selling a higher mix of self-checkout devices and DN Series ATMs. The company is off to a good start in Q1, and we're tracking to our previously disclosed plan of $160 million of gross savings this year. Transformation restructuring payments are also tracking to plan and our prior comments on this topic and we'll conclude this year. The combination of enhanced profitability and lower restructuring payments is driving a strong increase in free cash flow. Our outlook for 2021 is a range of $140 million to $170 million or approximately 30% of our adjusted EBITDA. The company's operating rigor is driving our transformation and value creation. While we have been tested during the global pandemic, we continue to demonstrate tremendous result with our ability to execute during this challenging time and we will continue to leverage this operating rigor going forward. Slide 4 summarizes how our competitive differentiation is playing out in the marketplace and in our first quarter results. Our retail business is benefiting from accelerating self-checkout demand, as well as mild growth in our point of sale business. These trends drove retail revenue growth of 11% in the quarter, excluding the impact of divestitures and currency. We expect growth will continue as retailers improve the end-to-end experience and reduce operating costs. We're growing faster than the market, because customers value our high degree of modularity, increased availability and our open architecture. During the quarter, we secured a multi-year agreement with the French retail group, Les Mousquetaires, to transform the checkout experience at nearly 2,000 stores with next generation point-of-sale and self-checkout products, our AllConnect Data Engine and dynamic self-service software. In the United States, we booked our initial order for DN Series EASY self-checkout units with a high profile convenience store retailer, operating in airports and other tourist destinations. Beyond the value of winning new self-checkout hardware deals, we're also benefiting from higher services attach rates that increase our recurring revenue. Moving now over to the banking business. We're seeing growing evidence of market share gains due to the advanced features and functionality of our next generation DN Series ATMs. In the United States, we're seeing gains among larger financial institutions, including an initial order to deliver DN Series cash recycling ATMs and maintenance services at a top 10 U.S. financial institution, which previously bought hardware from others. With this wining [Phonetic], we received DN Series orders from five of the top 10 U.S. banks and we see opportunities to add to our success. In Latin America, we're seeing DN Series orders from customers in Mexico, Colombia, Peru and Honduras, including a contract with Banco Nacional de Mexico, or Banamex, to deliver approximately 1,200 DN Series ATMs, Vynamic software licenses and maintenance services. A number of customers have indicated that DN Series is not only a hardware upgrade, there is a critical element for automating, digitizing and enhancing the self-service channels. For example, DN Series is facilitating higher service levels due to strong engineering and the AllConnect Data Engine, which leverages Internet of Things and machine learning to enable a data-driven service model. For legacy ATMs, we're seeing service cost reductions of approximately 20%. For customers that upgrading from legacy ATMs to DN Series, the potential performance improvements from ACDE can be even more significant. We increased the number of machines connected to ACDE by 10% sequentially during the first quarter. As we connect more devices to AllConnect Data Engine, we expect the operational efficiencies will add to our service margins and contribute to our target range of 32% to 33%. Additionally, DN Series also supports advanced, self-service capabilities through enhancements we're making to our dynamic offering. Our Video-as-a-Service offering is seeing solid demand. Furthermore, our software team has created a single stack environment to facilitate quicker implementations and more frequent updates of new capabilities such as cardless transactions, cash recycling and video teller access. We see opportunities to continue to grow our software business. And, as previously disclosed, we're making investments in our dynamic payment suites and are seeing heightened interest from early adopters for our cloud native solution, although the sales cycle is expected to be longer than our typical software sale. We're also hearing from more customers about their efficiency agendas and we're responding with pre-configured managed services, which support advanced capabilities and drive higher service levels. The number of managed services opportunities has increased in the past quarter across retail and banking customers. Beyond our growing pipeline, our managed services success in the quarter included a five-year contract to be the sole source supplier for maintenance, monitoring and help desk services for more than 4,000 self-service terminals and in a top five bank in the United Kingdom. Secondly, an extended managed services contract with increased scope at the largest private sector bank in India. And, thirdly, a three-year managed services contract extension covering more than 3,500 self-service terminals with HSBC, the largest bank in Hong Kong. Our financial results represent a very solid start to 2021. Adjusted EBITDA of $100 million was the highest first quarter in the company's history and while Jeff will discuss the details, I'm especially pleased that our operating profit growth of 25% and adjusted EBITDA growth of 12% significantly outpaced our top line growth of 4%. This demonstrates strong operating leverage in our business model. Next on the call, Jeff Rutherford, who will take you through a more detailed discussion of our financials and our financial outlook for 2021. Our first quarter revenue growth and positive operating leverage demonstrates our transformed business model, which creating value for our stakeholders. Slide 5 contains the first quarter P&L metrics for the past two years, providing a useful perspective of our transformed business model. Total first quarter revenue of $944 million reflects foreign currency benefits of $34 million versus the prior-year period, partially offset by $23 million headwind from divested businesses. Adjusted for foreign currency and divestitures, revenue increased 2.4% led by product growth of 11%, software growth of 7%, and a services decline of 4%. We generated $273 million of non-GAAP gross profit in the quarter, an increase of $19 million or 7% versus the prior year period, reflecting higher revenue and improving margins from our DN Now achievements. Gross margin increased 110 basis points to 29%. We've expanded gross margins across all three segments, led by strong gains in software and services of approximately 590 basis points and 220 basis points, respectively. Product gross margins declined 200 basis points, due primarily to non-recurring benefits in the prior year period and a slightly less favorable customer mix. Operating profit increased $16 million or 25% versus the prior quarter, while operating margins gained 150 basis points to 8.4%. SG&A expense was flat versus the prior year quarter, allowing the gross profit from incremental revenue to flow through to operating profit. R&D expense was $3 million higher year-over-year, due to planned growth investment. We delivered adjusted EBITDA of $100 million in the quarter, which increased $11 million or 12% over the prior year. The next three slides contain financial highlights for our segment. On Slide 6, Eurasia Banking revenue of $328 million, increased 5% versus the prior year period excluding the foreign currency benefit of $21 million and a $20 million impact from divestitures. Growth was driven by higher product volumes as the team converted our backlog, which has been building for several quarters. Segment gross profit increased $7 million year-over-year with contributions from all three business lines. Foreign currency benefits of $8 million were partially offset by interim cost benefits from the prior year. Gross margin expanded 60 basis points year-over-year led by software and services improvements, while product margins declined due to a less favorable customer mix. Moving to Slide 7, Americas Banking revenue of $312 million declined 7% versus the prior year, excluding a $6 million foreign currency headwind and a $2 million divestiture headwind. We experienced lower product volumes and installation activities in U.S. regional accounts and in Mexico versus the prior year period, although we see order growth picking up. As Gerrard mentioned, our national account business is showing strength in both orders and revenue due to a customer acceptance of DN Series. The software business delivered strong double-digit growth in the quarter, due to the revenue recognition of a large contract. Segment gross profit of $97 million was down $7 million year-over-year due to lower volume and modest currency and divestiture headwinds. Gross margin expansion of 100 basis points to 31.3% was driven by benefits from DN Now initiatives. On Slide 8, retail revenue of $304 million increased 11% year-over-year after adjusting for $19 million foreign currency tailwind and the divestiture headwind of $1 million. During the quarter, we experienced continued strength from self-checkout solutions as well as mild growth from point-of-sale products. Software growth was driven by a large project in Europe. When compared to the prior year period, retail gross profit increased 32% and $79 million, due primarily to revenue growth. Gross margin expanded 260 basis points, demonstrating that our team is doing a great job delivering positive operating leverage, revenue growth, a more favorable mix of self-checkout solutions and continued execution of DN Now initiatives. On Slide 9, we summarize our free cash flow performance and update our leverage and debt maturity schedules. Free cash flow use of $70 million in the quarter was up slightly compared with the prior year quarter and was in line with our internal plan. Versus the prior year, free cash flow was impacted by higher interest payments related to the timing of our secured note payments and higher cash used for inventory. The combination of our growing product backlog coupled with longer lead times for electronic components and a weaker U.S. dollars resulting in higher cash requirements for inventory. We are working closely with our suppliers to manage these challenges, however, just like other technology companies, these dynamics will remain on our watchlist. Cash from receivables and payables improved slightly versus the prior year. On an unlevered basis, free cash flow use improved from $30 million to $10 million year-over-year due to higher profits and lower restructuring events. For modeling purposes, investors should expect our cash interest payments to be approximately $30 million in the second and fourth quarters and approximately $60 million in the third quarter of 2021. When compared with year-end, the company's cash balance reflects seasonal cash use for us approximately $30 million used to pay down a portion of the revolving credit facility. The company ended the quarter with $573 million of total liquidity, including $260 million of cash and short-term investments. At the end of the quarter, the company's leverage ratio of 4.4 times was unchanged versus year-end and down one-tenth of the term from the year ago period. On the right side of this slide, we update our gross debt levels as of March 31st. Note that we have no material debt maturities until November of 2023. We remain committed to strengthening our credit profile and we'll continue to evaluate opportunities to refinance that on more favorable terms. Slide 10 contains our 2021 outlook, which we are reaffirming today. We expect to generate revenue of $4 billion to $4.1 billion, which equates to 3% to 5% annual growth. Our adjusted EBITDA range is $480 million to $500 million for the year, or 6% to 10% growth as we benefit from topline growth and operating leverage. As most of you are aware, our second quarter results for 2020 included significant non-recurring benefits to our services' gross profit margins and operating expense. We do not expect these benefits to recur during the second quarter of 2021. Operating expense for the second quarter is expected to be in line with the first quarter or approximately $194 million, although it could be slightly higher if the euro continues its strength against the U.S. dollar. Based on these factors, we expect adjusted EBITDA for the second quarter to be similar to our first quarter results. Moving on to cash flow. We continue to expect $140 million to $170 million of positive cash flow for 2021, including up to $50 million for DN Now restructuring payments. Our outlook reflects a material improvement in the company's EBITDA, to free cash flow conversion rate from 12% in 2020 to approximately 30% in 2021.

sees 2021 total revenue $4.0b - $4.1b.

Joining me on the call today are Nish Vartanian, Chairman, President and CEO; and Ken Krause, Senior Vice President, CFO and Treasurer. These risks, uncertainties and other factors are detailed in our Form 10-K filings with the SEC. I appreciate your interest in MSA. I'm tremendously proud of the efforts of our team, which stayed focused on our mission, our people, our customers and communities. I've often said, our greatest asset is our employee engagement and commitment to our mission of protecting workers' lives. And I've never had greater appreciation for what our company contributes to society each and every day. We finished a challenging year with a very strong fourth quarter realizing record high revenue of $388 million and double-digit improvements in free cash flow. From a full-year perspective, our revenue declined 3%. Strength in our fire service market and air purifying respirators was offset by weakness in industrial products. But there is no question that diversification of our product provided support through the downturn. Despite the revenue challenges in certain areas, our annual adjusted operating margin reached 18%, that's up 10 basis points from a year ago. We've talked about our long-term aspiration to get our operating margins into the 20% range over the coming years. Our performance in this challenging environment provides me with a great deal of optimism for the future. With that in mind, there were three key areas I'd like to discuss today that support my confidence. First, MSA's innovation engine is stronger than ever. We're launching safety technologies that solve our customers' toughest safety challenges. Second, our continuous improvement culture across all areas of our business is yielding strong results, especially in the International segment. Third, we're committed to using our balance sheet to make strategic acquisitions that strengthen our leadership positions in key markets. Starting with the first area, MSA's innovation engine and R&D pipeline. The accomplishments of our founders back in 1914 reflects what happens every day in MSA's product development labs around the world. At the turn of the century, they partnered with Thomas Edison to develop a battery-powered miners' cap lamp. This electric lamp helped reduce mining fatalities by 75% over the next 25 years. That same passion for innovation exist throughout MSA today, so we continue to invest in new product development to drive organic growth. We do this to provide our customers with leading safety technologies that solve complex challenges. In 2020, we invested nearly $70 million in R&D to bring the most advanced safety solutions to our global customer base. One example is our new Advantage 290 reusable respirator. The Advantage 290 is the first government-approved reusable respirator designed without an exhalation valve. It filters both inhale and exhale breath that gives health-care workers increased flexibility, adding yet another option to the available supply of respiratory protection. And it can be stored for long periods of time. The work we're doing in the fire service is another great example. The MSA Connected Firefighter platform includes the breakthrough G1 or M1 SCBA as well as our soon-to-be-launched LUNAR system. LUNAR is a handheld device that uses cloud technology to deliver breakthrough fire scene management capabilities for incident commanders. It also uses real-time direction in distance data to help search and rescue teams locate a separated firefighter and it's a personal thermal imaging camera. While system-oriented products like LUNAR can have a longer adoption period, we continue to be very excited about the future possibilities that this technology has to offer on a global scale. Quite simply, our goal is to protect firefighters from head to toe, the same passion for innovation that led to the G1 to M1 in our LUNAR system is being applied to firefighter software solutions, helmets, turnout gear and boots. At the end of the day, it comes down to this. We understand our customers at a deep level. We listen, watch and learn from them. With this knowledge, we use the latest technology to keep them safe, solve their problems and simplify their day. Looking beyond the fire service, I'm also encouraged by the trends associated with our safety mission, a mission I believe is more relevant than ever. As an example, in one of his first acts in office, President Biden signed an executive order calling on OSHA issue guidelines related to COVID-19 in the workplace. It's reflective where COVID is bringing safety to the forefront of the national discussion. An example is our International segment. Our entire international team continues to execute a playbook focused on three areas: driving growth in select markets, optimizing our channel's approach and delivering efficiencies. We've been executing on this international playbook for three years now, and it's encouraging to see the continued margin improvement. As an example, our long-term goal was to improve operating margin in the International segment by 500 basis points over 2017. In 2020, the International segment operating margin rose to 15%. This is a 270-basis-point improvement compared to 2019 despite the 3% revenue decline. And to-date, we've achieved 400 basis points of segment margin expansion. With the pipeline of programs we have in place, we're very confident in our ability to surpass our original goal over time. And that leads me to the third area I want to discuss today, which is our balance sheet to make strategic acquisitions that strengthen our leadership position in key markets. In January of this year, we closed the acquisition of Bristol Uniforms. Bristol is the UK leader for firefighter turnout gear. And so, Bristol enhances our position as a global leader in fire service PPE. This acquisition builds on our 2017 North American turnout gear leader Globe, so it's a great fit strategically and culturally. It also expands our footprint in a defensive area of our portfolio. Our fire service business increased 10% in the fourth quarter of 2020, even in the face of the pandemic. So to summarize, there are three key areas that give me confidence in MSA's future. First, MSA's innovation engine is stronger than ever. Second, our continuous improvement culture across all areas of our business is yielding strong results, especially in the International segment. And third, we're effectively using our balance sheet to make strategic acquisitions that strengthen our leadership positions in key markets. Our integration plan for Bristol is well under way and we continue to move forward with an M&A pipeline focused on evaluating assets that align with our safety mission. First, looking at overall growth, I was very pleased to see the team execute well and deliver record revenue for the fourth quarter despite the challenges we all face throughout the year. Second, our profitability was strong as adjusted operating margin expanded by 10 basis points. This equates to a 14% decremental operating margin. We delivered on our goal to manage decremental margins at a lower rate than our incremental margins, improving overall operating margins to 18% on lower revenue volume is another step in the right direction for reaching our long-term margin aspirations. And third, we generated more than $200 million of operating cash flow in 2020 or 25% higher than a year ago. Through the downturn, we've continued to execute a balanced capital allocation strategy focused on growing our business and returning value to our shareholders. We invested $49 million in capex projects. We paid down $44 million of debt. We funded $67 million in dividends to our shareholders and deployed $20 million for share repurchases. And just last month, we deployed approximately $60 million for the acquisition of Bristol Uniforms. Our net leverage continues to track below 1 times as we enter 2021. So although 2020 was a year unlike any other, our growth, profitability and cash flow demonstrated the resilience of our business model and the disciplined execution of our teams around the world. Now let's take a closer look at the financial results in the quarter. Let's start with the focus on growth. Quarterly revenue was a record high of $388 million, growing over 3% from a year ago or 2% in constant currency. From a geographic perspective, revenue increased 5% in the Americas segment and decreased 2% in the International segment in constant currency. As I had indicated on the October call, we entered the third quarter with a large backlog in SCBA and air purifying respirators. We started to see a recovery in our business, especially in the fire service, in the latter part of Q3 that carried into Q4. Order activity was healthy to finish the year and we exited the quarter with a very healthy book-to-bill ratio and an overall backlog that was consistent with the end of Q3 despite the record invoicing. The fire service market was a key driver of results in the fourth quarter on strong SCBA growth. We continue to convert competitive SCBA accounts in the US and had good order flow in key geographies around the world, including Germany, China and Latin America. While we've had production constraints at Globe due to COVID, we continue to focus on driving operational improvements, and it's great to see continued wins with key pillar cities in the United States. Firefighter safety is a resilient business and has performed well through various business cycles. We continue to extend the breadth and depth of our market position in fire service through organic and/or inorganic investments like the upcoming launch of LUNAR and the recent acquisition of Bristol. Shifting gears to the employment-based industrial PPE products, which were down 4% year-over-year after declining by 25% in the third quarter. While we are most likely not out of the woods just yet, it was good to see such sequential growth versus the third quarter. Our FGFD business was down 7% in the quarter on tough comparisons in both the Americas and International segments. For the full year, we had a 2% decline in FGFD, reflecting the support from that recurring revenue streams in the product line that we've discussed with you previously. With that said, while we have seen a recent uptick in oil prices, which could provide some support for projects going forward, we have a challenging comparison to start the first quarter of 2021. Revenues from air purifying respirator lines increased 32% from a year ago. As expected, we have largely delivered on our backlog from the pandemic surge of 2020 and we are well prepared to pursue new opportunities with healthcare and government end markets. In the near-term, we are planning for a difficult comparison in the first quarter of 2021. If you recall, our Q1 results a year ago included approximately $10 million of incremental revenue from APR at the onset of the pandemic. The landscape continues to evolve as stimulus packages are allocated to enhance PPE supply for workers in a range of industries and we stand ready to help and fulfill our mission of protecting workers' life and health. Turning to profitability and earnings. Gross profit declined 350 basis points from a year ago as we incurred about $11 million of higher costs in the quarter. $5 million of these costs were associated with lower throughput in certain factories and $6 million is primarily associated with inventory-related charges, which we don't expect to continue into 2021. To a much lesser degree, the less favorable revenue mix was a headwind to margins. These items had the most significant impact on our Americas segment margin in the quarter and for the full year. SG&A expense of $76 million was down 10% from a year ago. We delivered $6 million to $8 million of savings from previously executed restructuring programs and discretionary cost savings in the quarter associated with reduced travel, controlled hiring, professional services and other costs, and $3 million of savings from variable compensation on a year-over-year basis. Similar to past cycles, we invested in restructuring programs throughout 2020 to improve our margin profile in the downturn and to position MSA for strong incremental margins during the recovery. We incurred $9 million of quarterly restructuring expense to accrue for cost reduction programs related to footprint rationalization and business model optimization, primarily in the International segment where operating margin is up 270 basis points for the year. Together with the programs we've discussed throughout 2020, we expect to deliver approximately $15 million of savings across the income statement in 2021 and annual savings of $20 million thereafter. These savings will partially offset the impact of variable compensation resets and other discretionary costs coming back into the P&L in 2021. Quarterly adjusted operating margin was flat with the prior year at 17.3% as the cost discipline and SG&A was offset by the gross profit headwinds. International margins were up 320 basis points and were 17.5% in the quarter, which very much reflects the results the team are driving in pricing and cost reduction initiatives. Americas' margins were down 260 basis points and were 20.8%. The $11 million of higher cost in gross profit that I mentioned a moment ago was incurred primarily in the Americas segment. Pricing is holding up well and we expect improvements in this segment margin going forward. Just stepping back and looking at margins over the long-term, it is good to see improvements each and every year in operating margins since 2015, despite some challenging economic cycles along the way. From a cash flow and capital allocation perspective, quarterly free cash flow conversion was well north of 100%. We saw strong performance across working capital, which declined 320 basis points as a percentage of sales. As I had indicated on the October call, we were planning for our improvement in the inventory balance through year-end. Our strong balance sheet and inventory position at the end of the third quarter enabled us to deliver record high revenue in the fourth quarter. We continue to focus on improving our performance in AR and AP and are seeing very strong results on that front as well. Consistent with past years, we completed our annual cumulative trauma evaluation in the fourth quarter. As part of that review, we reflected changes in underlying assumptions in our model that increase our product liability reserve and resulted in a pre-tax charge of $34 million, net of insurance recoveries on the income statement. While the timing of cash flows for product liability and insurance receivable vary from quarter to quarter in MSA LLC, we've been successful in establishing cash flow streams that have allowed us to fund these liabilities without a material impact on our capital allocation priorities. For example, over the past five years, our average cash conversion has exceeded 100% of net income both with and without the impact of product liability and insurance receivables. We continue to focus on growth as our primary capital allocation priority, most recently completing the acquisition of Bristol Uniforms in January. We're excited about the opportunity to build our position in turnout gear and expand MSA's addressable market globally. We're also well positioned to realize a range of synergies from the transaction over the coming years. From a financial standpoint, the acquisition provides attractive returns and aligns with the criteria we've shared in the past. While we are in the midst of finalizing our purchase accounting for the acquisition, we expect earnings accretion in the first year of ownership, excluding acquisition-related amortization of about $0.03 to $0.05 per share. With the closing date of January 25, we will recognize just over two months of Bristol results in our first quarter 2021 financial statements within our International business segment. The acquisition does not have a material impact on our leverage. So we remain very active in pursuing opportunities as well as funding organic R&D and capex projects that drive long-term growth for MSA. As we turn the page to 2021, we're operating in a very dynamic environment. There is a number of evolving macro level factors that will have an impact on our revenue outlook in 2021. These factors include, among other things, the effectiveness of the vaccine rollout, risk of additional COVID lock-downs, the pace of economic recovery as well as the potential for government stimulus. While the outcome is certainly hard to predict, the steps we are taking to improve our business model positions us to emerge as a much stronger company as macro conditions improve. Our investments in organic and inorganic growth programs are driving an improved market position and that will be beneficial helping us return to growth as we see conditions improve. Again, our ability to deliver revenue growth in 2021 is very much influenced by a range of external factors. As a result, we are approaching the first half cautiously and are positioned for a stronger second half of 2021 as compared to the first half. With that said, we remain committed to executing our strategy and advancing our mission, which has never been any more important. We remain confident in our ability to maintain and grow our market share positions, improve our margin profile and drive strong cash flow performance. The team delivered a strong Q4 with record revenue and strong working capital improvement. Throughout the year, we funded the R&D portfolio and strategic capex projects. We also executed on restructuring programs to make sustainable improvements in our business model. And most recently, we completed an acquisition that positions us as a global leader in firefighter turnout gear. To wrap up, I'm very confident that MSA is well positioned to advance our mission and create value for all -- all of our stakeholders. At this time, Ken and I will be glad to take any questions you may have. Please remember that MSA does not give guidance.

qtrly revenue was $388 million, increasing 3 percent from a year ago on a reported basis.

Joining today's call are Bob Blue, chair, president, and chief executive officer; Jim Chapman, executive vice president, chief financial officer, and treasurer; and other members of the executive management team. Before I report on our strong quarterly financial results, I'm going to start with a recap of our compelling investment proposition and highlight our focus on the consistent execution of our repositioned strategy. We expect to grow earnings per share 6.5% per year through at least 2025 supported by a $32 billion five-year growth capital plan. As outlined on our fourth-quarter call in February, over 80% of that capital investment is emissions reduction enabling and over 70% is rider recovery eligible. We offer a nearly 3.5% yield and expect dividends per share to grow 6% per year based on a target payout ratio of 65%. Taken together, Dominion Energy offers an approximately 10% total return premised on a pure-play, state-regulated utility profile, operating in premier regions of the country. More on that lasting in a minute. Turning now to earnings. Our second-quarter 2021 operating earnings, as shown on Slide 4, were $0.76 per share, which included $0.01 hurt from worse than normal weather in our utility service territories. Both actual results and weather-normalized results of $0.77 were above the midpoint of our quarterly guidance range. So this is our 22nd consecutive quarter, so 5.5 years now, of delivering weather-normal quarterly results that meet or exceed the midpoint of our quarterly guidance range. Note that our second quarter and year-to-date GAAP and operating earnings, together with comparative periods, are adjusted to account for discontinued operations, including those associated with our gas transmission and storage assets. Second-quarter GAAP earnings were $0.33 per share and reflect the mark-to-market impact of economic hedging activities, unrealized changes in the value of our nuclear decommissioning trust funds, the contribution from Questar pipeline, which will continue to be accounted for as discontinued operations until divested and other adjustments. A summary of all adjustments between operating and reported results is, as usual, included in Schedule 2 of our earnings-release kit. Turning now to guidance on Slide 5. As usual, we're providing a quarterly guidance range which is designed primarily to account for variations from normal weather. For the third quarter of 2021, we expect operating earnings to be between $0.95 and $1.10 per share. We are affirming our existing full-year and long-term operating earnings and dividend-growth guidance as well. No changes here from prior communications. For the first half of the year, weather-normal operating earnings per share of $1.86 represents approximately half of our full-year guidance midpoint. So we are tracking nicely in line with our expectations. We'll provide our formal fourth-quarter earnings guidance, as is typical, on our next earnings call, but let me provide some commentary on the implied cadence of our earnings over the second half of the year. While Q3 guidance is roughly in line with weather-normal results from a year ago, we will see a multitude of small year over year helps in Q4, such as normal course regulated rider growth, the impact of the South Carolina electric rate settlement, strengthening sales, modest margin help, including -- from Millstone, continued expense management and tax timing that combined will help us to deliver solid second-half results. We continue to be very focused on extending our track record of achieving weather-normal results, at least equal to the midpoint of our guidance on both a quarterly and annual basis. Turning now to our couple of macro items. First, overall electric sales trends. In Virginia, weather-normalized sales increased 1.2% year over year in the second quarter and 3.2% in South Carolina. In both states, increased usage from commercial and industrial segments overcame declines among residential users, as the stay-at-home impact of COVID waned, some context on that. You'll recall that demand in DOM zone last year was despite the pandemic pretty resilient due to robust residential and data center demand. So it's not surprising to see South Carolina's relatively higher growth in Q2, given the larger toll COVID had on sales there last year. We're encouraged by the strong return of commercial and industrial volumes in South Carolina in the second quarter. And looking ahead, we expect electric sales growth in our Virginia and South Carolina service territories to continue to a run rate of 1% to 1.5% per year, so similar to what we were observing pre pandemic. Next, let me discuss what we're seeing around input prices. As discussed on last quarter's call, we're continuing to monitor raw material costs. And it seems to be the case across a number of industries right now, we're observing higher prices, although we have seen a moderation in the upward pressure over the last few months, especially in steel. Despite these cost pressures, as it relates to offshore wind, in particular, we remain confident in our ability to deliver that project in line with our previously guided levelized cost of energy range of $80 to $90 per megawatt hour. On the solar side, we're seeing, again, what others seem to be seeing, supply is tight, and prices for steel, poly and glass are up, but our 2021 projects remain on track with most material now already on site. We're beginning to see moderation in pricing and relief from modest shipping constraints, which bodes well, we expect, for our post-2021 projects. So again, we're watching but no material financial impacts at this time. Let me address a few additional topics on Slide 6. Last month, Dominion Energy and Berkshire Hathaway Energy mutually agreed to terminate our planned sale of Questar pipeline as a result of ongoing uncertainty associated with the timing and the likelihood of ultimately achieving Hart-Scott-Rodino clearance. A few thoughts here. First, though we obviously felt that a timely clearance of closing was the logical outcome given the facts and circumstances surrounding that transaction, we did build into the original Berkshire sale contract, the flexibility to easily accommodate a termination if needed. Second, we are already at a reasonably advanced stage of an alternate competitive sale process for Questar Pipeline with expected closing by the end of this year. Third, its termination has no impact on the sale of the gas transmission storage assets to Berkshire, which we successfully completed back in November of last year and which represented approximately 80% of the originally announced transaction value. And finally, this termination nor the outcome of the ongoing sale process impacts Dominion Energy's existing financial guidance. As mentioned, Questar pipeline will continue to be accounted for as discontinued operations excluded from the company's calculation of operating earnings. Briefly, on credit, we've continued to deliberately enhance our qualitative and quantitative credit measures. Last month, we were pleased to see Fitch upgrade Dominion Energy South Carolina's credit rating from BBB+ to A-. Fitch cited both improved regulatory relationships, including the unanimous approval of the General Electric rate settlement, which Bob will discuss in some more detail, as well as good balance sheet management. So let me turn now to a couple of ESG-related topics. In June, we announced the successful syndication of sustainability-linked credit facilities totaling $6.9 billion, and we very much appreciate the efforts and support of all the banks who work with us on what we view as a very interesting new type of financing. The $6 billion master credit facility links pricing to achievement of annual renewable electric generation and diversity and inclusion milestones. And the $900 million supplemental facility presents a first-of-its-kind structure where pricing benefits accrue for draws related to qualified environmental and social spending programs. So in other words, going forward, if we meet or exceed our quantifiable goals in these areas, our borrowing costs decline. And of course, the opposite is also true. If we fail to meet our goals, we pay more. But through this financing, we're very much putting our money where our mouth is when it comes to ESG performance. And we're looking for more ways to deploy green capital raises as we execute on our fixed income financing plan during the balance of the year. In July, we issued an updated and comprehensive climate report, which reflects the task force on climate-related financial disclosures, or TCFD, methodology. We are just one of six U.S. electric utilities that have pledged formal support for TCFD. As described in the report, which is available on our website, we have modeled several potential pathways to achieve net zero emissions across our electric and gas business that reflect 1.5-degree scenario and are consistent with the Paris Agreement on climate change. The climate report shows we are a leader in both greenhouse gas emission reductions over the last 15 years and in our commitment to transparent progress toward our goal of net zero emissions. As shown on Slide 7, I'm very pleased that our results over the first two quarters of this year surpassed even our record-setting results from last year. Our safety performance matters immensely to our more than 17,000 employees, to their families and to the communities we serve, which is why it matters so much to us and why it's our first core value. Turning to Slide 8. I often describe our pure-play state-regulated strategy as centering around five premier states, all of which share the philosophy that a common sense approach to energy policy and regulation puts a priority on safety, reliability, affordability and, increasingly, sustainability. We were pleased that CNBC's list of America's Top States for Business ranked Virginia, North Carolina and Utah as 1, 2 and 3, respectively, a podium sweep for three of our five primary jurisdictions with a fourth major service territory, Ohio, also ranking in the top 10. This is the second consecutive No. 1 ranking for Virginia. Obviously, an assessment of this variety is just one of several possible ways to evaluate state-specific business environments, but we're pleased with the independent confirmation of what we observe every day working on the ground in all of our regions. We've strategically repositioned our business around the state-regulated utility model in order to offer investors increased stability, which is further enhanced by our concentration in these fast-growing, constructive and business-friendly states. Next, I'd like to highlight the outstanding work done across our operating segments by the women and men of Dominion Energy, who exemplify our core values of safety, ethics, excellence, embracing change and One Dominion Energy. At Gas Distribution, our colleagues have collaborated across our national footprint to share best practices, resulting in a nearly 20% reduction of third-party excavation damage to our underground infrastructure as compared to 2019. Each instance of damage prevention enhances the safety and reliability of our system while also reducing the emissions profile of our operations. At Dominion Energy South Carolina, our ability to work in close partnership with state and local officials, combined with our commitment to meet an aggressive time line for electric and gas service delivery, were key to attracting a new $400 million brewery to the state last year. The facility is expected to create 300 local jobs and is one of the largest breweries built in the United States in the last 25 years. Being on time, however, wasn't good enough for our South Carolina colleagues, who safely completed the infrastructure upgrades and installation ahead of an already ambitious schedule. We take pride in examples like this that demonstrate how DESC plays a key role in supporting South Carolina's economic and job growth. And in Virginia, despite several days of near-record peak demand in June, our generation colleagues delivered exceptional performance as evidenced by the absence during those periods of any forced outages across our fleet. Our transmission and distribution team members kept the grid operating flawlessly under demanding load conditions while also keeping pace with robust residential connects and remarkable data center demand growth, which continues the trend of robust growth over the last several years with no end in sight. I'll now turn to updates around the execution of our growth plan. The 2.6 gigawatt Coastal Virginia offshore wind project received its notice of intent, or NOI, from the Bureau of Ocean Energy Management in early July, consistent with the time line we had previously communicated. The issuance of an NOI formally commenced the federal permitting review, which, based on our previously disclosed time line, is expected to take about two years. Key schedule milestones are shown on Slide 10. Later this year, we'll file our CPCN and rider applications with the Virginia State Corporation Commission. In June, we announced an agreement with Orsted and Eversource, under which they will charter our Jones Act-compliant wind turbine installation vessel for the construction of two offshore wind farms in the Northeast. Turning to Slide 11. The Virginia triennial review is currently in discovery phase, and the company is providing timely responses to requests for information, all of which generally conform with what we would reasonably expect during a rate proceeding of this size and complexity. As a reminder, the earnings review applies only to the Virginia base portion of our rate base, which becomes smaller as a percentage of DEV and Dominion Energy during our forecast period. Virginia rider investments like offshore wind, solar, battery storage, nuclear life extension and electric transmission, which are outside the scope of the proceeding, represent the vast majority of the growth at DEV. We've provided a summary of our filing position, as well as key milestones in the procedural schedule. A few items to reiterate here. First, our filing highlights the compelling value we've provided to customers during the review period of 2017 through 2020. We've delivered safe and reliable service at affordable rates that are well below regional, RGGI and national averages, all while taking aggressive steps to accelerate decarbonization by pursuing early retirement of fossil fuel and power generation units. Second, at the direction of the general assembly, we've provided over $200 million of customer arrears forgiveness to assist families and businesses in overcoming financial difficulties caused by the pandemic. Third, we've invested over $300 million in CCRO-eligible projects, including our offshore wind test project, which is the first operational wind turbines built in federal waters in the United States. Finally, our filing reports a regulatory return that aligns closely to our authorized ROE plus the 70-basis-point collar. Inclusive of arrears forgiveness, this financial result warrants neither refund nor a change to revenues. While offshore wind and the triennial review are understandably areas of focus, we'd be remiss if we didn't also highlight the blocking and tackling we're doing to advance other very material growth investments and their associated regulatory processes for the benefit of our customers, communities and the environment. Since our last update, we received our fourth consecutive regulatory approval for investments in utility-owned rider recoverable solar projects. We've now surpassed 1,000 megawatts of Dominion Energy-owned solar generation in service in Virginia, and there is a lot more to come. In fact, our pipeline of company-owned solar projects in Virginia under various stages of development currently totals nearly 4,000 megawatts, which gives us great confidence in our ability to achieve the solar capacity targets set forth in Virginia law and which support our long-term growth capital plans. In the very near term, about 25 days to be specific, we'll make our next and largest to date clean energy submission. We expect the filing to include as many as 1,100 megawatts of utility-owned and PPA solar, roughly consistent with the 65-35 split identified in the Virginia Clean Economy Act. It will also include around 100 megawatts of battery storage, including 70 megawatts of utility-owned projects. Taken together, the filing will represent as much as $1.5 billion of utility-owned and rider-eligible investment, further derisking our growth capital guidance provided on our fourth-quarter 2020 earnings call. Next, the State Corporation Commission approved our inaugural renewable portfolio standard development plan and rider filings. This annual accounting is mandated under the VCEA and provide a status update on the company's progress toward meeting both near- and long-term requirements under the state's RPS targets. We received commission approval for our Regional Greenhouse Gas Initiative, or RGGI, rider filing. Under state law, Virginia has joined with other RGGI states to promote a marketplace for emissions credits with the goal of significantly reducing greenhouse gases over time, and this approval allows for timely recovery of our cost of compliance. Next, we received authorization from the Nuclear Regulatory Commission to extend the life of our two nuclear units at the Surry power station for an additional 20 years. These units currently provide around 45% of the state's zero carbon generation and under this authorization will be upgraded to continue providing significant environmental and economic benefits for many years to come. We expect to file for rider cost recovery associated with license renewal capital investment later this year. And last but not least, progress on our grid's transformation plans. Our first phase covering 2019 through 2021 is well underway, and we recently filed our phase 2 plan with Virginia regulators covering the years 2022 and '23. The second phase includes approximately $669 million in capital investment, which is needed to facilitate and optimize the integration of distributed energy resources while continuing to address the reality that reliability and security are vital to our company and its customers. We expect the final CPCN order around the end of the year. Our customers and our policymakers have made it abundantly clear. They want cleaner energy, and they want it delivered safely, reliably and affordably. We're therefore very pleased to be executing on that vision on multiple fronts while extending the track record of constructive regulatory outcomes to the benefit of all stakeholders. Turning now to our gas distribution business. We're leading the industry in initiatives to reduce the carbon footprint of our essential natural gas distribution services. Our efforts include modifications to our operating and maintenance procedures, systemic pipeline and other aging infrastructure replacement, third-party damage prevention, piloting applications for hydrogen blending, producing and promoting the use of carbon-beneficial renewable natural gas and offering innovative customer programs. For example, in Utah, we're seeking approval for a program that would enable customers to purchase voluntary carbon offsets. For around $5 per month on a typical residential bill, customers that opt into the program will offset the carbon impact of their gas distribution use. This program, which like our existing GreenTherm program, allows customers to make choices about how to manage and lower their individual carbon profiles is just one way we're reimagining how gas distribution service intersects with an increasingly sustainable energy future. Along those lines, our hydrogen blending pilot in Utah is performing in line with expectations, and we're in the planning stages of expanding the pilot to test communities. We filed for a similar blending pilot in North Carolina and are evaluating appropriate next steps for blending in our Ohio system. And as it relates to our already industry-leading renewable natural gas platform, we're pleased to announce an expansion of our strategic alliance with Vanguard Renewables. As a result, we expect to grow our dairy RNG portfolio from six projects in five states to 22 projects in seven states through the second half of the decade and enhance our development pipeline with specific projects toward our aspirational goal of investing up to $2 billion by 2035. Our current pipeline of projects will result in an estimated annual reduction of 5.5 million metric tons of CO2e, which is the equivalent to removing 1.2 million cars from the road. Turning now to South Carolina. On July 21, the South Carolina Public Service Commission with the support of all parties unanimously approved the proposed comprehensive settlement in the pending General Electric rate case. We appreciate the collaborative approach among the parties over the last six months, which allowed us to produce this agreement that provides significant customer benefits, as shown on Slide 14; supports our ability to continue providing safe, reliable, affordable and increasingly sustainable energy; and aligns with our existing consolidated financial earnings guidance. Further, the approval allows all parties to turn the page and focus on South Carolina's bright energy future. It's also worth noting that the commission also recently approved our modified IRP, which favors a plan that would result in the retirement of all coal-fired generation in our South Carolina system by the end of the decade. While the IRP is an informational filing and does not provide approval or disapproval for any specific capital project, we look forward to continuing to work with stakeholders, including the commission, to drive toward an increasingly low carbon future. First, Senior Vice President, Craig Wagstaff, who's provided over 10 years of exemplary leadership for our gas utility operations in Utah, Idaho and Wyoming, will be retiring early next year. And I can say definitively on behalf of all of our colleagues, he will be sorely missed. Craig joined Questar Corp. in 1984, and we have benefited greatly from his contributions since the Dominion Energy-Questar merger in 2016. Best wishes to Craig and his family on his retirement. We ask Steven Ridge, our current vice president of investor relations, to relocate to Salt Lake City and, effective October 1, assume the role of vice president and general manager for our Western natural gas distribution operations. Steven has been a valuable member of our IR efforts over the last nearly four years. And I think he's got to know most of you pretty well. We have every confidence in his ability to follow Craig's long-standing example of serving our Utah, Wyoming and Idaho customers and communities well. And finally, David McFarland, who's been working on our investor relations team since October of last year, will assume responsibility for our IR efforts as Steven transitions into his new role later this year. We congratulate David on this new opportunity. Our investors should expect no change to our aim to provide consistently a high level of responsiveness and accuracy they've grown to expect from our current IR team. With that, let me summarize our remarks on Slide 15. Our safety performance year to date is on track to improve upon last year's record-setting achievement. We reported our 22nd consecutive quarterly result, normalized for weather, meets or exceeds the midpoint of our guidance range. We affirmed our existing annual and long-term earnings guidance and our dividend-growth guidance. We're focused on executing across project construction and achieving regulatory outcomes that serve our customers well, and we're aggressively pursuing our vision to become the most sustainable regulated energy company in America.

compname posts q2 gaap earnings per share $0.33. sees q3 operating earnings per share $0.95 to $1.10. q2 operating earnings per share $0.76. q2 gaap earnings per share $0.33. affirms its long-term earnings and dividend growth guidance.

If you did not receive a copy these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website cousins.com. In particular there are significant risks and uncertainties related to the severity and duration of the COVID-19 pandemic and the timing and strength of the recovery therefrom. Over a year ago, COVID-19 emerged swiftly and our entire world changed nearly overnight. As we mark a year later, I'm sure I share with many of you a feeling of hope that while the pandemic is not yet over, there is optimism on the horizon with the accessibility of vaccinations. I'm hopeful that 2021 will be a healthier, happier, more productive year for everyone. Cousins was well prepared to weather the challenging year with our simple compelling strategy that enabled us to operate effectively. The core principles of our strategy include first to build the premier urban Sunbelt office portfolio we have focused on building concentrations in existing and potential new Sunbelt markets with the best long-term growth characteristics. Second, to be disciplined about capital allocation and pursue new investments where our operating and/or development platforms can add value; third and importantly to have a best-in-class balance sheet; and finally to leverage our strong local operating platforms with focus on an entrepreneurial approach, local market relationships, and community involvement in our high-growth markets. Today, we have the leading trophy portfolio in the best Sunbelt submarkets of Atlanta, Austin, Charlotte, Dallas, Phoenix, and Tampa. Second, we have a terrific development pipeline of $363 million that is 79% pre-leased and attractive land sites where we can build an additional 5.2 million square feet. Our balance sheet is strong with net debt to EBITDA of 4.87 times and G&A as a percentage of total assets at 0.32%. This strategy positioned us to perform well during challenging circumstances. The first quarter of 2021 was no different. Here are a few highlights of our solid Q1 results. On the operations front, the team delivered $0.69 per share in FFO. We leased 271,000 square feet with a 10.5% increase in second-generation cash rents. We placed our 10,000 Avalon development project into service. In addition we acquired a land parcel adjacent to our 3350 Peachtree property in Atlanta for $8 million through a 95% consolidated joint venture. While these results are very solid, they reflect a time when vaccines were not widely available. Now, that they are, we see a market that is on a strong path to recovery. Broadly speaking, our customers are shifting their plans to begin a phased reopening of their offices during the summer, with a significant ramp-up likely after Labor Day. This is translating into significant increase in tour activity and in our leasing pipeline. Richard will touch on this more specifically in a minute, but we are optimistic that our leasing volume is likely to improve during the second half of the year. As Cousins evaluates the role of the office, we look directly to our customers for feedback. First, let's look at what they're saying, Amazon, Google, Facebook, Microsoft, Goldman Sachs, Bank of America, Morgan Stanley I could go on. They've all publicly communicated, that their office remains core to their culture and their business. Next, let's look at, what they're doing. Microsoft and Google both committed to large new hubs in Atlanta. And Oracle has announced a corporate relocation to Austin and a major expansion into Nashville. Most recently, Apple announced plans to create, at least 3,000 jobs in the Raleigh-Durham area. So what does this mean for Cousins? Large growing companies, recognize the value of the office to promote culture, collaboration and mentorship. They are migrating to the Sunbelt at an accelerated pace. And they continue to prioritize newer, highly amenitized properties. Their goal is to create a dynamic environment that excites employees to come together, in person. As we near the end of COVID-19, our conviction around our Sunbelt, trophy office strategy continues to grow. Looking ahead to the balance of 2021, our priorities have not changed. We are focused on creating value in our existing portfolio, including making leasing progress in our larger blocks of space. We will also look for opportunities to upgrade, our already high-quality portfolio, through trophy acquisitions, in conjunction with compelling new development projects. We will likely fund new investments with the sale of ultra-vintage, less-relevant buildings. And we are making great progress on this front. And our recent investment activity is illustrative of our strategy going forward. In December, Cousins acquired The RailYard, a creative office asset in the South End submarket of Charlotte for $201 million. We also purchased an adjacent land site, for a gross purchase price of $28 million. On April 7, we sold Burnett Plaza, a one million square-foot office property in Fort Worth for a gross sales price of $137.5 million and with that, exited a non-core market. Last night, we announced plans to commence construction on Domain 9 in Austin, where we have a growing pipeline of demand from small, medium and large customers some already in Austin and some potentially new to the market. As I mentioned earlier, we have a simple and compelling strategy at Cousins. And these transactions showcase our creativity as we execute that plan, leveraging our balance sheet and our development platform to assemble the premier Sunbelt office portfolio which is positioned to capture outsized customer demand, while maintaining a lower capex profile. At the same time, we are generating attractive value-add returns for our shareholders, by blending acquisitions and development with discipline. As our customers' preference for trophy office accelerates, we are responding. As our Domain 9 project illustrates, we are not opportunity-constrained at Cousins. However, we continue to look at potential new markets in the Sunbelt that benefit from continued migration of people and companies. Nashville is one example, expanding in Dallas is, another. 2021, is a transitional year for Cousins from an earnings and occupancy perspective. Our financial results will reflect several known move-outs from past value-add acquisitions such as 1200 Peachtree and 3350 Peachtree in Atlanta and One South at The Plaza in Charlotte. With lockdowns easing, we have begun executing our business plans, to reposition these exciting projects. And we are seeing leasing opportunities grow. As we look to the future, Cousins is uniquely positioned to deliver long-term growth for our shareholders. Importantly, we have the right balance sheet with low leverage and ample liquidity to capitalize. They are the reason for our success. Like all of you the Cousins team was excited to leave 2020 behind and focus on executing in a new and hopefully more positive year. Our strong first quarter operating results reflect that excitement and focus, and we are very pleased with how this New Year has kicked off. As I've done since the pandemic started I will begin with general business conditions. First, physical customer utilization continues to track at an average of about 20% across the company. With that said, utilization is not consistent across markets or even among buildings within each market. For instance, our Atlanta, Dallas and Tampa portfolios are all running at about a 30% or higher average utilization rate. I also want to point out that activity and energy at many of our buildings even in the markets that still have lower overall utilization are building momentum with each passing month. Whether within our portfolio or generally speaking, we are hearing of more and more companies planning to return to the office at some capacity during 2021. We continue to believe the back half of the year should usher in more broad-based increases in utilization, however, with the full effects potentially not being felt until 2022. With regard to rent collections, they remain strong. Similar to last quarter, we collected 98.8% of rent from all customers and 99.1% of rent from office customers in the first quarter. Now let's turn to first quarter operating results. Recall that in February, we said, 2021 would be transitional for Cousins including occupancy. As expected, our total office portfolio leased percentage and weighted average occupancy declined to 90.2% and 89.3% this quarter, respectively. The biggest driver of occupancy by a wide margin was Bank of America's final phase of exploration at One South in Charlotte, which took occupancy at this 891,000 square-foot project to 57.3%. A second driver, albeit, much smaller was the addition of our 10,000 Avalon new development in Atlanta to the operating portfolio, adding about 50,000 square feet of highly desirable first-generation office vacancy. I would note that leasing interest at 10000 Avalon is very encouraging. Looking to the balance of 2021, our occupancy will continue to trend down into the second half of the year, largely due to the long-anticipated 200,000 square-foot move-out of Anthem at 3350 Peachtree at the end of June. With that said, and as we have said previously on other calls, our occupancy will benefit late in the year from the positive impact of some known commencements for new deliveries, most notably at The Domain in Austin. As for leasing activity, we executed 271,000 square feet of leases this quarter. We view this as solid volume given we are still operating in a pandemic. I would like to share some observations about our leasing activity this quarter that we see is encouraging. First, we executed leases in every one of our core markets, which has not always been the case during the pandemic. Not only that, we executed at least one new lease in all but one core market. Second, we executed the highest overall number of leases since the first quarter of 2020, increasing 43% over the last quarter. And finally, new and expansion leasing as a proportion of total leasing activity increased versus last quarter coming in at 30% of our total leasing activity. But we do see these characteristics as reflective of a clearly improving leasing environment. I'm also pleased to report that rent growth remained remarkably strong in the first quarter with second-generation net rents increasing 10.5% on a cash basis. With this continued rent growth and concessions only modestly higher than our eight-quarter run rate, net effective rents this quarter came in at a solid $23.53 per square foot. I have one more fact about our recent lease economics that I think is important to point out. During the 12 months ended this quarter, essentially the time horizon of the pandemic to-date, our completed leasing activity yielded weighted average net effective rents 1.1% higher than our completed activity during the 12 months leading up to the pandemic. This is an outstanding achievement in a difficult operating environment and is a testament to the quality of our team and portfolio. Across the Sunbelt economic activity is recovering and expected to be even more robust later this year and beyond. As we have said many times, migration to the Sunbelt is only accelerating through the pandemic. In fact inward migration to Florida is back to over 1,000 people a day. Not surprisingly, Austin has become the top destination in the country for potential commercial real estate investment according to CBRE, due to the resilience of its labor market and an outlook for steady and attractive growth. Further per JLL, Austin has seen twice as many new jobs announced in the first two months of 2021 than in all of 2020. The same JLL study found that Dallas, Phoenix and Atlanta were also among the top-performing cities in 2020 with regard to overall job retention. As I mentioned earlier in my remarks, more and more companies are announcing plans to return to the office. Importantly, they are also vocalizing the view that time together as a team in an office is critical for healthy culture, collaboration and career development. As a result, many major global companies no longer plan to reduce their use of their offices after the pandemic. I'm sure many of you have already seen the recent KPMG survey that found just 17% of senior executives plan to reduce their usage of office space down from 69% in the last survey in August. This is a staggering change in sentiment to the good. With companies now willing to make longer-term decisions and data points like the one from KPMG, you will not be surprised to hear that our leasing pipeline has improved considerably over the past couple of months. The most noticeable increase in activity has been in our early stage leasing pipeline, which we define as tour and proposal activity. Specifically, this quarter the number of active proposals outstanding increased 68% and the number of space tours increased 89% compared to the fourth quarter of 2020. This is an exciting trend. But please remember, this is early stage activity that typically takes a number of quarters to translate into signed leases, occupancy and net operating income if at all. While the pandemic is certainly not over, we are cautiously optimistic about the balance of the year ahead of us. Absent a negative catalyst not seen today our markets are well positioned for a sustained recovery and our teams in the markets are excited about the opportunities we have in front of us. They continue to focus on our goals, work hard everyday and drive impressive results. I'll begin my remarks by providing a brief overview of our quarterly financial results, including some detail on our same-property performance, our development pipeline and our transaction activity followed by a quick discussion of our balance sheet and dividend before closing my remarks with updated information on our outlook for 2021. Overall, first quarter numbers were solid and held up well since the onset of the pandemic. FFO was $0.69 per share. Same-property cash NOI declined 2.7% year-over-year. And as Richard said earlier, cash rents on expiring leases rose by a very healthy 10.5%. Before moving on, I did want to highlight that we have increased cash rents on expiring leases every single quarter since the onset of COVID last spring with a weighted average increase of 12.4% over that period. Focusing on same-property performance, first quarter results represent a positive change in trend and are an improvement over the previous two quarters, which averaged year-over-year cash NOI declines of 3.1%. This improvement took place despite Bank of America's departure from our One South property that was discussed earlier. If we pull One South out of our same-property pool to get a better sense of performance for the balance of the portfolio, same-property cash NOI adjusting for COVID-related parking losses increased 2.7% compared to the first quarter of 2020. Turning to our development efforts. One asset 10000 Avalon was moved off of our development pipeline schedule and into our portfolio statistics schedule during the first quarter. The remaining development pipeline represents a total Cousins investment of $363 million across 1.3 million square feet for assets. Our remaining funding commitment for this pipeline is approximately $94 million which is more than covered by our existing liquidity and future retained earnings. On the transaction front, we closed one land acquisition during the first quarter and one property disposition subsequent to quarter end. We also refinanced the maturing construction loan during the first quarter. I'll start with the land purchase. In mid-March a land parcel was acquired in Buckhead, next to our 3350 Peachtree operating asset for $8 million. This transaction was completed through an existing 95/5 joint venture partnership with Cousins investing $7.6 million. The partnership already owned an adjacent parcel and with this acquisition it now controls the entirety of what is the last surface parking lot located in the core of the Buckhead submarket often referred to as the Buckhead Loop. Subsequent to quarter end, we sold Burnett Plaza in Fort Worth for a gross sales price of $137.5 million. Built in 1983, Burnett Plaza was 80% leased at the time of sale. We acquired it through the TIER merger in 2019 and it was identified as a noncore asset from the very beginning. Proceeds from the sale were used to help fund the prior acquisition of The RailYard in the South End submarket of Charlotte. Finally, we refinanced the outstanding construction loan on our Carolina Square mixed-use property in Chapel Hill during the first quarter. A new $135.7 million nonrecourse loan was obtained replacing the original $77 million construction loan. The proceeds from this refi exceeded the partnership's original equity contribution and are clear third-party validation of the value that we created there. As a quick reminder Carolina Square is held in a 50-50 joint venture partnership. Looking at the balance sheet. We entered this period of volatility with outstanding financial strength among the very best among our office peers. Our debt maturity schedule is balanced. Our liquidity position is strong. And our leverage is low. At the end of the first quarter our net debt-to-EBITDA was 4.87x. Proceeds from the Burnett Plaza sale are not reflected in this number since it happened after quarter end. Incorporating the Burnett Plaza sale as well as the potential Dimensional Place sale which I'll discuss in a moment will reduce this ratio to approximately 4.5x. We also increased the dividend during the first quarter by 3.3%. This follows a similar increase last year. Our underlying cash flow growth has allowed us to deliver consistent dividend increases even through the COVID pandemic. Our dividend policy is set by our Board and is based on an FAD payout ratio between 70% and 75%. Last year our FAD dividend payout ratio was 68%. Needless to say our dividend is well covered by cash flow. I'll close by updating our 2021 earnings guidance. We currently anticipate full year 2021 FFO between $2.68 and $2.78 per share. This is down $0.08 at the midpoint from our previous guidance of $2.76 to $2.86 per share. The change is entirely driven by the completed sale of Burnett Plaza and the assumed sale of our Dimensional Place investment this summer. As we've stated before our joint venture partner Dimensional Place has a onetime purchase option. And while they have not provided formal notice, we have received strong indications that they will exercise their option in the near future, hence our inclusion of the sale in our guidance. The start of Domain 9 during the second quarter has no material impact on our guidance and there are no other dispositions, acquisitions or development starts included in our guidance.

cousins properties inc - funds from operations was $0.69 per share for the quarter. cousins properties inc - updated its full year 2021 ffo guidance to $2.68 to $2.78 per share from $2.76 to $2.86 per share.

I'm Hallie Miller, Evercore's Head of Investor Relations. Joining me on the call today are John Weinberg and Ralph Schlosstein, our Co-Chairman and Co-CEOs; and Bob Walsh, our CFO. These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we have noted previously, our results for any particular quarter are influenced by the timing of transaction closings. We began our last earnings call commenting on what a difference a year had made. And as we sit here today, not only are things dramatically different from a year ago, but things are also somewhat better than even three months ago. Over the past three months, we have witnessed a material improvement in the global economy, in global markets and in Evercore's business. The rollout of COVID-19 vaccines accelerated in the U.S. and in many countries around the world during the quarter, and we experienced a decline in new daily cases in areas where vaccination rates are high. We are grateful for the progress being made against the pandemic, but we also are cognizant that there are many around the world who have not been as fortunate to date and are in earlier stages of overcoming this pandemic. And while we are encouraged by the progress being made overall, we continue to monitor the new COVID variants, the ongoing vaccine rollout in the U.S. and other parts of the world and the data on infection rates, which unfortunately seem to be rising right now, particularly in areas with lower vaccination rates. We have delivered strongly for our clients over the past 17 months advising them on their most important strategic, financial and capital requirements during one of the most uncertain and volatile periods of our lifetimes. And we produced extraordinary financial results for our shareholders. And while we achieved a lot while operating as a predominantly remote firm, we are genuinely energized by the reopening of our offices that began toward the end of the second quarter. We remain firmly committed to our culture of in-office collaboration, apprenticeship and mentorship, and we look forward to bringing our teams back to the office over the next several weeks and months. That said, we have learned a lot about operating flexibly over the past 17 months, and we are committed to integrating more flexible work arrangements into the way we work going forward. As the macroeconomic environment continued to strengthen throughout the quarter, our business did as well. Our results, which represent the best first half in our history, reflect the breadth and diversity of our capabilities, our team's relentless client focus and the continued favorable environment for M&A and capital raising. And while we continue to believe that we are in the early stages of the next M&A up-cycle, we are mindful that the resurgence of the virus in certain geographies, the outlook for inflation in interest rates and potential regulatory scrutiny and tax changes could affect the trajectory and the length of that up-cycle even though there is absolutely no evidence of that today. High levels of announced M&A transaction volume continued during the quarter. The total dollar volume of announced M&A increased 17% sequentially as the number of transactions increased 7% and the average deal size increased 10%. In fact, the second quarter represents the fourth straight quarter to surpass up $1 trillion in announced M&A activity and the first time ever the trailing 12 months activity exceeded $5 trillion. And large transactions are making a significant comeback compared to this time last year. This continued high level of activity led to record second quarter revenues and is adding yet again to our already strong backlogs. All of our capital advisory businesses, public and private debt and equity, continue to be meaningful contributors to our firmwide results. While the hot market for equity issuance cooled a bit during the quarter, it still remains well above historical averages. The investments that we have made in our ECM capabilities and our enhanced sector coverage enable us to participate in a wide array of assignments across many sectors and to take an increasingly large role in these assignments. In the private capital advisory businesses, momentum in capital raising for financial sponsors continued and secondary market activity remained high, particularly activity related to single asset and multi-asset continuation funds. Traditional restructuring opportunities have been more limited, given the strength of the economic recovery, the strong availability of credit and the positive environment for M&A and capital raising. But our team is adapting to meet client needs, working with financial sponsors and creditors on liability management and debt advisory assignments, though admittedly not as busy as they were in July of last year. Our equities business, Evercore ISI, continues to produce and deliver high-quality research and service to our clients, and we continue to make investments in our platform. The team delivered a solid quarter, in line with its historical 3-year quarterly average, as the impact of lower volatility and trading was partially offset by investments we have made to support our clients more broadly, particularly in converts and agency options. And solid performance continues to drive assets under management growth in our Wealth Management business. We continue to add talent in all parts of the firm, providing the fuel for future growth. And John will talk more about this in his remarks. We look forward to working with Celeste as she helps to drive the next stage of our firm's growth. Let me now turn to our financial results. We achieved record second quarter and first half adjusted net revenues, adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share, driven by continued revenue growth and strong operating leverage. Second quarter adjusted net revenues of $691.2 million grew 34% year-over-year. Year-to-date, adjusted net revenues of $1.36 billion increased 43% compared to the prior year period. Second quarter advisory fees of $561.4 million grew 67% year-over-year. Year-to-date advisory fees of $1.07 billion increased 54% versus the prior year period and represent the first time that we have exceeded $1 billion in advisory revenues for the first half of the year. Our trailing 12-month advisory fees exceeded $2 billion for the first time in our history. Based on current consensus estimates and actual results, we expect to maintain our number 4 ranking in advisory fees among all publicly traded investment banking firms for the last 12 months and to grow our market share relative to these firms. In the first half of the year, we also continued to narrow the gap between Evercore and the number 3 ranked firm in terms of trailing 12 months advisory fees. Our efforts to solidify further our position as the leading independent investment bank and to compete with firms larger than us have been recognized by clients and by industry observers as we were recently selected by Euromoney to be North America's best bank for advisory in 2021, and that was among all firms, not just among the independent firms. Second quarter underwriting fees of $48 million declined 49% year-over-year, but excluding two sizable fees during the second quarter of 2020, one from PNC BlackRock and one from Danaher, underwriting fees were essentially flat year-over-year. Year-to-date, underwriting fees of $127.3 million increased 11% versus the prior year period, even including the PNC BlackRock and Danaher fees. While there was a slowdown in equity issuance during the quarter, largely driven by fewer SPAC IPOs, demand for capital raising continues to be strong more broadly. The breadth of our capabilities and enhanced sector coverage have enabled us to work on diverse assignments for clients, and our second quarter underwriting revenues include engagements from seven different sectors. Second quarter commissions and related revenue of $50.7 million declined 7% year-over-year as both volumes and volatility were lower relative to the elevated levels in the second quarter of 2020. Year-to-date commissions and related revenues of $104.3 million declined 5% versus the prior year period. Year-to-date revenues are 6% higher than the first half average of the prior three years, which includes the extreme volatility during the first half of last year. Second quarter asset management and administration fees of $19 million increased 25% year-over-year as quarter end AUM were $11.1 billion, an increase of 23% year-over-year, principally related to positive investment performance and market appreciation. Year-to-date asset management and administration fees of $36.8 million increased 21% versus the prior year period. Our adjusted compensation ratio for the second quarter and year-to-date is 59%. This reflects our current best judgment on compensation for the year, recognizing both the factors that may affect revenues in the second half of the year and the current pressures on market compensation for our industry. As always, we will reassess our compensation ratio at the end of the third quarter and again at year-end and make adjustments then, if appropriate. Second quarter noncompensation costs of $73.1 million declined 5% year-over-year. Our noncompensation ratio for the second quarter is 10.6%. Year-to-date noncompensation costs of $145.8 million declined 9% versus the prior year period, and Bob will comment more on noncomp expenses in his remarks. Second quarter adjusted operating income and adjusted net income of $210 million and $154 million increased 105% and 115%, respectively. Year-to-date adjusted operating income and adjusted net income of $412 million and $316.5 million increased 122% and 144%, respectively. We delivered a second quarter operating margin of 30.4% and second quarter adjusted earnings per share of $3.17, an increase of 107% year-over-year. Year-to-date adjusted margin is 30.3% and adjusted earnings per share of $6.47 increased 136% versus the prior year. Finally, we continue to execute our capital return strategy, and we resumed our historical policy of returning cash not needed for investment in our business to our shareholders through share repurchases and, of course, dividends. We returned $221 million to shareholders during the quarter through dividends and the repurchase of 1.4 million shares. Year-to-date, we returned nearly $500 million through dividends and the repurchase of 3.3 million shares, a record level of capital return for our shareholders. We achieved our commitment to offset the dilution associated with our annual bonus RSU grants through share repurchases in the first quarter. So these additional repurchase in the second quarter represent discretionary buyback activity that shrinks the shareholder base. Our dividend -- our Board declared a dividend of $0.68. Our second quarter and first half results reflect the breadth and diversity of our capabilities supported by a positive macroeconomic environment for strategic merger activity, capital raising and investing. Both strategics and financial sponsors have been driven to transact as they are focused on growth opportunities, technological disruption and the role of ESG. And with the key ingredients for M&A strengthening, the volume number and size of announced transactions increased during the quarter. In this robust environment, our teams have been busy working on a variety of assignments globally for our clients. We sustained our number 1 league table ranking in dollar volume of announced M&A transactions in the U.S. among independent firms for the 12-month period ending June 30. Our high level of activity is translating to our financial results. We achieved a third straight quarter of advisory revenues greater than $500 million. And as Ralph mentioned, we surpassed $1 billion in the first half advisory revenues for the first time with strong contribution across capabilities globally, including M&A, capital advisory and strategic defense and shareholder advisory. We have prominent roles on some of the biggest announcements of the year, including serving as the lead advisor to Grab on its $40 billion SPAC merger, the largest SPAC merger in history and serving as the sole advisor to Nuance on its pending $19.7 billion sale to Microsoft. And we worked on a greater number of assignments and grew our average fee size in the first half compared to the first half of last year. Our industry-leading strategic defense and shareholder advisory team continues to be extremely busy and is currently advising companies representing $1.5 trillion in market value in activist defense. This is an important capability for us because many of our defense clients subsequently turned to us for advice on strategic matters. Our underwriting business had a solid quarter, and activity and backlogs in this business continue to be strong. We participated in a number of significant transactions across a variety of sectors during the second quarter, including 31 transactions that raised nearly $10 billion in total proceeds across seven sectors. And of the ECM transactions that we participated in during the quarter, 60% were as an active bookrunner, including in consumer lead left bookrunner on Post Holdings SPAC; in biopharma active bookrunner on Centessa Pharmaceuticals IPO; and in e-commerce active bookrunner on 1stDibs IPO. And we participated in our first direct listing for ZipRecruiter as their financial advisor. As we mentioned last quarter, our investments in our ECM platform have earned us a place in the top 20 for underwriting revenue as estimated by Dealogic for the 12-month period ending June 30 for deals listed on the U.S. exchanges, excluding bought deals. We are focused on strategically gaining share and working our way toward the top 10, which is currently comprised of banks that use their balance sheets to win underwriting business. Given our strategic approach to SPAC underwriting, we believe we can consistently gain share without the volatility that others, who work highly dependent on SPACs, may experience. Activity in our private capital advisory groups, our secondaries advisory business and our primary fundraising business continued to be very strong. Our success in this area is driven by our strong client relationships and our outstanding track record. In restructuring, many companies and sectors continue to take advantage of the strong economic recovery and access to capital to restructure out of court. Our team continues to work through previous engagements and is focused on liability management assignments and partnering with our debt advisory team for private financing activity. We continue to believe that there could be a longer tail to the restructuring cycle as certain sectors and companies take longer to recover. In equities, while volumes and volatility moderated from their pandemic highs across the street, we remain engaged with our clients and focused on producing and delivering high-quality research and service for them. Our corporate access team was especially busy in the quarter and ran three flagship conferences, including our inaugural TMT Conference, our 13th annual macro investment conference and our 2nd Annual Consumer & Retail Summit, each with hundreds of institutional investors participating. We also arranged highly topical full-day thematic events that were well attended by clients. Our newer capabilities, including options and convertibles, continued to perform well during the quarter as well. Finally, assets under management and our Wealth Management business finished the quarter at $11.1 billion as long-term performance remains solid and net new business continued to be positive. We also made several hires for this team, including a National Director of Wealth Planning and a Director of Trust Services. Let me now turn to discuss some of our priorities going forward, including our initiatives focused on long-term growth. We continue to believe that there is substantial opportunity to grow our investment banking business through a combination of maintaining our high current levels of activity, the continued seasoning of ramping SMDs as they work toward full productivity and broadening our footprint and our client coverage through strategic hiring. The breadth and diversity of our platform positions us well to participate meaningfully in the current M&A and capital raising environment. We also have more than 30 SMDs on our platform that have either joined or been promoted within the last three years that represent additional opportunities for growth as they continue to ramp to our high levels of productivity. And we continue to focus on expanding our capabilities, enhancing our sector and geographic coverage and improving our coverage of the most significant client groups. The expansion of our underwriting capabilities has driven significant revenue growth, and there continues to be meaningful growth opportunities, as I mentioned just a few minutes ago. On the advisory side, we believe that there is significant opportunity to expand our coverage model so that we can continue to grow both revenues and our share of fees. Our efforts to fill in the white space are focused on effectively covering large multinational firms and financial sponsors and enhancing our sector and geographic coverage, including the four techs, biotech, fintech, greentech and TMT, pharma and consumer and U.K. and Europe. As we move into the second half of the year, we remain focused on adding talented individuals to our firm as we seek continued growth. We're actively recruiting highly talented individuals to our team, and we continue to have many conversations with senior level candidates in the capabilities, sectors and geographies that can contribute to our growth objectives. Competition for the caliber of talent we are recruiting is always high, and our dialogues with senior level recruits continue to be elevated. Historically, we've added four to eight advisory SMDs per annum, and we continue to believe that we will be at or near the high end of that range and perhaps above it. In addition to the two senior advisory directors who joined us earlier this year, we have three committed advisory senior managing directors who will join us over the next several months, strengthening our coverage of the healthcare, fintech and our coverage of financial sponsors. In addition to hiring at the most senior levels, we are building out our teams at all levels to meet the demands of the industry and the elevated pace of activity. And we -- as we add to our teams, we are also focused on returning to our offices globally with the health and safety of our employee as our top priority, and we developed plans to meet that need. We have seen a steady increase of in-person attendance over the summer months, and we look forward to up to a more full return in September. We also continue to make meaningful progress on our ESG initiatives and diversity, equity and inclusion. In May, we published our inaugural Sustainability Report and launched our dedicated DE&I web page. And just last week, we held two day of understanding events associated with our commitment as signatories of the CEO action pledge. We look forward to continuing to have candid dialogue around DE&I and inspiring change across our firm globally. Lastly, we remain committed to operating our firm with financial discipline and delivering strong returns to our shareholders, returning excess cash not needed for investments in our business or to fund prior deferred compensation arrangements to our shareholders through dividends, share repurchases, while maintaining a strong and liquid balance sheet. We very much look forward to bringing our teams back together in person so that we can continue to build and strengthen the culture that has been the foundation of our success. As always, let's begin with our GAAP results. For the second quarter of 2021, net revenues, net income and earnings per share on a GAAP basis were $688 million, $140 million and $3.21, respectively. Year-to-date, net revenues, net income and earnings per share on a GAAP basis were $1.35 billion, $285 million and $6.46, respectively. During the quarter, G5 Holdings, our former affiliate in Brazil, repaid their outstanding note to us for approximately USD12 million, enabling us to financially exit our relationship there. The settlement resulted in a gain of $4.4 million, which we have excluded from our second quarter 2021 adjusted net revenues. Our GAAP tax rate for the second quarter was 22.1% compared to 24.5% in the prior year period. Year-to-date, our GAAP tax rate is 19.2% compared to 25% in the prior year period. On a GAAP basis, the share count was $43.7 million (sic) [43.7 million] for the quarter and $44.1 million (sic) [44.1 million] for the first half. Our share count for adjusted earnings per share was 48.5 million for the quarter and 49 million for the first half. Focusing on noncompensation costs. We continued to generate significant operating leverage in part due to lower noncompensation expense. Firmwide noncompensation costs per employee were approximately $39,000 for the second quarter, down 8% on a year-over-year basis. This level of noncompensation costs per employee contrasts to our 3-year quarterly average measured from 2017 to 2019 of approximately $47,000 per employee. Not surprisingly, the decrease in costs per employee versus last year primarily reflects lower travel expense. As we look ahead, we expect expenses on a per head basis to begin to increase as we continue to evolve toward more normal operations, including returning to our offices, traveling to engage an in-person dialogue and meetings with our clients and recruiting and onboarding senior talent, which we expect in the second half of the year. We do expect, however, some cost efficiency as we move forward as we utilize the technologies that enabled us to work so effectively over the past 16 months. Looking at our balance sheet. As of June 30, we held $1.5 billion in cash and cash equivalents and investment securities, up from the prior quarter as our balance sheet grows throughout the year, as we accrue for compensation obligations that will be paid in the first quarter of next year. As we have said before, we hold cash and investment securities to fund our obligations and commitments. Cash and investment securities at the end of the quarter support the minimum level of capital required to operate our businesses, including regulatory capital requirements, accrued comp that is both on the balance sheet and committed but not yet expensed and, of course, earnings that were earned in the second quarter that have not yet been returned to shareholders. Finally, in closing for me and before we turn to questions, as Ralph noted and most of you know, this is my final earnings call with Evercore. The past 14 years as the CFO of Evercore have been an exciting and challenging journey. There have been several lively ones. We have built a strong team over the years, a team that makes these calls easy for John, Ralph and me and a team that I have been privileged to work with and to lead. Our leadership, as are our analysts and investors, remain in very capable hands.

compname posts qtrly diluted earnings per share $3.21. compname reports record second quarter 2021 results; quarterly dividend of $0.68 per share. evercore inc - qtrly diluted earnings per share $3.21.

Our Chief Financial Officer, Ray Young, will review financial highlights and corporate results as well as the drivers of our performance. Adjusted segment operating profit was $1.15 billion, 12% higher than the fourth quarter of 2019. For the full year, we delivered record adjusted earnings per share of $3.59, $3.4 billion in adjusted segment operating profit, 12% higher than 2019, four straight quarters of year-over-year segment operating profit growth, and trailing four-quarter adjusted ROIC of 7.7%, almost 200 basis points above our weighted cost of capital. We maintain our strong balance sheet and generating strong cash flows. The team managed a wide variety of risks superbly and we achieved our strategic initiatives, exceeding our $500 million to $600 million guidance and driving our ability to deliver a steady, sustainable earnings growth. I'll highlight for you some of our many achievements in 2020. In our Optimize pillar, around the globe, amid lockdowns, rapidly shifting demand patterns and extreme weather events, our colleagues fulfilled our purpose by adapting and innovating to keep our work environment safe from COVID-19, maintaining our operations to support the global food value chain, and delivering for our customers to provide nutrition around the world. Beyond that, for the year, our Ag Services and Oilseeds team delivered more than $300 million in capital reduction initiatives. And we are focusing on new ways to enhance the return structure of that business, from digital technologies like our Grainbridge joint venture to differentiated products and services that add share value for growers, customers, and ADM. In our Drive pillar, our new organizational structures and business processes, like our centers of excellence and our 1ADM business transformation projects, are helping drive better decision-making and operational excellence. We continued our work to support our planet and its natural resources. We achieved our 15x20 environmental goals ahead of schedule and launched Strive 35, an even more ambitious plan to reduce greenhouse gas emissions, energy, water and waste by 2035. And we are partnering with farmers in their efforts to pull better outcomes, supported by the 6.5 million acres we had in sustainable farming programs over recent years. In our Growth pillar, our Nutrition team exceeded our Neovia synergy targets and delivered them ahead of schedule. We expanded our plant-based protein capabilities, including the launch of our PlantPlus Foods joint venture. And amid an incredibly dynamic demand environment, we utilized new innovative technologies and continued launching new products to ensure we were meeting our customers' needs. Our Carbohydrate Solutions colleagues moved quickly to meet changing customer needs for retail flour, industrial starches for cardboard and USP grade alcohol for hand sanitizer. And the ADM team showed its innovative spirit by partnering and supporting companies that are making food out of air, spider silk out of corn and animal feed out of insects. Finally, I'm proud to say we surpassed by about 10% our stretch goal of $1.3 billion in readiness runway benefits by the end of the year. Readiness is driving our strategic initiatives, enabling us to be more efficient and powering our growth. Perhaps, most importantly, today, we can say that readiness is truly embedded in our culture. It's how we work. This dividend will be our 357th consecutive quarterly payment, an uninterrupted record of 89 years. It's been a remarkable year with achievements and results that truly demonstrate the strategic work we've been doing over the years to optimize, drive and grow. Even more important is how we are building for the future. We've created and are now strengthening the strategic foundation to deliver steady, sustained earnings growth for years to come. I'll be talking about that shortly. As Juan mentioned, adjusted earnings per share for the quarter was $1.21, down from $1.42 in the prior-year quarter. As a reminder, the fourth quarter of last year was positively impacted by the recognition of about $0.61 per share for the retroactive biodiesel tax credits. Absent this, earnings would have grown by about 49%. Our trailing four-quarter average adjusted ROIC was 7.7%, almost 200 basis points higher than our 2020 annual WACC. And our trailing four-quarter adjusted EBITDA was about $3.7 billion. The effective tax rate for the fourth quarter of 2020 was approximately 8% compared to a benefit of 1% in the prior year. The calendar year 2020 effective tax rate was approximately 5%, down from the approximately 13% in 2019. The decrease in the effective tax rate for the calendar year was due primarily to changes in the geographic mix of earnings and the impact of US tax credits, mainly the railroad tax credits, which have an offsetting expense in the cost of products sold. Absent the effect of earnings per share adjusting items, the effective tax rate for the fourth quarter was approximately 11% and for the calendar year 2020 was approximately 9%. Looking ahead, we're expecting full-year 2021 effective tax rate to be in the range of 14% to 16%. We generate about $3.1 billion of cash from operations before working capital for the year, significantly higher than 2019. Return of capital for the year was $942 million, including more than $800 million from dividends. We finished the quarter with a net debt to total capital ratio of about 32%, up from the 29% a year ago due to higher working capital needs due to rising commodity prices. Capital spending for the year was about $820 million, in line with our guidance and well below our depreciation and amortization rate of about $1 billion. For 2021, we expect capital spending to be in the range of $900 million to $1 billion. Other business results were substantially lower than the prior-year quarter. ADM Investor Services earnings were impacted by drastically lower short-term interest rates. Captive insurance results were negatively impacted by $15 million more in net intracompany settlements compared to the prior-year quarter. For 2021, we expect other business results to be in line with 2020. In the corporate lines, unallocated corporate costs of $278 million were higher year-over-year due primarily to increased variable performance-related compensation expense accruals, increased IT and project-related expenses and centralization of certain costs, including from Neovia. Other charges decreased due to lower railroad maintenance expenses, partially offset by the absence of prior-year investment gains. For 2021, corporate unallocated should be overall similar to 2020. Net interest expense for the quarter was lower than the last year due to lower short-term interest rates and liability management actions taken in 2020. For 2021, we expect net interest expense for the calendar year to be similar to or slightly lower than 2020. The Ag Services and Oilseeds team capped off an outstanding year, with record adjusted operating profit in the fourth quarter. Ag Services results were significantly higher year-over-year. In North America, the team executed extremely well, capitalizing on strong global demand, particularly from China, to deliver higher export volumes and margins. South American origination was lower year-over-year after significantly accelerated farmer selling in the first half of 2020. Global trade continued to do a great job, contributing to higher results by utilizing its global reach and managing risk well to meet customer demand. Approximately $80 million of prior timing effects reversed in the quarter as expected. Crushing also delivered substantially higher results versus the prior-year period. The business did a great job to capture higher margins in a continued environment of tight soybean supply and strong global demand for both meal and vegetable oils. There was approximately $125 million in net negative timing in the quarter, driven by basis impacts and improved soft seed margins. Refined products and other results were higher year-over-year, absent the recognition of the retroactive biodiesel tax credit in the fourth quarter of last year, with good results driven primarily by solid South American margins. Wilmar's strong performance drove our equity earnings higher versus the prior year despite our slightly lower ownership stake. For the full year, Ag Services and Oilseeds delivered exceptional results of $2.1 billion, 9% higher than 2019. Its team achieved multiple records, including an all-time high global crush volumes. In addition, we're proud of the teams that brought our reserve export facility back online safely and ahead of schedule despite dealing with multiple severe weather events this year. Looking ahead, we expect the first quarter of 2021 results for Ag Services and Oilseeds to be significantly higher than the prior year first quarter, driven by extremely strong North American export demand and continued healthy crush margins. The Carbohydrate Solutions team again delivered substantially higher year-over-year results despite the impacts of lockdowns in key market segments. The starches and sweeteners subsegment achieved significantly higher results, driven by lower net corn costs and intercompany insurance settlements. Earnings were partially offset by low results from corn oil and wet mill ethanol margins. Vantage Corn Processors results were also better versus the prior year, though they continue to reflect a challenging ethanol industry environment. The team delivered higher year-over-year margins as they met increased demand for USP grade alcohol, partially offset by fixed costs from the two temporarily idled dry mills. Considering the impact of lockdowns in both driving miles and the food service sector, we're extremely proud of our Carbohydrate Solutions team for delivering full-year results of $717 million, 11% higher than 2019. The team achieved record high operating profits from starches in the year. They acted decisively by temporary idling production at our 2 VCP dry mill plans, helping address industry supply and demand balances. And the wheat milling business' modernization and optimization plan, including a new state-of-the-art mill in Mendota, Illinois helped power a significant improvement over full-year 2019 for that business. Looking ahead, we expect Carbohydrate Solutions results in the first quarter to be significantly higher than last year's first quarter, which was negatively impacted by corn oil mark-to-market impacts, but below the fourth quarter 2020 levels due to the challenged industry ethanol margins. The Nutrition team delivered 24% year-over-year growth in the quarter. In human nutrition, flavors delivered a strong quarter, driven by good sales and product mix in North America and EMEAI. Continued strength in plant proteins drove higher results in specialty ingredients. Health and wellness delivered higher sales in probiotics and natural health and nutrition. Prior-year results included revenue and income related to the launch of the strategic Spiber relationship. Human nutrition results for the quarter also included an intercompany insurance settlement. Animal nutrition results were significantly higher year-over-year, driven by strong performances in Asia and EMEAI and improvements in amino acid results, partially offset by currency effects in Latin America. We're continuing to make improvements in our amino acid business, including our announcement last month that we're discontinuing dry lysine production and transitioning to our liquid and encapsulated products in the first half of this year. For the full year, Nutrition results were $574 million, 37% higher than 2019. The Nutrition team grew revenue 5% on a constant currency basis and continued to expand EBITDA margins. We exceeded our Neovia synergy targets and delivered them ahead of schedule. We are truly seeing the benefits of our investments in Nutrition. Looking ahead, we expect Nutrition to solidly grow operating profits in 2021 calendar year, but the first quarter should be similar to the prior-year period due to the timing of certain expenses over the year, including investments in projects to drive organic growth. I'd like to congratulate the team once more on delivering great results in 2020. I am proud of what we achieved and I'm excited to see our work empowering us to reach even greater heights. In 2020, Ag Services and Oilseeds capitalized on its unparalleled and flexible global footprint to meet the strong demand. In 2021, we expect Ag Services and Oilseeds' strong execution, diverse and flexible crush capabilities, including an extensive soft seed footprint, and important strategic work to continue to drive results. In addition, we expect the global demand environment for Ag Services and Oilseeds to remain strong. China should continue to be a significant buyer. We see continued strong global growth in mill demand and we expect increased demand for vegetable oil due to recovery in cooking oils for foodservice and growth in demand for biofuels, including renewable green diesel. That is why we are confident in another outstanding performance from Ag Services and Oilseeds in 2021. Carbohydrate Solutions is showing how we have embedded great execution into our operational structure and culture. The team is doing a great job strengthening their business by optimizing their plants and product mix. And their ability to adjust production in 2020 to quickly meet changes in demand showed how those strategic efforts are paying off. Now they are well positioned to use those same tools as the effect of lockdowns on the foodservice and transportation fuel sectors dissipates throughout 2021. We expect solid profit growth for the year for Carbohydrate Solutions. Nutrition continued to harvest investments, leading consumer growth trend areas and partnered with customers to bring innovative new products and solutions to market in 2020. Based on our current organic growth plans, we expect the Nutrition team to deliver solid revenue expansion and enter a period of an average 15% per annum operating profit growth, consistent with our strategic plan. Across ADM, we are fulfilling our purpose and building on a foundation for steady, sustainable earnings growth. We are growing and leading in key trend areas, including food security, health and wellness and sustainability. Our continued advancements of readiness is benefiting the entire enterprise, and we are making investments in exciting growth innovation platforms, which we'll be talking more about in the future. In 2021, we will remain focused on the drivers under our control, adding incremental returns as we focus on organic growth, advancing operational excellence initiatives to maximize returns from every business and every asset, and continuing to generate benefits from readiness. With the strong execution of these strategic initiatives and improving market conditions as the year progresses, we expect to build on a record 2020 with a strong growth in segment operating profit and another record year of earnings per share in 2021.

compname reports fourth quarter earnings of $1.22 per share, $1.21 per share on an adjusted basis, affirms earnings growth expectation for 2021. q4 adjusted earnings per share $1.21 excluding items. expect growth in operating profit and earnings per share in 2021. expect nutrition team to deliver solid revenue expansion and profit growth in 2021. qtrly ag services & oilseeds achieved substantially higher results year over year. qtrly carbohydrate solutions results were higher than q4 of 2019. expect strong growth in segment operating profit in 2021. carbohydrate solutions business is well positioned to generate solid profit growth in 2021.

Today's call will cover ITT's financial results for the three-month period ending October 2, which were announced yesterday evening. These statements are not a guarantee of future performance or events and are based on management's current expectations. Actual results may vary materially due to, among other items, the factors described in our 2020 annual report on Form 10-K and other recent SEC filings. These adjusted results exclude certain nonoperating and nonrecurring items, including, but not limited to, asbestos-related charges, restructuring, asset impairment, acquisition-related items and certain tax items. I am very pleased with the results ITT delivered in the third quarter. Once again, the resilience of our businesses and our teams has allowed ITT to execute for our customers in a tough macroeconomic environment. As a result of the revenue growth, continued margin expansion and the effective deployment of the balance sheet, ITT delivered adjusted earnings per share of $0.99, growing 21% over the prior year. During the quarter, it was paramount that we stay focused on execution while cultivating the significant growth opportunities ahead of us, and this is exactly what we did. In the third quarter, I continued to work our shop floors around the world to ensure we are taking full advantage of our opportunities. I'm encouraged by what I saw firsthand as we are not even close to being done improving our operational and business excellence. I saw the engineering expertise and prowess on display at the Friction plant and innovation center in Barge, Italy. The productivity and automation opportunities at our KONI plant in Oud-Beijerland, The Netherlands and the energized high-performing goods pumps team I reconnected with in Dammam, Saudi Arabia. I was also fortunate to visit our industrial process team in Tizayuca, Mexico, where we have a good low-cost manufacturing setup poised for future growth. And lastly, our Friction plant in Silao, Mexico is continuing to add new production lines to support the wins in EVs and share gains on conventional vehicle platforms. There is a lot to be excited about at ITT. Let's talk about some of the key highlights from ITT's third quarter. We drove broad-based sales growth across all three segments and implemented strategic commercial actions to minimize the impact of rising inflation. We drove incremental productivity in the quarter, roughly 280 basis points through a combination of shop floor and sourcing actions, and we continue to apply strict controls over our fixed costs as growth resumes. We thought to overcome a year-over-year $0.23 or 370 basis point raw material headwind. Our ITTers delivered 60 basis points of adjusted segment operating margin expansion, an exceptional result, considering the supply chain dynamics we see. We generated organic orders growth of 27% with strong demand in Friction aftermarket, rail, connectors and industrial controls. We also continued to grow nicely in IP short-cycle and projects. Finally, we put our capital to work, repurchasing an additional $50 million of ITT shares to bring our year-to-date repurchases above $100 million, exceeding our repurchase commitment for the full year. These accomplishments and the dedication of our ITTers drove adjusted earnings-per-share growth of over 20% compared to prior year and 2% above 2019 pre-pandemic levels. Looking at the businesses. Despite the supply chain disruption, the restricted auto production volumes, Friction OE continued to outperform, while also driving strong aftermarket growth. We continue to win on both conventional OE vehicles and on new electric vehicle platforms, which will power future outperformance as they transition to hybrid and ultimately to full electric accelerate. This quarter, we won content on six new electric vehicle platforms in China, the world's largest automotive market. This year, we have been awarded content on 25 new EV platforms and our win rate is significantly above our current global OE share of over 25%. Electrification will be MT's next springboard for long-term growth given our strategic focus on EV platforms. In Connect & Control Technologies, we drove 17% organic sales growth with strong demand in North America distribution, especially in the industrial market. This, coupled with progress on CCT's operations, generated 17% adjusted segment margin for the quarter, putting the business closer to pre-pandemic levels. Lastly, we generated 8% organic revenue growth in industrial process, driven by short-cycle demand across parts, valves and service. This is remarkable, given the supply chain difficulties we are experiencing. We see positive signs in our weekly order rate. And as you will hear shortly, continue to see sequential improvement and market share gains in the long-cycle project business, which is an encouraging sign for 2022 and beyond. One of the most telling metrics for ITT this quarter was the 27% organic orders growth. Our order levels again surpassed 2019, even with many of our key end markets still early in their recovery, like commercial aerospace. In Industrial Process, we generated double-digit growth versus 2020 in short-cycle across baseline pumps, part and service. Q3 was also the third consecutive quarter of sequential orders growth in projects with 36% organic order growth. As a result, IP's backlog was up $28 million in the quarter. In Connect & Control, orders grew over 40% organically, including an encouraging 70% orders growth in aerospace and the strong performance in North America distribution. Finally, in Motion Technologies, we generated strong demand in the Friction aftermarket and in KONI/Axtone, which more than offset a slight decline in friction OE due to the chip shortage impact on our OEM customers. Even with these challenges, MT grew over 20% organically versus 2020 and 4% above 2019. And for the year, we now expect MT to deliver over $1.3 billion in revenue, comfortably above 2019. As we head into the fourth quarter, we are not anticipating any improvement in the global supply chain or with raw material pricing. With our teams executing relentlessly against these challenges, we are narrowing and raising our full year adjusted earnings per share outlook for 2021 at the midpoint to reflect the strong performance to date and our ability to execute. We now expect adjusted earnings per share in the range of $4.01 to $4.06 at the high end, which equates to 25% to 27% growth versus prior year. This is a $0.06 improvement at the midpoint after a $0.37 increase through the first half of the year. This puts ITT on pace to comfortably surpass 2019 adjusted EPS. In September, ITT released the second supplement to our 2019 sustainability report, demonstrating the company's progress on our environmental, social and governance practices. We are continuing to integrate ESG in our business strategy and the day-to-day operations of over 10,000 ITTers. Some highlights from the report to note: we drove a 25% reduction in greenhouse gas emissions, and a 23% reduction in waste sand to landfills, with 25% fewer workplace safety incidents. We are expanding investments in guarantee of origin certificates throughout our European locations to increase ITT's share of electricity from renewable sources. We are investing in more sustainable product technologies, especially in our pump business, building on the success we have achieved in MT's copper-free brake pads. As we conduct our operating plan reviews for 2022, ESG continues to be a key element of the leadership team's mandate and there is much more for us to do. Thus far, we have deployed capital in an amount nearly three times our year-to-date free cash flow across all our capital deployment priorities. Our capex for the year is approximately 3% of revenue through the third quarter. We've invested in capacity in our Friction plant to support the share gains achieved with new and existing customers as it relates to the accelerated transition to electric vehicles. We also continue to execute value analysis, value engineering to reinvigorate our product offerings in Industrial Process and Connect & Control. From the inception of this initiative in 2018, we have commercialized more than 100 different pump models, representing 23% of our total product portfolio. In addition, we completed redesign for more than 30 additional pumps ahead of their commercial release. We have only begun to scratch the surface with more than 70% of the product offerings still to be addressed. As an example of this effort, following the success of our BB2 pumps, our year-to-date order growth for our recently redesigned magnetic drive pump is 40%. The VA/VE announcements resulted in increased performance, better reliability and shorter lead times. Regarding our other capital deployment priorities, we increased our dividend rate by 30% after 15% the year before. This represents an annual dividend yield of approximately 1%. Our share repurchases this quarter will drive a 1% reduction in our weighted average share count for the full year. We will continue to drive repurchase activity in the future and our existing $500 million authorization. And lastly, as we discussed last quarter, we divested our legacy asbestos liability to a portfolio company of Warburg Pincus. This has reduced ITT's risk profile and allows us additional capital flexibility. To accelerate our M&A activity, we're investing in our capabilities. Bartek leads strategy development and will drive all merger and acquisition activities, including ITT's newly launched corporate venture vehicle. On this front, we made one initial venture investment in Q3 for Connectors-related assets. And we have a growing pipeline of leading technologies to enhance our existing product portfolio. We have stepped up our M&A pipeline and cultivation activities and are looking forward to bringing great companies into ITT in the near future. Emmanuel, over to you. As you heard, Motion Technologies again delivered a solid performance, driven by strength in the Friction aftermarket. In our OE business, Friction's market outperformance was over 1,000 basis points this quarter, significantly above our historical average despite large declines in global auto production levels. For all of ITT, we estimate that the supply chain disruptions deducted approximately 350 basis points from our sales growth this quarter. However, we expect to recover a majority of the pushed-out sales in the next few quarters. We also saw double-digit organic sales growth in IP short-cycle and continued strong demand for industrial connectors. And similar to what we saw in Q2, demand in commercial aerospace is increasing as exhibited by the 70% growth in aerospace orders. On segment margin, CCT grew margin by 300 basis points and IP by 150 basis points, while MT declined 110 basis points, mainly due to raw material inflation. We overcame a 470 basis point inflation headwind to drive 60 basis points of adjusted segment margin expansion. On adjusted EPS, despite the challenges Luca highlighted in his introduction, we drove a $0.42 operational improvement year-over-year through a combination of higher sales volumes, strategic pricing actions and productivity across the enterprise. We continue to realize benefits from prior restructuring, including our 2020 cost action plan, and we're carefully managing the unwinding of temporary cost actions taken in 2020 to ensure these costs align with the pace of ITT's recovery. We achieved an adjusted trailing 12-month free cash flow margin of more than 11% this quarter, due to higher segment operating income. On a year-to-date basis, excluding the asbestos payment in Q2, adjusted free cash flow declined by -- driven by strategic investments in working capital. As I mentioned earlier, our performance this quarter was largely operationally driven. Our year-over-year growth was significantly impacted by $0.23 headwind related to raw material inflation and a $0.09 headwind from prior year environmental settlements and temporary cost actions. Partially offsetting these items was a roughly $0.04 benefit from foreign currency. We also realized a slightly lower effective tax rate versus the prior year, which drove over a $0.02 benefit. This was due to effective tax planning strategies related to our patent portfolio abroad. We now expect our full year effective tax rate to be approximately 20.75%. Motion Technologies Q3 organic revenue growth of 20% was primarily driven by strength in the aftermarket as the Friction OE business declined slightly given the supply chain headwinds affecting OEMs. This and the raw material inflation also impacted operating margin as we had signaled last year -- last quarter. The Friction team is working diligently with our customers to drive equitable price recovery action, given the significant inflation we are seeing today. We were able to pass price increases on to our customers this quarter and manage the impact of contractual price concessions. However, there is much more to be done to compensate for the inflation we are experiencing. Our Motion Technologies team will continue to methodically execute incremental pricing actions in Q4 and 2022. We also experienced significant production inefficiencies resulting from large variations in customer orders patterns. However, as with last quarter, our Friction OE business executed very well with over 99% on-time performance across all Friction plants. In challenging economic conditions, Friction continues to be widely recognized as the quality -- as the highest quality and most reliable supplier in the market. And in KONI, we continue to improve our quality performance and remain deeply focused on serving our customers amid supply chain disruptions. Finally, we also continue to evaluate strategic footprint actions and announced one additional plant closure in Europe this quarter, which will drive further cost competitiveness within our rail business. For Industrial Process, revenue was up 8% organically. This was driven primarily by short-cycle demand across parts, valves and service. Serving our customers this quarter require tremendous focus, coordination and effort by the IP team to overcome supply chain disruptions. Our all-hands-on-deck approach made this happen. As we signaled last quarter, we see the project funnel continuing to grow and IP was able to capture a significant share as evidenced by the 36% organic order growth in project this quarter. We see this constructive momentum continuing and expect to deliver similar year-over-year growth in Q4. IP margin expanded 150 basis points to 15.6% with an incremental margin of 33%, this was driven by higher sales volume, favorable mix, given the higher proportion of short-cycle sales, productivity and price, partially offset by labor and material inflation as well as higher freight charges given shipping delays. Similar to MT, we're making progress on footprint optimization and have executed one plant closure during the quarter with another plant in Brazil in Q4. In Connect & Control Technologies, we continued to drive a recovery from both the sales and margin perspective. With incremental margin of 35%, CCT generated segment margin above 17%. This is a 300 basis point improvement over prior year. The margin expansion was the result of continued volume leverage and strong productivity, including restructuring savings, despite inflationary headwinds. This margin profile is approaching pre-pandemic levels, but with approximately $20 million less in revenue. While there is much work to be done to further solidify this performance, we are very encouraged by the work the team has done thus far and it gives us confidence in the future prospects at CCT. As you can see, our teams have done a good job capturing the demand, leading to solid order growth in Q2 and Q3. A few highlights to note. It is important to note that our ability to win a majority of the EV competitions that we bid on is key to creating the long-term growth platform that Luca talked about. Second, in Industrial Process, the strength we anticipated in short cycle is materializing. But even more encouraging is the order growth and continuing recovery in long cycle pump projects. Both the number and the size of orders in the funnel is increasing, and we have seen a steady sequential order increase throughout 2021. This is the result of our relentless focus on customer centricity and operational excellence, which is increasingly recognized by our OE customers. Third, CCT orders were up 40% organically in -- on the strength of our connector portfolio, particularly in North America. The commercial connector performance, especially with our distribution partners is encouraging, and we're working to replicate the strong momentum across all our customers. We also continue to see a gradual recovery in commercial aerospace, which will further bolster the sales growth in CCT over the next several years. CCT backlog is up 17% organically or $40 million since year-end with a book-to-bill of 1.06. This is a notable improvement for CCT since this time last quarter. Through two quarters we had raised our organic sales outlook by 600 basis points and adjusted earnings per share by $0.37 versus the midpoint of our original guidance. Given our strong performance, today, we are again raising the midpoint of our adjusted earnings per share range by an additional $0.06 to reflect the stronger-than-anticipated results and lower tax rate. We're not anticipating any improvement in the market headwinds in the near term. Nevertheless, in 2021, we expect to comfortably exceed pre-pandemic adjusted earnings per share levels. IP will grow revenue in the low single-digit range, while CCT will drive mid-teen percent revenue growth. Facing a tough comparison after a strong Q4 last year and the continued impact from constrained OEM demand, MT revenue will decline by mid-single digits in Q4. However, we expect to largely outperform the global auto market. In total, this will drive approximately flat to slightly up organic revenue growth in Q4. From a segment margin standpoint, we expect all businesses to expand sequentially with CCT growing triple digits and IP building on its strong Q3 performance. Year-over-year we expect segment margin to grow approximately 50 to 75 basis points. Because of an exceptionally strong Q4 last year, Q4 adjusted earnings per share will grow in the low single-digit range year-over-year, and this will drive full year adjusted earnings per share above 2019. With that, let me pass it back to Luca. Let me wrap it up. First, ITT has performed extremely well in a challenging climate. We fought through adversity, and we're winning in the market. Second, we have a resilient set of businesses that have demonstrated over and over again the ability to effectively manage multiple external factors while investing in long-term growth. We delivered strong growth in revenue and margin, while not all of our markets have fully recovered yet. Third, while we are continuing to invest for long-term growth and sustainability, our funnel of opportunities is increasing, and the growth in orders throughout 2021 will pave the way for continued outperformance. Lastly, we have deployed over 2.8 times our year-to-date adjusted free cash flow through our asbestos divestiture, dividends and share repurchases. And we are increasing our focus on M&A, we are in a favorable position to execute acquisitions given our balance sheet strength, and we are growing our pipeline and expanding our target cultivation activity. As I said earlier, there is a lot to be excited about at ITT.

q3 adjusted earnings per share $0.99. sees fy revenue up 11 to 13 percent. raised its full-year 2021 guidance. expect full-year 2021 adjusted earnings per share of $4.01 to $4.06 per share.

These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those detailed in our periodic SEC filings. Please note that the company's actual results may differ materially from those anticipated, and we undertake no obligation to update these statements. He will provide an update on our strategy and highlights from the last quarter. And Karen Holcom, senior vice president and chief financial officer, who will walk us through our earnings performance. There will be an opportunity for Q&A at the end of the call. For those participating, please limit your remarks to one question and one follow-up, if necessary. Our team delivered another strong performance in the second quarter of fiscal 2022. For the second consecutive quarter, we delivered net sales growth of 17%, and we maintained our gross profit margin at 41.7%, consistent with the first quarter. And compared to last year, we increased diluted earnings per share by 22%. Despite the cost challenges, we were able to convert our sales growth into operating profit and net income by effectively leveraging operating expenses. The world remains complicated. Although our demand environment is strong, costs continue to be volatile, and we are continuously dealing with the ongoing pressures resulting from the global component shortages. In spite of this, our team continues to execute well, and this is reflected in our performance. Both ABL and Spaces are performing admirably. Our decisions to prioritize shipments by investing in electrical components and transportation are resulting in higher sales and operating profits, albeit at slightly lower margins. Now, I want to move to talk to our progress at both ABL and Spaces. First, in ABL, I'm happy to report that some things are returning to the way they used to be. In March, we hosted our first in-person sales conference in three years, NEXT '22. It was great to be back together with our independent sales network, who have performed exceptionally through the ups and downs of the last two years. We have the best agents in the industry, and it was a great opportunity to talk about our strategic vision for Acuity Brands Lighting, share many new products, and engage our agency partners around our EarthLIGHT initiative. This was the first time that many of our associates and agents had seen each other in person since the pandemic started. While we have been incredibly productive working virtually with our channel, it was great to spend some quality time together in person. It was hard not to be struck by the levels of energy and enthusiasm throughout the event and the consistency of the feedback from our agents. They said, "Acuity is delivering". Our investments in service have allowed us to prioritize delivering for our customers when others have been unable to. At the same time, our investments in product vitality have allowed us to continue to create compelling new products that are both innovative and market-moving. As I said last quarter, we have done this by focusing on three main areas. First, by focusing on strategic supplier relationships, the current environment has reminded us all that it really matters who you do business with. Because we are the largest lighting company, we have certain advantages over our direct competitors. But those same components are also used by larger industries. Consequently, we are making investments in people, time, and resources. We have recruited a new head of strategic sourcing for ABL. We are working with our key suppliers on effective planning and allocation management, and we are investing in inventory. Second, by empowering our teams to prioritize access and speed over cost on available components, we have been able to ensure continuity of supply across many of our existing product lines, while also supporting our ongoing product vitality efforts across our product portfolio. Finally, as I said last quarter, our engineering teams continue their Herculean efforts to redesign products to the available components. At the same time, these teams have also managed to introduce around 220 new, or significantly upgraded, lighting and lighting control products over the last two years. We expect the challenges around access to and costs of components to continue into the foreseeable future. Our strategy around product vitality and the dexterity of our engineering teams inflecting to the changing requirements of the component shortages have been a significant part of why we are leading in this market, and we expect to continue these efforts. Another highlight of the NEXT conference was our focus on EarthLIGHT. EarthLIGHT is an important part of our strategy. Our product vitality efforts are not just about improving the functionality of our products. It is also about redesigning products to reduce customer energy consumption, reducing packaging and waste, and improving transportation efficiency. This quarter, we announced a new initiative that brings together both technology and sustainability to significantly reduce paper use by introducing scannable QR code instructions across our products. At NEXT, we also expanded our community outreach by packing a thousand bags of food for a local Atlanta organization together with our agents. It was one of the highlights of the event. Now, moving to the Intelligence Spaces Group, Spaces had another solid quarter of growth. In both Distech and Atrius, we have a strong product roadmap to make Spaces smarter, safer, and greener. Distech continues to win in the building controls market against significant competition. Through the ECLYPSE Controller products, Distech is at the forefront of the technology curve with a presence in key markets and recognized leadership built on open-protocol technology. In the last quarter, Distech won projects across North America and Canada and saw significant project wins in key verticals, including in education, commercial infrastructure, and in data centers. Distech is now a key supplier to two of the largest cloud providers. We also continue to develop the Atrius platform, including progress on Atrius Building Insights, and we expect to expand the portfolio over time. We continue to add talent to this team. Finally, I want to update you on our capital allocation. Our capital allocation priorities remain the same. We expect to continue to prioritize investments for growth in our current businesses, to invest in acquisitions, to maintain our dividend, and to allocate capital to share repurchases when there is an opportunity to create permanent value for our shareholders. This quarter, the board of directors authorized additional capacity for share repurchases to increase our remaining authorization from 3 million to 5 million shares. Since May of 2020, we have repurchased approximately 13% of our shares outstanding. I would also like to announce the appointment of Sachin Sankpal, our senior vice president of growth and transformation. Sach joins us to manage our technology organization, to deploy our better, smarter, faster company operating system, and to lead the integration efforts for future acquisitions. Sach comes to us with distinguished experience at leading companies, including Trimble and Honeywell. We're excited to have Sach on our team. Each quarter, we are faced with new challenges, and our team continues to deliver. Our continued focus on service and product vitality is allowing us to take advantage of the strong demand environment. I am so impressed by their flexibility and ability to drive results. We delivered strong performance in the second quarter of 2022. We grew net sales. We managed margins effectively despite a volatile cost environment. And we leveraged our operating expenses. Net sales were $909 million, an increase of 17% compared to the prior year. This performance was driven by our focus on service levels and product vitality, a continued recovery in the end markets of both of our business segments, and the benefits of recent price increases and acquisitions. Gross profit was $379 million, an increase of $43 million or 13% over the prior year. This improvement was driven by revenue growth and by offsetting the significant increase in input costs through price increases and product and productivity improvements. Gross profit as a percent of sales was 41.7%, a decrease of 170 basis points from 43.4% in the prior year, but flat sequentially from the first quarter of 2022. I will talk more about the current cost environment later on in the call. Reported operating profit was $102 million, an increase of $11 million or 12% over the prior year. Reported operating profit margin was 11.3% of net sales for the second quarter of fiscal 2022, a decrease of 40 basis points over the prior year. Adjusted operating profit was $123 million, an increase of $14 million or 13% over the prior year. Adjusted operating profit margin was 13.5% of net sales, a decrease of 50 basis points against the prior year. Adjusted operating profit margin was lower than the prior year, as the decline in gross profit margins was partially offset by leveraging operating expenses. Finally, we saw continued improvement in diluted earnings per share for the second quarter of fiscal 2022. Diluted earnings per share of $2.13 increased $0.39 or 22% over the prior year. And adjusted diluted earnings per share of $2.57 increased $0.45 or 21% over the prior year. Our share repurchase program favorably impacted adjusted diluted earnings per share by $0.06. Now, moving on to our segments. During the quarter, our Lighting and Lighting Controls segment saw sales increase, 17% to $863 million over the prior year. This was driven by the improvements within our independent sales network, which grew approximately 12%, and an increase of 5% in our direct sales network. Additionally, sales in the corporate account channel increased approximately 105% over the prior year. Recall that last year, customers had paused their renovations due to the pandemic. That activity has now restarted as you can see from the growth this quarter. We also had growth in our other channel of 83% over the prior year, due primarily to the acquisition of OSRAM. Sales in the retail channel declined approximately 2% in the current quarter. This was due to some of our inventory being delayed in transit or held up in the ports, resulting in longer lead times than we anticipated. We should start to see growth in this channel in the upcoming quarters. ABL's operating profit for the second quarter of 2022 was $117 million, an increase of 14% versus the prior year, with operating margin declining 30 basis points to 13.5%. Adjusted operating profit of $127 million improved 13% versus the prior year, with adjusted operating profit margin declining 50 basis points to 14.7%. ABL has demonstrated the ability to grow sales while leveraging our operating expenses. Moving on to the results for our Intelligent Spaces Group. For the second quarter of 2022, sales in Spaces increased approximately 16% to $50 million, reflecting growth in both the Distech and Atrius. Spaces operating profit in the second quarter of 2022 increased approximately $400,000 to $1.2 million. Adjusted operating profit of $6 million increased approximately $1 million versus the prior year as a result of the strong sales growth and continued investment in the business. Our business model continues to be highly productive, generating $127 million of net cash flow from operating activities in the first half of fiscal 2022. This was a decrease of $85 million compared to the prior year due primarily to an increased investment in working capital primarily related to inventory. Inventory days are up over the end of our fiscal year, with approximately half of the increase due to increased lead times on source finished goods and, to a slightly lesser extent, increased purchases of electronic components. We are managing our inventory levels to support our growth, as well as insulate our production facilities from inconsistent supply availability. We also invested $24 million or 1.3% of net sales and capital expenditures during the first six months of fiscal 2022. Finally, we have continued to repurchase shares in the second quarter. As a result, since May of 2020, we have bought back approximately 13% of our company shares at an average price of approximately $120 per share. I would now like to spend a few minutes focusing on the remainder of the year. As Neil stated, we expect the current environment to continue for the foreseeable future with strong demand, while access and cost of components will remain a challenge. Our focus throughout will continue to be on growing sales and leveraging our operating expenses. In relation to the recent instability in Europe, we have no direct sales exposure either to Russia or Ukraine. However, the conflict does add to the existing supply chain pressures. Additionally, we are experiencing increases in transportation costs, driven by expected increases in oil prices. In the last 15 months, we have strategically introduced six price increases in addition to driving product and productivity improvements. Before I hand you over to the operator, I want to leave you with our key takeaways. We have continued to demonstrate strong sales growth and effective management of gross margins in a volatile cost environment. We've leveraged our operating expenses. And finally, we have continued to allocate capital effectively.

q2 earnings per share $2.13. q2 adjusted earnings per share $2.57.

I'm Ian Hudson, the company's Chief Financial Officer. Also with me on the call today is Jennifer Sherman, our President and Chief Executive Officer. These documents are available on our website. In addition, we will file our Form 10-K later today. Jennifer is going to start today with her perspective on our performance, and then I will provide some more detail on our fourth quarter and full year financial results. Jennifer will then go over our outlook for 2021 before we open the line up for any questions. I'm immensely proud of how our teams have managed through these challenging times. It's hard to believe that it's been a little over a year since the first COVID-19 patient was reported in the U.S. Since the outbreak of the pandemic, the health and safety of our employees has been our highest priority, and we worked quickly to implement a host of measures to establish a safe work environment for our employees. These steps have included adjusting our office spaces and production processes at our facilities to comply with safe distancing guidelines. During 2020, we invested in temperature screening capabilities at most of our facilities, issued a mandatory face mask policy, provided our employees with additional paid time off and made at-home test kits available for free to our employees and their family members. As the national COVID-19 vaccine distribution has gotten under way, it is clear to me that vaccinating our workforce is the single most effective tool at our disposal to protect our employees and customers and keep our businesses operating efficiently. In a nutshell, putting this pandemic behind us is critical to our long-term success. So with that in mind, we recently kicked off a companywide effort to raise awareness about COVID-19 vaccines, assist eligible employees in gaining access to available vaccines and encourage participation levels. Through the pandemic, our businesses have worked closely with local health departments. In Illinois, where we have three of our largest manufacturing facilities, many of our employees are now eligible to receive vaccine as essential workers. In partnership with the local health department, we have organized an on-site vaccination event in March for all eligible employees at that site. I'm extremely appreciative to everyone that helped make this happen and hope that we can host similar events at our facilities in other states when our employees become eligible. In addition to protecting our employees, one of our objectives in launching this initiative is to provide comfort to the customers and suppliers with whom we frequently interact in-person that our high percentage of our customer-facing employees have received a vaccine. We also want to provide a mechanism to encourage eligible employees to feel more comfortable traveling to support our customers. Sharing the same sentiment as others, we are anxious to move beyond COVID. During the fourth quarter, with the resurgence in cases across much of the country, many of our businesses experienced COVID-related disruptions. The fact that we are able to navigate through these issues and deliver strong results was a real testament to our teams. There is no doubt that these remain tumultuous and uncertain times. However, this experience has confirmed my strong belief that our workforce is unparalleled in its passion, commitment and grit. And while we may have some challenging days or periods, I am confident that we will ban together and work through these challenges as we have many others. Overall, our performance in the fourth quarter represented a strong finish to 2020, a year in which we delivered the second highest adjusted earnings per share in the company's history, surpassed only by the $1.79 per share reported in 2019. The despite the impact of the pandemic on our top line, I was pleased with how our teams responded quickly, taking actions to control costs, which not only preserved our EBITDA margin but improved it by 40 basis points on a year-over-year basis. In fact, both of our groups exceeded the upper end of their current target EBITDA margin ranges in 2020. While many companies can serve capital in 2020, we were proactive in taking a number of actions to position the company well for 2021 and beyond as we continue to focus on our long-term growth objectives by funding strategic investments to support the future growth of the company in three critical areas. First, we have made significant investments in our existing plants to add additional capacity to support our long-term growth and to gain operational efficiencies through the use of newer machinery and equipment. We recently completed our plant expansion at Vactor, and are making progress on expansions of our manufacturing facilities in Rugby, North Dakota and Lake Crystal, Minnesota. Earlier in the year, we also completed the expansion of our MRL facility in Billings, Montana. Second, we continue to invest in new product development, and we are seeing the benefits from these efforts with an estimated $200 million of revenue in 2020 being generated from the sales of products introduced in the last three years. Among those products was the 2100 I full-size tower cleaner, which we launched in 2018. The 2100 I sewer cleaner introduced intelligent controls on the truck and was entirely designed around our customers' needs for ease of use and operability. two years following the launch, we continue to see strong results from that product line and positive customer feedback on the design. During 2020 and on the back of our success with the 2100 I, we launched a smaller sewer cleaner and a truck jetter machine that incorporates the same intelligent controls as the 2100 I. The initial response to these products has been very positive. TBEI, our dump bodies business was also successful in bringing several new products to market in 2020, addressing specific customer needs or improving our competitive positioning. A few examples, I would note, are the launch of the J Craft Apex dump body, which features smooth sides with no seems in a tough dump body that results in a significantly better flow of materials for the end user and the DuraTuff, which is a heavy-duty abrasion resistant dump body with a simplified design that allows us to manufacture and fulfill the needs of our customers within a lead time of approximately six weeks which is much shorter than manufacturers of competitor products. Overall, revenues from these new products accounted for nearly 10% of TBIS overall revenues during a year in which TBI delivered the highest EBITDA margin under our ownership. Within SSG, we've increased our recurring revenue streams through Commander one, a product that leverages our existing installed base of outdoor warning siren and provides a unique differentiator for Federal Signal siren control equipment. Of our total R&D spend in 2020, approximately 20% was invested in electrification projects, and we are pleased to report that during the fourth quarter, we received our first orders for our hybrid electric street sleeper. Electrification will continue to be an important initiative for the company moving forward. Third, we reacted quickly to introduce several new digital marketing tools to enhance the customer experience of our customers under reclaiming Tomorrow Together initiative. These tools, which include virtual equipment demonstrations and digital training academies allow us to reach our customers in a new way. We also launched our e-commerce site in the fourth quarter, which initially focuses on certain product lines within our safety and security Systems group. Our strong cash flow generation supports not only these organic growth initiatives but also ongoing debt repayment, cash returns to shareholders and acquisitions. In June of 2020, we completed the acquisition of PWE. And last week, we completed the acquisition of OSW equipment and repair. In October of 2020, we issued our inaugural long-form sustainability report. I'm incredibly proud of the progress we've made on our environmental, social and governance initiatives and thrilled to share are many accomplishments through the issuance of this report. With our commitment to continuous innovation, strong governance, and reduced resource consumption, we continue to build and deliver equipment that has beneficial impacts to both the environment and human safety. We are proud to be a company whose products have inherent environmental and social importance, and we hope that our pride is evident upon reading the report. Let me now spend a minute on our recent acquisition, OSW. OSW is a leading manufacturer of dump truck bodies and a custom upfitter of truck equipment and trailers and is headquartered in Snohomish, Washington with an upfitting location in Tempe, Arizona, and a service center in Edmonton, Alberta. Since acquiring TBEI in 2017, the geographic expansion of our existing platform of market-leading dump bodies and trailers has been an important strategic initiative. The acquisition of OSW represents a highly strategic transaction, adding three premier brands that serve attractive infrastructure, construction and other industrial end markets on the West Coast, Arizona and in parts of Canada. We have previously noted that our dump truck businesses have a general correlation with new housing starts. The region in which OSW operates along the West Coast, have been the fastest-growing areas in the country in the last five years. To capitalize on that growth potential and expand its reach, OSW completed two acquisitions in recent years and represents a good anchor tenant for future growth on the West Coast. With its main operations located in Washington state where the coronavirus pandemic first hit in the U.S., OSW's financial performance was adversely impacted in 2020. However, it is a company with strong brands, several long-term contracts with municipalities and a reputation for making quality products. The acquisition will also extend our current product offerings by filling in several gaps in the TBEI's existing trailer portfolio. Although we expect this acquisition to be neutral to our 2021 earnings, the acquisition provides considerable opportunity for long-term value creation through the application of our 80/20 improvement principles, organic growth initiatives and additional bolt-on acquisitions. Overall, our fourth quarter results represent a strong finish to the year. Before I talk about the fourth quarter, let me highlight some of our full year results. Consolidated net sales for the year were approximately $1.13 billion, down about 7% compared to the prior year. Operating income for the year was $131.4 million compared to $147.1 million in the prior year. Consolidated adjusted EBITDA for the year was $182.2 million compared to $191.3 million in the prior year. That translates to a margin of 16.1% for the year, up 40 basis points from the prior year and above the high end of our target range. GAAP earnings for the year equated to $1.56 per share compared to $1.76 per share in 2019. On an adjusted basis, we reported full year earnings of $1.67 per share compared to $1.79 per share in the prior year. For the rest of my comments, I will focus mostly on comparisons of the fourth quarter of 2020 to the fourth quarter of 2019. Consolidated net sales for the quarter were $295 million compared to $314 million in the prior year. Consolidated operating income for the quarter was $33.8 million compared to $36.4 million in the prior year. On an adjusted basis, consolidated operating margin was 12%, up 10 basis points from the prior year. Consolidated adjusted EBITDA for the quarter was $47 million compared to $48.5 million in the prior year. That translates to a margin of 15.9% for the quarter, an improvement of 50 basis points over the prior year. Income from continuing operations for the quarter was $26 million compared to $29.7 million in the prior year. That equates to GAAP earnings per share of $0.42 per share for the quarter compared to $0.48 per share in the prior year. On an adjusted basis, earnings per share for the quarter was $0.44 per share, which compares to $0.48 per share in the prior year. Orders for the quarter were $276 million, down from record levels in the prior year quarter, but up $10 million or 4% from the third quarter of 2020. That momentum continued into 2021, with strong order intake in January, contributing to a backlog of $330 million at the end of last month. That represents an increase from $304 million at the end of 2020. In terms of our fourth quarter group results, ESG sales were $238 million compared to $252 million in the prior year. ESG's adjusted EBITDA for the quarter was $44.2 million, up 1% from the prior year. That translates to an adjusted EBITDA margin for the quarter of 18.6%, above our target range and up 120 basis points from the prior year. Our aftermarket revenues for the quarter were up about 11% year-over-year, again contributing to the strong margin performance. Overall, our aftermarket revenues represented roughly 25% of ESG's revenues for the quarter, which is up from 21% in the prior year period. SSG sales for the quarter were $57 million compared to $62 million in the prior year. SSG's adjusted EBITDA for the quarter was $11.2 million compared to $12.6 million in the prior year, and its adjusted EBITDA margin for the quarter was 19.6% compared to 20.3% in the prior year. Corporate operating expenses for the quarter were $9.8 million compared to $8.4 million in the prior year with the increase primarily related to unfavorable fair value adjustments of certain post-retirement reserves, which represented a headwind of about $0.02 in the quarter and higher M&A expenses. Turning now to the consolidated income statement, where the decrease in sales contributed to a $5.6 million reduction in gross profit. Consolidated gross margin for the quarter was 25.7% compared to 25.9% in the prior year. As a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down 40 basis points from the prior year. Other items affecting the quarterly results include a $700,000 increase in acquisition-related expenses, a $1.1 million increase in other income and a $600,000 reduction in interest expense. Compared to the prior year, tax expense for the quarter increased by $2.8 million, largely due to the recognition of fewer discrete tax benefits than in the prior year quarter. Although it was up on a year-over-year basis, our effective tax rate for the quarter was lower than we expected at around 23%, primarily due to the recognition of benefits associated with stock compensation activity and other discrete items, which collectively added about $0.03 to our fourth quarter EPS. For 2021, we currently expect a tax rate of approximately 24%. That rate includes an estimate of tax benefits associated with stock compensation activity, similar to those recognized in recent years. On an overall GAAP basis, we, therefore, earned $0.42 per share in the quarter compared with $0.48 per share in the prior year. To facilitate earnings comparisons, we typically adjust our GAAP earnings per share for unusual items. During the fourth quarter, we made adjustments to GAAP earnings per share to exclude acquisition-related expenses, pension-related items, coronavirus-related expenses and purchase accounting expense effects. On this basis, our adjusted earnings for the quarter were $0.44 per share compared with $0.48 per share in the prior year. Looking now at cash flow, where we generated $57 million of cash from operations in the quarter, bringing the total amount of operating cash generation for the year to $136 million. That represents a year-over-year improvement of $33 million or 32%. The improved cash flow facilitated a $30 million debt reduction in the quarter as well as continued strategic investments in new machinery and equipment and other organic growth initiatives like the expansion of several of our manufacturing facilities. In 2021, we are currently anticipating that our capex, including investments associated with ongoing plant expansions will be lower than in 2020 and in the range of between $20 million and $25 million. We ended the year with $128 million of net debt and availability of $280 million under our credit facility. As a reminder, we executed a new five year $500 million credit facility in July of 2019. We also have the option to trigger an increase in our borrowing capacity by an additional $250 million for acquisitions. Our net debt leverage remains low even after factoring in the OSW acquisition that we completed last week. We remain committed to our long-term capital allocation priorities of investing in organic growth initiatives, pursuing strategic acquisitions and funding cash returns to shareholders. On that note, we paid a dividend of $0.08 per share during the fourth quarter, amounting to $4.9 million, and we recently announced that we are increasing the dividend by 13% to $0.09 per share in the first quarter. That concludes my comments. And now I would now like to turn back the call to Jennifer for our outlook for 2021. Looking forward, we remain focused on delivering strong results while continuing to execute on our long-term strategy. Our strong balance sheet provides opportunities for us to drive both our organic growth initiatives and pursue additional strategic acquisitions like OSW. Over the last several years, we have transformed our end market exposure and implemented a revenue-diversification strategy that has enabled us to adjust as needed to market conditions. Our aftermarket business has grown to represent about 1/4 of ESG's revenues, and we see additional opportunities to grow that business. For example, late in 2020, we accelerated an initiative at one of our FS solution centers to expand our parts offerings by in-sourcing manufacturing of certain parts that we had previously procured from third parties. We have also worked to develop strong contingency planning protocols, continue our journey of 80/20 and invest for growth. We are closely monitoring the potential actions that the new administration may take to boost the economy, including potential federal stimulus packages that may be provided at the state or local level to aid municipalities whose budgets have been impacted by the pandemic and a potential infrastructure bill. While there's still uncertainty as to the magnitude and timing of any federal stimulus package, I would like to provide a framework of what we know and what we believe the potential benefit to Federal Signal could be. The initial proposal under the American Rescue Plan, COVID relief package call for approximately $1.9 trillion of economic stimulus with initial projections of approximately $350 billion going to state, local and territorial governments with the goal of keeping frontline workers employed, distributing the vaccine, increasing testing, reopening schools and maintaining essential services. As the provider of equipment used for these essential services like sewer cleaning and street sweeping, Federal Signal is well positioned to benefit from additional aid that may be provided to state and local sources for these purposes. We have recently completed our annual market planning process with our dealer partners, and they remain cautiously optimistic about market conditions in 2021, noting that both corporate and sales tax collections appeared to have held up better than originally anticipated, which should add stability to their revenue sources. Although the dollar amounts that have been cited in the potential infrastructure bill are uncertain, it is clear that the U.S. is in desperate need of renewed investment in its infrastructure. An estimated 47,000 bridges and 40% of our highways are in need of replacement, whereas entire sewer systems have exceeded their useful life cycles. We expect that a long-term infrastructure bill will provide visibility for project planning, I could see capital equipment demand increase in such areas as roads, bridges, broadband, clean energy and public transportation build-outs. We anticipate that this would provide benefits for the majority of our product offerings, including equipment sales and rentals of dump truck and trailers, safe digging trucks, road marking equipment, sewer cleaners and street sweepers. Within our industrial markets, we continue to be bullish about our prospects with respect to our safe digging initiative and are monitoring further developments on the regulatory front. We are also optimistic that the recent increase in oil prices could generate increased demand for the sale and rental of our industrial products. We have positioned Federal Signal in a manner in which we fully participate in the post-pandemic recovery by increasing capacity within our facilities, reducing lead times to a level where we can better respond to customer needs, investing in new product development and gaining market share. On the flip side, we are anticipating that some of the cost savings that resulted from actions taken in 2020 are expected to return in 2021, representing an estimated year-over-year expense headwind of approximately $8 million. Like many companies, we have noted an increase in material costs over the last several weeks, and we are responding accordingly. We are also monitoring the availability of chassis at certain locations linked to a nationwide shortage in semiconductors and expect to be proactive where appropriate, so that any supply chain disruption is minimized. This could have more of an impact on TBEI. As we get more visibility into the year, including the timing of widely available vaccine, we are committed to increasing our target EBITDA margin range. On the M&A front, our deal pipeline remains active and some of the logistical challenges that were experienced in 2020 have started to ease a little. We continue to believe that M&A will be an important part of our future growth. Now turning to our outlook. We are encouraged by conditions in our end markets and the ongoing execution against our strategic initiatives and are monitoring the potential for additional tailwinds. As a reminder, seasonal effects typically result in our first quarter earnings being lower than subsequent quarters. Mainly due to the pandemic, 2020 was a bit of anomaly in that regard. We started off 2020 with record production levels during the first quarter at our largest facility and minimal impact from the pandemic, which did not meaningfully impact our operations until the last few weeks in March. In the first quarter of 2020, we also recognized a benefit of approximately $0.02 per share associated with fair value adjustments to certain reserves. As a result, in 2020, our first quarter represented a higher share of our full year earnings than we typically would expect. While we are very encouraged with recent order trends, including the sequential quarterly order improvements that we experienced since the second quarter of 2020, our operations are still being impacted by disruptions associated with the pandemic. These factors range from operational inefficiencies related to employee absenteeism, to the impact of the recent lockdown measures that have been put in place across much of Canada, most notably in Ontario. In addition, several of our businesses have been impacted by the adverse weather conditions that much of the U.S. has been experiencing in recent weeks. For example, our three facilities in the Houston area and our dunk truck facilities in Alabama and Mississippi had to be closed for several days due to the harsh weather conditions. Fortunately, we did not experience any significant damage to our operations, but we did lose several days of production. Considering the factors impacting the first quarter, we currently anticipate the second half of 2021 to be stronger than the first half. There still remains uncertainties surrounding COVID, commodity costs and chassis availability. Yet despite this, we are expecting a strong year in 2021 with top line growth, double-digit improvement in pre-tax earnings and adjusted earnings per share of between $1.73 and $1.85.

q4 adjusted earnings per share $0.44 from continuing operations. q4 earnings per share $0.42 from continuing operations. q4 sales $295 million versus refinitiv ibes estimate of $291.6 million. sees q4 adjusted earnings per share $1.73 to $1.85. sees q4 sales $295 million.

This is John Faucher, Chief Investor Relations Officer. Actual results could differ materially from these statements. I will provide commentary on our Q1 performance as well as our latest thoughts on 2021 guidance before turning it over to Noel to discuss our 2021 priorities. We will then open it up for Q&A. As usual, we request that you limit yourselves to one question so that as many people as possible get to ask a question. We started 2021 in positive fashion with strong organic sales growth despite a very difficult comparison, which included some consumer pantry loading in March of last year. Our net sales grew 6% in the quarter, organic sales growth of 5% was driven by 0.5% organic volume growth and a 4.5% increase in pricing. Foreign exchange was a 1% tailwind in the quarter. While the tough comparisons, particularly impacted our trends in developed markets, which were flat on an organic sales basis in the quarter, we delivered double-digit organic sales growth in emerging markets with volume up 5.5% and pricing up 6%. We also delivered organic sales growth in three of our four categories; Oral Care, Home Care and Pet Nutrition, while Personal Care organic sales declined due to difficult comparison. We believe our strategy to deliver more impactful premium innovation, which Noel and Pat Verduin talked about at CAGNY, is bearing fruit, and we will continue to focus in this area to drive future growth. Our efforts on premiumization and pricing along with our focus on productivity, like our funding-the-growth initiatives, drove improvement year-over-year in our gross margin despite a worsening raw materials environment. This gross margin expansion was a key factor in allowing us to deliver base business earnings-per-share growth in line with our full year guidance despite higher logistics costs, incremental advertising spending and investment to build capabilities. In the first quarter, our gross profit margin was 60.7% on both a GAAP basis where we were up 50 basis points year-over-year, and a base business basis where we were up 40 basis points. For the first quarter, pricing was 170 basis points favorable to gross margin, while raw materials were 310 basis point headwind. This is a large impact for the first quarter and it was driven by increases in the cost of raw materials like resins, fats and oils, agriculture-related costs and the transactional impact from foreign exchange. Productivity was a 180 basis point benefit. Our SG&A was up 90 basis points as a percent of sales for the first quarter on both a GAAP and base business basis. This was primarily driven by a 50 basis point increase in advertising to sales as we drove strong activation on brand building, innovation and e-commerce. Our SG&A ratio was also impacted by increased logistics costs, primarily in the U.S. and investments behind growth and innovation. Excluding advertising and logistics, our SG&A ratio declined year-over-year. For the first quarter, on a GAAP basis, our operating profit was up 5.5% year-over-year, while it was up 5% on a base business basis. Our earnings per share was down 4% on a GAAP basis and up 7% on a base business basis. Our free cash flow was down year-over-year in the quarter against a very difficult comparison. The decline was primarily driven by the negative impact of accounts payable and other liability, which was mostly due to changes in the timing of payables and income tax payments. A few comments on our divisional performance. Our volume declines in the quarter were primarily due to a combination of category deceleration in the face of difficult comparisons as we cycled last year's COVID pantry loading, logistics issues related to a warehouse transition on our U.S. business that impacted our shelf availability and our market shares and the winter storms in February. Though logistics issues lessened over the last month of the quarter, service levels improved, and we expect service levels to return to normal by the end of the second quarter. Pricing grew mid-single-digits in the quarter as our efforts in revenue growth management for pricing growth across all our categories. The combination of higher raw materials costs, higher underlying logistics costs and costs related to remediating the company's specific logistics issues, pressured margins in the North America division. Despite these headwinds, we continue to invest in advertising, particularly behind premium innovation like Colgate Renewal and the Colgate Optic White Overnight Teeth Whitening Pen and behind the continued strength of Colgate Optic White Renewal. Latin America net sales were up 2% as 9.5% organic sales growth was mostly offset by the negative impact of foreign exchange. We continue to deliver broad-based organic sales growth in Latin America with organic sales growth in all three categories and in every hub. As we highlighted at CAGNY, our innovation in Latin America is driving growth in the premium segment of the toothpaste category. In Brazil, Colgate Total is gaining share behind Colgate Total Anti-Tartar, and our Natural Extracts line is gaining share, particularly behind Charcoal. Our toothpaste value share is flat year-to-date in Brazil and measured channels and is up year-over-year in e-commerce. Europe net sales grew 6% in the quarter. Organic sales were down 2%. Volume declined 3.5% in the quarter as we lap strong shipments in the year ago period, which was driven by COVID-related demand and pantry loading. Pricing was plus 1.5% as we took pricing across all categories to help offset raw material inflation. We're launching equity campaigns across our core oral care equity; Colgate, meridol and elmex, and we're excited about the launch of Sanex Microbiome, which Pat talked about at CAGNY. We delivered 16.5% net sales and 11% organic sales growth in Asia Pacific led by volume growth across our biggest markets; Greater China, India and the Philippines. While China and India benefited from comparisons that included COVID-related shutdowns in 2020, our innovation continues to drive improved underlying performance, particularly in e-commerce. Over the next several quarters, we will begin to rollout more premium innovation in brick and mortar in China like our Colgate Enzyme Whitening Toothpaste, leveraging the success we have had online in transforming our portfolio. Africa/Eurasia net sales grew 8.5% as we delivered strong organic sales growth throughout the division. Volume grew 5% in the quarter, while pricing was up 8%. Foreign exchange was a 4.5% headwind. This growth was led by our toothpaste and manual toothbrush businesses, although we also delivered organic sales growth in personal and home care. Our business in Turkey delivered strong sales and market share performance, and launched significant premium innovation in naturals, charcoal and whitening. Hill's started the year with another quarter of strong net sales and organic sales growth despite lapping significant growth in the year ago period. Developed markets led the growth, particularly the U.S., Canada and Europe led by e-commerce. Emerging markets grew organic sales greater than 20% in the quarter through a combination of volume and pricing growth. We're very excited about our Hill's equity campaign addressing pet obesity. This global campaign is leveraging digital, in-store, in-office and traditional media assets to drive growth in our weight control products across both our prescription and wellness businesses. And now for guidance. We still expect organic sales growth to be within our 3% to 5% long-term target range. As we think about our current organic growth assumptions versus where we were three months ago, we're probably a little more cautious on developed markets. As you've seen from the scanner data, our categories moved negative more quickly than we had anticipated, and we expect that to continue in the short-term. Hopefully, this allows for some of the volatility to play itself out sooner in the year, and we will see trends stabilize more quickly. Coming into this year, in categories where consumption rose last year due to COVID, we expected 2021 consumption levels to be below 2020, but above the levels we saw in 2019. That is the case so far across our developed markets businesses, although year-to-date these categories are slightly weaker than expected. Categories like toothpaste where usage did not spike in relation to COVID, should normalize more quickly as we move past some of the aggressive pantry loading in March and April of last year, and we're beginning to see that happen -- and the scanner data has returned to growth in the last several weeks. We are encouraged by how we started the year in emerging markets. We saw broad-based organic sales growth in our emerging markets across all the divisions and with a good balance of volume and pricing. Comps will get more difficult as we go through the year, but we believe we have solid momentum. Please note that given widespread COVID outbreaks in countries like Brazil, Mexico and India, we could still see an impact from government actions to stem the spread of COVID and other disruptions related to COVID, and this is not in our guidance. Using current spot rates, we expect foreign exchange to be a low-single-digit benefit for the year, although slightly less favorable than when we gave guidance in January. All in, we still expect net sales to be up 4% to 7%. Our gross margin guidance remains unchanged as we expect our gross profit margin to be up year-over-year in 2021 on both the GAAP and base business basis. As we mentioned on our 2020 year-end call, raw materials began the year moving higher and faster than we had expected. This trajectory has continued through the first quarter, as you all know. We are still laser focused on driving our gross margin higher, but the significant increase in costs across our materials base obviously requires additional pricing and productivity. Advertising is still expected to be up on both a dollar and a percent of sales basis. Logistics also continues to be a headwind, particularly in the U.S. where costs also have risen faster than anticipated. We expect these costs to remain elevated in the near-term, but to moderate later in the year. Our tax rate is expected to be between 23.5% and 24.5%. We point out that our guidance does not account for any changes in U.S. corporate tax rates given the recent change in administration. On a GAAP basis, we still expect earnings-per-share growth in the low-to-mid single-digit. On a base business basis, we continue to expect earnings-per-share growth in the mid-to-high single-digit. The adverse moves in foreign exchange and raw materials have moved to slightly lower in that range over the past few months, but it is still early in the year. I'll keep my commentary brief since we've -- so we'll have plenty of time for the Q&A. I think the results for the quarter really speak for themselves. Obviously, we're really pleased with our performance in the first quarter. Despite the significant volatility and headwinds, we delivered strong results around the world and up and down our P&L. While we've made progress on our strategic areas we've been discussing, we still have a lot to do in the balance of the year. Here are key priorities for the remainder of 2021. Continue to drive broad-based growth. Our priorities here are the same as we've discussed for the past several years. We need to grow volume and pricing. We need organic sales growth in every category and in every division in both emerging and developed markets. In order to do this, we'll continue to ramp up our breakthrough and transformational premium innovation. We delivered high-single-digit growth in toothpaste in the first quarter despite lapping solid growth in the year ago period, which help us drive high-single-digit growth in our oral care business. We're driving growth through innovation like Colgate Renewal in the U.S., Colgate Enzyme Whitening Toothpaste in China and our Natural Extracts line in Colgate Total Anti-Tartar line in Latin America. As Pat and I discussed at CAGNY, this is a marathon not a sprint, but we're making good progress which will continue as we shift our resources, continue to build new skills and even adapt how we motivate our teams. Pricing is also an important element of growth. And behind our revenue management efforts, we continue to drive strong pricing as we look to increase our price index versus the market as well as offsetting rising costs. You're hearing about rising costs from every company this quarter, and we're seeing inflation on pretty much every line of the P&L, but especially raw materials, warehousing and logistics. Naturally, our pricing plans are focused. We just discussed, we're battling the cost inflation across the board. We are also driving savings through funding the growth and other efficiency initiatives, which helped offset these headwinds, an effort Stan, our new CFO, is spearheading for us. We do not expect these headwinds to abate any time soon, so we have to continue to invest in marketing and building capabilities for future growth, while delivering on our earnings guidance. We know we need to be disciplined and efficient in this area. The third is maintaining our focus on building out the key pillars of our long-term strategy, while simultaneously managing through all of the volatility. That includes building our capabilities on innovation, e-commerce, digital and data and analytics, progressing on ESG including increasing our commitments on DE&I and advancing our 2025 sustainability targets, and then ultimately navigating to return to work for most of our office-based employees. We are building a team and a culture at Colgate that is focused on adapting and changing to this volatile world. We're embracing new strategies and new ways of working, and it's paying off. We've had a good start to 2021 and we're looking to maintain our momentum through the rest of the year. So with that, we'll go ahead and open up to questions.

company reiterated its financial guidance for full year 2021. delivered positive pricing in every division in quarter. expects fy 2021 organic sales to be up within its long-term targeted range of 3% to 5. colgate-palmolive - looking ahead, seeing volatility in consumer demand and currencies as well as increases in raw material prices and logistics costs. expects fy 2021 net sales to be up 4% to 7% including a low-single-digit benefit from foreign exchange. north america net sales decreased 0.5 percent in quarter.

On the call today are Tim Crew, Chief Executive Officer; John Kozlowski, the company's Chief Financial Officer; Maureen Cavanaugh, our Chief Commercial Operations Officer; and Steve Lehrer, who leads our biosimilar insulin initiatives. A playback will be available for at least three months on Lannett's website. In a moment, Tim will provide brief remarks on the company's financial results as well as recent developments and initiatives. Then John will discuss the financial results in more detail. We have a couple of items of news to report today. In addition to issuing our fiscal 2022 first quarter financial results, we also announced a substantial restructuring and cost reduction plan. I'll discuss both matters in turn. Overall, first quarter results were on track. Our top line and bottom line were respectively, above and at our expectations, largely due to solid sales of several key products. Our gross margin, however, was lower than anticipated, primarily due to growing competitive pressures on our base portfolio. Turning to our balance sheet. Our cash position increased to more than $105 million as of September 30, 2021, up from approximately $93 million at June 30, 2021. We continue to emphasize the importance of our cash position as we believe it affords a strategic flexibility in how we run our business, maintaining adequate cash levels to support our operational needs, the launch of our durable product pipeline remains a key focus. Meanwhile, as often mentioned across the industry, we are operating in a particularly competitive environment, especially for oral generics. The market generally and some of our products such as probenecid, esomeprazole, levothyroxine tablets and chlorpromazine specifically, have been deteriorating more quickly than the declines we had anticipated. This environment certainly reverses our pivot toward expanding our portfolio to include more durable assets, such as the three respiratory and two insulin products in our pipeline. However, we do not expect the current competitive environment to abate in the near term. While we are disappointed in the accelerating declines, we are taking actions to address the current competitive environment: first, we have revised down our fiscal 2022 guidance; and second, while preserving our core portfolio strategies, we are taking immediate and proactive steps to make Lannett a leaner and more focused organization. So with that, let's turn to the restructuring and cost reduction plan we announced earlier today. Again, our plan retains our core strategies while further optimizing our operations, improving efficiencies and reducing costs. The plan will be implemented in phases, and we expect we will be completed in about 18 months. Key elements of the plan include, first, consolidating our manufacturing footprint from two facilities to 1. This includes transferring liquid drug production to our main plant in Seymour, Indiana from our facility in Carmel, New York. And closing the Carmel plant once relevant products are transferred and pursuing its sale. We are already in active discussions with several potential parties. Our Seymour plant will be strengthened in this process by increasing the technologies it supports and expanded its portfolio with smaller volume but decent margin liquid products, thus further optimizing our overall network. The second element of the restructuring plan involves the R&D function. This includes reducing headcount and eliminating development formerly dedicated to the Carmel site and discontinuing future development programs targeting liquid generic medications as we no longer see adequately scaled returns in that sector. We will also raise product threshold requirements and start internally developed products and API selection earlier. The goal of which is to focus on fewer, potentially larger market opportunity products and come to market as part of the so-called first wave of generics. We will continue to be a targeted generic manufacturer focused on attractive, select internal development areas where we believe we can successfully compete. But we will scale those investments to what the business can support today and continue to augment our pipeline with durable partnered assets like generic ADVAIR and insulin. And the third element of the restructuring plan is further rationalizing over time as we have in the past, certain lower-margin products. This particular exercise primarily involves scaling back or phasing out some low-margin and low-volume OTC products that were made at Carmel and two very low-margin prescription products. Ultimately, the plan is expected to result in a workforce reduction of approximately 11% from current levels. Another 3% or so of the workforce, mainly at the plant, we expect not to replace as attrition occurs. Other existing vacancies will also not be filled. In total, we anticipate cost savings approximately $20 million annually. So now let's turn to our pipeline. While we tend to focus on the potentially transformational value of our durable pipeline, there are a number of interesting pipeline assets that could be launched before the end of next fiscal year, including subflooring, sulfate oral solution, sumatriptan and flutamide. And our business development team is hard at work to secure more. We currently have approximately 12 ANDAs pending at the FDA, including partner products, plus three additional products that are approved and pending launch. We also have more than 20 products in development and expect to add more from both external and internal efforts. With regard to our large, durable partnered product pipeline, I'll provide an update on two of the 5, starting with our generic ADVAIR DISKUS product. The FDA provided mid-cycle disciplined review comments on the pending ANDA. And we are working to address the FDA's helpful comments and intend to respond to as many of the agency's request as possible before the FDA due dates. We expect to receive additional comments from the FDA on the FDA assigned goal date of January 31, 2022. As previously disclosed, we expect the product to undergo more than one review cycle. We believe and we're planning for a launch that is possible next fiscal year. I'd note the application approval is also contingent on a successful FDA inspection of the overseas facilities involved. The CRO site that conducted the bioequivalence and clinical studies has already been inspected by the FDA and the observations they shared, we believe are addressable. Given inspection backlogs due to COVID-19, we appreciate the parent -- priority FDA has assigned to these inspections. We have formally asked the FDA to schedule an inspection of the manufacturing site and look forward to their visit in the near future. Regarding our biosimilar insulin glargine product. We remain on track for submitting the investigational new drug IND application next month and commencing the pivotal trial around March 2022. While there are always execution risks, we expect to launch this product in fiscal year 2024. In terms of our expectations for next year's clinical trial, we are not aware of a U.S. trial failure of a well-characterized biosimilar. And at this point, we believe our product is well characterized and highly similar based on the results of our structural and functional assays. Those assays have been early reviewed by the FDA. We are also seeing positive trends in formulary decisions for 2022, demonstrating payers continued effort to pursue affordable insulin. Express scripts has added Viatris' biosimilar and interchangeable insulin glargine, Semglee as a preferred product for 2022 on one of their formularies. In addition, Florida, Illinois and Texas have included Walmart's ReliOn insulin as a preferred product on their 2022 state medicaid formularies. We will continue to monitor how payers adopt biosimilar and interchangeable insulins as we develop our go-to-market plans. All five of the durable products in our pipeline are differentiated from the average oral generic product that are under the aforementioned industry pressures because of the significant technical expertise required for development and the substantial and largely dedicated plant investments needed to manufacture them. So for all of these products, we expect only a handful of competitors and thus more durable value. Also, as noted on the last call, we are evaluating and in negotiations for additional market and product opportunities for insulin and drug device inhalation products. There continues to be additional multibillion dollar markets to pursue in these areas with both current and future partners. When combined with our targeted internal development efforts, we believe we have built and continue to expand an exciting pipeline of opportunities. One brief comment on legal matters. We have earlier reached a settlement agreement with Genus Lifesciences related to our Numbrino product. While the terms of the settlement are confidential, the various court challenges levied by Genus related to the product and our right to market it have all been dismissed. To sum up today's remarks, we have reported better-than-expected top line for the quarter. We have revised down our fiscal 2022 guidance to reflect the increasingly competitive environment for a base oral generics portfolio. However, our cash levels remain substantial. Our core strategies remain in place, and we have begun implementing restructuring plans to become a leaner, more focused organization. The plan is expected to be completed in approximately 18 months and generate annual cost savings of approximately $20 million. Our pending generic ADVAIR DISKUS ANDA continues to make its way through the FDA review process. We expect to submit an IND application for biosimilar insulin glargine next month and commenced the pivotal trial around March of 2022. We anticipate both these and our other durable assets can contribute significantly to our future sales. And one final comment. We appreciate the frustrations our investors may have over the pressures we are now forecasting in our near-term results. We are keenly aware of our current stock and bond valuations. However, our optimism on future expectations remains quite high. Our durable pipeline of exciting opportunities are steadily progressing, and we believe we have the capabilities, discipline and resources to get them to market over the next few years. With that in mind, our management and our Board will continue to carefully consider various options looking to enhance investor value across the near, immediate and longer term. I'll begin with our financial results on a non-GAAP adjusted basis. For the 2022 first quarter, net sales were $101.5 million compared with $126.5 million for the first quarter of last year. Gross profit was $20.6 million or 20% of net sales compared with $34.4 million or 27% of net sales for the prior year first quarter. Interest expense increased to $12.8 million from $11.2 million. Net loss was $10.6 million or $0.27 per share versus net income of $2.2 million or $0.06 per diluted share. Adjusted EBITDA was $10.0 million. Turning to our balance sheet. At September 30, 2021, cash and cash equivalents totaled approximately $105 million, up from $93 million at June 30. Cash increased during the first quarter due to a few factors: first, as a result of our refinancing earlier this year, we did not have any required debt interest or principal payments in Q1; the second relates to timing of certain inflows and outflows of cash; and the third was the receipt of a prescription drug fee refund. Looking ahead, we expect to receive additional income tax refunds, continue to benefit from initiatives to improve our working capital, and we have no mandatory principal payments on our debt until maturity. Accordingly, we expect to maintain a healthy cash position of $80 million plus through the end of fiscal 2022. As for our liquidity, we also have access to our $45 million credit facility, which to date, we have not drawn upon. Turning to our revised guidance. For fiscal 2022, we now expect net sales in the range of $370 million to $400 million, down from $400 million to $440 million. Adjusted gross margin, as a percentage of net sales, of approximately 19% to 21%, down from approximately 23% to 25%. Adjusted R&D expense in the range of $25 million to $28 million, down from $26 million to $29 million. Adjusted SG&A expense ranging from $55 million to $58 million, down from $58 million to $61 million. Adjusted interest expense of approximately $52 million, unchanged. The full year adjusted effective tax rate in the range of 22% to 23%, up from 21% to 22%. Adjusted EBITDA in the range of $22 million to $32 million, down from $40 million to $55 million. And lastly, capital expenditures to be approximately $10 million to $14 million, down from $12 million to $18 million. Regarding the phasing of the quarters, we expect net sales and adjusted EBITDA in Q2 to be lower than Q1, ramping up slightly in the second half of fiscal 2022, with Q4 net sales and adjusted EBITDA to approximate Q1. This reflects the new product launches we've previously discussed combined with the initial benefits from the cost restructuring. Gross margin to decline slightly in Q2 and Q3 from Q1. We expect Q4 gross margin to be higher than Q1 as the restructuring plan begins to take effect. And R&D expected to increase from Q1 and SG&A to decrease from Q1. With that overview, we would now like to address any questions you may have.

lannett revises down full-year guidance. q1 adjusted loss per share $0.27. compname announces restructuring plan targeting $20 million in reduced expenses, to consolidate manufacturing operations and restructure research and development function. sees 2022 net sales $370 million to $400 million. lannett company - have revised our guidance down to reflect, in part, particularly competitive environment of our current base oral generics portfolio. also announced a restructuring plan approved by board earlier this week. restructuring retains core strategies, while further optimizing operations, improving efficiencies and reducing costs. elements of plan, which is expected to be completed in about 18 months, includes consolidating manufacturing footprint. plan includes reducing headcount and discontinuing future development programs targeting liquid generic medications. lannett - current organizational workforce will be reduced by about 11%, and other existing and anticipated future vacancies will not be filled. plan is expected to result in a leaner, more focused organization and generate cost savings of approximately $20 million, annually.

I'm Evan Goldstein, senior vice president of investor relations. With me on the call today is Marc Benioff, chair and CEO; Amy Weaver, chief financial officer; Bret Taylor, chief operating officer; and Gavin Patterson, chief revenue officer. As a reminder, our commentary today will primarily be in non-GAAP terms. In particular, our expectations around the impact of COVID-19 pandemic on our business, acquisition, results of operations and financial condition, and that of our customers and partners are uncertain and subject to change. A description of these risks, uncertainties, and assumptions, and other factors that could affect our financial results is included in our SEC filings, including our most recent report on Form 10-K. With that, let me hand the call to Marc. I am actually here in Geneva, Switzerland with Gavin Patterson, our chief revenue officer. And I'm attending the World Economic Forum's IBC meeting and board of trustees meeting, and it's been a great experience being here in Geneva. Very much the world is open for business here, and it's great to be meeting with our customers face-to-face and in-person and discussing our business with them and talking about their businesses and how their businesses are doing in this new normal. And we're learning quite a bit about how different the U.S. is from Europe right now and also how much has really changed, which is quite a bit. So, I'm absolutely excited to be here, but I'm also extremely excited to share our phenomenal second-quarter results with you. You can really see we had a phenomenal second quarter. We just had a phenomenal second half. You're about to hear we're about to have a phenomenal first half as well. And we're also going to have a good chat about what we're doing with Slack, a very exciting acquisition that's now closed. And you are going to hear about No. 1 CRM just got better. And it's incredible what's going on with Slack, and looking forward to addressing all that with the -- in the script with you. So look, we are in a new world. There's no doubt about that. I'm sure that all of us realize that, and we are delivering success from anywhere as well for Salesforce. We've gone through a tremendous transformation, and we're now delivering this new world for our stakeholders. And from a business perspective, well, I'd say it's been an absolutely extraordinary 18 months for Salesforce, I know for all of you and certainly for all the CEOs I met with today. We're navigating this global pandemic. We have been guided by our core values of trust, of customer success, of innovation, of quality. But through all this and through our perseverance and through our, I think, dedication to our customers, we've been able to deliver record financial results. And with these results, we've now -- can say -- and looking over this, we've now had five outstanding quarters in a row really delivering the success of our vision. So, let's take a look now at the second quarter because the numbers are incredible. And you can see we delivered our first $6-billion-quarter, about $6.3 billion, and continue to maintain our very strong growth rate, our profitability, our cash flow, our margin growth, continue to execute our new operating margin model. And you can see right now, revenue and the growth in the quarter, you can see $6.34 billion, up 23% year over year. Pretty awesome and above where we thought we were going to be, considerably above. And I guess I'm -- as excited as I am about the revenue, I'm also very excited that as we're executing this new operating margin model, we can see the margin in the quarter was also a very healthy, 20.4%, up 20 basis points year over year, and also delivered $386 million in operating cash flow. For fiscal year '22, we are raising again our guide to $26.3 billion, which is now at the high end of our range. It's a raise of $300 million, and it's going to represent about 24% projected growth year over year and just really reflects, I think, how well the company is doing in its core, not just through the Slack acquisition, but you can see organically, especially when you look at the numbers over the last five quarters. And we're raising our operating margin to 18.5%, up 80 basis points year over year. Again, based on just the outstanding performance of the company, we're able to do some amazing things here with the operating margin. I don't think Salesforce has really ever been -- you know, had better execution, better management team, greater momentum. And as I have spoken to so many customers today, I don't think we've ever been more well-positioned for them. And I'll say that in two areas. One is in our core products, our focus on customer success, the Customer 360 now with the Slack user interface and everything being Slack first, but also our core values. So, many of our customers are attracted to us because, in many cases, they're going through an amazing values transformation and in the areas of -- that we've pioneered. And now especially in regards to sustainability, which we'll talk about because, as you know, Salesforce has been a net zero company, but now we're fully renewable as well. And as we start to head toward the Fortune 100, I think that -- a lot of the companies that I met with today were mostly Fortune 100 CEOs. They crave to have that same net zero and renewable profile, which is very exciting to see the world having this kind of sustainability focus. So, I'm absolutely thrilled to see how the core business grew in the first half of the year. And I am excited about the outlook. I'm excited about our positioning with our customers. And I'll tell you, I'm very excited that five out of the last five quarters that we've had that 20% or greater revenue growth. And three out of the last five quarters, we're having greater than 20% operating margin. I don't think we could have said either of those things five quarters ago. So, my hat is really off to the management team and to the employees for making this happen. And we're raising our guidance for the fourth time in a row as we see increased opportunities for additional revenue growth and additional operating margin capability this year. And look, we're the fastest-growing enterprise software company ever. You see where the numbers are going. You can see what the trajectory is, the velocity of the company, both in revenue and margin. And now you can also see that no other software company of our size and scale is really performing at this level. So, we are really quite confident and remain on our path to generate $50 billion in revenue by fiscal year '26, which doesn't seem very far away from right now. And when we first gave that number, it didn't seem as -- it didn't -- it seems like it was so far away. Now it seems like, wow, this is going to happen.

q2 revenue $6.34 billion versus refinitiv ibes estimate of $6.24 billion. sees fy revenue $26.2 billion to $26.3 billion. raises fy22 gaap operating margin guidance to approximately 1.8% and non-gaap operating margin guidance to approximately 18.5%.

During today's call, we will reference non-GAAP metrics. Looking at second quarter results, we are pleased with our performance. Second quarter were up 3% versus a year ago and up 7% sequentially from the first quarter. Our second quarter results demonstrate the strength of our business model with replacement part sales providing valuable stability as we grew market share in key markets and geographies. During this quarter, we also built momentum in first-fit sales in our Engine segment, and we're seeing increases of incoming orders across our Industrial segment. We are pleased to see the uptick in second quarter sales and incoming orders within our first-fit equipment businesses. While this creates mix pressures in the short term, it also sets the stage for replacement parts in our razor to sell razor blade strategy and provides continued confidence that the worst of the pandemic-related economic impacts are behind us. We played the long game during the pandemic, maintaining our disciplined focus on the future and avoiding the temptation to make potentially shortsighted decisions on our cost structure. During the second quarter, we took planned full actions with a longer view toward optimizing our organization and our cost structure, primarily in Europe. We incurred $14.8 million in restructuring expense and expect annualized savings of approximately $8 million once the restructuring activities are completed over the next 12 months. Excluding the impact from our restructuring actions, gross margin was up 30 basis points from the prior year as lower raw material costs, including benefits from our procurement initiatives more than offset the increasing pressure from an unavoidable mix of sales. With continuing momentum, we expect full year sales to be up 5% to 8% over 2020, including favorability from FX of about 3%. We're also projecting adjusted operating margin to increase 60 to 100 basis points, driven largely by gross margin strength. Finally, our company remains in a strong financial position. We had solid cash conversion during second quarter, and our balance sheet is in good shape with our net debt to EBITDA ratio sitting at 0.7 times. Our balance sheet gives us ample capacity to pursue our strategic initiative to move into the life sciences market via acquisitions and continue to invest in organic growth opportunities. We're delivering on our strategic and financial objectives so far in fiscal 2021, and we are planning for a strong finish to the year. Scott will talk more about our forecast later in the call. But first, let me provide some additional color on recent sales trends. Total second quarter sales were up 2.6% from the prior year or 0.2% in local currency. Total Engine segment sales rose over 6%, and Industrial was down 4%. Geographically, the Asia-Pacific region led our positive performance as we continued to see very good growth in China. In the Engine segment, the sales increase was driven by meaningful growth in both Off-Road and Aftermarket. The growth was partially offset by a slight decline in On-Road and a drop in Aerospace and Defense. Off-Road growth was widespread with sales in all major geographic regions up from the prior year. Importantly, our incoming order rates and backlog point to building momentum through the second half of fiscal 2021. Within Off-Road, our second quarter sales in China were up about 70%. We are seeing momentum in the market with construction equipment build rates remaining at high levels. We are also seeing strong growth of PowerCore in China, and several new PowerCore programs for Tier three upgrades have gone into production. On-Road sales were down about 1% in the quarter, which is our best year-over-year result since fiscal 2019, signaling to us that the second quarter was the cyclical trough in this business. Our view is supported by external data with order rates for Class eight trucks launching higher in the past several months and higher build rates projected in the coming quarters. With increasingly favorable market conditions, combined with our strong share in North America heavy-duty trucks, we are optimistic about our opportunities to drive growth in our On-Road business. Second quarter sales of Aftermarket were up over 7% year-over-year, and they were also up 4% sequentially from the first quarter, which is atypical and serves as another indicator that market conditions are improving. In China, second quarter sales of Engine Aftermarket were up over 30%. We are beginning to see service parts benefit from new equipment under warranty, which includes an increasing percentage that have proprietary PowerCore and PowerPleat air cleaners installed. Overall, PowerCore sales increased about 9% in second quarter with strong growth in both first-fit and replacement parts. As I mentioned earlier, in China, we are seeing significant growth, which we expect to continue as PowerCore becomes more mainstream. Aerospace and Defense, which represents about 3% of our business, faced another tough quarter due primarily to the ongoing pandemic-related weakness in commercial aerospace while sales for helicopters continue to perform well. As we expect, the time line for recovery in commercial aerospace to be protracted, we took restructuring actions within the quarter to improve our cost structure and better position the organization for the current business environment. Turning now to the Industrial segment. Second quarter sales were down about 4%, including a 3% benefit from currency. We continue to face pressure on sales of dust collection sale products within Industrial Filtration Solutions, or IFS, as utilization rates were lower and customers remain cautious in making capital investments. Once again, a bright spot in the quarter was Process Filtration. Our Process Filtration for the food and beverage market with our LifeTec brand continues to grow, particularly on the replacement side. Overall Process Filtration sales increased in the high teens with contributions from both first-fit and replacement. And we see a long runway for further expansion of this business. We are making new inroads with some of the world's biggest food and beverage companies, and we are also gaining share with existing customers. The sales process for these massive brands involves winning at the parent and then selling one plant at a time, which is why we continue to grow our sales force and invest in new tools and resources. We launched LifeTec five years ago with fewer than 10 salespeople, and we're on track to be over 100 by the end of this fiscal year. Sales of Gas Turbine Systems, or GTS, were down 3.5% in second quarter as large project deliveries, though a smaller part of our business, were less than the prior year. Our replacement parts business, on the other hand, delivered another quarter of double-digit growth. We continue to win share of aftermarket while being selective in which large turbine projects we pursue. The team has done a tremendous job of improving the profitability of GTS, and our more focused approach is clearly paying off. In Special Applications, we again saw very good growth in integrated venting solutions as we continue to drive adoption in the automotive market with our high-tech products. However, overshadowing these wins were continuing softness in disk drive filters and lower sales of membrane products. Second quarter results highlight the strength of our diversified portfolio of businesses and disciplined focus on the long game. We are well positioned to benefit from the recovery in cyclical end markets, and we continue to press forward on our strategic initiatives, including the recently announced investments to grow our life science business. I'll talk more about that later. As Tod said, we are pleased with our second quarter performance. Sales were up 2.6% from the prior year, and adjusted operating income grew 7.6%. Given the uneven macroeconomic environment, it was a strong quarter in terms of both absolute growth and leverage. Looking ahead, we plan to build on that momentum. As I said many times, we are committed to increasing levels of profitability and increasing sales. I know I'm repeating myself, but I also want all of you to know that, that statement is a guiding principle for us. One way we deliver on that commitment is through select optimization initiatives, which is how I would characterize the restructured actions we took in the second quarter. Most of these activities are happening in Europe, and all of them support our long-term objectives. For example, we are centralizing key aspects of our aerospace business, giving us a strong platform for when the market returns to growth. We are moving the production of certain compressed air products to Eastern Europe, where we have an excellent team and a competitive cost structure. And we are centralizing our European accounts payable and customer service functions to improve standardization and optimization, giving us the ability to leverage common tools as we grow. The projects we initiated in the second quarter should generate annual savings of about $8 million once fully implemented with about $1 million realized in this fiscal year. These actions drove a second quarter charge of $14.8 million and resulted in an operating margin headwind of about 220 basis points and an earnings per share impact of $0.08. With that, I'll dig into our second quarter results a bit more. As I said earlier, adjusted operating profit, which excludes restructuring charges, was up 7.6% from the prior year. That translates to an adjusted operating margin of 13.4%, which is 60 basis points up from the prior year. Second quarter adjusted gross margin grew 30 basis points to 34%, accounting for half the operating margin increase. The price we paid for raw materials in second quarter was lower than last year due in part to our strategic procurement initiatives, and the gains were partially offset by an unfavorable mix of sales. While we expect gross margin will be up in the back half of fiscal '21, the drivers are predictably changing. As expected, raw materials will move from a tailwind to a headwind, and the pressure from mix is going to increase with the anticipated sharp growth in our first-fit businesses over the next two quarters. As always, we remain focused on managing the price cost relationship. Net pricing for the company was a push last quarter, and we will take a proactive stance as raw material costs trend higher. We also remain focused on being deliberate with our operating expenses. As a rate of sales, second quarter adjusted operating expense was 30 basis points favorable versus the prior year, continued benefits from lower discretionary expenses due in part to the pandemic-related restrictions were partially offset by higher incentive compensation. Importantly, we continue to invest in our strategic priorities. Compared with last year, we invested more on research and development, and we increased our headcount-related expense to drive growth in our Advance and Accelerate portfolio of businesses. You can see the impact of these choices more prominent in our Industrial segment, where many of our high-growth businesses are reported. If you exclude restructuring charges, the second quarter Industrial profit rate was down about 50 basis points from the prior year, reflecting incremental investments in businesses like Process Filtration and Venting Solutions. On the other hand, solid growth in our Engine segment is creating leverage across the P&L. The team is doing an excellent job of focusing on share gains and market expansion, especially in China, and they are also thinking long term. We are aggressively pursuing share gains in new markets and driving higher aftermarket retention with innovative products. We have great partnerships with many of the world's largest equipment manufacturers. We will be leveraging those relationships as we all navigate inflationary pressures related to raw materials and fulfilling rapidly elevating demand. Across our company, we believe the balanced approach we have taken throughout the pandemic puts us in a strong position to capitalize on the economic rebound. Instead of making deep cuts to manage a short-term demand pressure, we focused on supporting our investors and making targeted investments into our strategic growth priorities. While we anticipate uneven market trends will continue, we are confident in our long-term positioning. Capital deployment is another area we have a disciplined and balanced approach. We invested about $12 million in the second quarter, which is down more than 70% from the prior year. With the economic environment improving and many of our new apps online, our focus is shifting toward driving productivity gains and working toward the operating margin targets we shared at our Investor Day in 2019. We returned more than $57 million to shareholders through dividends and share repurchase, bringing our year-to-date total to almost $100 million. Maintaining our dividend is a priority for us, and we have demonstrated our willingness and ability to grow it over a long period of time. We have increased our dividend each calendar year for the past 25 years, making us part of the elite group included in the S&P High Yield Dividend Aristocrat index. Our position on the dividend is the same as it was 65 years ago when we began paying it every quarter. And I am proud of this trend. Share repurchase is also an important part of our capital deployment priorities, but it's a bit more variable. At a minimum, we plan to offset dilution from stock-based compensation in any given year, and we are on track to meet or exceed that objective this year. Beyond that, our share repurchase is guided by our balance sheet metrics, strategic opportunities and overall market conditions. Overall, our narrative is consistent over time. Our year-to-date results demonstrate both the strength of our business model and the value we create by taking a long-term focused view. We plan to build on this momentum in the back half of 2021. So let me share some details on our expectations. As Tod mentioned, we see building momentum in our first-fit business throughout the past quarter. With this in mind, we expect sales this year to return to a pattern that is generally in line with our typical seasonality, where about 52% of our full year revenue occurs in the back half. Therefore, we expect full year sales will increase between 5% to 8%, which includes the benefit from currency translation of about 3%. In the Engine segment, full year sales are projected to increase between 8% and 12% with our first-fit business comprising a bigger piece of the recovery story in the back half. We expect full year Off-Road sales to increase in the low 20% range with building strength in commodity prices driving an acceleration in equipment production in agriculture and other select markets. In On-Road, we expect a full year increase in the low teens, driven by the strong rebound in global truck production rates. We expect the momentum to continue in our Aftermarket business with a full year sales increase in the high single digits. We expect to continue to benefit from improving equipment utilization trends globally and market share gains in the Asia-Pacific region, particularly in China, where PowerCore is experiencing significant growth. Our Aerospace and Defense business is anticipated to decline in the high-teens digits overall as demand in the commercial aerospace is expected to remain depressed. We do expect to see sequential improvements as we lap the pandemic-related impacts, and helicopter and ground defense programs continue to grow over time. In the Industrial segment, full year sales are projected to be between a 2% decline and a 2% increase as recovery in the capital investment environment is still emerging. We continue to press forward with market share gains during this period, and our investments in building the Advance and Accelerate portfolio are expected to continue to result in sales growth above the company average. We expect IFS sales to be roughly flat for the full year, reflecting a return to growth in the back half of the year. While uncertainty remains, we are seeing signs of increased quoting activity and expect we are well positioned to capitalize on any recovery in addition to our gains in share and continued progress with our innovative products in important markets like food and beverage. Our GTS revenue is expected to increase by the mid-single digits, driven by continued growth in replacement parts. In special applications, we are anticipating a decline in low single digits based on our year-to-date results and expected softness in the market for disk drive products. At a company level, we are expecting an adjusted operating margin to increase to within a range of 13.8% and 14.2% compared to 13.2% in 2020. This implies a sequential step up in our operating margin to 14.4% for the back half of the year and aligns with our commitment to increasing profitability on increasing sales. Gross margin expansion continues to be an important lever for us. We expect to benefit from our ongoing initiatives to drive cost efficiency in our operations and are positioned to gain leverage on a higher sales volume. Over time, mix should also be a consistent factor in driving our gross margin up. As we think about the near term, however, mix is likely to be a headwind as improving market conditions and our strong position with our large OEM customers will likely result in stronger first-fit sales growth in replacement parts. We are also beginning to see increases in our input costs, including steel and freight rates, so we are expecting a cost headwind for the remainder of fiscal 2021. We continue to invest in our customer relationships and in maintaining our position as a top-tier supplier. We will continue to work to align our pricing with the increases in our input and supply chain costs. Additionally, we expect to maintain a disciplined approach to our operating expenses and deliver further leverage in the back half of the year despite an expected full year headwind of approximately $20 million from increased incentive compensation, about 2/3 of which is in the back half of the fiscal year. For our other operating metrics, we expect interest expense of about $13 million, other income of $2 million to $4 million, and a tax rate between 24% and 25%. Capital expenditures are planned meaningfully below last year, reflecting the completion of our multiyear investment cycle. Taking the midpoint of our sales and capex guidance for 2021 would put it at just over 2% of sales. We expect to repurchase 1% to 2% of our outstanding shares. Finally, our cash conversion was very good in the first half, and we continue to expect to exceed 100%, reflecting strong first half conversion and anticipated increases in working capital later in the fiscal year. We have had a solid first half of our fiscal year and are expecting even better results in the second half. I am very proud of what our employees have been able to achieve in this unprecedented time, and I'm optimistic about Donaldson's future. As we saw during the first year of our fiscal year, improving economic conditions are complementing the benefits from consistently strong execution of our strategic priorities. Of course, achieving the significant sales and profit growth projected in the second half is not without risks. Costs are going up. Demand for raw material is quickly increasing. The global supply chain is getting stretched, and above everything else, the pandemic is still hanging over all of us. While the pandemic is certainly a new occurrence, the other pressures are not. We have successfully navigated them time and again due in large part to our talented employees and strong customer relationships. As always, we will manage our costs, execute strategic price increases and pursue profitable sales. It's a straightforward plan, and it has served us well for 106 years, giving me confidence we are in an excellent position to deliver a strong finish to fiscal 2021. I will also say that I'm more excited than ever about our long-term prospects. As a reminder, our strategic priorities include expanding our technologies and solutions, extending our market access and executing thoughtful acquisitions. The recent announcement of our newly formed life sciences business development team represents a significant move that supports all those priorities. As previously announced, we hired a new Vice President to build and lead the life sciences team and drive our growth strategy. This team comes to Donaldson with tremendous industry experience, including strong M&A backgrounds. With the leadership in place, we are now poised to drive our expansion plans into the fast-growing, highly technical and highly profitable life sciences markets. While there are no specific details to share today, we are highly confident that technology-led filtration has a critical role in these spaces. With our strong balance sheet and disciplined approach to capital deployment, we are well positioned to pursue acquisition opportunities that make strategic and financial sense. And we are also enhancing our internal capabilities to drive organic growth. Our new materials research center, which was completed last year, will further strengthen our material science capabilities. The technical skills we gain can be used right away by fueling growth in our current markets, like food and beverage, and they can be used to support longer-term growth in broader life sciences markets. We are committed to these new markets, and establishing the life sciences business development team is one step on a long journey, but it was an important step. I'm excited about our opportunities and look forward to sharing our success with all of you over time. One year ago, we were all wondering about how COVID-19 was going to ripple through the economy, and there were more questions than answers. We all still have questions, but one thing that I am more certain about is the quality of our employees. They are truly remarkable. I've seen that personally, and we can all see it in our company's results.

expects fiscal 2021 sales to increase between 5% and 8%. q2 gaap earnings per share of $0.44 includes $0.08 of restructuring expense.

This is Ramesh Shettigar, vice president of ESG investor relations and corporate treasurer. On the call today to present our fourth quarter results are Dante Parrini, Glatfelter's chairman and chief executive officer; and Sam Hillard, senior vice president and chief financial officer. These statements speak only as of today, and we undertake no obligation to update them. Today's earnings call marks the conclusion of a very pivotal year in Glatfelter's transformation as we successfully delivered on our commitment to scale up the company through two sizable acquisitions of leading engineered materials businesses. At the same time, 2021 was also a very challenging year as we continue to navigate a pandemic that included severe macroeconomic headwinds. In the first half of the year, our Airlaid segment was negatively impacted by customers destocking while the second half ended with unprecedented energy inflation in Europe and significant raw material price increases that adversely impacted all three segments. As we closed out the fourth quarter, continued escalation in energy prices in Europe, raw material inflation, supply chain disruptions, and pockets of pandemic-driven labor constraints negatively affected our financial results. The intensity with which these inflation factors unfolded was not fully anticipated, nor reflected in our previous guidance. And the timing of these events has handicapped the Jacob Holm acquisition from having the quick and positive start we had expected. Despite the significant impact of these external factors, we remain confident in the strategic rationale of our two acquisitions. Mount Holly is in line with our near-term expectations and has the capability to over-achieve our original goals. And our new Spunlace segment provides scale and further expands our product and technology portfolio, which positions us favorably for the longer term. Ultimately, our leading positions in the broader non-woven sector will facilitate our ability to deliver meaningful value to our shareholders and customers. While it is too soon to project when these extraordinary external pressures will dissipate, we are taking swift and aggressive steps to manage through this period of volatility. I will speak more about this later. If you go to Slide 3 in the investor deck, provides the key highlights for the fourth quarter. We reported adjusted earnings per share of $0.04 and adjusted EBITDA of $26 million. Airlaid materials performance was generally in line with expectations as contractual costs passed through arrangements protected margins from raw material inflation, although energy cost escalation in Europe was a drag on earnings. This segment had a very good year-over-year profit growth, driven by the addition of Mount Holly and a strong recovery in the tabletop category. Composite fibers results were much lower than expectations, driven by the unprecedented rise in energy costs in Europe and higher raw material inflation. Energy prices further spiked to record levels in the fourth quarter, negatively impacting earnings by approximately $4 million versus our prior guidance, which had already reflected about $1.5 million of energy inflation. To combat this spike in costs, we introduced an energy surcharge in November for customers in all three segments to specifically target the recovery of mounting energy costs. Volumes were also lower as some price-sensitive customers, predominantly in the low [Inaudible] category, altered their buying patterns in response to the additional pricing actions we implemented. In our Spunlace segment, results were lower than expectations, driven by higher raw material and energy costs, and a production delay at one of our manufacturing sites caused by a key raw material shortage that impacted shipments. This is our first reporting quarter for the Spunlace segment since the October 29th acquisition date. The integration work is well underway as we continue to focus on aligning processes, technologies, and commercial strategies while addressing the external factors impacting near-term results. I will elaborate more on Spunlace integration in my closing remarks. Fourth quarter adjusted earnings from continuing operations was $1.6 million, or $0.04 per share, a decrease of $0.18 versus the same period last year. This was primarily driven by an unprecedented increase in European energy prices and from higher interest expense related to the bond issuance completed in October to finance the Spunlace and Mount Holly acquisitions. Slide 4 shows a bridge of adjusted earnings per share of $0.22 from the fourth quarter of last year to this year's fourth quarter of $0.04. Composite fibers results lowered earnings by $0.15, driven primarily by significant inflationary pressures experienced in energy, raw materials, and logistics. Airlaid materials results increased earnings by $0.04, primarily due to strong volume recovery in the tabletop products category, as well as from the addition of Mount Holly results compared to the prior year. Spunlace results lowered earnings by $0.02, driven by inflationary headwinds experienced in energy and raw materials and unfavorable operations. Corporate costs were in line with the same quarter last year. Interest expense lowered earnings by $0.07, driven by the issuance of the new bond to finance the two acquisitions. Taxes and other items were $0.02 favorable due to a lower tax rate this quarter from a valuation allowance release of approximately $3 million. Slide 5 shows a summary of fourth quarter results for the composite fiber segment. Total revenues for the quarter were 1.3% higher on a constant currency basis, mainly driven by higher selling prices of approximately $9 million. This was a result of multiple pricing actions taken in 2021 and an energy surcharge in late November. However, this was not enough to mitigate the extreme prices for energy in Europe during the fourth quarter, and the relentless inflationary pressures in raw materials and logistics. Shipments were down 11%, or nearly 3,900 metric tons with wall cover accounting for more than 75% of the decline. Shipments for wall cover in Q4 2020 were very strong as the supply chain recovered from the shutdowns during the pandemic, creating a difficult comparison this quarter. In addition, our pricing actions in wall cover to recoup the sharp rise in key raw materials such as wood pulp and the cost of energy did alter the buying patterns of some price-sensitive customers. Prices of energy, wood pulp, and freight continued to escalate in the fourth quarter and negatively impacted results by $16.6 million versus the same quarter last year. Sequentially from Q3 of 2021, this impact was $5.4 million, primarily driven by rising energy prices in Europe, which escalated even further during the quarter despite the savings provided by our existing energy hedging program. This was the single largest factor in missing our guidance for composite fibers in the fourth quarter. We expect input costs, particularly energy prices, to remain relatively high in the near term. In addition to our ongoing focus on managing costs and operational efficiencies, we are also assessing a variety of mitigating contractual actions with our customers, which Dante will cover in more detail. Operations were slightly unfavorable by $200,000, and currency and related hedging activity unfavorably impacted results by $900,000. Looking ahead to the first quarter of 2022, higher selling prices are expected to be fully offset by raw materials and energy prices. We expect lower volume and market-related downtime to have a cost penalty of approximately $2 million. Slide 6 shows a summary of fourth quarter results for Airlaid materials. Revenues were up 48% versus the same prior year period on a constant currency basis, supported by the addition of Mount Holly and strong recovery in the tabletop category. Shipments of tabletop almost doubled while wipes were 74% higher when compared to the fourth quarter of last year. Additionally, demand for home care and hygiene products were lower by 2% and 3%, respectively, reflecting changes in buying patterns at year end. Selling prices increased meaningfully from contractual cost pass-throughs, as well as from price increases, including the 10% price increase action implemented in the third quarter for customers without cost pass-through arrangements. We also implemented an energy surcharge on all customers served from Europe to offset rising energy costs. While these actions together helped the segment to offset the higher raw material prices, they fell short of recovering the higher-than-anticipated energy price increases, unfavorably impacting results by a net $1.2 million. Operations were lower by $1.7 million compared to the prior year, mainly due to higher spending and inflationary pressures. And foreign exchange was unfavorable by $1.2 million, mainly driven by the lower euro rate. For the first quarter of 2022, we expect shipments to be 3% higher on a sequential basis with favorable mix, thereby improving operating profit by $1 million. Selling prices are expected to be higher but fully offset by higher raw material prices. And we expect energy prices to be fully offset by the energy surcharge, assuming energy does not continue to spike further. Slide 7 shows a summary of fourth quarter results for the Spunlace segment from October 29th acquisition date until the end of the year. Revenue for the segment was approximately $58 million in the quarter. Shipments for the quarter were approximately 12,500 metric tons, which were slightly below our expectation of 13,000 metric tons. Lower shipments were mainly driven by softer demand in the wipes category due to year-end inventory management by a large customer and from a production delay at one of our manufacturing sites due to raw material and labor availability. The lower shipments, coupled with unfavorable mix, negatively impacted results by $700,000. The segment also experienced higher-than-anticipated raw material inflation, particularly on synthetic fibers, as well as higher energy costs at its European sites, lowering profits by approximately $1.5 million. Operations were unfavorable from lower production, higher-than-anticipated waste rates, and COVID-related labor challenges. The preliminary purchase price allocation resulted in depreciation and amortization of approximately $1.7 million after including the acquisition step-up to fixed and intangible assets. For the first quarter of 2022, we expect shipments per month to improve in Q1, slightly outpacing the two-month run rate of ownership in 2021. We expect higher raw material and energy costs on a sequential basis to outpace price increases and energy surcharges, and we expect improved operations. However, due to inflationary pressures, we expect a loss for the first full quarter at a similar run rate as the first two months of ownership, equaling approximately $2 million for the first full quarter. Clearly, this projected loss outlook is being addressed, and Dante will cover several key actions we are taking going forward. Slide 8 shows corporate costs and other financial items. For the fourth quarter, corporate costs were mostly in line with the same period last year. Our corporate costs for full year 2021 of $22.4 million were approximately $4.9 million lower than prior year and mostly in line with our guidance from last quarter. Costs related to strategic initiatives for the full year were $31 million, mainly pertaining to our two acquisitions and the associated financing. Interest and other income and expense for the full year was $15 million and in line with our previous guidance. For 2022, we expect corporate costs to be approximately $27 million higher than 2021, where we had lower overall spending due to COVID, but in line with 2020 costs. Our tax rate for the full year was 32% lower than our previous guidance of 38% to 40%. This was largely driven by the release of a valuation allowance of $3 million, reflecting a change in the recovery of deferred tax assets, primarily due to changes resulting from completing the recent Jacob Holm acquisition. Given the unusual level of volatility in our tax rate components, which is highly dependent upon how much income we generate from within each of our respective jurisdictions, we are limiting our tax guidance to Q1 only rather than providing a full year tax rate projection at this time. We expect our Q1 2022 tax rate to be between 48% and 50% on adjusted earnings and full year interest and other financing costs to be approximately $35 million, reflecting the recent bond issuance. Slide 9 shows our cash flow summary. 2021 adjusted free cash flow was lower by approximately $10 million, driven mainly by lower cash earnings and capital expenditures. We expect capital expenditures for 2022, including Spunlace and Mount Holly, to be between $45 million and $50 million, $7 million to $8 million of which pertains to Spunlace Systems integration costs, which we previously announced as costs associated with generating our targeted synergies. Depreciation and amortization expense is projected to be approximately $74 million, reflecting a full year of ownership for Mount Holly and Jacob Holm. Slide 10 shows some balance sheet and liquidity metrics. Our leverage ratio increased to 4.6 times as of December 31, 2021, versus year-end 2020 of 1.7 times, mainly driven by the Mount Holly acquisition for $175 million and the Jacob Holm acquisition for $302 million. We successfully executed our previously mentioned $500 million bond offering in October 2021, and we still have ample available liquidity of approximately $260 million. Our near-term focus will be to successfully integrate Jacob Holm, realize the $20 million of expected annual synergies and actively de-lever the balance sheet. Looking ahead, 2022 will be a very important year for Glatfelter as we continue our integration efforts and navigate the challenging macroeconomic environment to optimize profitability and cash flow. We're directing our focus on a short list of imperatives. Our top priority is to restore Spunlace profitability and drive the overall financial performance of this segment to levels more consistent with our legacy business. Given its criticality, I have asked our chief commercial officer and 12-year Glatfelter executive, Chris Astley, to take full responsibility for the Spunlace P&L and all integration activities, including synergy delivery. Chris' former experience as business unit president of the Airlaid materials segment, where his leadership significantly drove growth, accelerated innovation, and boosted profitability will be invaluable as we integrate this new business into Glatfelter. Chris and his team will focus on driving with greater speed and urgency to achieve more consistent top-line growth and asset utilization, cost reduction, and margin expansion. Secondly, we're taking actions to reduce the volatility in the composite fiber segment by implementing raw material and energy costs passed through mechanisms like we have within our Airlaid business. This construct is necessary for us to continue to supply high quality engineered materials to our customers while maintaining stable margins. Our objective is to move as many customers as possible to a dynamic pricing model with the goal of migrating approximately 50% of the revenue base to this new structure in '22. While it is likely energy prices will remain elevated in the first half of the year, we will continue to closely monitor price trends and work with our customers to implement additional pricing actions as warranted. At the same time, we'll step up our cost reduction activities, focus on energy efficiency, and reduction, and continue to monitor the effectiveness of our energy hedging program during this period of dramatic price volatility. Additionally, we're fully committed to achieving the synergies we announced for the two acquisitions and we'll continue to progress this work throughout the year. The foundation is set for us to accelerate the profitability of the respective segments and mitigate the challenges of inflation. In summary, I want to reiterate that we strongly believe in the strategic benefits of expanding and enhancing the Glatfelter portfolio with our recent acquisitions. As a leading global non-wovens company, we have the most attractive set of manufacturing assets, technologies, and talent to support our customers needs, to bring new, innovative and sustainable engineered materials to market and to deliver meaningful value to shareholders. While 2021 was a challenging year, it was also a constructive year as we advanced our growth and transformation objectives. As we look ahead at '22, we're redoubling our efforts to address the impacts of inflation, integrate our new acquisitions, and optimize profitability and cash flows. This concludes my closing remarks.

q4 adjusted earnings per share $0.04 from continuing operations.

We invite you to read the safe harbor statements on Slide 2. Actual results may differ. Before we get into our results for the quarter, I wanted to provide a brief update on the macro environment. During the fourth quarter, despite the widespread surge in omicron variant cases, gasoline demand held up well. And on diesel, we're seeing highway trucking volumes continuing to meet or exceed seasonal records. While jet demand reached post-pandemic highs in the fourth quarter, it's still roughly 15% below 2019 levels as business travel remains suppressed, but we expect to see recovery in that this year as well. When we spoke with you in November, we were cautious about rising COVID cases this winter and the potential impact. Based on the trends over the last few months, we've become less concerned about the pace of recovery in transportation fuels demand. demand continues to recover. We believe that refining margins will be well-positioned for 2022. On the aspects of the business that are within our control, this quarter, we made continued progress on our priorities. Since our last earnings call at the beginning of November, we've repurchased approximately $3 billion of shares. That puts us at approximately 55% complete on our initial $10 billion share repurchase program. Further reinforcing our commitment to return capital to shareholders, we obtained board approval for an additional $5 billion in share repurchase authorization. This brings our total outstanding authorization to approximately $9.5 billion. Today, we announced our 2022 capital spending outlook. We expect MPC will have approximately $1.7 billion in capital expenditures, with approximately 50% of the $1.3 billion growth capital for our Martinez refinery conversion. Total costs for the Martinez refinery conversion is estimated at $1.2 billion. Approximately $300 million has been spent to date, $700 million for 2022 and $200 million for 2023. This competitive capital cost is driven by the fact that Martinez' assets are conducive to retrofit, and we can leverage existing infrastructure and logistics. At Martinez, the project reached another milestone as a 60-day comment period for the Environmental Impact Report concluded on December 17, 2021. We remain committed to progressing the conversion to a renewable fuels facility, engineering is complete and we're ready to begin construction. Our plan is to have the first phase start-up in the second half of '22. We've already sourced some advantaged feedstocks for the Martinez facility and are engaged in negotiations with multiple parties for the balance. Our strategy is multifaceted, including long-term arrangements, joint ventures, and alliances, all of which are common in this space. A recent example of our success would be our joint venture with ADM. We're also leveraging existing capabilities that are currently supporting Dickinson to optimize between the two facilities. We remain confident in our progress and ability to secure feedstocks for Martinez. On Kenai, we have been working at sales process since we last communicated. We'll be back to you when we have additional details that we can share. In 2021, we progressed all three of our strategic initiatives, and Slide 4 highlights this execution. On the portfolio, we completed the Speedway sale, receiving $17.2 billion of proceeds from that transaction and securing the 15-year fuel supply agreement with 7-Eleven. Our Dickinson renewable diesel facility started up, reached capacity, and we've been successfully optimizing the operation. We made two strategic decisions to idle our Gallup refinery and to convert Martinez to a renewable fuels facility. And this year, MPLX produced exceptionally strong cash flow, which provided $2.2 billion of contributions to MPC. As we look at cost reduction, what began as a $1.5 billion cost-reduction initiative is being embraced by the organization and now a low-cost culture is becoming embedded in how we conduct our business. While I've been reluctant to share too much, I wanted to highlight a few items that have commercial significance in our portfolio. In March of 2021, we started up the Beatrice pretreatment facility, which processes about 3,000 barrels a day of advantaged feedstock for the Dickinson renewable diesel plan. In December, we closed on a joint venture with ADM, which will provide approximately 5,000 barrels a day of logistically advantaged feedstock for Dickinson when the new soybean crush plant comes online in 2023. And in January of this year, we successfully started up our Cincinnati pretreatment facility, which will process about 2,000 barrels per day for our Dickinson renewable diesel plant. We converted this facility from its original configuration as a biodiesel plant. Our team's execution on these three strategic priorities builds a foundation for continued value creation and we look forward to sharing updates each quarter as we continue to advance these initiatives. Shifting to Slide 5. We remain focused on challenging ourselves to leading in sustainable energy. We have three companywide targets on GHG, methane and freshwater intensity than many of our investors and stakeholders know well. In the coming weeks, we look forward to providing an update on our progress against these targets and some of our accomplishments in 2021. Slide 6 provides a summary of our fourth quarter financial results. Adjusted earnings exclude $132 million of pre-tax charges related to make-whole premiums for the $2.1 billion in senior notes we redeemed in December. Additionally, the adjustments include an incremental $112 million of tax expense, which adjusts all results to a 24% tax rate. Beginning with our first quarter 2022 results, we will be reporting our effective tax rate on an actual basis and will no longer adjust our actual results to a 24% tax rate. Adjusted EBITDA was $2.8 billion for the quarter, which is approximately $400 million higher from the prior quarter. Cash from operations, excluding working capital, was $2 billion, which is an increase of almost $300 million from the prior quarter. Finally, during the quarter, we returned $354 million to shareholders through dividend payments and approximately $2.7 billion in share repurchases. In the three months since our last earnings call, we have repurchased approximately $3 billion of shares. Slide 7 illustrates the progress we have made toward lowering our cost structure over the past two years. As we think about our strategy on cost structure, I want to emphasize a few things. We will never compromise the safety of employees or the integrity of our assets. And we are committed to ensure the current cost reductions are sustainable, even during periods of general cost pressures. Since the beginning of 2020, we have been able to maintain roughly $1.5 billion of cost reductions that have been taken out of the company's total cost. Refining has been lowered by approximately $1 billion. Our refining operating costs in 2020 began at $6 per barrel. While we were able to finish 2021 with a full year operating cost per barrel that was $5. Additionally, midstream was reduced by $400 million and corporate cost by about $100 million. However, regardless of the margin environment, our EBITDA is directly improved by this $1.5 billion. This improvement is expected to make the company more resilient in future downcycles, while having more bottom-line profitability and upcycles. Turning to Slide 8. We would like to highlight our financial priorities for 2022. First, sustaining capital as we remain steadfast in our commitment to safely operate our assets, protect the health and safety of our employees and support the communities in which we operate. Second, we're committed to the dividend. As we continue to purchase shares, we will reduce the share count and increase the potential of returnable cash flow. Third, we continue to believe this is both a return on and return of capital business and we will continue to invest capital where we believe there are attractive returns. In traditional refining, we're focused on investments that are resilient and reduce cost. In renewables, current spend is primarily focused on our Martinez renewable fuel conversion. We believe that share repurchases can be used to meaningfully return capital to shareholders. In order to successfully execute the strategies guided by these priorities, MPC needs a strong balance sheet as a foundation. We continue to manage our balance sheet to an investment-grade credit profile. Moving to another key focus area. Slide 9 highlights our focus on strict capital discipline. Today, we announced our 2022 capital outlook for MPC. MPC's 2022 capital investment plan totals approximately $1.7 billion. As we continue to focus on strict capital discipline, our overall spend remains approximately 30% below 2019 spending levels. Sustaining capital is approximately 20% of capital spend, underpinning our commitment to safety and environmental performance. Of the remaining 80% for growth, approximately 50% of this $1.3 billion supports the conversion of Martinez into a renewable fuels facility. The remainder of the growth capital is for other projects already underway. At our refineries, the growth capital is primarily for projects that enhance returns at MPC's large coastal assets with a focus on completing Galveston Bay STAR project, as well as smaller projects at Garyville and Los Angeles. Going forward, we expect growth capital will continue to have a significant portion for renewables and projects that will help us reduce future operating cost. Slide 10 shows the reconciliation from net income to adjusted EBITDA, as well as the sequential change in adjusted EBITDA from the third quarter 2021 to fourth quarter 2021. Adjusted EBITDA was higher quarter over quarter, driven primarily by a $354 million increase from Refining & Marketing. The adjustment column reflects $132 million of pre-tax charges for make-whole premiums for debt redemption during the quarter, which has also been excluded from the interest column. Moving to our segment results. Slide 11 provides an overview of our Refining & Marketing segment. The business reported continued improvement from last quarter with adjusted EBITDA of $1.5 billion. Fourth quarter EBITDA increased $354 million when compared to the third quarter of 2021. The increase was driven primarily by higher refining margins in the U.S. Gulf Coast and West Coast regions. Gulf Coast production increased by 14%, recovering from storm-related downtime last quarter, and solid margin per barrel increased 31% due to higher export sales and higher sales of light product inventory. The West Coast margin per barrel increased 40% associated with increased demand and refinery outages. Utilization was 94% for the quarter, slightly improved from the third quarter. The higher Gulf Coast throughput was offset by lower throughput in the Mid-Con for planned turnaround activity. Operating expenses were higher in the fourth quarter, primarily due to higher natural gas prices. There was also higher routine maintenance and planned project expense. Additionally, we saw natural gas prices softened during the quarter, coming off highs in the $5 to $6 range and ending in the $3 to $4 range. Slide 12 shows the change in our midstream EBITDA versus the third quarter of 2021. Our midstream segment continues to demonstrate earnings resiliency and stability with consistent results from the previous quarter. Slide 13 presents the elements of change in our consolidated cash position for the fourth quarter. Operating cash flow was approximately $2 billion in the quarter. This excludes changes in working capital and also excludes the cash we received for our CARES tax refund in the quarter, which was approximately $1.6 billion source of cash and is included in the income tax part of the chart. Working capital was an approximate $1.3 billion source of cash this quarter, driven primarily by reduction in crude and product inventory. As we announced on last quarter's call, MPC redeemed $2.1 billion in senior notes in December. Under income taxes, we received approximately $1.6 billion of our CARES tax refund in the fourth quarter. We also used about $300 million to offset against our Speedway tax obligation. There is about $60 million of the refund remaining, which we expect in the first half of 2022. We paid approximately $1.2 billion for our Speedway income tax obligation. All that remains is about $50 million of state and local taxes. With respect to capital return during the quarter, MPC returned $354 million to shareholders through our dividend and repurchased approximately $2.7 billion worth of shares. At the end of the quarter, MPC had approximately $10.8 billion in cash and short-term investments. Slide 14 provides our capital investment plan for 2022 which reflects our continuing focus on strict capital discipline. MPC's investment plan, excluding MPLX, totals approximately $1.7 billion. The plan includes $1.6 billion for Refining & Marketing segment, of which approximately $300 million or roughly 20% is related to maintenance and regulatory compliance spending. Our growth capital plan is approximately $1.3 billion, split between renewables and ongoing projects. Within renewable spending, the majority is allocated for the Martinez conversion. Ongoing projects in our Refining & Marketing segment will enhance the capability of our refining assets, particularly in the Gulf Coast, and also support our focus on growing the value recognized from our Marathon and ARCO marketing brands. Also included is approximately $100 million of corporate spending to support activities we believe will enhance our ability to lower future costs and capture commercial value. Their plan includes approximately $700 million of growth capital, $140 million of maintenance capital, and $60 million for the repayment of their share of the Bakken Pipeline joint venture's debt due in 2022. On Slide 15, we review our progress on our return of capital. Since our last earnings call at the beginning of November, we have repurchased approximately $3 billion of company shares. This puts us at approximately 55% complete on our initial $10 billion repurchase program commitment, leaving approximately $4.5 billion remaining. We remain committed to complete the $10 billion program by the end of 2022. And as we are ahead of pace given our recent repurchases, could foresee completion sooner than initially planned. As part of our long-term commitment to return capital, we announced an incremental $5 billion share repurchase authorization today, increasing our recent repurchase authorizations to $15 billion. We plan to continue using open market repurchase programs, although all of the programs we have previously discussed remain available to us to complete our commitment. We intend to use programs that allow us to buy on an ongoing basis, and we will provide updates on the progress during our earnings call. As we have said many times, we believe a strong balance sheet is essential to being successful in a competitive commodity business. It's the foundation allowing us to execute our strategy. Slide 16 highlights some of the key points about our balance sheet. MPC ended the year with approximately $10.8 billion of cash and short-term investments. But longer term, we believe that we will need to maintain about $1 billion of cash on the balance sheet. Additionally, we will always ensure that we have enough liquidity to endure market fluctuations. Currently, we have a $5 billion bank revolver that is undrawn. We continue to manage our balance sheet to an investment-grade profile. At year end\, MPC's gross debt-to-capital ratio is 21% and our long-term gross debt-to-capital target is approximately 30%. As we continue to execute our share repurchase program, we will see that ratio increase. After the recent redemption in December, our current structural debt is approximately $6.5 billion, and we do not have any maturities until 2024. Slide 17, we provide our first quarterly outlook. We expect total throughput volumes of roughly 2.9 million barrels per day. Planned turnaround costs are projected to be approximately $155 million in the first quarter. The majority of the activity will be in the Gulf Coast region. Our 2022 planned turnaround activity is back half-weighted this year. Total operating costs are projected to be $5.10 per barrel for the quarter. Distribution costs are expected to be approximately $1.3 billion for the quarter. Corporate costs are expected to be $170 million. If time permits, we will reprompt for additional questions. And with that, operator, we'll open it to questions.

r&m segment income from operations was $881 million in q4 2021 versus a loss of $1.6 billion. on feb 2, company announced that its board approved incremental $5 billion share repurchase authorization. capital spending outlook for 2022 is $1.7 billion.

During today's call we will reference non-GAAP metrics. I'm very pleased with our third quarter results, which exceeded our expectation and was the highest sales quarter in our company's history. Third quarter highlights includes, sales increased 22% year-over-year and 13% sequentially from second quarter, the largest second to third quarter increase in over 10 years. Gross margin improved 50 basis points year-over-year and earnings per share grew 32%. This could not have been accomplished without our dedicated Donaldson employees who come to work every day whether at home or in the office to ensure we are meeting our goals in serving our customers. Now let me provide some insights on our third quarter sales. Total company sales increased 22% in the third quarter from prior-year. In local currency sales rose 17%. We are pleased with this level of growth and believe our momentum will continue. Engine sales recorded strong year-over-year growth of 26%, 22% in local currency. Our 51% Off-Road business growth was widespread with all regions experiencing an increase in sales. In particular, local currency sales in Europe and Asia-Pacific were up 78% and 42% respectively. China sales increased almost 50%. Several factors give us confidence in the outlook for Off-Road. Global demand for construction and agriculture equipment remains high and mining is also seeing increased demand. PowerCore continues to gain traction in China and we are on track to deliver 2 times as many PowerCore air cleaners in 2021 compared to 2020. And our backlogs continue to build as we exit third quarter. On-Road sales experienced a sharp rebound from the 1% year-over-year decline in second quarter, increasing 58% from 2020. Order and build rates for Class 8 trucks in the US have risen significantly over the past few months and are projected by external data sources to remain at a high level over the next several quarters. In China, our On-Road sales more than doubled driven by increased heavy-duty truck production and market share gains. With a favorable economic backdrop, our strong market position in North America and the significant opportunity to grow in China, we are optimistic on the outlook for our On-Road business. Aftermarket sales increased 23% in third quarter including a 4% currency benefit. Utilization rates for construction and agriculture equipment and heavy-duty trucks remain at a high level, which is driving increased demand for replacement products. In local currency sales Latin America increased by over 40% and Europe and Asia-Pacific were up 17% and 18% respectively. Aerospace and Defense continues to be pressured, primarily due to a weak commercial aerospace market as a result of the COVID-19 pandemic. A bright spot in Aerospace and Defense is rotary aircraft where sales increased due to previous program wins now coming online. Looking at the Industrial segment. Sales in third quarter increased 12% or 7% excluding the favorable impact of currency translation and growth was widespread across geographies. Industrial Filtration Solutions or IFS saw a significant sequential uptick in quoting activity for dust collection systems in third quarter. IFS benefited from increased sales of dust collection products on both a first-fit and replacement parts basis. This is a nice turnaround from the declines experienced in second quarter, which we believe was the trough. We have seen this business move from the -- if it breaks, you fix it cycle through the if it breaks new replace it cycle and now move to the investment and expansion cycle where we see increased purchases for new projects. We also saw increased sales in first-fit and replacement products across the rest of the IFS businesses, including greater than 50% growth at BofA and mid 20s percentage growth in Process Filtration sales. These growth rates indicate to us that not only are we winning share in targeted growth areas, we are also retaining the replacement business, which should only increase as our installed base becomes larger. Sales of Gas Turbine Systems or GTS declined about 13% year-over-year due to a decline in demand for gas turbines used in the oil and gas market, a slowing of retrofit activity and the timing of projects. Sales in Special Applications saw double-digit growth in integrated venting solutions and membranes which was partially offset by a high single-digit decline in our disk drive business. These broad based positive company results give us increased confidence in our ability to have a strong finish to our fiscal 2021. Finally, we believe supporting the communities in which our people live and work and where we do business is the right thing to do. Therefore, in third quarter Donaldson contributed $1 million to support our local community and help rebuild areas in Minneapolis and St. Paul that were damaged from the unrest over the last year. Like Tod, I'm also very pleased with our results in the third quarter, which were stronger than our expectations and as previously mentioned, the highest quarterly sales in the company's history. Total sales increased 22% year-over-year and operating margin increased 90 basis points to 14.3%. As you have heard me say many times, we are committed to generating higher levels of profitability on higher sales and our third quarter results demonstrate our commitment to this, even in the face of pressures from higher raw material costs and supply chain disruptions. As we entered the third quarter, we were building momentum and that continued through the end of the quarter, given our incoming order rates and backlog levels, we expect this momentum should maintain through the end of fiscal '21. Now let me get into our third quarter results in a bit more detail. Our Engine segment profitability increased 250 basis points year-over-year as we leverage the significant uptick in sales. The Industrial segment in contrast, recorded a 50 basis decline in profitability. This decline is a result of the business unit mix with an industrial and weaker gross margins in GTS and disk drive products. Third quarter company gross margin improved by 50 basis points to 33.7% which accounted for a bit over half of the 90 basis point increase in operating margin. Raw material and freight cost inflation were headwinds and the reversal from the tail and we experienced in the first half of the fiscal year. Sales mix is also unfavorable to gross margin primarily as a result of strong and new sales. However, we were able to offset the margin pressures for sales leverage and pricing. We continue to expect second half gross margin will be up year-over-year, however, the headwinds from higher raw material and freight costs are increasing from what we experienced in the third quarter. Given the sharp increases in our raw material and freight costs, we are focused on pricing actions to mitigate the impact on our margin. We remain committed to managing our price cost relationship, particularly in an environment of strong demand for our products. We are also committed to controlling operating expenses. In the third quarter operating expenses as a percentage of sales declined 40 basis points year-over-year. This was driven by leverage on increased sales, partially offset by increased incentive compensation expense. Investing on our strategic priorities remains a focus for us. Our Advance and Accelerate portfolio received the largest amount of our investment and over time as expected to generate sales growth and higher margins and company average. We are also excited about the growth opportunities with our first-fit engine businesses. These businesses tend to be more cyclical and command leadership positions in their markets. In the case of On-road, Off-Road and Defense, there are multi-year programs that provide a solid base of business to help grow our aftermarket sales. We see opportunities for additional program wins and further penetrate into markets where we have a smaller share. One example is China but the market is large. There is an increasing willingness of OEs to adopt the filtration technology we provide and we are winning new programs. We have taken a disciplined approach to managing our business and opportunities by focusing on selective cost optimization projects and leveraging our global presence while continuing to invest in growth areas. As the world recovers from the pandemic, we are in a great position to participate in the post-pandemic upswing some of which is represented in our third quarter results. We made capital investments of approximately $10 million in the third quarter, a decline of over 60% from the third quarter of last year as we bring to completion many of our significant capital projects from the prior two years. We paid over $26 million in dividends and repurchased over $32 million of our stock in the third quarter. Year-to-date we have returned almost $160 million to shareholders. We have paid a dividend every quarter for the past 65 years and increased our dividend every calendar year for the past 25 years, making Donaldson among a small group of companies that are included in the S&P High Yield Dividend Aristocrats Index, maintaining this track record is important to us. Our results for the third quarter of fiscal '21 demonstrates that our focus on higher margins and higher sales is working. The results also underscore the diversification of our business model and our long-term view adds value to the company and our shareholders. We have good sales momentum as we head toward the end of the fiscal year which should carry through the fiscal '22, as such, we are raising our fiscal '21 sales and earnings per share guidance. With that, let me share our updated expectations for fiscal '21. In the third quarter, we saw continued sales momentum in our Off-Road, On-Road and Aftermarket Engine businesses and an uptick in our Industrial Filtration Solutions business. Given the strong results we experienced and our visibility into the remainder of fiscal year, we expect full year sales will be up 9% to 11% year-over-year versus our prior guidance of 5% to 8% increase. Our annual guidance assumes a full year 3% benefit from currency translation. In our Engine segment, we project a sales increase of 12% to 14%, which is up from our prior guidance of an 8% to 11% increase. We project full year Off-Road sales will now increase in the mid to high 20% range, driven by continued strong demand for construction and agricultural equipment and increase ore activity in mining. Our prior guidance was for low 20% range growth. In On-Road we expect full year sales will increase in the mid-teens compared to our prior guidance of low-teens. This increase is due to a stronger improvement in global heavy-duty truck production rates. Our Engine Aftermarket business has continued to see stronger than expected sales momentum, as global equipment utilization continues to improve. We now believe sales will increase in the mid-teens compared to our prior guidance of high single-digit increase. We believe utilization rates for construction and agriculture equipment as well as On-Road trucks will remain at a high level through our fiscal year-end. We continue to expect our full year sales in Aerospace and Defense to decline in the mid to high 20% range, given the pandemic related stock conditions in commercial aerospace resulted in weak demand. In the Industrial segment, we expect a full-year sales increase of 3% to 5% versus our previous guidance of down 2% to up 2%. As Tod mentioned earlier, we are experiencing increased demand for industrial dust collection products particularly replacement parts. We have increased our outlook for IFS sales and now project sales growth in a mid-single digits compared to our previous expectations of flat sales. Core and sales activity have increased more quickly than we previously forecasted. GTS sales are expected to decline in the low single-digits versus our prior expectation of a mid single-digit increase. In Special Applications, we continue to anticipate a decline in the low single-digits based on our year-to-date results and expected softness in the market for disk drive products. Expanding our gross margin remains a key focus for us. We continue to work to reduce cost and drive operational efficiencies to leverage higher sales. In the near term, however, increases in raw material prices and higher freight costs will pressure margins through fiscal '21 and into at least the early part of fiscal '22. To offset some of the sharp increases in our input costs, we have selectively raised prices and may do so again. We know the value we bring to our customers and we'll continue to demonstrate this value, the technology led products and best-in-class service. We are expecting adjusted operating margin in a range of 13.8% to 14.2% compared to 13.2% in 2020. The midpoint of this range implies a sequential step up in operating margin to about 14.5% for the back half of the year compared to 13.5% in the first half. Additionally, we expect to maintain a disciplined approach to our operating expenses and deliver further leverage in the remainder of the year, despite an expected full year headwind of $5.25 million from increased incentive compensation, about half of which was incurred in the third quarter. Other fiscal '21 operating metric expectations are: interest expense of about $13 million, other income of $5 million to $7 million and a tax rate between 24% and 25%. Capital expenditures are planned to be in the range of $55 million to $60 million. Taking the midpoint of our sales on capital expenditure guidance for 2021 would put us at just over 2% of sales which as we previously noted as lower in the last few years due to the completion of major projects. We also plan to repurchase 1.5% to 2% of our shares outstanding. Our cash conversion has been very good in the first nine months of fiscal '21 and we expect to exceed 100% cash conversion for the full year. The sales momentum we're currently experiencing is likely to carry through to the first half of fiscal 2022. We expect first half fiscal 2022 sales to a greater percentage of our full year sales as compared to the first half of fiscal 2021. Looking at our fiscal '22 gross margin, we expect the headwinds from higher raw material and freight costs to increase from what we've experienced in FY 2021, particularly in the first half of FY 2022. Our operating expenses for fiscal '22 will have some pluses and minuses relative to fiscal '21. As we begin to operate on a more normal post-pandemic environment, we expect to see an increase in expenses related to in person customer engagement costs including marketing and travel costs as our sales and engineering employees return to on-site visits and attend trade shows. Investment in our Donaldson employees, including training and development and increased headcount to meet demand. However, we should see an offset in reduced incentive compensation expense on a year-over-year basis as we reset our annual compensation plans. Our objectives for the remainder of this fiscal year and '22 are unchanged. We will continue to invest for growth and market share gains in our Advance and Accelerate portfolio, including inorganic growth in life sciences, execute productivity initiatives and pricing actions that will strengthen gross margin, maintain control operating expenses and protect our strong financial position through disciplined capital deployment and working capital management. Our second half started off strong and we have solid momentum to carry us through the end of fiscal '21 and enter fiscal '22. Our third quarter results demonstrate the momentum we have in our business and the benefits of having a diversified portfolio. We continue to maintain a disciplined long-term focus on our strategy. To remind you, our strategic priorities remain unchanged and we are focused on expanding our technologies and solutions, extending our market access and executing thoughtful acquisitions, particularly in life sciences. Some recent examples of new products include our new Ultrapac Smart Dryer for Compressed Air Process Filtration, an upgrade to our iCue Connected Filtration Service, which now comes standard on many of our Industrial Dust Collectors and over time will provide recurring revenue. The expansion of our Filter Minder real time monitoring service to Engine liquid filtration in addition to air filtration and our Rugged Pleat Baghouse industrial dust collector that we introduced in first quarter, which is already on pace to generate 2 times our initial first year forecasted sales. Our strategy also involves seeking out inorganic growth opportunities and we are well positioned to expand our addressable market in life sciences. We have a solid roadmap and a pipeline of potential opportunities in life sciences. While I can't comment on when or if the deal might happen, I can say I'm very encouraged by the work the life sciences business development team is doing. They have increased our understanding of the life sciences market and improved our strategic focus in that area. We have the right people in place to execute our strategy. We continue to maintain a strong balance sheet and disciplined on our capital deployment, which positions us well to make acquisitions that will expand our markets, increase our margins over time and allow us to further leverage our Filtration technology expertise. We have the ability to continue to invest in organic growth to extend our market reach, increase market share and maintain our market leadership positions. This is a very exciting time for Donaldson and I look forward to sharing our successes with you.

sees fy sales up 9 to 11 percent. expects to repurchase 1.5% to 2.0% of its outstanding shares during fiscal 2021. challenges in supply chain are expected to continue through q4 2021. expects fiscal 2021 capital expenditures between $55 million and $60 million.

As a reminder, before we begin, the Company has a slide deck to accompany the earnings call this quarter. Because these statements deal with future events, they are subject to various risk and uncertainties and actual results could differ materially from the Company's current expectations. I'm going to pass it over to Tom to begin. I'm going to tie my comments to the slide deck and I'm going to start on Slide five, which is the results table and comparative 2020 through -- to 2021. Our operating revenue for the quarter was up to a $147.7 million from $125.6 million in the first quarter of 2020 and we'll talk about the reasons for that in a moment. And our net loss decreased from $20.3 million to $3 million, as well as our earnings per share, loss per share rather went from $0.42 loss to a $0.06 loss for the quarter. Capital investments, I'll point out on this slide, were up very slightly and according to our plan. And then switching to Slide six, our financial highlights. So as we mentioned -- as I mentioned a moment ago, the net loss decreased by $17.3 million and that was primarily the result of the adoption of the California General Rate Case late last year. So we had a couple of different factors associated with that. The first was obviously, the rate increases associated with that, that added $4 million of revenue. In addition to that, if you'll recall back in the 2020 first quarter, we did not recognize our balancing mechanisms that's WRAM and the MCBA coupling mechanisms, as well as our pension and healthcare balancing accounts. And by recognizing them here in the first quarter of 2021 as they were continued and adopted in the rate case. We're adding $7.6 million of revenue associated with that. We did have as you'd expect increases in our other operations, depreciation and associated costs and that offset somewhat the revenue increases from the rate case as well as the recognition of the mechanisms. As we have mentioned at year-end, our AFUDC equity that's the funds used during construction -- the equity funds used during construction is lower and as a result of a lower amount of construction work in progress during 2020, we had a significant capital project associated with the Palos Verdes Peninsula Water Reliability Project and that was adding to our AFUDC equity all year. So we're expecting to see lower AFUDC equity here in the quarter, it was down about $1 million. I mentioned is up slightly. We believe we're on target for capital for the year. And then two other items that are outside of our general control, but I did want to mention because they are fairly significant in the quarter. The market value of certain of our retirement plan assets was in -- so the market value increased $0.3 million as compared to a loss of $4.7 million in the first quarter of 2020. So kind of a return to normal for that -- for that item [Technical Issues] now first quarter of 2020. And then our unbilled revenue very similar, we had a $1,000 loss on unbilled revenue, very small and probably more typical as compared to a negative $3.7 million in 2020 which was a sort of an atypical drop in that unbilled revenue accruals. And so those two items I'd say are a little bit more normal compared to the abnormal amounts that were in the last year. Flipping to Slide seven, I won't talk in detail about this, but this is our waterfall earnings per share bridge chart that covers those same topics. Next on Slide eight, I'll just make a brief comment about the tax rate, I know some of the analysts look at the effective tax rate of the company. Just wanted to remind everyone that during 2021 we are refunding to customers in rates, $19 million of excess deferreds associated with the change in tax rate for the Tax Cuts and Jobs Act. And that drives down the effective income tax rate to 6%. So there is a -- the revenue is down and the tax rate is down and so we aren't making any money on that, but just when you see the headline tax rate it's very low. The second thing, there was a big benefit at the end of 2020 related to our mains and services repairs investments and the state tax deduction that we're allowed to take there. And just to update you on the estimates, in 2020 we had $160 million of deductible mains and services repairs investments, and our current estimate for 2021 is that we will have $60 million that qualifies for that tax treatment, and so that's going to be a factor that's going to be a little bit lower for the year 2021. Capital spending is still anticipated to be between $270 million to $300 million. That hasn't changed, but it's just the timing of the close of certain projects that is going to change that tax qualification. So the first one is our cost of capital filing. The cost of capital, if you will remember is filed once every three years. Our last one was in 2017, because we had a one-year extension. We will be filing that cost of capital application on Monday, May 3rd, and in our application that we will be filing with the Commission we're requesting a return on equity of 10.35%, that is up from the currently approved 9.2% cost of equity. We also will be taken advantage of refinancings, and new debt issuances. So that our embedded cost of debt is going down a 128 basis points from the previously authorized 5.51% cost of debt, to a new cost of debt of 4.23%. Coupling those two together the increase in cost of equity and the decreased cost of debt means that our rate of return -- authorized rate of return that we are requesting would go up just slightly from 7.48% to 7.5%, and what that really means from a customer perspective is that the median bill increase should be about $0.34 a month. So, really not a big change on the customer's bill at all. Now we do recall that though -- the cost of capital filing will be reviewed by the Commission, and would be approved for -- to be effective in January 2022. I might also point out that our capital structure, which is about 53% equity and 47% debt will remain unchanged in this particular application. Not only are we refinancing existing debt with new lower-cost debt, but because we've been investing so much capital, and have been obtaining new debt at a lower cost, that is really what's helping drive our overall cost of debt down, which is a benefit to our customers. The second item I'll talk about just briefly is our our three-year General Rate Case filing that will be filed in -- on July 1st, actually July 3rd, because the 1st is a weekend. We are working on that right now, and we will provide more information to you all when we get to our next quarterly conference call. I want to provide a quick update on our continued efforts in responding to the COVID-19 pandemic. First and foremost, let me start off by saying we have continued to see the incremental benefits of people being vaccinated in all four states that we operate in. Currently over one-third of our employees have been vaccinated, which is great news. The vaccine rollout was a little bumpy at first, but we've seen those bumps kind of smooth out, and we continue to see daily increases in a number of employees that we've seen vaccinated, as well as we have seen a steep decline in the number of cases of COVID found within the Cal Water family or from our employees. We only had a -- five cases in the first quarter that we've seen where employees have become sick, and then recovered. To date we've had no -- we've sustained no loss of the life with Cal Water employees for which we're very grateful for. In terms of supporting our customers, we have maintained a suspension of all collection activities in all four states. You're starting to see that lifted in different states around the U.S., in the four states that we operate in our suspension of collection activities is still in full force. We have seen and continue to see an increase in customer account aging from suspension of collection activities, that bills currently over 90 are about $11.6 million, and we have adjusted our bad debt reserve, an additional $0.5 million from $5.2 million to $5.7 million, and I'll talk more about some creative things we're doing working with the Commission a little bit later on collection activities. The incremental expenses associated with our COVID response was approximately $300,000. That gets recorded in a memo account for a potential recovery at later dates in Hawaii and California. Interesting to note that water sales have been a 105% of adopted, really driven by the fact the residential demand has been higher and that's been offset by lower business and industrial use. And so as we start to see business use just kind of pick back up, and things get back to normal, we'll expect to see that the business and industrial sales pick up. Our liquidity has remained strong. We had $84.4 million of cash, and additional capacity of about $115 million on the lines of credit, subject to some borrowing conditions. So I think we weathered the worst of the COVID storm, and we're starting to come out of it. California, which is the largest entity that we operate in, is scheduled to be fully opened back up for business here on June 15th. Going on to the next slide, I want to just take a moment to talk about our recently published ESG report. Our report was published a few weeks ago, that aligns with SASB and referencing GRI is now available. There is a link in the deck that will take you to the report. Additionally, for those of you that get the hard copy of the Annual Report and proxy, there is a summary ESG report that's included in our annual report. A lot of hard work went into producing our first ESG report. We're very, very proud of it, and we're very proud of the work we're doing on the ESG frontier. And I look forward to reporting more on this as we work on our ESG-related projects throughout 2021. I'm going to hand it back over to Paul to give you a quick update on acquisitions. The business development effort at Cal Water has been very active, and very successful. You will recall that last year we closed upon two deals. That was the Rainier View Water System in Washington and the Kahao system -- I'm sorry, the Kalaeloa system in Hawaii or you can see on Slide 12, we have six other announced acquisitions that we are working on. The first one, the Kapalua Water and Wastewater System, we actually expect to close that here within the next few days. It's very exciting to be adding another system to the Cal Water, or in this case the Hawaii Water family. And the other items listed on this list The Preserve at Millerton, Animas Valley, Keahou, Skylonda, Strohs, you can see we have activity in all of our operating states, and we are working to get all of those closed as well. So they are announced -- a number of announced systems. A number of other systems still in the pipeline. It is an exciting time for acquisitions with our company. And with that, Marty, I will give it back to you. Actually it will go over to Tom. Yup, I am going to grab it. Tom will take it to the next slide. So we're on Slide 13, and this is our traditional graph of capital investment. Last quarter, we added a line for depreciation. So you can see the relationship between the capex that we're making and the depreciation that occurs every year in our systems. And the point there being that we've been averaging about three times our depreciation accrual every year for the last five years. And so this chart, and projection only goes through system there are of $285 million is the midpoint between our window of $270 million to $300 million of capex during the year, and we --- when we have our second quarter call, and we release the details of our General Rate Case in California, I'll be updating this slide. So you'll see the years 2022 through 2024 on here as well. Flipping to Slide 14. This is our rate base slide and similar comment here, which is that we will project rate base out from 2023 through 2025 on the basis of the rate case filing, and you'll see that in the second quarter slide decks. So not too much new on the rate base estimate on Slide 14 right now. Just a couple of things ticked as we close out our call and get ready for Q&A. First and foremost, Q1's our slowest quarter. It's always nice to get it done. Administratively, it's a very heavy quarter because we have our year-end audit, get the annual report done, and then this year, we got the ESG report done. That takes us us into a very, very busy Q2 administratively with the filing of our cost of capital proceeding that Paul talked about, where we're requesting a slight increase as well as filing our 2021 General Rate Case. And our 2021 General Rate Case is voluminous, there's tens of thousands of pages that gets filed here with the commission this quarter, and a lot of effort go into pull in that rate case off. So we look forward to getting that on file and moving forward and as Tom said we'll update everyone during our second quarter earnings call on where our request came in at for the 2021 General Rate Case. Additionally, and this is more kind of late breaking news, some of you may have seen in the press, the last 24 hours to 48 hours, a few parts of the state of California have declared drought emergencies. In particular Governor Gavin Newsom in the state of California declared a drought emergency for Sonoma and Mendocino counties, in Northern California. Given that the very mild winter season that we had this year coupled with the fact that our snow pack as of earlier this week was only 25% of normal, we fully expect to see more drought declarations at the local level happen throughout 2021. For those of you that know we spend a -- remember, we spend a lot of time on our emergency preparedness and emergency planning, likewise as part of the rate case process, we are updating our water supply master plans, which also include drought contingency master plans. What does that mean at a 25,000 foot level, the reservoirs in California, currently, they're in decent shape, I wouldn't say they're in great shape. But they're in decent shape going into the summer months. The real issue from a drought perspective is what is winter going to look like this year and if it's a light winter again what happens in 2022? So that'll be something to watch as we move into what is potentially a more disruptive fire season and a more disruptive public safety power shut down season given the fact it's been such a dry winter for us. As we think about fire season and PSPS season as we point out in our ESG report despite the many challenges of operating in a COVID environment over 97% of our employees have completed their emergency response training this year and our efforts are well under way to be prepared for early fire season and the various PSPS events that could happen throughout the state. As you may recall, last year despite a number of PSPS events throughout the state that went on, in some cases for two, three, four days, none of our customers went without water due to successful planing by the company -- contingency planning and the ability to move resources up and down the state to make sure we kept our systems pressurized and our pumps running. As we get into kind of hopefully what will be the final throes here of COVID-19 and we are seeing things improve. And as I mentioned earlier, June 15th is the official date declared by the California Governor that the state will officially reopen back to some amount of normal, then that's to be defined. We continue to work with the commission on creative solutions for our customers that have been impacted by COVID. In particular, as part of the low income OIR Phase-II we did propose a program for wage management. Similar to what the electric utilities got approved recently and as part of our proposal, we propose that people who have past-due balances due to COVID as long as they keep paying their water bill that we would give them a credit equal to one-twelfth of the outstanding balance, provided if they keep making their payments until they are paid in full and current. And then that credit that gets issued every month would go into a balancing account for recovery at a later date. This program for the water industry has not been approved yet, but it has been approved for the electric industry. So we're waiting to see what the commission does with that. Obviously, we'd like to see those past-due balances get paid down as we get back to a more normal operating environment. Having said all that, it is very nice to get Q1 done. It's very nice to see the light, hopefully, at the end of the tunnel with COVID and seen employees get vaccinated and it's starting to get back to what is a normal environment. We do not have our of employees back in the office yet, 90% of our employees have been at work every day, because they are field employees. Our corporate employees are the ones at our corporate offices have been the ones that have been working more remotely and we are in the process of finalizing our back-to-work plans and we'll continue to monitor the local jurisdictional requirements to bring people back to work. So that can vary kind of county by county in the state of California. But our plans are developed and we're ready to roll, once we get the green light to bring people back to work.

q1 loss per share $0.06. q1 revenue rose 17.7 percent to $147.7 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 pleased to report a solid start to 2021 in what can be described as a truly unique operating environment. We continue to deliver organic sales growth, capturing new real opportunities in growing markets with our innovative fiber-based packaging solutions. Global adoption of paperboard multipacks and KeelClip packaging solutions through beverages Paperboard trades, including our new PaperSeal and ProducePack lines for food packaging and Integra fluids, a ship and own container package for omnichannel commerce, all are examples of products that are driving our results. We remain encouraged by the traction we are seeing from our innovative packaging solutions with existing and new customers in growing markets around the world. Aligned with Vision 2025 and supported by our history of successful acquisitions, we are announcing today our intent to acquire Americraft Carton. The proposed transaction will provide benefits to our customers, employees and stakeholders. I will provide additional details on this development shortly. Turning to Slide three. Let me update you on a high-level financial and operational highlights for the quarter. Growth continued in the first quarter of 2021, with net organic sales increasing 2% year-over-year. Notably, this follows a very strong first quarter of 2020, where net organic sales growth was 7%. Over the last 12 months, we've exceeded our targets, delivering 3% net organic sales growth. Stronger than forecasted sales growth is the result of ongoing conversions to more sustainable fiber-based packaging options across our food, beverage, foodservice and consumer goods markets. In addition, our business has benefited from increased at-home consumption. Importantly, we continue to have confidence in our 100 to 200 basis points goal for annual net organic sales growth established with Vision 2025. Achieving consistent year-over-year organic sales growth is supported by the strengthening global trend to more sustainable packaging alternatives. As we look out specifically at the year to the anticipated volume from our innovation pipeline, coupled with return to growth in foodservice, we expect 2021 net organic sales growth will be at the high end of our 100 to 200 basis point range. Adjusted EBITDA in the quarter of $240 million met our expectations before the $29 million of costs we incurred associated with winter storm Uri. During the quarter, we did see a return of inflation across some of our commodity input cost categories such as logistics, recycled fibers, resins and chemicals. We are executing multiple price initiatives with our customers to fully recover the current inflationary environment. Our commitment to price offsetting commodity input costs remains the pillar of our overall value creation model for stakeholders. Also during the quarter, we made further progress on the Vision 2025 goal of achieving 80% to 90% paperboard integration across our consolidated business. We exited the first quarter of 2021 at 71%, improving from 70% in the full year of 2020 and 68% in 2019. We expect to benefit from a meaningful increase in our paperboard integration rate as we start up the new CRB paperboard machine in Kalamazoo later this year while winding down a portion of the existing supply agreements. In addition, we will drive paperboard integration rate higher as we grow our converting volumes both organically and through acquisitions. Our partnership with International Paper continue to wind down during the quarter as we acquired another $400 million of minority partnership interest, reducing their interest to 7% from the initial 21% held at the inception of the partnership. In addition, work on our CRB platform consolidation project in Kalamazoo continues ahead of schedule, with the new K2 machine set to begin paperboard production in the fourth quarter. Planning related to our more recently announced investment in Texarkana to convert an existing SBS machine to its full capacity capable of also producing CUK is tracking on time and on budget. This represents a very efficient path to meet increased global demand for CUK and further advances our efforts to closely match supply with areas of strengthening demand. Continuing the capital allocation discussion, let's move to Slide four, where I will provide an overview of our intent to acquire Americraft Carton. We have entered into an agreement to acquire Americraft Carton for approximately $280 million. The company is one of the largest remaining independent converters in North America, with over $200 million in annual sales, operating seven well-capitalized and high-quality converting facilities. The company has a great reputation with customers, has been in business for over 100 years and generates approximately $30 million of annual EBITDA. We see 300 basis points of paperboard integration opportunity across all three substrates and expect an additional $10 million of synergies over 24 months following the close. The transaction is expected to close in the next few months. Turning now to Slide five and a discussion of innovation and new product development. We have discussed with you in past calls the significant ongoing conversions to paperboard solutions we are seeing in our beverage and foodservice markets. An additional area of expansion for us is into food categories around the printer of the grocery store. We have targeted and are seeing success in new categories as we align our global innovation resources and have established frameworks to execute on the biggest opportunities. On Slide six, I will provide details on our PaperSeal innovation. With the launch of the PaperSeal in 2020, we targeted a $1 billion addressable market opportunity to replace foam trays and shrink wrap alternatives commonly found in the grocery store meat departments around the world. Our PaperSeal packaging innovation offers producers and retailers significantly increased food trade recyclability as well as enhanced branding opportunities. We have seen traction in Europe, in Australia with the list of retailers, including Aldi, Esda, ECA, Little, Marks & Spencer and Woolworths adopting our packaging for meats and poultry products. We have tests under way in North America and are on track to be commercial in the region in 2021. Building on early momentum on PaperSeal, we are executing a product expansion with the launch of PaperSeal Slice and PaperSeal Wedge. The recyclable barrier line paper packaging format now offers the same ease of use and sustainability benefits for sliced deli meats and cheese categories. The packaging insures hygienic and shelf-life characteristics that match existing packaging alternatives. The design allows for enhanced branding and meets the requirements for high-speed food manufacturing lines. Turning to Slide seven. We are also targeting and expanding in another category found at the perimeter of the store, produce. With our ProducePack line, we are offering a variety of fully sustainable shelf-ready solutions for protecting and preserving fresh fruit and vegetables. ProducePack offers significant branding advantages in an eco-friendly container versus existing alternatives. The leading Michigan apple distributor, bell harvest, recently switched to ProducePack for its Fuji, Honeycrisp and Gala Apples in response to consumer preference for fiber-based packaging. With the launch of our new Punnet tray line, we are extending our offerings to new categories like berries and snacking size vegetables. Our global marketing, sales and innovation and sustainability team members are working clearly that are focused on winning in today's market. Sustainability is a key part of every new product development discussion and is central to our go-to-market strategies. We are engaging with external stakeholders to learn more about consumer preferences, product direction and the evolving needs in the market places we move to more environmentally, conscious society. Providing packaging enhancements for consumers that include 100% recyclability and reduced carbon footprint will be the key to our new product development road map moving forward. Let me conclude on Slide eight, revisiting my comments made at the end of what was an incredible year 2020. We are creating value to leadership with our Vision 2025. Simply put, we are running a different race. The investments we have made to advance our capabilities, engage employees and optimize our mills and converting infrastructure differentiate us. We are leaders in sustainability because we've built our business on it. Our packaging solutions are made primarily from renewable wood fiber from sustainably managed wood baskets in the United States, and the vast majority of our fiber-based packaging can be recycled today. As a result of prudent capital management and strong cash flow generation, we have invested back into the business and has continued to enhance our service offering to meet global demand and customer preferences, delivering on new product development opportunities with customers and achieving our sustainability-supported growth goals with the proposed acquisition of Americraft, we are positioned to further strengthen our growth outlook, adding customers, adding markets while driving greater paperboard integration. We are confident in the pipeline in front of us to achieve a 100 to 200 basis of annual net organic sales growth and expect to be at the high end of that range in 2021. Our ability to help customers reduce their environmental impact and elevate their brands through continued innovation and improvements in packaging is expanding opportunities in drive growth. Moving to Slide nine, focused on key financial highlights in the first quarter of 2021. Net sales increased 3% from the prior year to $1.65 billion, driven by 2% net organic sales growth and positions. Adjusted EBITDA declined from the prior year quarter, primarily related to $29 million in costs associated with winter storm Uri and maintenance downtime. As a result, adjusted earnings per share were $0.23 as compared to $0.31 in the first quarter of 2020. Total liquidity remained significant at $1.44 billion. Additional financial and market detail can be found on Slide 10. Solid sales performance was driven by continued strength food, beverage and consumer markets, where sales before acquisitions increased 5%. Partially offsetting this performance was our foodservice business, where sales declined 10% versus the prior year period. Importantly, foodservice sales improved to flat performance year-over-year in the month of March and are inflecting positive for month-to-date April versus the prior year. This is encouraging and largely as expected, as we see a return to more away-from-home consumption, as vaccinations are rolled out and as we anniversary the beginning of the COVID-19 pandemic. On Slides 11 and 12, you'll see our year-over-year revenue and EBITDA waterfall. Net sales increased $50 million in the first quarter of 2021, driven by $33 million of improved volume mix, resulting from a combination of 2% organic sales growth and acquisitions, partially offset by fewer selling days when compared to leap year observed in the prior year quarter as well as $20 million of favorable foreign exchange. Adjusted EBITDA decreased $55 million to $240 million in the first quarter of 2021. Adjusted EBITDA benefited from $21 million in improved net productivity and $5 million from favorable foreign exchange. EBITDA was unfavorably impacted by $3 million of pricing, $2 million of unfavorable volume mix, $34 million of commodity input cost inflation, $13 million of other inflation and $29 million of costs related to winter storm Uri. Excluding storm-related costs, adjusted EBITDA was $269 million, consistent with our expectations. As Mike mentioned in his remarks, we experienced higher inflation across certain commodity categories during the first quarter, and we are successfully executing multiple price initiatives to offset inflation. Back on Slide nine, you will see that industry operating rates remained strong and backlogs are quite elevated across all of our paperboard substrates. In addition, AF&PA first quarter data reflects declines in industry inventory levels, with balances significantly below historical 5-year average. AF&PA industry operating rates at the end of Q1 for SBS and CRB were 92% and 94%, respectively. Our CUK operating rate was over 95%, as we remained in an oversubscribed environment. Backlog increased from last quarter and were 6-plus weeks in SBS and CRB and 8-plus weeks in CUK at the end of the quarter. We ended the quarter with net leverage at 3.7 times. While leverage is above our long-term targeted level of 2.5 times to three times and our 2021 target of three times to 3.5 times, we remain confident in our cash flow generation commitments and increase in expected cash flow generation in 2022. Referring back to Slide three and highlights in the quarter. Since the beginning of 2021, we have strengthened our balance sheet, debt maturity and interest rate profiles through very effective borrowing arrangements. We issued $800 million in two senior secured notes offerings. What is notable about these transactions are the annual interest rates of the 2024 notes at 0.8% and the 2026 notes at 1.5%. We also retired $425 million of maturing higher interest rate bonds, with an attractive farm credit system loan. And earlier this month, we completed an amend and extend to our bank credit facility, which notably extended the maturity date from January 2023 to April 2026 and increased the availability under the domestic revolving line of credit by $400 million. Our significant liquidity, balance sheet flexibility and strong cash flow generation remains a source of strength of the economy. We have excellent optionality. And as Mike detailed for you, we are executing a balanced approach to capital allocation. Turning now to guidance on Slides 13 and 14. Underlying demand for our fiber-based packaging solutions remains strong. As Mike mentioned, we expect 2021 net organic sales growth to be at the high end of our 100 to 200 basis points target range. We are meeting demand, introducing new products and growing organically. We remain steadfastly focused on achieving the growth goals we established in Vision 2025. We are executing multiple price initiatives to offset commodity input cost inflation. We continue to expect that our volume mix and net performance will be in line with our original expectations for the year, as we earn on organic sales growth at the high end of our expectations and execute performance countermeasures to offset winter storm Uri related costs. While some components of adjusted EBITDA have changed given the operating environment we are managing, our full year adjusted EBITDA guidance range of $1.09 billion to $1.15 billion provided at the beginning of 2021 remains unchanged due to the numerous pricing, volume and productivity initiatives we are committed to successfully executing throughout the remainder of the year. All of which will result in stronger adjusted EBITDA performance in the second half of 2021. As such, there's also no change to our full year cash flow guidance range.

q1 adjusted earnings per share $0.23. q1 sales rose 3 percent to $1.649 billion. intends to acquire americraft carton, inc. for approximately $280 million. graphic packaging holding - transaction with americraft carton includes seven well-capitalized converting facilities, team of employees. graphic packaging - proposed acquisition of americraft carton is expected to add about $200 million in sales, $30 million in adjusted ebitda upon completion.

Let me provide highlights on our 2020 performance, share my expectations for 2021 and comment on our strategy going forward. And then Stephen will cover our fourth quarter results and guidance for 2021 in more depth. We finished the year strong with fourth quarter results much better than expected. We delivered another solid quarter in a pandemic year that was challenging and unpredictable. Our operations demonstrated agility and a relentless focus to deliver great bottom line results, despite pressure on the top line and downturns in some of the end markets that we serve. And this was our story throughout the year. Beginning in early 2020, we took swift action to ensure the safety and well-being of our employees. Our teams worked tirelessly to reset our manufacturing and supply chains at many times during the year to meet our customers' needs as they changes. We did a great job for customers and continue to drive efficiency and productivity improvements. We took early action to manage our costs well. And consequently, we were able to deliver outstanding margins for our shareholders and generate solid free cash flow and add to our strong balance sheet. Also notable, our customer performance metrics are at record levels for service, on-time delivery and quality. Our safety performance ended the year as the best in the history of the company. Our factory productivity and supply chain initiatives contributed to our bottom line success. And we managed to launch a number of employee training and development initiatives. I'm most proud of how our employees found ways to work safely and how they've innovated to not only do our work, but to improve how we do it. It's not an accident that we completed well over 100 Lean Kaizen improvement projects in 2020 despite the restraints of social distancing, working remote and following precautions for COVID-19. In December, we recognized these accomplishments by our employees, and we're pleased to award all of our employees around the world, excluding the executive team, with a $1,000 bonus of gratitude. As I've said, I'm proud of how our employees pulled together to support one another and work safely during this pandemic and continue to do a great job for customers. Now let me make a few comments about the outlook for this year and beyond. Our Machine Clothing segment's end markets appear to be gaining strength. We exited last year with a solid order book, which bodes well for this year and beyond as the global economy improves. As a leader in machine clothing, we're well positioned to grow with our customers, especially in the higher growth areas of tissue and packaging. Our long-standing strategy of continuous investment in technology and product development, along with our operating discipline, has served us well during the worst market downturn in more than a decade. Consider this: in the middle of a global pandemic recession, our MC segment expanded its adjusted EBITDA margin by 170 basis points in 2020. And more impressive, since 2015, our MC segment has expanded its adjusted EBITDA margin by more than 500 basis points. We're also optimistic about our Engineered Composites segment's future, although it's longer term since 2021 still portends to face headwinds from the pandemic and the downturn in commercial aerospace and airline travel. Through 2021, we're planning for slower production on some lines in AEC because of excess inventory in our facilities and inventory and the supply chain of our customers, particularly for components for the Boeing 737 MAX, the 787, and to a lesser degree the F-35. To continue managing our costs, and because of the recent downward revision by Boeing for 787 demand, we just yesterday implemented a reduction in our Salt Lake City workforce where we produce 787 frames. While 2021 is expected to be slower because of inventory destocking, we expect growth in Engineered Composites to resume longer term. We're well positioned in both military and commercial markets with solid programs such as the CH-53K, the JASSM missile, the F-35 and LEAP. And our position on LEAP engines with Safran should see early growth in the recovery since narrow body aircraft, which the LEAP engine powers, are expected to lead commercial aerospace out of the recession as domestic air travel is expected to recover first. Next, let me say a few words about our strategy. Albany International has a 125-year history of innovation and developing new materials that add value for our customers. We're committed to continuing this legacy with a focus on developing the next generation of engineered materials and advanced composites to help our customers improve their products and production processes. Our Machine Clothing segment is the leader in PMC because it offers a full range of the most advanced material belts used on paper machines, which operate at high speeds in a severe environment. We've earned a reputation for constantly improving our belt's technology, durability and performance. And because of our advancements, our customers are able to produce higher quality paper products reliably at lower overall cost of production under demanding conditions. This is a technology-intensive collaborative partnership that our customers value. In our Engineered Composites segment, we continue to advance the state of the art in advanced composites, including our proprietary 3D woven composite material used in the LEAP engine, fan blades and fan cases. In 2020, despite the pandemic, we worked closely with Safran to continue improving our 3D woven composite materials and to reduce our cost of manufacturing them so as commercial aerospace rebounds, we'll be even more competitive. We also expanded our collaboration with new customers and for new applications to diversify our customer base and develop future growth areas. Our technology development on the Wing of Tomorrow program with Airbus has continued through the pandemic. While this program is longer term, it's imperative that we get an early seat at the table and bring our technology to design the next generation of aircraft. In the medium and near term, we have other ongoing R&D development efforts, what I call incubator projects, in both military and commercial areas. For example, our R&D team is supporting a major prime OEM in the development of next-generation hypersonic materials and structures using our proprietary 3D woven composite materials. We also have projects in unmanned vehicles, higher temperature materials and thermal plastics. We believe the current downturn in commercial aerospace is transitory and that market forces in the long term will drive energy efficiency and ongoing replacement of metallic components with lighter composites. This trend will gain in importance as the industry seeks to reduce its environmental impact with the next generation of more efficient aircraft. Our 3D woven composite technology is commercially proven can meet the need for lighter weight and high strength, and we intend to grow our participation in the most demanding structural applications in aerospace. As a company, we remain committed to investing in technology and product development of advanced materials for organic growth. In fact, we're increasing our R&T budgets in both segments in 2021. And this is a critical part of our capital allocation strategy. Organic growth has been driven by not only our investment in hard capital such as new products, tooling and production equipment, but also by our investment in intellectual capital, the expertise, the time and effort that are necessary for successfully developing new products and process know-how over time. We're disciplined in how we invest in the criteria we use to measure success. We guide our capital investment decisions based on expected returns to shareholders, and we direct capital to those programs with the best risk-adjusted returns. In summary, we're optimistic about the future. We have a solid balance sheet and strong free cash flow generation, which enables continued investment to grow. So with that, I'll hand it over to Stephen. I will talk first about the results for the quarter and then about our initial outlook for our business in the coming year. For the fourth quarter, total company net sales were $226.9 million, a decrease of 12% compared to the $257.7 million delivered in the same quarter last year. Adjusting for currency translation effects, net sales declined by 13.6% year-over-year in the quarter. In Machine Clothing, also adjusting for currency translation effects, net sales were down 6.6% year-over-year, driven by declines across most major grades of product, partially offset by growth in engineered fabrics. Once again, the most significant decline of over 21% on a constant currency basis was in publication grades, which represented about 17% of our MC sales in the quarter. However, we do see signs of a generally improving machine clothing market. First, while we did see year-over-year declines in packaging and tissue grades in the quarter, driven by the same factors that we discussed on our third quarter call, the year-over-year declines we saw on those grades in the fourth quarter were considerably smaller than we had seen in the third quarter. Second, segment net sales in the fourth quarter were sequentially higher than the third quarter and modestly exceeded our expectations. Engineered Composites net sales, again, after adjusting for currency translation effects, declined by 23.5% compared to last year, primarily caused by significant reductions in LEAP and Boeing 787 program revenue, partially offset by growth on the F-35 and CH-53K platforms. During the quarter, the ASC LEAP program generated revenue of a little under $25 million compared to $48 million in the same quarter last year. However, this quarter's ASC LEAP revenue was up significantly on a sequential basis, 48% higher than the third quarter, driven by the fact that all three of our ASC LEAP facilities were operational for the full fourth quarter. Fourth quarter gross profit for the company was $91.3 million, a reduction of 5.5% from the comparable period last year. The overall gross margin increased by 280 basis points from 37.5% to 40.3% of net sales. Within the MC segment, gross margin improved from 50.2% to 50.9% of net sales, driven by favorable foreign currency exchange rates, increased efficiencies and product mix. AEC gross margin improved from 19.6% to 21.7% of net sales, driven primarily by a favorable mix in program revenues, partially offset by a lower net favorable change in the profitability of long-term contracts. While we did recognize a net favorable change in the estimated profitability of long-term contracts this quarter of about $500,000, this compares to a $3.3 million improvement recognized in the fourth quarter of 2019. Fourth quarter selling, technical, general and research expenses increased from $51.3 million in the prior year quarter to $54.8 million in the current quarter and increased as a percentage of net sales from 19.9% to 24.1%. The increase in the amount of the expense was driven primarily by higher incentive compensation expense and an increase in foreign currency revaluation losses from $1.4 million in Q4 of 2019 to $3.0 million this quarter. These items were partially offset by lower travel expenses in the fourth quarter of 2020 compared to the same period in 2019. I would like to note that the higher incentive compensation expense that we recorded in both the third and fourth quarters of 2020 included accruals at corporate totaling $3.9 million across both quarters combined for the special $1,000 employee bonus that Bill referenced. Total operating income for the company was $35.0 million, down from $43.6 million in the prior year quarter. Machine Clothing operating income decreased by $4.9 million, caused by lower gross profit, higher STG&R expense and higher restructuring expense, while AEC operating income fell by $2.1 million, caused by lower gross profit and higher STG&R expense, partially offset by lower restructuring expense. Other income and expense in the quarter netted to about income of $490,000 compared to an expense of about $350,000 in the same period last year. The improvement was driven primarily by a more beneficial foreign currency revaluation effect in the quarter. The income tax rate for this quarter was 13.5% compared to 24.8% in the prior year quarter. As a result of a foreign currency revaluation gain at an entity where no tax provision is required, the tax rate associated with our adjusted earnings per share is somewhat higher at 17.8%. That 17.8% tax rate is significantly lower than the tax rate for the full year. In 2020 as a whole, our tax rate, excluding discrete items, was 28.4%, which compares to 28%, excluding discrete items, for 2019 as a whole. The lower rate this quarter, due mainly to a true-up of earlier quarters' provisions, increased adjusted earnings per share by $0.12 this quarter. Had we known the final full year rate earlier in the year, that $0.12 would have been recognized as additional adjusted earnings per share in those earlier quarters. Net income attributable to the company for the quarter was 27.5% (sic) $27.5 million, a reduction of 5.5% from $29.1 million last year. The reduction was primarily driven by the lower operating income, partially offset by the lower tax rate and improved other income and expense. Earnings per share was $0.85 in this quarter compared to $0.90 last year. After adjusting for the impact of foreign currency revaluation gains and losses, restructuring expenses, pension curtailment charges and expenses associated with the CirComp acquisition and integration, adjusted earnings per share was $0.89 this quarter compared to $0.97 last year. Adjusted EBITDA fell 10.4% to $57.3 million for the most recent quarter compared to the same period last year. Machine Clothing adjusted EBITDA was $50.9 million, or 35.3% of net sales this year, down from $52.8 million, or 35.1% of net sales, in the prior year quarter. AEC adjusted EBITDA was $21.3 million, or 25.7% of net sales, down from last year's $24.2 million, or 22.6% of net sales. Turning to our balance sheet. Net debt declined by about $46 million during the fourth quarter. As a result, our absolute leverage ratio declined from 0.89 at the end of Q3 to 0.74 at the end of Q4. The reduction in net debt was principally caused by strong operating cash flow generation in the Machine Clothing segment and lower capital expenditures during the quarter, due principally to a reduction of capital expenditures on the LEAP program. I would now like to turn toward the coming year by comparing it to 2020 and by providing our resulting initial financial guidance for 2021. We expect to deliver another strong year -- another year of strong performance in the Machine Clothing segment. For the full year 2020, we delivered net sales of about $573 million, down 5% from about $601 million in 2019. Orders in the fourth quarter of 2020 were up about 6% compared to the fourth quarter of 2019. This was a marked change from the first three quarters of the year when cumulative orders in the segment had been down compared to the same period in 2019. This gives us some comfort as we head into 2021. In particular, we do expect that sales in Q1 of 2021 will be up compared to the relatively low level of sales delivered in Q1 of 2020. We are providing initial net sales guidance for the segment of $570 million to $590 million. From a profitability perspective, Machine Clothing had a very strong year in 2020, delivering $216 million of adjusted EBITDA. However, there are three effects that will make it hard to replicate those results in 2021. First, as we have previously disclosed, we benefited from very favorable foreign exchange rates in 2020, particularly with respect to the weakness of the Brazilian real and Mexican peso, both of which are currencies in which we are short in that we have more expenses than revenues in both. Overall, net favorable foreign exchange rates contributed over $6 million of adjusted EBITDA in 2020 compared to the prevailing foreign exchange rates in 2019. However, some of those favorable effects had dissipated by the end of the year. For example, the Mexican peso had weakened from under 20 pesos per U.S. dollar in Q1 of 2020 to almost 25 pesos per dollar in Q2, but by the end of the year, the rate was back under 20 pesos. Second, in 2020 due to the COVID-19 pandemic, we incurred a significantly lower level of travel expense in the segment than in prior years. While this helped the bottom line to the tune of about $6 million, this was not ideal from a business perspective, as we depend on strong customer relationships to develop insight into customer needs and to drive product development and support. We are expecting to resume our prior level of travel during 2021, although in Q1, travel will likely continue to suffer from some COVID effects. Third, we continue to see pressure on input costs, particularly right now with respect to logistics where sea, rail and air freight costs are all considerably higher than they were 12 months ago. In the typical year, we see over $4 million of input cost pressure, and there is reason to believe that in 2021, this could be higher. While as is typical, we believe that we will be unlikely to be able to recover all of that increased cost through pricing increases. We will, of course, work to implement cost improvement initiatives to offset as much of the remainder as possible. Notwithstanding these three pressures on profitability, we expect the Machine Clothing segment to deliver another strong year of profit performance and are providing initial adjusted EBITDA guidance for the segment of $195 million to $205 million. Turning to Engineered Composites, 2020 was a challenging year for the segment from a revenue perspective. Overall, revenue in the segment declined by about $125 million in 2020 compared to 2019, driven principally by lower sales on LEAP, 787 and other commercial programs, offset by growth in military programs. Unfortunately, in 2021, we are going to see a continuation of some of the same trends with 2021 shaping up to be a year of finished goods inventory destocking across our customers' supply chains. On the ASC LEAP program, we expect to continue to produce components for the LEAP-1B variant, which powers the 737 MAX, at very low levels. While the 737 MAX is now reentering service, there is considerable finished goods inventory in the channel at Boeing, at Safran and in our own facilities on which we have already recognized revenue as we recognize revenue at the time of production, not delivery. In 2021, we currently expect to make components for fewer than 150 LEAP-1B engines, far below the 1,000-plus engine shipsets we would expect to deliver annually in the long term. On LEAP-1A, there is a much lower level of finished goods inventory in the channel, and we expect to produce components for well over 500 engine shipsets in 2021. Overall, while the total number of ASC LEAP engine shipsets produced in 2021 is expected to be somewhat higher than that produced in 2020, this is offset by the absence of certain recoverable nonrecurring expenses that were recognized as revenue in 2020, resulting in roughly flat revenues for ASC from 2020 to 2021. Our next largest commercial program to produce frames for the Boeing 787 also has finished goods inventory destocking challenges. In 2020, we had already seen some effect from Boeing's decision to reduce the 787 build rate, and our revenues from the program in 2020 were down over 20% from 2019. However, as Boeing reduced the 787 build rate further, there has been an increased buildup of our finished goods in Boeing supply chain, resulting in drastic reductions in order quantities for delivery in 2021. In addition, we expect our start-up of production of the 787 aft fuselage frames will now shift from late 2021 into mid- 2022 as it will take longer to consume the parts already in the supply chain that were produced by the previous supplier. Overall, in 2021, we expect our revenues on the 787 frames program to be $30 million to $35 million lower than we recognized in 2020. On the military side, we support the Lockheed Martin F-35 through several contracts for different parts, including wing skins, edge seals and engine components at both our Salt Lake City and Boerne locations. F-35 has been and remains a very important platform for us. In 2020, we recognized over $85 million of revenue on the platform overall, up more than 25% from what was recognized in 2019. However, during 2020, Lockheed Martin produced finished F-35s at a rate lower than they had originally predicted due to supply chain issues caused by the pandemic and consumed fewer sustainment parts. As a result, during 2020, there was a buildup of our finished goods in the F-35 supply chain; a situation that we expect will reverse itself in 2021. This year, to rebalance the supply chain, we expect that our build rate will be lower than the rate at which Lockheed Martin is completing aircraft. We now expect our F-35 revenues in 2021 to be more than $15 million lower than we recognized in 2020. We see similar patterns in several smaller commercial programs across the segment where the revenue on those programs in 2021 will be close to $15 million lower than recognized in 2020. All of these reductions will be offset by growth on other programs, most notably on the CH-53K. Overall for the Engineered Composites segment, we are providing initial guidance for net sales of $275 million to $295 million. Turning to the Engineered Composites segment profitability, 2020 was a strong year with adjusted EBITDA margins of over 26%, largely enabled by three factors: one, strong operating performance in the period as evidenced by about $10 million in net favorable adjustment to long-term contract profitability; two, a sales mix benefit as the majority of the revenue declined from 2019 to 2020 was on the ASC LEAP program, which is a lower than average profit margin; and 3, despite the decline in revenue, there was limited loss of fixed cost absorption as the cost-plus nature of the ASC LEAP program allowed us to still recover all of the fixed costs of operating our three ASC facilities. Unfortunately, those factors will not help us again in 2021. First, the lower revenue in 2021 at our non-ASC facilities, most notably our Salt Lake City operation where all of our 787 work and the bulk of our F-35 work is performed, will create upward pressure on plant overhead rates. While, as Bill mentioned, we have announced a workforce reduction of our Salt Lake City facility, that alone will not offset these rate pressures. In such an environment, it will be difficult for us to achieve the lower unit production costs required to deliver significant improvements to long-term contract profitability. This is a change from the past few years when a growing revenue base at our non-ASC facilities created a tailwind to long-term contract profitability. Second, in 2021, we will see a product mix hit as a roughly $40 million to $50 million revenue decline we expect this year is on fixed price programs, which have a higher than average profit margin. And third, unlike 2020, we will suffer from a loss of fixed cost absorption due to the fixed price nature of the programs with declining revenues. As a result, the decremental margins will be much larger than the average margins on those programs. In fact, it is not atypical for our fixed price programs to have EBITDA contribution margins in the 30% to 40% range. As a result of the impact of those three factors in 2021, not only do we expect the top line reduction I discussed earlier, but we also expect the EBITDA margins for the segment to fall from the 26.1% level delivered in 2020 into the low 20s. Therefore, we are providing initial 2021 guidance for Engineered Composites adjusted EBITDA of $55 million to $65 million. At the total company level, we are providing initial 2021 guidance as follows: revenue of between $850 million and $890 million; effective income tax rate of 28% to 30%; depreciation and amortization of between $70 million and $75 million; capital expenditures in the range of $50 million to $60 million; GAAP and adjusted earnings per share of between $2.40 and $2.80; and adjusted EBITDA of between $195 million and $220 million. While we are not providing explicit cash flow guidance for 2021, we do expect that the free cash flow we generate in 2021 will be well above the roughly $100 million generated in 2020. I would also like to note that in 2021, we expect R&D expenses to be more than 25% higher than they were in 2020, reflecting the ongoing investments in both segments that Bill referenced earlier. Returning to the present, we are very pleased with how the company performed in 2020 overall. Despite the challenging operating environments, both segments met our customers' needs and delivered outstanding performance, all while maintaining a safe working environment. While it does appear that we have one more year of channel destocking ahead of us before we return to growth in the Engineered Composites segment, we remain very excited about the future prospects for both segments.

q4 earnings per share $0.85. q4 sales fell 12 percent to $226.9 million. q4 adjusted earnings per share $0.89. sees fy 2021 revenue $850 million to $890 million. sees 2021 gaap and adjusted earnings per share of between $2.40 and $2.80. sees 2021 capital expenditures in range of $50 million to $60 million.

We look forward to discussing our first quarter 2021 results with you today. Joining me for Assurant's conference call are Alan Colberg, our President and Chief Executive Officer; and Richard Dziadzio, our Chief Financial Officer. Yesterday after the market closed, we issued a news release announcing our results for the first quarter 2021. The release and corresponding financial supplement are available on assurant.com. We'll start today's call with brief remarks from Alan and Richard before moving into a Q&A session. During today's call, we will refer to non-GAAP financial measures, which we believe are important in evaluating the Company's performance. As we continue to shift to a more fee income capital-light business mix, we introduced adjusted EBITDA as part of our restated financial statements in April. This is another important financial metrics for the Company, reflective of our go-forward Global Lifestyle and Global Housing business. We're very pleased with our results for the first quarter. We delivered double-digit earnings growth, driven by favorable non-catastrophe loss experience, including improved underwriting in Global Housing as well as continued profitable growth in our Global Automotive, Multifamily Housing and Connected Living businesses. Once again results demonstrated the attractiveness of our market leading Specialty P&C and Lifestyle offerings distributed across multiple channels. This is in addition to the compelling growth opportunities emerging across mobile, auto, and renters. Together, these businesses represent what we refer to as the connected world. In 2020, our Connected World offerings represented two-thirds of our net operating income excluding catastrophes and in combination with our Specialty P&C businesses will enable us to continue to expand our innovative offerings and deliver a superior and seamless customer experience. Generating over $1 billion of adjusted EBITDA in 2020, our business portfolio is well positioned to sustain above market growth and strong cash flows over time. And as we look ahead, we are continuously investing to bring innovation to market to build a more sustainable future for all of our stakeholders. To that end, we recently published our 2021 Social Responsibility Report highlighting the many ways we are delivering on our commitment as a purpose-driven company. We are continuing to advance our ESG efforts, specifically within our strategic focus areas of talent, products, and climate. Further integrating ESG within our business operations will be critical as we look to create an even more diverse, equitable, and inclusive culture that promotes innovation enhances sustainability and minimizes our carbon footprint for the benefit of all stakeholders. Recent notable examples include, we are increasing all US hourly wages to at least $15 per hour by July, which supports the financial well-being of our employees. We've launched in assessment of our carbon footprint, including our investment portfolio and supply chain as a critical step to setting a future long-term carbon emissions reduction goal. And we further integrated sustainability into our offerings such as rolling out electric vehicle products globally and extending the mobile device lifecycle through trading services. With HYLA, we recently passed a significant milestone repurposing our 100 million device. This has extended the life of devices, put billions of dollars back into consumers hands and prevented additional e-waste from ending up in our landfills supporting Global Sustainability. We are pleased with our progress and are proud of the recognitions we have received, including our inclusion in the Bloomberg Gender Equality Index and America's Best Employers for Diversity by Forbes. As well as being awarded the Best Place to Work in several of the key markets we operate. Sustainability and innovation go hand-in-hand. Recently, we surpassed $100 million invested through Assurant Ventures, our venture capital arm. This quarter several high-quality investments in our portfolio announced back transactions, including Cazoo, a fully digital UK car sales company and smart rent, a smart home automation provider. Given current attractive valuations, these investments have the potential to generate strong returns while also providing strategic insight that support our connected world businesses, creating value-added partnerships, and piloting new innovations. Now, let me share some first quarter highlights for each of our operating segments. We continue to see strong growth in Global Lifestyle, increasing earnings by 7% year-over-year. Over the years, we continuously invested in mobile capabilities such as same day local repair or come-to-you to repair for mobile devices, which provide another opportunity to drive value for our clients and the end consumer. Most recently in Connected Living, we further strengthened our product capabilities and customer experience through the acquisition of TRYGLE in Japan. TRYGLE develops and operates a mobile phone app that allows consumers to manage the lifecycle of their devices and centrally organizes digital product manuals for all connected products. Collectively, all of our investments have helped lead the 15 new client program launches in 2015. This includes partnerships with several US cable providers including Xfinity and Spectrum as well as large mobile carriers in Japan like KDDI and Rakuten. Recently, we've expanded our global partnership with Samsung through the launch of Samsung Care+, a smartphone protection program in Brazil and Mexico. We expect to further extend this partnership globally. We will continue to build on the strong momentum we have with our global multi-product and multi-channel strategy bolstered by the additional investments we are making. As an example HYLA Mobile added scale and technology capabilities to our global trade-in and upgrade business and has been performing even better than our initial expectations. We're now providing over 30 trading programs around the world. The acquisition positions us to benefit from favorable tailwinds in the global mobile market, including the upcoming 5G smartphone upgrade cycle and new client relationships. In Global Automotive, we continue to benefit from our scale and expertise as we now cover over 50 million vehicles. Already this year, we've seen a significant increase in auto production versus pre-pandemic first quarter levels. In the year since acquiring AFAS, we've combined our award winning training programs to create the Automotive Training Academy by Assurant. These expanded in-person and virtual programs will allow us to scale faster and adapt to the changing needs of dealers and automotive professionals. Within Global Financial Services, we've added a number of embedded card benefit clients recently, including the previously announced partnership with American Express. We look forward to enhancing these partnerships and building on our existing suite of products. Moving to Global Housing. Net operating income excluding reportable catastrophes grew 17% as we benefited from favorable non-GAAP loss experience, including improved underwriting results. Within our Lender-placed business, we continue to play a vital role in supporting the mortgage industry as we track over 31 million loans. The business remains well positioned and we expect to benefit from investments in our superior customer platform over the long-term. Multifamily housing increased policies by 9% year-over-year to almost $2.5 million as we continue to grow through our affinity partnerships and PMC channel, including seven of the top 10 largest PMCs in the US. We've also continued to grow our sharing economy offerings, which include car sharing, on-demand delivery, and vacation rental. Over the last two years through our partnership with market leaders and on-demand delivery, we tripled the number of deliveries we protect over 1 billion deliveries. While it is too early to gauge whether the pandemic has fundamentally changed consumer demand for these services. We're encouraged by our momentum and the potential for future products and services in the gig economy. Now let's move to our first quarter results and our 2021 outlook. Net operating income excluding cats grew by 13% to $182 million and earnings per share increased 16% to $3.03, demonstrating improved results in Global Housing and continued momentum in Global Lifestyle. Given our strong performance in the first quarter and current business trends, we are increasing our full-year outlook for 2021. We now expect 10% to 14% growth in operating earnings per share excluding catastrophes versus our initial expectation of 9% earnings per share growth. EPS expansion from the $9.88 in 2020 will be driven by high single-digit earnings growth mainly from Global Lifestyle and the lower corporate loss. Results will also benefit from share repurchases, including the completion of our three-year $1.35 billion objective in the initial return of net proceeds from the Global Preneed sale. Our increased outlook largely reflects Global Housing's favorable non-catastrophe loss experienced in the first quarter. As such Housing's earnings are expected to be down only modestly year-over-year from what was a strong 2020. Looking at adjusted EBITDA, excluding catastrophes, the first quarter generated $302 million, an increase of 15% year-over-year. We expect adjusted EBITDA will grow at a modestly higher rate than net operating income in 2021. We ended March with $332 million of holding company liquidity, after returning $80 million to shareholders through common stock dividends and buybacks during the quarter. And we expect to deliver on all of our commitments, sustaining our strong track record of capital return. In addition, throughout the year, we will continue to make strategic investments in our portfolio to position us well for sustained long-term growth. As Alan noted, we are pleased with our first quarter performance as our results across Global Lifestyle and Global Housing remains strong. Before getting into our first quarter performance, I want to provide a quick update on the sale of our Preneed business. In March, we announced our plan to sell the business for $1.3 billion to CUNA Mutual Group. Since signing, we have completed the necessary regulatory filings and we remain on track to close the transaction by the end of the third quarter. Now let's move to segment results for Global Lifestyle. This segment reported net operating income of $129 million in the first quarter, an increase of 7% driven by Global Automotive and Connected Living. In Global Automotive, earnings increased $7 million or 18%, results included a $4 million one-time benefit as well as a gain on investment income related to a specialty asset class from our TWG acquisition, which we don't expect to recur. Year-over-year, underlying performance was driven by another quarter of global organic growth from US CPA and international OEMs as well as some favorable loss experience. Connected Living grew earnings by 3%. However, this was muted by a $7 million favorable client recoverable with an extended service contracts in the prior year period. Underlying performance was driven by mobile subscriber growth in Asia Pacific and North America. Higher trading results from increases in volume and contributions from our HYLA acquisition. For the quarter Lifestyle's adjusted EBITDA increased 11% to $193 million, four points above net operating income growth. This reflects this segment increased amortization related to higher deal related intangibles for more recent acquisitions in Global Automotive and Connected Living. IT depreciation expense also increased, stemming from higher investment. Lifestyle revenue decreased by $85 million. This was driven mainly by a $98 million reduction in mobile trade-in revenue, primarily due to the contract change we disclosed last year. Excluding this change, revenue for this segment was flat. For the full year, we continue to expect Lifestyle revenues to be in line with last year at approximately $7.3 billion. As expected overall trade-in volumes, which flow through fee income increased year-over-year and sequentially. This was driven by four elements. New phone introductions last year, greater device availability, carrier promotions and contributions from HYLA. While the first quarter did benefit from strong mobile trade-in volumes, we do expect it to be a high watermark for the year, given historical seasonal patterns. Since year-end, we've increased covered mobile devices by 600,000 subs driven by continued growth in North America and Asia-Pacific. This year, we continue to expect covered mobile devices to grow mid single-digits compared to 2020, as we go subscribers in key geographies like the US and Japan. As a reminder, we expect the growth rate of earnings to exceed the growth rate of covered mobile devices over time. As we benefit from offering additional products and services to our clients and their end consumers. For 2021, we still expect Global Lifestyle's net operating income to grow in the high single-digits compared to the $437 million reported in 2020. Growth will come from all lines of business particularly Connected Living. Adjusted EBITDA for this segment is expected to grow double-digits year-over-year. Moving now to Global Housing. Net operating income for the first quarter totaled $67 million compared to $74 million in the first quarter of 2020. The decrease was largely due to $22 million of higher reportable catastrophes mainly related to the extreme winter weather particularly from areas like Texas. Excluding catastrophe losses, earnings increased $50 million or 17%. More than two-thirds of the increase was from favorable non-cat loss experience mainly in our specialty offerings, including sharing economy products. We estimate that approximately half of the favorable loss experience in the first quarter was from underwriting improvements, with the remainder of the benefit, driven by favorable loss experience, which we don't expect to recur. In addition, we saw continued growth in multifamily housing. Lender-placed results were up modestly, higher premium rates, and favorable non-Cat loss experience were mostly offset by declining REO volumes from ongoing foreclosure moratoriums. Looking at the placement rate, the modest sequential increase to 1.6% was attributable to a shift in business mix and is not an indication of a broader macro housing market shifts. Revenue decreased 2% related to a reduction in our specialty product offerings, which included the impact from the exit of small commercial as well as lower REO volume. This decrease was partially offset by growth in multifamily housing, which grew 8% year-over-year, driven mainly by our affinity partners. We now expect Global Housing's net operating income excluding Cat to be down modestly compared to 2020. This reflects our stronger first quarter and the assumption of a modest increase in our expected non-Cat loss ratio to more normalized levels for the remainder of the year. We are also monitoring the REO foreclosure moratoriums in any additional extensions that may be announced. As we position for the future, we will continue to invest in some of the business to sustain and enhance our competitive position. At Corporate, the net operating loss was $22 million, which was flat year-over-year. For the full year, we continue to expect the Corporate net operating loss to improve to approximately $90 million as we eliminate enterprise support costs associated with Global Preneed. As we think about the remainder of the year for all of the Assurant, we are beginning to plan for a phase reentry of our workforce post-COVID and we are evaluating our real estate footprint to align with new business and employee need as we adapt to the future of work. This may result in additional expenses throughout the year. I also wanted to provide a quick comment on our investment portfolio. With Preneed moving to discontinued operations, our investment portfolio is now approximately $7.9 billion, excluding cash and cash equivalent. Given Preneed's relatively longer average duration of around 10 years compared to the rest of our business, following the sale of Preneed, our go-forward duration will drop to between 4.5 years to 5 years. As a result our interest rate sensitivity will be reduced by approximately two-thirds. Turning to holding company liquidity, we ended the first quarter with $332 million, which is $107 million above our current minimum target level. In the first quarter, dividends from our operating segments totaled $183 million. In addition to our quarterly corporate and interest expenses, we also had outflows from three main items. $42 million of share repurchases, $43 million in common and preferred stock dividends, and $10 million mainly related to the acquisition of TRYGLE and Assurant Venture Investments. Also in January, we redeemed the remaining $50 million of our March 2021 note. And our mandatory convertible shares converted to approximately 2.7 million common shares during the quarter. For the year overall, we continue to expect dividends to approximate segment earnings subject to the growth of the businesses and rating agency and regulatory capital considerations. We've now completed over 70% of our $1.35 billion capital return objective from 2019 to 2021 and remain confident that we will meet this objective by the end of this year. In addition, we expect to begin incremental buybacks prior to closing the Preneed transaction in the third quarter. The total buybacks associated with the net proceeds from the sale are expected to be returned within one year of the transaction closed. In the second quarter through April 30, we repurchased an additional 95,000 shares for $14 million. In summary, our first quarter results demonstrate the strength of our business and our capital liquidity position. We remain focused on completing the sale of Global Preneed and delivering on our 2021 financial objectives.

increases 2021 outlook to deliver double-digit earnings per share growth. reportable catastrophes, per diluted share $3.03. assurant - for fy 2021, expects net operating income, excluding reportable catastrophes, per diluted share, to increase about 10% to 14%. qtrly total revenues $2,432.6 million versus $2,448.7 million.

David Lesar, our CEO; Jason Wells, our CFO, will discuss the company's third quarter 2021 results. Actual results could differ materially based upon various factors as noted in our Form 10-Q on their SEC filings and our earnings materials. We will also discuss non-GAAP EPS, referred to as utility EPS, earnings guidance and our utility earnings growth target. In providing these financial performance metrics and guidance, we use a non-GAAP measure of adjusted diluted earnings per share. As a reminder, we may use our website to announce material information. Information on how to access the replay can be found on our website. Now I'd like to turn the discussion over to Dave. As you know, we laid out our first ever 10-year plan back at our Analyst Day. We expressed that and are reiterating today that we are a management team who can execute. We believe we will continue to demonstrate that for you. This marks my sixth quarter with CenterPoint and Jason's fifth. I'd like to first start by laying out how we are building a consistent track record of delivery. First, if you recall, the CenterPoint value proposition we laid out at our recent Analyst Day focused on our efforts to achieve sustainable earnings growth for our shareholders, sustainable, resilient and affordable rates for our customers and a sustainable positive impact on the environment for our communities. I believe we are continuing down the path of achieving this value proposition. Each quarter under the new CenterPoint leadership, we have met or exceeded quarterly utility earnings per share and dividend expectations. We have increased our annual utility earnings per share guidance for both 2020 and 2021. And as I will discuss shortly, today, we are increasing our 2021 utility earnings per share guidance once again. Our 2021 through 2024 annual utility earnings per share growth rates of 8% are top decile among our peers, and we also expect to achieve at the mid- to high end of our 6% to 8% utility earnings per share guidance range each year from 2025 to 2030. I am confident in our team's ability to achieve that growth. Last year, we had a $13 billion 5-year capital plan. We increased that to $16 billion in our 2020 Analyst Day. In this year, we increased it yet again to $18 billion plus. We introduced our first ever 10-year capital plan. CenterPoint remains ripe with opportunities across our footprint to expand and harden our system to benefit customers and shareholders. Our current 10-year plan contains no external equity issuances. We will fund the equity portion of our capital needs to internally generated operating cash flows and our already announced strategic transactions. We are also executing on our plan to become a pure-play regulated utility as we approach the closing of the Enable ET merger expected by the end of this year and then our subsequent sell-down of our midstream stake. With the recent settlement agreement among the parties in Arkansas, we are also moving toward the completion of our LDC asset sale. The remaining steps include the Oklahoma approval, which is anticipated to be received in November and the all-party settlement in Arkansas is expected to be approved by mid-December. And with our newest announcement around our industry-leading ESG targets, we are on the path to executing our goals to be net 0 on direct emissions by 2035. We continue to believe that this is an achievable path delivering for customers, regulators, investors and the environment. In the third quarter of 2020, I said that I will not be satisfied until we are recognized as a premium utility. In the theme of our Analyst Day was again establishing a path toward a premium. I believe we are making tremendous strides down that path. The storm headwinds of up to 90 miles an hour, leaving 470,000 of our Houston Electric customers without power. Within three days, we had 95% of the power restored for those customers. And within five days, the whole system was back online. Now for this quarter's headlines. Our year-to-date financial progress has been strong. We are reporting a utility earnings per share beat and are raising our full year outlook this quarter. For the third time this year, we are increasing our 2021 utility earnings per share guidance this time to $1.26 to $1.28 for the full year. And for the first nine months, we've already achieved nearly 80% of that full year goal. More importantly, we are still targeting an 8% annual growth rate for 2022 to 2024. So this raises our guidance for 2022 utility earnings per share to $1.36 to $1.38. For the third quarter of 2021, we reported $0.25 of utility EPS, which compares to $0.29 in the third quarter of 2020. In the third quarter of this year, we had a onetime impact to earnings of $0.04 per share related to our most recent Board implemented governance changes. Jason will get into more detail on the variances shortly. As I mentioned earlier, we have increased our five-year capital plans to $18 billion plus over the next five years and $40 billion plus over the next 10 years. This is nearly a 40% increase in our five-year capital investment plan since the third quarter of 2020. This includes new opportunities that stem from the latest legislative session in Texas. One of those opportunities was the ability to lease and put into rate base mobile generation units. We move quickly on this opportunity and procured [Indecipherable] five-megawatt and 30-megawatt mobile generation units, some of which we were able to deploy during Hurricane Nicholas as backup while crews worked to repair our system. And recently, during an ERCOT forecasted Texas wide load-shedding event, the Texas PUC [Indecipherable] to make sure our units were ready to support customers. We were the first the utility in the state to act on this legislative opportunity and had them in place to utilize them in the way the law intended. We look forward to mobilize quickly on the other tools provided to us by the Texas legislature to improve the resiliency of the electric grid and help reduce the risk of prolonged outages. We already have an outstanding RFP for additional mobile generation, which could bring our total up to 500 megawatts and hope to have this procured in the coming months. We believe that with the deployment of these additional tools, we will be able to mitigate some of the impacts of future extreme weather events on our customers. Due to recent weather events in both Louisiana and Texas, we are running slightly behind on our capital spending plans on a year-to-date basis. These weather events pulled away many of our contract crews, so they could provide mutual assistance to our fellow utilities, especially in Louisiana. Therefore, while deployed elsewhere, they cannot work on our capital projects, but we have a catch-up plan in place and anticipate making the short fall of. In anticipation of continued labor shortages and as we ramp up our capital plans in the coming years, we have now moved to procure additional contractor resources from multiple suppliers. We believe that this will help to support continuity and crews on a long-term basis and reduce the impact of any labor disruptions in executing our $40 billion-plus capital spend over the next 10 years. We remain committed to our continuous improvement cost management efforts and our target of 1% to 2% average annual reductions. We've already realized the benefit of some of these improvements this year. We stated in the second quarter that we could accelerate approximately $20 million of recurring O&M work forward from 2022 into this year if we had the available resources. So far, we've achieved approximately 20% of this goal year-to-date and remain confident around our team's ability to continue to execute toward this goal for the balance of the year. This allows us the luxury of reducing near-term run rate O&M costs which helps to mitigate rate pressures while maintaining continued focus on reliability and safety of our service for customers, all while sustaining growth for our shareholders. In addition to O&M continuous improvement efforts, we are fortunate to operate in growing jurisdictions. This combination plays a key role in keeping our growth plans affordable for our customers. As we discussed during our Analyst Day, Houston is the fourth largest city in the U.S. and the only one of those four that's growing. Houston's organic growth has been multi-decades long. That organic growth rate continued for yet another quarter. We are also seeing strong growth in many of our other jurisdictions as well. On a year-over-year basis, we saw about 2% customer growth for electric and 1% for natural gas through September. Again, this organic growth is the luxury, most other utilities just do not have. Now let me shift gears and give a brief regulatory update. A recent highlight in Indiana happened just this past week. As part of our long-term electric generation transition plan, we received the CPCN approval from the Indiana Utility Regulatory Commission for the first tranche of solar generation, 75% of which we expect to own and 25% due a PPA. This approval shows the commission's alignment and support of our 2020 IRP, which bridges our coal generation into a mix of lower carbon and renewable sources. We anticipate the CPCN decisions for our Gas CT plant in the second or third quarter of 2022 and the incremental solar PPA in the third quarter of 2022. As outlined in our IRP, we are targeting to own approximately 50% of our total solar generation portfolio. Our continued build-out of renewables is a key driver in achieving our net zero direct emissions goal by 2035. Shifting to gas cost recovery from the February winter storm. We continue to make progress. And as we previously mentioned, we have mechanisms in place or have begun recovery in all jurisdictions. We are happy to report that just this past week, we reached a settlement on the prudence proceedings supporting securitization of 100% of gas costs in Texas, including all of related carrying costs. We look forward to the commission approval of the agreement. We anticipate a financing order for the securitization bonds by the end of the year. With this time line, we anticipate receiving the proceeds sometime mid next year. In Minnesota, we started a recovery as of December and are working with stakeholders on ways to reduce the impact on our customers. We filed a rate case earlier this week, and also proposed an alternative rate stabilization plan to address the unique set of circumstances customers are experiencing. The full rate case requests $67.1 million per year, while the rate stabilization plan requests $39.7 million per year and an extended recovery period for winter storm costs. The proposed rate stabilization plan would resolve the rate case and limit the bill impact on customers, in part by recovering the winter storm costs over a 63-month period. We're asking the PUC to review and approve the stabilization plan by the end of this year, which would allow rates to take effect on January 1. To summarize, we are working with stakeholders to align our focus on safety and related investments while minimizing the burden to our customers. Largely as a result of mechanisms in our Houston Electric in Indiana South gas jurisdictions, we have recently received approval for $40 million of increased incremental annual revenue. As discussed in our Analyst Day, we anticipate approximately 80% of our 10-year capital plans to be recovered through interim mechanisms, which demonstrates the constructive jurisdictions in which we operate. In Texas, our PUC is now appointed a fourth commissioner. Jason and I have now had the opportunity to meet all four commissioners and are very encouraged by the dialogue and expertise that all of these commissioners bring to the PUC. We look forward to continued engagement with the commissions in all of our jurisdictions. So those are the headlines for the quarter. I remain excited about what's to come for CenterPoint. We have a growing track of execution and believe it more than demonstrates what we can do in the near future and the unique value proposition that CenterPoint offers to you. This marks my one year of earnings calls with CenterPoint and the story keeps getting better. To reemphasize Dave's message, we are focused on establishing a track record of consistent execution, and I fully believe the best is yet to come here at CenterPoint. On a GAAP earnings per share basis, we reported $0.32 for the third quarter of 2021 compared to $0.13 for the third quarter of 2020. Looking at slide five, we reported $0.33 of non-GAAP earnings per share for the third quarter of 2021 compared to $0.34 for the third quarter of 2020. Our utility earnings per share was $0.25 for the third quarter of 2021, while midstream investments contributed another $0.08. Favorable growth in rate recovery, lower interest expense and reversal of the net impacts from COVID last year, each contributed $0.01 of favorability. Board implemented governance changes recorded this quarter and another $0.03 of unfavorable variance attributable to weather and usage. For context, we experienced 73 fewer cooling degree day in Houston for the third quarter of 2021 compared to the third quarter of 2020. We estimate that each cooling degree day above normal has approximately a $70,000 a day impact in our Houston Electric business. Turning to slide six. For the first nine months, we've achieved nearly 80% of our full year 2021 utility earnings per share guidance, which we are now raising to $1.26 to $1.28. And as Dave said, we are also raising our utility earnings per share guidance for 2022 to $1.36 to $1.38, which is an 8% increase from our new 2021 estimates. Looking beyond that, we are focused on delivering 8% annual utility earnings per share growth through 2024 and at the mid- to high end of our 6% to 8% annual utility earnings per share range over the remainder of our 10-year plan, strong growth each year and every year, no CAGRs for earnings. The last thing I'll mention for this quarter is the share count. Our preferred Series B shares converted into 36 million common shares as of September 1, further reducing the number of share classes outstanding. We expect the conversion will have no impact on earnings as the increase in shares is effectively offset by the termination of our Series B dividends. Going forward, I want to reiterate we have no external equity included in our current [Indecipherable] and only expect our share count to modestly increase from dividend reinvestment or incentive plans. Now I want to offer some color on the capital plans supporting our rate base and utility earnings per share growth. We've spent approximately $2.3 billion year-to-date on capital investments. As Dave mentioned, we had some slight delays due to recent weather events and are focused on making that up over the coming months. We outlined on our Analyst Day the three buckets that we are investing in, safety, reliability and growth and enabling clean investments that are included in our $40 billion plus 10-year capital investment plan. This investment profile should benefit our shareholders, our customers and the environment. We see those opportunities weighted nearly 60% toward investments in our electric business throughout the plan. While we are slightly behind the capital plan on a year-to-date basis, we are in the midst of ramping up to a sustained increase in our capital investments and we are restructuring contract crews in a way that helps support our labor needs to execute this level of investment. We are confident we will make up the shortfall by early 2022. Moving to the financing updates. Our current liquidity remains strong at $1.8 billion, including available borrowings under our short-term credit facilities and unrestricted cash. Our long-term FFO to debt objective remains between 14% and 15%, aligning with Moody's methodology and is consistent with the expectations of the rating agencies. As mentioned during the Analyst Day, it's our intention to stay within this range throughout the course of our long-term plan. Lastly, as we near the end of the calendar year, we are getting incrementally closer to the expected closing of the strategic transactions we've announced. We recently filed a settlement in Arkansas that represents an agreement among all parties. We anticipate that Arkansas Commission will issue its final approval by mid-December. In Oklahoma, a hearing was held on November 3, and we expect a final order soon. Finally, as Energy Transfer expressed on their earnings call earlier this week, the Enable and Energy Transfer merger is also expected to close before year-end. Once that transaction closes, we will remain absolutely focused on reducing and then eliminating our exposure to midstream through a disciplined approach. Analyst Day, we anticipate being fully exited from the midstream sector by the end of 2022. We will then be nearly a pure-play regulated utility. As we continue to express, we take our commitment to be good stewards of your investment very seriously and realize our obligation to optimize stakeholder value. And with that, we look forward to more of these shorter earnings calls in the future. As you heard from us today, and others from our full management team during the Analyst Day, the outlook for CenterPoint just keeps getting better. As I said, we now have six quarters of meeting or exceeding expectations, but we believe there is much more to come. We are demonstrating the pathway to premium, and we hope that you will be on board with us as a shareholder when that happens. We will now take a few questions being mindful of today's earnings schedule and the upcoming EEI conference.

q3 non-gaap earnings per share $0.33. q3 earnings per share $0.32. utility earnings per share guidance range for 2022 raised to $1.36 - $1.38. reiterating 8% utility earnings per share annual growth rate target for 2022 through 2024. raising 2021 non-gaap utility earnings per share guidance range to $1.26 - $1.28.

Joining me on the call today are Gene Lee, Darden's Chairman and CEO; Rick Cardenas, President and COO; and Raj Vennam, CFO. Any reference to pre-COVID when discussing first quarter performance is a comparison of the first quarter of fiscal 2020. This is because last year's results are not meaningful due to the pandemic's impact on the business and the limited capacity environment that we operated in during the first quarter of fiscal '21. We plan to release fiscal 2022 second quarter earnings on Friday, December 17 before the market opens, followed by a conference call. Rick will give an update on our operating performance, and Raj will provide more detail on our financial results and an update of our fiscal '22 financial outlook. Our teams continue to operate effectively in a challenging environment. And I'm proud of their focus and ability to deliver another quarter of strong sales and profitability. All of our segments delivered record first quarter profit. Our ability to drive profitable sales growth is a testament to the strength of our business model and our continued to adherence this strategy we implemented six years ago. Our brands remain laser focused on executing our back-to-basics operating philosophy anchored in food, service and atmosphere, while at the Darden level, we concentrate on strengthening and leveraging our four competitive advantages of significant scale, extensive data and insights, rigorous strategic planning, and our results-oriented culture. Our first quarter sales trends started strong. This momentum carried over from the fourth quarter, and they further strengthened and peaked in July. However, in August, sales slowed due to the impact of the Delta variant, but remained positive relative to pre-COVID levels. For the first quarter, sales per operating week were up 4.8% relative to pre-COVID. And through the first three weeks in September, sales per operating week were up approximately 7% relative to pre-COVID. Regardless of the operating environment, our unwavering commitment to our strategy ensures we will stay focused on what we do best, providing exceptional guest experiences. Throughout this unique period, our operators have shown tremendous flexibility, while remaining locked in on the fundamentals of running great restaurants. At the same time, our focus helps us continue to find ways to make our competitive advantages work even harder for us. One of the ways we do this is by leveraging our ability to open value-creating new restaurants. We opened seven new restaurants during the quarter, all of which are exceeding our expectations. And we remain on track to open approximately 35 to 40 new restaurants this fiscal year. A long-term framework calls for 2% to 3% sales growth from new restaurants. Given our stronger unit economics, our development team is working hard to build out a pipeline of locations for fiscal '23 and beyond that would put us at or above the higher end of our framework. As I visit our restaurants and talk with our teams, I'm constantly reminded why our people are our greatest competitive advantage. Their passion for being of service to our guests and each other fuels our success. Our success this quarter was driven by the work we have done to simplify our processes and our menus to drive execution at the highest level. We also paused any new initiatives in order to further eliminate distractions for our restaurant teams and allow them to focus on what it takes to run 14 great shifts a week. In addition, To-Go sales continue to benefit from the ongoing evolution of our digital platform. This platform makes it simpler for our guests to visit, order, pay and pick up, all while making it easier for our teams to execute at the highest level, both in the dining room and off-premise. This served our teams well, as To-Go sales remained high through the quarter. For the quarter, off-premise sales accounted for 27% of total sales at Olive Garden and 15% of total sales at LongHorn Steakhouse. Digital transactions accounted for 60% of all off-premise sales during the quarter, and guest satisfaction metrics for off-premise experiences remained strong. As we navigate short-term external pressures, our focus is simple. We must continue to win when it comes to our people and product. From a people perspective, the employment environment is challenging. That's why our top priority during the quarter was staffing our restaurants. Our operators and HR teams have done a great job sourcing talent. We recently launched a new talent acquisition system that helps increase our pool of candidates by allowing applicants to apply and schedule an interview in five minutes or less. Additionally, our brands are successfully utilizing their digital platforms, including social media to promote our employment proposition and drive applications. As a result, we are netting more than 1,000 new team members per week, and our team member count is approximately 90% of our pre-COVID levels. The biggest operational challenge we've been dealing with is a temporary exclusion of team members identified through contact tracing. Given our commitment to health and safety, we are diligent about exclusions, but they create sudden staffing disruptions for our operators. Despite being appropriately staffed in the majority of our restaurants, these exclusions reduce the number of available team members with little notice for our operators to prepare. This volatility can negatively impact sales in these restaurants for the duration of the exclusion period. Getting and staying staffed also requires a strong focus on training. As we continue to hire, it is critical that we have the right training in place to ensure we continue to execute at a high level. That's why our operations leaders are validating the quality of our training during their restaurant visits, ensuring new team members receive the appropriate amount of training and successfully complete the required assessments. Our team members are the heart and soul of our business, and we are constantly focused on our employment proposition. The investments we have made and continue to make in our people are helping us retain and attract top talent, and I'm confident in our ability to address our staffing needs. When it comes to product, our significant scale, including our dedicated distribution capabilities, enables us to manage through the challenges affecting the global supply chain and maintain continuity for our restaurants. Our supply chain team continues to work hard to ensure we successfully manage through any spot outages we encounter, and our restaurants have the key products they need to serve our guests. During the quarter, we had to secure more product than usual on the spot market, because our brands exceeded sales expectations and some of our suppliers experienced capacity challenges. Raj will share more details in a moment, but these higher sales volumes, as well as freight costs have contributed to higher-than-expected inflation. Our scale advantage provides the opportunity for us to price below our competition and inflation, which is a strategy we have executed successfully. Our competitive advantage of extensive data and insights allows us to be surgical in our pricing approach, positioning us well to deal with these higher costs and maintain our value leadership. The rich insights we gather from our analytics help us find the right opportunities to price in ways that minimize impact to traffic over time. We still expect pricing to be well below the rate of inflation for the year, further strengthening our value proposition. Ensuring our restaurants are appropriately staffed and our supply chain continues to avoid significant disruptions, will be the most important factors of our continued success in the short term. To wrap up, I also want to recognize our outstanding team. I'm inspired by the dedication and winning spirit that our leaders and team members, both in our restaurants and in our support center continue to demonstrate. Total sales for the first quarter were $2.3 billion, 51% higher than last year, driven by 47.5% same restaurant sales growth and the addition of 34 net new restaurants. Diluted net earnings per share from continuing operations were $1.76. We returned approximately $330 million to our shareholders this quarter, paying $144 million in dividends and repurchasing $186 million in shares. We had strong performance this quarter, despite increased inflationary pressures with EBITDA of $370 million and EBITDA margin of 16%, 250 basis points higher than pre-COVID. Our sales results were better than expected requiring us to go out and purchase more product on the spot market, in particular, proteins, as our LongHorn and Fine Dining segments had the largest sales outperformance versus our expectations. The market for proteins this quarter was very strong with spot premiums as high as 30% above our contracted rates. This resulted in higher average cost per pound for our proteins contributing to total commodities' inflation for the quarter of approximately 5.5%. Given the heightened attention on inflation, I want to clarify that we use a conventional approach to calculating the rate of inflation. We're only measuring change in average price holding product mix and usage constant. We follow the same approach for calculating wage inflation rate, in which we keep the hour and job mix constant and only look at change in wage. While we expect higher rates of inflation to persist for the remainder of the year versus what we initially planned, we believe our scale and recent enhancements to our business model enable us to deliver significant margin expansion, while still adhering to our strategy of pricing below inflation. Now looking at the P&L for the first quarter of 2022, we're providing a comparison against pre-COVID results in the first quarter of 2020, which we believe is a more comparable to normal business operations and with how we've been talking about our margin expansion. For the first quarter, food and beverage expenses were 150 basis points higher, driven by investments in both food quality and pricing significantly below inflation. Restaurant labor was 110 basis points lower, driven primarily by hourly labor improvement, due to efficiencies gained from operational simplifications and was partially offset by elevated wage pressures. Restaurant expenses were also 110 basis points lower due to sales leverage. Marketing spend was $45 million lower, resulting in 220 basis points of favorability. As a result, restaurant-level EBITDA margin for Darden was 20.9%, 290 basis points better than pre-COVID levels. G&A expense was 30 basis points higher, driven primarily by approximately $10 million of stock compensation expenses related to the immediate expensing of equity awards for retirement eligible employees. Additionally, we had approximately $5 million of expense related to mark-to-market on our deferred compensation. As a reminder, due to the way we hedge this expense, it's largely offset on the tax line. Our effective tax rate for the quarter was 12.6%, which benefited from the deferred compensation hedge I just mentioned. Excluding this benefit, our effective tax rate would have been closer to the top end of our guidance range for the year. Turning to our segment performance. First quarter sales at Olive Garden were flat to pre-COVID, while segment profit margin increased 220 basis points. This was strong performance despite elevated inflation and two-year check growth of only 2.4%. LongHorn had the best sales performance across our segments with sales increasing by 26% versus pre-COVID, while growing segment profit margin by 250 basis points. Sales at our Fine Dining segment increased 24% versus pre-COVID in what's traditionally their slowest quarter from a seasonal perspective. Segment profit margin grew by 490 basis points, driven by strong sales leverage and operational efficiencies, which more than offset double-digit commodity inflation. Our Other segment grew sales by nearly 5% and segment profit margin by 360 basis points. We continue to be excited about the long-term prospects of this segment, as it's driving the strongest underlying business model improvement of all our segments. Finally, turning to our financial outlook for fiscal 2022. Based on our performance this quarter and expected performance for the remainder of the year, we increased our outlook for the full year. We now expect total sales of $9.4 billion to $9.6 billion, representing growth of 7% to 9% from pre-COVID levels; same restaurant sales growth of 27% to 30% and 35 to 40 new restaurants; capital spending of $375 million to $425 million; total inflation of approximately 4% with commodities inflation of 4.5% and total restaurant labor inflation of 5.5%, which includes hourly wage inflation of about 7%; EBITDA of $1.54 billion to $1.60 billion; and annual effective tax rate of 13% to 14% and approximately 131 million diluted average shares outstanding for the year, all resulting in diluted net earnings per share between $7.25 and $7.60. This outlook implies EBITDA margin growth versus pre-COVID, in line with our previous outlook as higher sales are helping offset elevated inflation. This will be a net negative to second quarter from a sales perspective.

darden restaurants q1 earnings per share $1.76 from continuing operations. q1 earnings per share $1.76 from continuing operations. sees fiscal 2022 same-restaurant sales versus. fiscal 2021 of 27% to 30%. sees 2022 total sales of approximately $9.4 to $9.6 billion. sees 2022 diluted net earnings per share from continuing operations of $7.25 to $7.60.

Dave Lesar, our CEO; Jason Wells, our CFO; and Tom Webb, our Senior Adviser, will discuss the company's second quarter 2021 results. Actual results could differ materially based upon various factors as noted in our Form 10-Q, other SEC filings and our earnings materials. We will also discuss non-GAAP EPS, referred to as Utility EPS, earnings guidance and our utility earnings growth target. In providing these financial performance metrics and guidance, we use a non-GAAP measure of adjusted diluted earnings per share. As a reminder, we may use our website to announce material information. Information on how to access the replay can be found on our website. Now I'd like to turn the discussion over to Dave. Now while we are always keen to discuss our great future, we are planning to discuss our exciting longer-term strategy updates at our Analyst Day, which will take place on September 23 here in Houston. Though this is our second Analyst Day in less than 12 months, we feel that it is warranted as we are now well into our strategic transition and we want to use that forum to update our investors on our longer-term business plan, earnings capacity, financial metrics and the net zero emissions target that we will be sharing with you. We are also excited for the opportunity to spend more time with you in our hometown here in Houston and to see you in person. Let me quickly remind you of just how far we have come in the last year. A year ago, CenterPoint was going through a strategic review at the direction of our Business Review and Evaluation Committee or BREC. The goal of the review was to optimize shareholder value and address specific shareholder concerns. Initially, in my role as Chairman of the BREC, and then later when I became CEO, it was crystal clear to me that while the company had a great asset base and talented employees, we have not unlocked all of our potential, and certainly had not taken full advantage of all of our inherent opportunities. Before the BREC process, CenterPoint was targeting modest earnings per share growth and had reduced capital spending in our regulated businesses. We had work to do to strengthen our regulatory relationships. The company had previously announced a strategic review of Enable, but had not found an executable opportunity to actually reduce exposure to its midstream investments. Our O&M expenses were historically growing, and we needed a stronger balance sheet. We had minimal renewables opportunities on our radar screen, and we were in search of a permanent CFO. So yes, the list of challenges was long. I mentioned these not to revisit the adversities our investors and company we're experiencing, but to highlight for you the aggressive speed and approach used by our new team to attack and resolve the challenges and headwinds we faced. Let me quickly recap our progress. I substantially refreshed and diversified our Executive Committee, and we now have what I believe is a best-in-class management team. We announced an updated five-year strategy that prioritizes investment in our regulated businesses and boosted our planned capital spending by about 25% to $16 billion. We instituted a 10% utility rate base CAGR, well above our peer group average of 8%. That rate base growth then supported an increased long-term utility earnings per share target growth rate of 6% to 8%, which is also above the consensus peer average of 6%. To efficiently fund our growth, while repairing our balance sheet, we announced the sale of our Arkansas and Oklahoma gas LDCs at a landmark earnings multiple of 2.5 times rate base. We were instrumental in the Enable and Energy Transfer merger which, once closed, will provide us a pathway to eliminate our exposure to midstream. And we announced a commitment to a 1% to 2% annual reduction in O&M over the five years to keep our customer rate growth manageable. We recently announced changes to our Board leadership to bring our governance structure in line with best practices and shareholder expectations, and we will be announcing a commitment to an industry-leading net zero carbon commitment at our Analyst Day. So in my view, we certainly have walked the talk, and through timely and aggressive actions overcome many of the headwinds we faced. Now it's time for CenterPoint to switch gears. We are going to use the same aggressive approach and organizational speed to take advantage of the tailwinds we have today. Our strong execution, coupled with a privilege to serve some of the fastest-growing regions in our country, have created the foundation for CenterPoint to trade as one of the premium utilities in the U.S. Believe me, we are just getting started. Our six-month financial performance in 2021 has been strong. Today, we are raising our 2021 Utility earnings per share guidance range to $1.25 to $1.27. This 8% growth projection in '21 puts us at the high end of our 6% to 8% Utility earnings per share annual growth target. And as a reminder, this increase in guidance is after the dilution impact of the 18% increase in our share count that we experienced in 2020. When we compare our Utility earnings per share growth to analysts' long-term consensus growth for our peers, we are now in the top decile. And as you would expect, we are also reaffirming both our long-term 6% to 8% Utility earnings per share annual growth target and 10% rate base compound annual growth rate target. This 10% rate base growth also exceeds the average 8% rate base growth of our peer group. For the second quarter of 2021, we reported strong results, including $0.28 of Utility earnings per share compared to $0.18 for the second quarter of 2020. The comparison to Q2 2020 is a bit noisy, and I believe essentially irrelevant as both quarters included a number of one-off items. Q2 2020 results also reflected the impact of COVID on our business. The bottom line for me is to focus on the reality that our Utility earnings per share is expected to grow 8% this year over last year, and then target 6% to 8% growth from there. Our O&M continuous improvement programs have strengthened our results for the first six months of 2021. We are already on track to save over $40 million in total O&M costs this year alone, while maintaining our focus on safety. This is almost 3% of our annual O&M cost. However, when compared to last year's second quarter, our O&M costs are actually up a bit. Again, this is just more noise that I don't worry about as last year's second quarter O&M costs were artificially depressed by the impact of COVID and disconnect moratoriums. We are still absolutely committed to our continuous improvement cost management efforts in our target of 1% to 2% annual reductions in O&M. In fact, as a result of our excellent 2021 results to date, we were in the fortunate place to be able to already make a management decision and begin pulling recurring O&M work forward from 2022 into the last six months of this year and still be able to hit the 8% Utility earnings per share growth for this year. This allows us the luxury of reducing near-term run rate O&M costs today, and immediately reinvesting them for the future long-term benefit of our customers and investors. We continue to see industry-leading organic customer growth rates. Despite COVID, our Houston service territory continues its 30-plus years of consistent growth. Overall, we saw about 2% customer growth for electric and 1% for natural gas for the first six months of the year when compared to the prior year. The growth is supported by the highest level of new home starts in Houston since 2005. This continued and consistent growth reinforces the value of the fast-growing markets that we serve. This organic growth plays a key role in keeping our service costs reasonable for our customers. Moving to capital investments. We have invested approximately $1.5 billion for the first six months of this year and are still on track to invest approximately $3.4 billion for the full year 2021. More importantly, we now have better line of sight to additional capital investment opportunities beyond the five-year $16 billion investment plan we outlined on our Analyst Day. New Texas legislation provides more tools to transmission and distribution utilities to improve the resiliency of the electric grid and helps minimize the risk of prolonged outages and allows us to put all of this into rate base. Some of these laws include the ability to lease and put into rate base, backup battery storage capacity for resiliency and to assist with restoring power. Next, the ability to lease and put into rate base emergency generation, which may include mobile generation capabilities. The ability to immediately procure, store and put into rate base long lead time items related to restoring power, and the allowing of economic versus resiliency justifications for new transmission projects. Based on initial analysis, these legislative changes provide support to increase our five-year capital investment plan by at least $500 million. Now this is on top of the $1 billion in reserve capital investment opportunities we previously identified during our last Analyst Day, but were not incorporated into that plan. Just as important, we will have the ability to efficiently fund $1.1 billion of these incremental opportunities. This is primarily due to the incremental proceeds expected from the sale of our gas LDCs and the execution of tax mitigation strategies, which Jason will discuss shortly as well as additional debt, assuming a roughly 50-50 cap structure. Even better, all of this is before the additional proceeds we anticipate from the sale of Energy Transfer units given the significant appreciation in value since the Enable and Energy Transfer merger was announced. We are in the midst of quantifying what the whole new slate of organic opportunities will look like, and we'll be in a position to provide more detail at our Analyst Day in September. However, just as a teaser, we are confident that we will be in a position to announce an increase to our previous five-year investment plan, fund that increase with no incremental equity and execute on projects that will continue to improve the resiliency and safety of our systems for the benefit of our customers, a very nice trifecta. Now I will briefly touch on strategic initiatives, which we have announced over the recent months, including our gas LDC sale and our planned exit of our midstream investment. We know that investors are highly focused on the ultimate completion of these initiatives, and we believe we will achieve our timing expectations. We continue to make progress on the gas LDC sale and still anticipate closing by the end of the year. We are working closely each day with Summit to secure regulatory approvals for the sale and to successfully transition that business. Turning to the Enable transaction. We still anticipate the transaction between Enable and Energy Transfer to close in the second half of the year. We remain absolutely focused on reducing and then eliminating our midstream exposure through a disciplined approach. Now to be clear, it would be very unlikely for either of these transactions to close prior to our September Analyst Day. And finally, to reiterate what we said when we announced the news of these two transactions in our last quarterly call, completing these transactions will not change our industry-leading 6% to 8% Utility earnings per share growth target or 10% rate base compound annual growth rate target. Finally, I want to highlight the Natural Gas Innovation Act that recently passed in Minnesota. This is a landmark law that establishes a new state regulatory policy that creates additional opportunities for a natural gas utility to invest in innovative, clean energy resources and technologies, including renewable natural gas, green hydrogen and carbon capture and further demonstrates the forward-thinking mindset of the jurisdictions that we serve. This is a successful outcome for all stakeholders as we work to collectively achieve lower greenhouse gas emission reduction goals. With the approval from the Minnesota Public Utility Commission, a utility can invest up to 1.75% of our gross operating revenue in the state annually. This opportunity increases up to 4% of gross operating revenues by 2033. Under the new law, we expect to submit our first innovation plan to the PUC next year. This law aligns with our steadfast commitment to environmental stewardship and more specifically, our carbon reduction goals. Our customers are asking for ways in which we can deliver not only safe and reliable, but cleaner electricity and gas, and we are working to achieve that. Across jurisdictions, we are collaborating to find ways to introduce more renewable fuels into our systems as we firm up our goal to achieve a net zero target. We look forward to unveiling this in September during our Analyst Day. For now, I'll just remind everyone how thrilled I am to be able to deliver these messages. As I've said, this marks one year for me as CEO, and a lot has changed. I look forward to the calls every quarter, so I can proudly share our team's accomplishments with you. I strongly believe the strategy we have laid out and the progress we have made so far more than demonstrates what a unique value proposition CenterPoint offers. While I don't quite have a full year with CenterPoint under my belt, I am just as energized as Dave by our recent execution and more importantly, about the path we are on to becoming a premium utility. Let me get started by discussing our earnings for the second quarter of 2021. On a GAAP earnings per share basis, we reported $0.37 for the second quarter of 2021 compared to $0.11 for the second quarter of 2020. Looking at slide four, we reported $0.36 of non-GAAP earnings per share for the second quarter of 2021 compared to $0.21 for the second quarter of 2020. Our Utility earnings per share was $0.28 for the second quarter of 2021, while Midstream investments contributed another $0.08. As Dave mentioned, there were a few onetime items for both quarters that made the comparison a bit noisy. This included favorable impacts for the second quarter of 2021, inclusive of $0.05 attributable to deferred state tax benefits. Of this $0.05 in total, $0.03 of the benefit was related to legislation in Louisiana that eliminated the NOL carryforward limitation period. This amount is included in our Utility earnings per share results. The remaining $0.02 of benefit was due to Oklahoma's revision of the corporate tax rate, which is a favorable driver in our midstream segment. Our 2020 Utility earnings per share included a negative $0.06 impact due to COVID. Beyond those onetime items, other notable drivers for the second quarter of 2021 include customer growth and rate recovery, which contributed about $0.04 of favorable impacts as well as miscellaneous revenue contributing another $0.02 of favorable impacts. These were partially offset by a negative $0.02 impact from the share dilution resulting from the May 2020 issuance and a negative $0.03 for unfavorable O&M variance. So there's a lot of noise when comparing to second quarter of 2020 as that was the quarter that most impacted by COVID worldwide. I look through that noise, and I think you should, too. The bottom line is we expect to grow our Utility earnings per share 8% this year and target 6% to 8% thereafter. And that's what we should all focus on. As Dave mentioned, O&M is a bit noisy this quarter as well. The key takeaway is we are delivering on our planned efficiencies of over $40 million in cost reductions for the year, and are now beginning to accelerate O&M work from 2022. This will help improve reliability of our service for our customers while sustaining growth for our shareholders. With two quarters of financial results behind us, we have good line of sight to our full year 2021 earnings per share outperformance. Our disciplined execution and tailwinds led us to raise our Utility earnings per share guidance range to $1.25 to $1.27 per share for the full year, which is at the high end of our 6% to 8% annual Utility earnings per share growth target. Beyond 2021, I want to reiterate, we are focused on growing Utility earnings per share at 6% to 8% each and every year. And we look forward to discussing incremental drivers over a longer-term horizon during our September Analyst Day. Moving to a discussion of future capital opportunities as shown on page five. We are currently developing our full analysis of additional capital opportunities resulting from bill signed into effect in Texas during the last legislative session. There will be some shorter-dated opportunities that develop such as the ability to procure long lead time items or to lease a portion of battery storage or backup generation across our footprint, and then some longer-dated projects such as transmission opportunities through economic justification. Based on our first look, we have confidence that new Texas legislation will support at least $500 million of incremental capital investment opportunities over just our current five-year plan. This number will likely increase as we work with stakeholders to refine the implementation of this new legislation and develop the longer-dated plan to incorporate some of these opportunities. We are confident the new tools we have been providing will help create a more resilient electric grid and help reduce the risk of prolonged outages. Regarding the previously identified incremental $1 billion, we may be able to deploy above our 2020 Analyst Day plan of $16 billion. This incremental capital spending is likely to be allocated toward recurring system improvements to accelerate the improvement in resiliency, reliability and safety of our services. We will provide a more comprehensive update on this additional capital spend in our upcoming Analyst Day, but it is important to highlight any incremental capital we include in this plan won't begin contributing to earnings until 2023 at the earliest, as we will begin recovering incremental spend the year following the investment. As far as the funding sources for these incremental capital opportunities, we continue to take advantage of a number of tailwinds that will allow us to incorporate additional capital spend. As we reported last quarter, and Dave reinforced, we will receive an incremental $300 million of proceeds above our original plan once the gas LDC sale closes. Additionally, we have continued to refine the estimate of the incremental benefit for the method we use to determine the amount of repairs expense that can be deducted for tax purposes. While we are still refining this study, we have confidence that the benefit will generate at least $1 billion in incremental tax deductions, resulting in at least $250 million in additional cash to us and likely more. This enhanced method for determining repairs expense is an efficient way for us to fund these capital investment opportunities, which improve the resiliency and safety of our systems for the benefits of our customers. The combination of these improved sources of funding, coupled with debt, that will be authorized under our regulatory capital structure, supports incremental investments of at least $1.1 billion. And importantly, this amount is before we consider any additional proceeds due to the unit appreciation of Energy Transfer. Moving to the financing updates. We closed our $1.7 billion debt issuance in May, which was comprised of $700 million of three-year floating rate notes, $500 million of five-year fixed rate notes at 1.45% and $500 million of 10-year fixed rate notes at 2.65%. The proceeds was to refinance $1.2 billion of near-term maturities at the parent as well as to pay down commercial paper. Based on our current financing plans, we have no further issuance needs for 2021. Our current liquidity remains strong at $2.2 billion, including available borrowings under our short-term credit facilities and unrestricted cash. Our long-term FFO to debt objective is between 14% and 15%, aligning with the Moody's methodology and is consistent with the expectations of the rating agencies. We continue to actively engage with them and they have informed us that they are comfortable with the outlook and thresholds we've indicated. Based on our current financing plans, we will not issue any incremental equity through an aftermarket equity program in 2022, as previously discussed, and are evaluating if or when we would initiate it beyond that. As we've said in the past, we take our commitment to be good stewards of your investment very seriously and realize our obligation to optimize stakeholder value. I am energized with our execution over the last year, and I am confident we are positioning CenterPoint to be a premium utility moving forward. Those are the updates for the quarter. As mentioned, we'll be hosting an Analyst Day here in Houston on September 23. We look forward to the opportunity to engage and introduce you to the depth of the CenterPoint team then. This will be Tom's last call with us, as Tom's work here at CenterPoint is winding down. I want to extend our sincerest appreciation to Tom for his counsel and support over the past year. I have, and I know we all have benefited greatly from his time here. I finally remember your visit to Kalamazoo a year ago, went over Dana's cooking in a bottle of nicely aged Bordeaux wine, I explained how I was busy and retired. I was humbled to be asked and honored to help in a very small way on your extensive checklist. Top of your list was identifying and attracting one of the very best CFOs in the business. You already have made immediate critical improvements that will be lasting. CenterPoint has transformed in less than a year, selling noncore, nonutility businesses, think Enable securing more efficient financing, think LDC sales, driving clean energy, think coal closures, renewable growth and a lot more to come, and accelerating performance, think continuous improvement. We are witnessing the emergence of a premium utility with sustainable, predictable earnings per share growth every year. I trust you see it, feel it. We truly do sweat the details so you don't have to. You'll see bumps in the road, serious challenges like the winter storm that impacted many utilities. I bet you had doubts. But watch CenterPoint, this team promptly addresses challenges to protect our customers and deliver for you, our investors. With important capital investment to deliver needed improvements for our customers, our rate base growth target at 10% substantially outstrips the peer average at about 8%. Our resulting annual Utility earnings per share growth target of 6% to 8% is strong. We expect it to be at the high end of the range this year. And as Dave mentioned, that's top decile. Customer growth of 2% is just the level our peers would celebrate. Coupled with O&M reduction of 1% to 2% a year, this creates a lot of headroom for needed capital investment. Our five-year plan includes 1% to 2% cost reduction every year. Our plan for this year is for a fast start, down more than $40 million or 3%. And with a fast start, we already are pulling work ahead from 2022. The cost reductions, favorable tax changes, lower financing cost, economic recovery and more allow us to reinvest $20 million for our customers now and possibly more later. This performance reflects good business decisions and continuous improvement. It comes from management commitment, experienced teams and ground-up process improvements that enhance safety every day; quality, doing things right the first time; delivery, doing things on time; cost, we see; and eliminate waste and morale higher every day. This continuous improvement process is powerful. It's just dependence from heroic individual work to better processes that are repeatable; as we eliminate human struggle, the cost fall out. And one of my favorite charts is on the right. As Dave often observes, we take on the headwinds, we take advantage of the tailwinds. We deliver our earnings per share commitment consistently every year. We deploy surplus resources to our customers. It is all about our customers and our investors. We did this last year. We're doing it again now. No ors, just ands here. It's fun to be part of a premium winning utility. CenterPoint is a great company with wonderful people and a huge investment opportunity. As Jason said, you've been a valuable part of our team, and we're grateful for the time you have shared with us. This has been one exciting year for CenterPoint. I could not be more pleased by the momentum we have, what we've accomplished and the bright future that we see for ourselves. We have truly been sweating the details so you don't have to. And I believe our effort is evident in our consistent and more predictable earnings and rate base growth in our world-class operations in growing service territories. I hope you now have the trust that we will continue our commitment to deliver on our promises to you, our investors. I believe the best is yet to come. I'd also like to remind everyone to register for our upcoming Analyst Day on September 23 here in Houston. We will now take a few questions.

centerpoint energy q2 earnings per share $0.37. q2 earnings per share $0.37. qtrly adjusted earnings per share $0.36. raising 2021 utility earnings per share guidance range to $1.25 - $1.27. on path to deliver 10% compound annual rate base growth over 5 years.

I'm Shivani Kak, Head of Investor Relations. I'm going to begin by providing a general update on the business, including Moody's third quarter 2021 financial results. And then following my commentary, Mark Kaye will provide further details on our third quarter 2021 performance as well as our revised 2021 outlook. Moody's delivered robust financial results in the third quarter of 2021. Revenue of $1.5 billion grew 13% due to strong customer demand for our mission-critical products and insights. In both operating segments, revenue increased in the double-digit percent range. For MIS, attractive market conditions continue to drive opportunistic refinancing and M&A activity for leveraged loans and structured finance issuance. Meanwhile, MA experienced strong growth across our subscription-based products, which now comprise 93% of total MA revenue on a trailing 12-month basis. We remain focused on delivering our integrated risk assessment strategy through innovation and investment in high-growth markets, and I'll spotlight a few examples later in the call. As a result of our strong third quarter performance, we've revised our full year 2021 guidance and now forecast Moody's revenue to grow in the low teens percent range. Additionally, we've raised and narrowed our adjusted diluted earnings per share guidance to be in the range of $12.15 to $12.35, which, at the midpoint of $12.25, represents an approximate 21% annual growth rate. In the third quarter, MIS revenue was up 12% from the prior year and MA revenue was up 13%. Organic MA revenue increased 8%. Moody's adjusted operating income rose 2% to $737 million. During the third quarter, expense growth was higher than revenue as we invested significantly in our capabilities and product development in order to better serve a number of high-growth use cases. Adjusted diluted earnings per share was $2.69, flat to the prior year period, and Mark will provide some additional details on our financials shortly. Favorable market conditions led to the strongest third quarter in over a decade in terms of both MIS revenue and rated issuance. Leveraged loan issuance was very strong, supported by low default rates and robust private equity activity and investor appetite for floating rate debt amid higher inflation and rising interest rate expectations. As we anticipated in our prior guidance, investment-grade supply moderated given the tough prior year comparable. However, volumes were still substantial and remained above the 10-year historical average for MIS-rated debt. Additionally, after a muted 2020, structured finance issuance reverted back to levels seen in 2017 and '18. Ongoing favorable market conditions, including tight spreads, drove both CLO refinancing activity and new CLO creation as well as new CMBS and RMBS issuance. As you can see on the chart on the left, tight credit spreads combined with low default rates created an attractive environment for opportunistic refinancing and M&A activity in the third quarter. The U.S. default rate is forecast to fall below 2% by year-end. That's a significant reduction from a pandemic high of nearly 9%. And while the uses of proceeds were weighted toward refinancing earlier in the year, heightened M&A activity continued in the third quarter as issuers used acquisitions to support growth. We frequently comment on our views on long-term issuance drivers, which include GDP growth, ongoing disintermediation trends and upcoming refinancing needs. Based on our annual research published by Moody's Investors Service earlier this month, refunding walls over the next four years for U.S. and European issuers have increased 9% to approximately $4.1 trillion. Investment-grade supply remains the biggest asset class despite the recent surge in leveraged loans. This is slightly above the historical compound annual growth rate and is supported by 19% growth in U.S. leveraged loan forward maturities and 7% growth in U.S. investment-grade forward maturities, providing a solid underpinning for medium-term issuance. Now moving to Moody's Analytics. MA's recurring revenue grew 18% in the quarter. And as I mentioned earlier, now represents 93% of total MA revenue on a trailing 12-month basis. This is supported by new customer demand and strong retention rates, which is really a testament to the mission-critical nature of our product suite. The chart on the right illustrates the strong organic recurring revenue growth on a trailing 12-month basis across some of our key operating units. Each of these businesses currently represent at least $100 million of annual revenue with growth rates above 10% versus the prior year. Starting with credit research and data feeds. Recurring revenue improved in the low double-digit percent range through a combination of increased yields and sales to new and existing customers. Recurring revenue in banking solutions within the ERS business grew at a similar pace as customers continue to leverage our products to support a wide range of functions, everything from lending to portfolio management and accounting and reporting requirements. Recurring revenue for our insurance and asset management business within ERS increased in the mid-20s percent range and was driven by ongoing demand for our actuarial modeling and IFRS 17 solutions. And finally, KYC and compliance built on its strong start to the year, also growing in the mid-20s percent range. This continues to be an important growth driver for Moody's that I'll expand on further. Last quarter, I summarized a few key trends underpinning growth in the KYC market. And I described how our differentiated offerings are driving organic growth rates north of 20%. And let me give you a few examples that illustrate the value that we provide across a variety of customer applications. In banking, one of our core use cases is to support customer due diligence requirements by providing transparency into counterparty relationships and beneficial ownership structures. And the accuracy, quality and linkage of our data enables us to be a trusted partner with banks in complying with the regulatory requirements and managing reputational risk across the financial sector. Turning to a large automotive leasing company. They previously relied on manual processes but now have automated their supplier due diligence activities by using our Orbis database to onboard and monitor tens of thousands of suppliers and their beneficial owners. And last, a worldwide transportation company was looking for an integrated supplier of risk solution to comply with anti-bribery and corruption laws and automate the risk assessment procedures. They chose our Compliance Catalyst solution to help them onboard and monitor almost 20,000 suppliers, primarily because it provided them with a single tool from which to source high-quality compliance, financial and ESG data. Last month, we closed on the RMS acquisition. And our teams have begun to work to jointly advance our integration plans. Recently, I had the opportunity to spend a couple of days together with the MA and RMS management teams to get to know each other and to align on priorities. And it's clearly a great cultural fit. And we see interesting opportunities across our combined life and P&C businesses, potential for new solutions that empower integrated risk assessment and an opportunity to sync and upgrade our technology platforms. We're focused on three key areas to drive incremental revenues and achieve our targets. First is cross-selling to our respective customers. And we've already begun conducting joint customer meetings to start to identify opportunities. And I have to say, the dialogues are encouraging. Second is the transition of RMS customers to their new SaaS platform, where RMS will benefit from MA's recent experience and which represents an opportunity for some revenue uplift. And third is new product development and integration. When I was with the team, they identified a wide range of opportunities, from simple integration to enhance our insurance analytics, to new products serving new customer segments. In fact, we have a team working specifically on identifying opportunities for corporates and governments across climate and cyber. So our work with RMS has begun and we're looking forward to the future together. At the beginning of this year, I highlighted our strategic priorities as a global integrated risk assessment firm. That included collaborating, modernizing and innovating to meet our customers' rapidly changing needs. And I want to showcase a few examples of how we're delivering on our strategy across the company. Beginning with ESG and climate, we recently launched new capabilities to help customers using our credit scoring tools so that they can integrate and understand the financial impact of physical and transition risks. That new module enhances our award-winning models and covers 40,000 public companies and millions of private firms. Within our ratings business, we recently expanded our ESG credit impact scores to include financial institutions. This is the next step in building out comprehensive coverage on our rated universe and furthering our efforts to help investors clearly understand the impact of E, S and G factors on credit. In MA, we're leveraging cloud and SaaS technologies to improve the customer experience. For example, as part of our Data Alliance consortia, we recently released our first set of CECL dashboards. And that enables banks to benchmark themselves against their peers and enhances the value of our product. And we're integrating commercial property data and cash flow analytics into our CreditLens suite of solutions to help commercial real estate lenders make better decisions. And this marks an important expansion of our offerings serving the commercial real estate sector. Finally, the exponential increase in cyberattacks and ransomware has threatened the stability and reputation of businesses across the world. And to help our customers understand this evolving risk, we made a significant investment in BitSight, a leader in cybersecurity ratings space. We see many potential opportunities for us to integrate their data and analytics into our products and solutions. And together, we will help market participants better measure and manage their cyber risk across supply chains and portfolios. With COP26 beginning in a few days, I want to underscore the importance of ESG and climate to both our stakeholders and to the Moody's organization. And this is evident in the way that climate considerations are embedded across our company. Within our products, we offer market participants the tools they need to better identify, measure and manage climate resilience. We've developed a comprehensive suite of climate risk data, scores and insights to measure physical exposure to climate hazards, to analyze the company's transition risk and also to understand how climate risk translates into credit risk. And the addition of RMS will meaningfully enhance the quality of our offerings to help deliver world-class analytics to the market. And as part of Moody's corporate commitment to sustainability, we announced several significant actions in the quarter. We brought forward our commitment to achieve net zero across our operations and value chain to 2040, and that's 10 years earlier than our original target. Additionally, we're very proud to have achieved recognition as a 2021 Global Compact LEAD company, a major distinction from the world's largest corporate sustainability initiative. And as founding member of the Glasgow Financial Alliance for Net Zero, we're committed to align all of our relevant products and services to achieve net zero greenhouse gas emissions. All these efforts underscore our strong commitment to address the climate crisis and to drive positive change. In the third quarter, MIS revenue and rated issuance increased 12% and 11%, respectively, on elevated leveraged loan and CLO activity. Corporate finance revenue grew 6% compared to a 2% increase in issuance. Heightened demand continued for leveraged loans as issuers opportunistically refinanced debt and funded M&A transactions. Additionally, we observed lighter investment-grade activity compared to the record levels in the prior year period as well as a decline in high-yield bonds as investors pivoted to floating rate debt. Financial institutions revenue rose 14%, supported by 25% growth in issuance. Transaction revenue was up 24% as infrequent bank and insurance issuers took advantage of the attractive rate and spread environment. Revenue from public, project and infrastructure finance declined 2% compared to a 17% decrease in issuance as U.S. public finance issuers largely fulfilled their funding needs in prior periods. Structured finance revenue was up 63%, supported by strong recovery in issuance. While this was primarily attributable to CLO refinancing activity, the third quarter also had a high level of new deals driven by a surge in leveraged loan supply. In addition, CMBS and RMBS formation further bolstered overall results. MIS' adjusted operating margin benefited from approximately 190 basis points of underlying expansion, more than offset by the impact of higher incentive compensation associated with our improved full year outlook, a legal accrual adjustment in the prior year and a charitable contribution via The Moody's Foundation. Third quarter revenue rose 13% or 8% on an organic basis. Ongoing demand for our KYC and compliance solutions as well as data feed drove a 15% increase in RD&A revenue or 12% organically. This was further supported by mid-90s percent retention rate and robust renewal yield for our credit research and data products. ERS revenue rose 8% in the quarter. Organic recurring revenue grew 13% driven by customer demand for our banking products as well as insurance analytics solutions. This was more than offset by an expected decline in onetime revenue and led to a 2% decrease in overall organic revenue. As a result of our strategic shift toward SaaS-based solutions, recurring revenue comprised 90% of total ERS revenue in the third quarter, up 12 percentage points from the prior year period. MA's adjusted operating margin benefited from approximately 210 basis points underlying expansion, more than offset by acquisitions completed in the last 12 months, nonrecurring transaction costs associated with RMS and the charitable contribution via The Moody's Foundation. Turning to Moody's full year 2021 guidance. Moody's outlook for 2021 is based on assumptions regarding many geopolitical conditions, macroeconomic and capital market factors. These include, but are not limited to, the impact of the COVID-19 pandemic; responses by governments, regulators, businesses and individuals as well as the effects on interest rates, inflation, foreign currency exchange rates, capital markets liquidity and activity in different sectors of the debt market. Our full year 2021 guidance is underpinned by the following macro assumptions. 2021 U.S. GDP will rise in the range of 5.5% to 6.5%, and Euro area GDP will increase in the range of 4.5% to 5.5%. Benchmark interest rates will gradually rise, with U.S. high-yield spreads remaining below approximately 500 basis points. The U.S. unemployment rate will remain below 5% through year-end, and the global high-yield default rate will fall below 2% by year-end. Our guidance also assumes foreign currency translation at end of quarter exchange rates. Specifically, our forecast for the balance of 2021 reflects U.S. exchange rates for the British pound of $1.35 and $1.16 for the euro. These assumptions are subject to uncertainty and results for the year could differ materially from our current outlook. We have updated our full year 2021 guidance for several key metrics. Moody's revenue is now projected to increase in the low teens percent range, and we have maintained our expectation for expenses to grow approximately 10%. As such, with an improved revenue outlook and ongoing expense discipline, we have expanded Moody's adjusted operating margin forecast to be approximately 51%. We raised and narrowed the diluted and adjusted diluted earnings per share guidance ranges to $11.65 to $11.85 and $12.15 to $12.35, respectively. We forecast free cash flow to remain between $2.2 billion and $2.3 billion and anticipate that full year share repurchases will remain at approximately $750 million, subject to available cash, market conditions, M&A opportunities and other ongoing capital allocation. Moving to the operating segments. Within MIS, we now forecast full year revenue to increase in the low teens percent range and rated issuance to grow in the high single-digit percent range. MIS' issuance guidance assumes that full year leveraged loan and structured finance issuance will both increase by approximately 100%, up from our prior assumption of 75% growth for each of these asset classes. Investment-grade issuance is forecast to decline by approximately 35%, an improvement from our prior assumption of a 40% decrease. High-yield bond issuance is expected to increase by approximately 20%, slightly lower than our prior outlook. Additionally, we are raising our guidance for first-time mandates to a range of 1,050 to 1,150. This is significantly above recent levels and will enable us to generate incremental revenue through future annual monitoring fees. We're also increasing MIS' adjusted operating margin guidance to approximately 62%, which implies approximately 200 basis points of margin expansion compared to 2020's full year result. This operating leverage is driven by continued top line outperformance and well-controlled expenses. For MA, we are maintaining our revenue growth projection in the mid-teens percent range, supported by our strong retention rates and the continued growth of SaaS and subscription products. We are also reaffirming the adjusted operating margin guidance of approximately 29%. These metrics include the impact of a deferred revenue haircut related to the RMS acquisition as well as the nonrecurring transaction-related expenses I noted earlier. Excluding the impact of acquisitions completed in the prior 12 months, MA revenue is anticipated to increase in the high single-digit percent range, and the adjusted operating margin is forecast to expand by approximately 300 basis points. As I mentioned previously, we are reaffirming our full year 2021 expense growth guidance of approximately 10%. For the third quarter, operating expenses rose 19% over the prior year period, of which approximately 16 percentage points were attributable to operational and transaction-related costs associated with recent acquisitions, including RMS, as well as higher incentive and stock-based compensation accruals, a $16 million charitable contribution via The Moody's Foundation and movement in foreign exchange rates. The remaining expense growth of approximately 3% was comprised of organic investments as well as operating costs such as hiring and salary increases and was partially offset by ongoing cost efficiency initiatives. We are on track to reinvest approximately $110 million back into the business in 2021. These organic investments are concentrated in the areas we've mentioned throughout the year, including ESG and climate, KYC and compliance, CRE as well as technology improvement and geographical expansion. Before turning the call back over to Rob, I would like to underscore a few key takeaways. First, we're pleased to have raised our full year guidance across several key metrics, primarily due to robust third quarter performance. Second, economic recovery and constructive market conditions continue to support issuance levels and refunding activity. Third, MA's high proportion of recurring revenue and retention rates, along with growing customer demand for our award-winning product suite, positions Moody's for sustainable long-term success. Fourth, our ongoing key organic investments in high-growth markets accelerate our integrated risk assessment strategy across a wider range of use cases. And finally, our focus on innovation and product enhancement delivers best-in-class ESG and climate solutions to our stakeholders, enabling them to make better decisions.

q3 revenue rose 13 percent to $1.5 billion. sees fy adjusted earnings per share $12.15 to $12.35. q3 adjusted earnings per share $2.69. fy 2021 earnings per share guidance $11.65 to $11.85. sees 2021 revenue increase in the low-teens percent range. sees 2021 capital expenditures about $100 million.

Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website. We appreciate your interest in CMS Energy. Over the past five months, I have been on the -- the virtual road and have had the opportunity to meet with many of you to share our investment thesis, which delivers for all our stakeholders. This thesis is grounded in our commitment to the triple bottom line of people, planet and profit and enable the excellence you have come to expect from CMS Energy. Many of you have asked what will change under my leadership. And I want to reemphasize, we've changed leadership not the simple proven investment thesis we delivered year in and year out. Looking forward, we're committed to leading the clean energy transformation with our net zero carbon and methane emissions plans, which are supported by our clean energy investments in our current progressive integrated resource plan. Furthermore, we are recognized as top tier for ESG performance earning top ratings among our peers. We continue to mature our industry-leading lean operating system the CE Way eliminating waste and improving our performance. I love this system. Over the past several years, we have used it across the business to drive efficiencies, improve employee engagement and deliver sustainable cost performance. I've seen it, I've worked it, and we have plenty of gas that are left. Today we are crafting the next horizon what I call CE Way 2.0, which layers in greater use of automation and analytics and begins to position CMS Energy, as a leader in digital. Another key differentiator of CMS Energy is Michigan's Top-tier regulatory construct that has 10-month forward looking rate cases in constructive ROEs. This all leads to our adjusted earnings per share growth of 6% to 8% and combined with our dividend provides a premium total shareholder return of 9% to 11%. At CMS Energy, we wake up every day to get after it, deliver for our customers in all conditions, rain, snow, sleet wind. And for you, our investors, we never quit. This year is no different. Now, let's get into the numbers. In the first quarter, we delivered $1.21 of adjusted earnings per share. This is up significantly, $0.35 from last year, primarily from incremental revenue to fund needed customer investments and sustained cost performance. As a reminder, our full year dividend is $1.74, up 7% from last year. We are reaffirming our 2021 guidance for the year of $2.83 to $2.87 of adjusted earnings per share and our long term earnings and dividend per share growth of 6% to 8% with the bias to the midpoint. At CMS Energy was committed to our promises to our co-workers, the communities we serve, and our planet, as we are to delivering our financial commitments. During my discussions with many of you, the topic of ESG often comes up. I'm proud of our leadership in this space. We continue to enhance our commitments and our efforts are being recognized with top tier ratings. We remain a AA rated company by MSCI and have ranked top quartile for global utilities by Sustainalytics since 2013. This is a deep commitment that began well before it was a trend. Our commitment -- our commitments to net zero methane emissions by 2030 and net zero carbon emissions by 2040 are among the most aggressive in the industry. As our industry approach is a cleaner energy future, and we retire our legacy generating units, it is critical that we honor the contributions and service of our co-workers, as well as address the economic impact on those communities. Now, I began my career on the generation side of our business. I have walked the halls, climbed the stairs of every one of our generating plants, shaking hands, drink coffee with the men and women, who work every day to provide energy for our customers. And I'm proud of the honorable and equitable way, we have cared for both our co-workers and our communities, as we retire these units from service. We've built a playbook for success. It began with the retirement of our seven coal plants in 2016. That work will continue with the retirement of Karn 1 and 2 in 2023. Our leadership and track record in this space is something I'm proud of and we'll continue, as we look to the future. This ensures ensure success for all stakeholders, including our investors. Our main focus is on the E of ESG. We have a strong record of delivering across all three. In my 20 years of service, I believe our culture has never been stronger. Every single day, our co-worker show up with a heart of service for our customers, our communities, and ultimately you, our investors. Our culture anchored by our values is thriving across our company and it's why we're recognized for top quartile safety performance, industry leading employee engagement, Forbes Best Employer for Women, Best for Vets by Military Times and Best Places to Work for LGBTQ Equality in the Corporate Equality Index. And earlier this month, we were ranked by Forbes, as the number one utility in the country, as Best Employers for Diversity. Our leadership, commitment and top tier ESG performance should provide you with the confidence that our long track record will continue to deliver value for customers and investors. Turning to recent updates. I want to highlight our continued growth in renewables with several exciting announcements. We are pleased to announce the recent commission approval of our Heartland Wind project in March, which will be online in December of next year. This project adds 201 megawatts of new capacity, as a part of our renewable portfolio standard earning a 10.7% return. I'm also pleased to share that we received approval for the first tranche of our current Integrated Resource Plan, which adds nearly 300 megawatts of new solar through two projects that we expect to come online in 2022. We are evaluating the second tranche of our current IRP, another 300 megawatts of solar expected to come online in 2023. And the third tranche 500 megawatts of solar expected to come online in 2024 for a total of 1,100 megawatts. We're on track to file our next Integrated Resource Plan in June. It has been a popular topic in -- in our meetings with many of you, while we're still finalizing the details, the focus of our upcoming IRP will be to accelerate the decarbonization of our fleet, ensure reliability and affordability and add renewable and demand side resources in a way that makes sense for our customers and investors, while maintaining a healthy balance sheet. I'm excited for this next IRP. It serves as yet another proof point that we are leading the clean energy transformation. As part of our clean energy transformation -- part of our clean energy transformation includes retirement of our remaining coal fleet. On Slide 7, you will see our plan to decarbonize is both visible and data driven. The meaningful reduction of carbon emissions in our plan will drive our ability to achieve net zero carbon emissions by 2040. Over the past few months, I've been asked quite a bit about the future of our gas business. As I've shared with many of you our gas business and system is critical to providing affordable and reliable heating here in Michigan. But it doesn't mean, we're -- we're sitting on our tails here. In fact, we are actively working to decarbonize our gas system. Now this aligns very well with the recent announcement from the Biden administration. Our first step is to reduce fugitive methane emissions, which is well under way, as we accelerate the replacement of vintage mains and services both plants approved by the commission will decrease our missions and achieve our net zero methane goal. Our decarbonization plans also leverage energy efficiency to reduce carbon usage and put renewable natural gas on our system, which will help decarbonize most difficult sectors, such as agriculture. By replacing vintage mains and services with plastic piping, we will be positioned to deliver hydrogen or other clean molecules to our customers in the future. As we would grow our renewable portfolio and decarbonize our generation fleet and gas delivery system, we remain committed to delivering against the triple bottom line of people, planet and profit. It demonstrates our consistent industry leading performance for nearly two decades. As much as things change, one thing stays consistent, year in and year out we have and we'll continue to deliver. 2020 proved this, 2021 will be no different marking 19 years of consistent, predictable financial performance. As Garrick highlighted, we're pleased to report our first quarter results for 2021. In summary, we delivered adjusted net income of $348 million or $1.21 per share. For comparative purposes, our first quarter adjusted earnings per share was $0.35 above our Q1, 2020 results, largely driven by rate relief, net of investment-related expenses, better weather and sustained cost performance from our 2020 efforts at the utility. Our enterprises and parent and other segments were slightly down as planned due to the absence of a one-time cost reduction item in 2020 and higher funded -- funding related costs respectively. This modest negative variance was more than offset by strong origination growth at EnerBank, which exceeded its Q1, 2020 earnings per share contribution by $0.06 in 2021 as planned and is tracking toward the high end of our guidance for the year of $0.22 per share. The waterfall chart on Slide 10 provides more detail on the key year-to-date drivers of our financial performance versus 2020 and highlights our latest estimates for the major year-to-go drivers to meet our 2021 earnings per share guidance range. To elaborate on the year-to-date performance, while weather in the first quarter of 2020 has been below normal to-date, which has led to lower volumetric gas sales, it has been better than the historically warm winter weather experienced in the first quarter of 2020. And the absence of that weather has led to $0.08 per share of positive variance period-over-period. From a rates perspective, given the constructive regulatory outcomes achieved in the second half of 2020 for our electric and gas businesses, we're seeing $0.26 per share of positive variance. As a reminder, our rate relief estimates are stated net of investment related costs, such as depreciation and amortization, property taxes and funding costs. It is also worth noting that our 2021 financials reflect the accelerated amortization of deferred taxes, as part of our 2020 gas rate order settlement. On the cost side as noted during our fourth quarter earnings call, we budgeted substantial increases in our operating and maintenance expenses in 2021 versus the prior year to fund key initiatives around safety, reliability, customer experience and decarbonization and in alignment with our recent rate orders. As you can see, we're $0.02 per share above our spend rate in the first quarter of 2020 as planned, and I'm pleased to report that we're seeing sustained cost performance from 2020, as well as increased productivity in 2021, largely attributable to the CE Way. That said, we do expect to see the bulk of the planned O&M increases to materialize later in the year. The balance of our year-to-date performance is driven by the aforementioned drivers at our non-utility segment and non-weather sales, which though slightly down at about 1% below the first quarter 2020 continue to exhibit favorable mix with the higher margin residential class, up 2% versus Q1 of 2020. And I'll remind you that our total electric sales exclude one large low margin customer. As we look ahead to the remaining nine months of 2021, we are cautiously optimistic about the glide path illustrated on this slide to achieve our full year earnings per share guidance. As always, we plan for normal weather, which in this case translates to $0.12 per share of negative variance given the above normal weather experienced in the second and third quarters of 2020. The residual impact of the aforementioned rate relief, which equates to $0.22 per share of pickup and is not subject to any further MPSC actions. And the continued execution of our operational and customer-related projects, which we estimate as an incremental $0.18 per share of spend versus the comparable period in 2020. We have also seen the usual conservatism in our utility, non-weather sales and our non-utility segments. All in, we are pleased with our strong start to the year and are well positioned for the remaining three quarters of 2021. And needless to say, we will be prepared to flex costs up or down, as the fact pattern evolves over the course of the year. As we look out over the long term, we are in the early stages of executing our $13.2 billion five-year customer investment plan at the utility, which is highlighted on slide 11 and will provide significant benefits for our customers, the communities we serve and our investors. As a reminder, we have budgeted over $2.5 billion of investments in 2021. The vast majority of which is earmarked for safety, reliability and clean energy projects. We are on track thus far, and recently filed an electric rate case in March that enumerate our customer investment priorities for the 2022 test year, which are summarized on the right hand side of the page among other key details related to the filing. We expect an order from the commission by the end of the year. Despite the substantial customer investments that we intend to make on our electric and gas system over the next several years, as you know we take great pride in taking out costs in a sustainable way to maintain affordable bills for our customers, and we have the track record to prove it. The left hand side of slide 12 summarizes the key components of our cost structure, which we have successfully managed over the past several years, while investing significant capital on behalf of customers. In fact from 2017 to 2019, we reduced utility bills, as a percentage of customer wallet by 1%, while investing roughly $19 billion of capital in the utility over that timeframe. As we look ahead, we have several highly actionable event driven cost reduction opportunities, which will provide substantial savings in the years to come. The planned expiration of our Palisades power purchase agreement and the recently approved amendment to our MCV PPA will collectively generate roughly $150 million of power supply cost recovery savings. And as you'll note, our initial estimates for the potential savings for the MCV contract amendment of approximately $50 million proved conservative with the revised estimate of over $60 million in savings, per the commission's order in March. Also the planned retirements of our five remaining coal unit should provide another $90 million of savings in aggregate, exclusive of any potential fuel cost savings, which will create meaningful headroom and bills for future customer investments. Lastly, I'd be remiss if I didn't mention our annual O&M productivity delivered through the CE Way, which last year generated roughly $45 million of savings and serves as a critical tool to our long term and intra-year financial planning. To that end, many of you've asked about proposed changes in corporate tax policy and its potential impact to our plan. Though at this point, the final details remain unclear, trust that we are evaluating the potential effects and we'll leverage the CE Way and other cost reduction opportunities, including potential offsetting tax credits that are also being proposed, as part of the legislation to minimize the impact to customers, while executing our capital plan. As we've said before, it is our job to do the warring for you, and we are uniquely positioned over the next several years to manage any potential headwinds. With our unparalleled track record on cost management, driven by our highly engaged workforce coupled with a robust customer investment backlog and top tier regulatory construct, we are confident that we can deliver on our ambitious, operational, customer and financial objectives for the foreseeable future. And with that we'll move to Q&A. Mr. Racho, please open the lines.

compname announces first quarter earnings results of $1.21 per share, reaffirms 2021 guidance. q1 adjusted earnings per share $1.21. q1 earnings per share $1.21. compname says reaffirmed its guidance for 2021 adjusted earnings of $2.83 - $2.87 per share.

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.

Today's discussion is being broadcast on our website at atimetals.com. Participating in today's call are Bob Wetherbee, President and Chief Executive Officer; and Don Newman, Senior Vice President and Chief Financial Officer. Bob and Don will focus on full year and fourth quarter highlights and key messages, but may refer to certain slides within their remarks. These slides are available on our website atimetals.com and provide additional color in detail on our results and outlook. During the Q&A session, please limit yourself to two questions. No surprise, we're glad 2020 is over. It was a challenging year amplified by a significant uncertainty, yet we made the best of it. Our team persevered and focused on doing the right things quickly and decisively to position ATI to emerge from the crisis stronger, a company focused on aerospace and defense. For the year, our free cash flow generation was positive overall at $168 million pre-pension contributions, free cash flow exceeded our full year guidance by 18%. In today's call, my remarks will focus on three major things: the leadership priorities that drove our actions and results; our transformation to a more profitable aerospace and defense focused company; and our outlook for our key markets. So, let's start with our leadership priorities. 2020 began with reasonably strong customer demand and without a hint of a looming global pandemic. ATI posted solid first quarter 2020 financial results. We enjoyed the benefit of stable jet engine demand bolstered by increased customer volumes that were delayed from the second half of 2019. While these results were made for a difficult year-over-year comp in the first quarter 2021, it did help to offset the significant headwinds we've faced in the subsequent three quarters of 2020. When the pandemic took hold late in the first quarter, we responded quickly and decisively. The leadership priorities shown on Slide 4 drove our results and continue to guide our actions today. First and foremost, we focused on keeping our people safe. Safety is a core ATI value. We quickly enacted policies and procedures around the world to ensure a virus-free work environment, mitigating the risk of spread. Our efforts continue to be largely successful. We remain vigilant to ensure our people go home safely each and every day. Second, we took the necessary actions to preserve cash and maintain liquidity. We ended the year with more than $950 million of total liquidity, including nearly $650 million of cash on hand. We extended our debt maturity profile and now have no significant debt maturities before mid-2023. Don will cover some additional achievements in more detail in a few minutes. Third, we proactively and aggressively optimize our cost structure. Our close customer relationships enabled us to match capacity with the rapidly declining demand expectations. We did what was necessary to ensure ATI would not only survive the global recession, but emerged stronger in recovery. By quickly reducing our costs, we've minimized detrimental margins limiting the steep demand drops impact on our bottom-line. We eliminated approximately $170 million of costs in 2020. We continue to pursue operational improvements. We expect total cost reductions to grow to at least $270 million over the next few quarters as actions implemented in the second half of 2020 reached their full run rate. Importantly, we expect about $100 million of these cost savings to become structural, continuing to benefit ATI as we return to growth over time. It's worth noting that the additional savings we announced in December as part of our strategic transformation are incremental to these savings. Fourth, we focused on supporting our customers through continued strong execution and operational excellence. Our customers count on us to deliver the mission critical materials and components to keep their planes flying, vehicles moving, energy flowing and medical equipment and electronics working flawlessly. I'm proud of how the team has led through 2020. Focused on our people's health, our company's financial health and strengthening our customer partnerships. Being recovery ready, our fifth leadership priority positions ATI to serve our customers and become a more sustainably profitable company over the long term. We've been rewarded with more of our customers' business as a result. In 2021, our share of jet engine materials and components on key programs is increasing. We've also won new business on airframes and are well-positioned to win upcoming specialty energy projects. The bottom line here, we've accomplished a lot in 2020. Our actions created the necessary foundation for the transformation we announced in December. You may recall, we're exiting standard stainless sheet products by year-end 2021 as we redeploy our capital to high return opportunities. These actions are major steps to becoming a more profitable-focused aerospace and defense leader. We're accelerating the creation of significant shareholder value. In eight weeks since the announcement, we've hit the ground running and are executing. On Slide 5, you'll see two of the leading indicators we're using to track our progress toward this transformation: a streamline footprint and an improved product mix. We have a third metric that we'll share in future progress updates. It attracts working capital release to largely self-funded projects' capital expenditures. So, let me take a moment to review the major actions we're taking. First, we're consolidating our Specialty Rolled Products finishing operations to create a more competitive flow path, focused on increasing production of high-value differentiated materials. This includes closing five plants within the AA&S segment by year-end 2021. In the fourth quarter, we closed two finishing facilities: one in Western Pennsylvania and the other in Connecticut. The three additional closures are expected in the second half of 2021. Second, we're on track to exit 100% of standard value stainless sheet products by year-end 2021. In the fourth quarter, sales of these products represented 17% of AA&S segment revenues down from 22% in full year 2019. And finally as a reminder, on the third action, we intended largely self-fund upgrades to our specialty finishing capabilities in Vandergrift Pennsylvania. This investment of $65 million to $85 million spread over three years will be largely self-funded through working capital releases, triggered by the transformation. We'll make progress on this initiative as we streamline our footprint and we'll report our results as part of our next transformation update later in 2021. So let's cut to the chase here. With these actions, we're on our way to a leaner, more competitive aerospace and defense focused powerhouse, poised to substantially increased margins in the AA&S segment and generate a significantly higher return on capital for ATI. Success is largely within our control. We know we have more work to do and we're doing it. With the demand recovery that we know will come, we're confident we'll meet our longer term objectives. Before Don provides detail about the fourth quarter financial results, let me share my thoughts about our recent experience in key end markets and provided near to mid-term outlook for each. Let's start with commercial aerospace, our largest end market. As predicted in our last update, demand for jet engine forgings increased modestly in the fourth quarter. Demand for engine-related specialty materials principally ingot and billet continue to soften as customers destock to align inventories with near-term demand expectations. Looking ahead, we expect jet engine product sales to recover slowly in the first half of 2021 with the pace increasing in the second half of the year. We expect continued weakness in airframe sales throughout 2021 due to excess supply chain inventories. This is consistent with the guidance we provided last quarter, which already accounted for decreasing widebody production rates. Next up, defense sales. In the fourth quarter we returned the year-over-year double-digit percentage growth. Each of ATI's defense market verticals expanded. Naval nuclear products in support of the U.S. Navy's increased long-term demand for new ships grew by nearly 50%. Military aerospace and ground vehicle armor each grew at a strong double-digit rate versus the prior year. We expect continued defense growth in 2021 albeit at a slower pace due to uneven demand levels across major platforms supplied by ATI. Let me give a couple of examples to illustrate what I mean by uneven demand across platforms. In naval nuclear, we expect continued demand growth. In ground vehicle armor, we expect a temporary contraction due to a one-year pause in demand on the customer's major program. Longer term, we expect ATI's advanced materials to be integral to the success of future government defense initiatives such as hypersonics. We're also pursuing increased participation and defense applications in other parts of the world. Shifting to our energy markets. Sales continue to decline in the fourth quarter compared to prior year, but at a slower pace than in the third quarter. Our fourth quarter oil and gas and chemical processing submarket sales dropped by more than 35%. Sales to our specialty energy markets were more resilient declining only 6% versus the prior year. Growth continued in our civilian nuclear and pollution control product sales while demand for electrical energy generation products remained weak. We expect fourth quarter trends to hold in the coming quarters as demand for oil and gas remain soft, especially energy demand will improve due to ongoing nuclear refueling requirements and strength in Asia from land-based gas turbines, solar and applications to reduce fossil fuel emissions. Robust demand for our consumer electronics products was driven by two factors: first, customer product launches in China; and second, the increased need for our specialty alloy powders to support the growth of next-generation consumer products globally. We expect increased demand levels to continue in 2021 with first quarter sales falling sequentially mainly due to the impact of Lunar New Year shutdowns with our precision rolled strip operation in China. Our medical markets continued to decline, both for MRIs and implant materials, primarily due to the effects of the pandemic. Fewer elective surgeries and restricted hospital access to install new equipment have reduced end customer demand and created excess supply chain inventory. We expect these negative trends to continue until vaccination programs reach critical mass. Over the next few minutes, I will focus on highlights from two key areas: first, our Q4 financial performance; and second, our expectations for 2021. 2020 was a difficult year for all of us. For ATI, it started with 737 MAX challenges that carried over from 2019. Of course, those challenges grew exponentially with the global pandemic. Its impact on our key end markets including commercial aerospace, energy, and medical was profound. Even with those challenges, we took the strategic and tactical steps necessary to improve our business and position it for a healthy future. Now, let's discuss Q4 performance. For the third quarter in a row, our results exceeded expectations. In the Q3 earnings call, we noted seeing signs of stabilization in the number of our key end markets by commercial aerospace. At that time, we said we expected our Q4 performance to be similar to Q3. In fact, Q4 revenue increased 10% to $658 million versus Q3 levels. We see this as a further indication of stabilization in our key end markets and a sign that the worst of the lingering aerospace downturn is behind us. Our adjusted EBITDA increased 39% to $23 million in Q4 from Q3 levels. Adjusted earnings per share was a loss of $0.33 per share in Q4. This was better than the optimistic end of our earnings per share guidance range, which was a loss of between $0.36 and $0.44 per share. Our improved performance was largely due to stronger cost reduction actions and a higher-than-expected sales. Speaking of cost reductions, in our early 2020 we announced targets to cut costs by between $110 million and $135 million for the year. We increased those targets multiple times in 2020 as we built momentum. In the last earnings call, we shared a target of $160 million to $170 million of 2020 savings. The final tally, reductions near the high-end of our guidance and nearly $170 million in 2020. That means a run rate of $270 million to $180 million of cost reductions that will benefit full year 2021. Those cost reductions, continue to contribute to favorable detrimental margins, which are below 30% for the third consecutive quarter. We expect approximately $100 million of those reductions to be structural. Those take outs should continue to benefit earnings in the up cycle, increasing incremental margins in the future. Working capital actions initiated in Q2 and Q3 gain momentum in Q4. Our free cash flow was $168 million for full year 2020, well in excess of the top end of our guidance range of $135 million to $150 million. We're extremely pleased that we closed 2020, with nearly $650 million in cash and more than $950 million of total liquidity. That's a great outcome and one that we can build on in the future. We ended Q4 with managed working capital at 41% of revenue, down 1,000 basis points from the end of Q3, great progress. Our goal is to reduce managed working capital for less than 30% of revenue over time. I can assure you this will remain a key focus in 2021 and beyond. In addition to a strong cash and liquidity position, we continue to maintain a manageable debt maturity profile. Our nearest significant debt maturity does not occur until Q3 of 2023. Another area of success in 2020 was CapEx management as we adjusted capital spending to fit the new demand levels. We started 2020 with a CapEx forecast $200 million to $210 million. Actual CapEx spend in 2020 totaled $1.37 million, 33% below the initial forecast. We manage that reduction by carefully analyzing future demand requirements, including recent share gains and adjusting timing on large growth-related projects. We also ensured that our facilities were not over maintained in the current period of low demand. We understand the importance of being recovery ready and we are prepared to handle our customer's desired pace of recovery. Now, let's move to pensions. Despite the broader demand challenges, we also made meaningful strides managing our pension glide path. Our goal is to reduce our net pension obligations each year. We ended 2020 with a net pension liability of $674 million that's nearly $60 million lower than the opening 2020 level. Strong pension asset performance and Company contributions in 2020 more than offset an 80 basis point decrease in discount rates. This drove the drop in net liability. The lower net pension level at the end of 2020 brings multiple earnings and cash flow benefits in 2021 and the coming years. I will detail that when I share the 2021 outlook. 2020 will be a year remembered for severe economic challenges and personal hardships for many. As a company, we have worked through this crisis to improve the business and prepare for the upcoming recovery. The team's work on strategic positioning, liquidity and cost structure's should benefit our shareholders into the future. With that, let's look ahead to 2021. While we are seeing stabilization there is still uncertainty in terms of end market recovery timing as the COVID vaccines are in the early stages of distribution. With that uncertainty we are going to continue the guidance structure that we started in Q2 2020. We will provide earnings per share guidance for the upcoming quarter, as well as certain elements of our full year cash flows that we believe we can reasonably estimate. We'll also provide insights into what we're seeing as key trends and indicators in our business. Bob shared his thoughts regarding our key end markets. Let me recap our forward demand views and the pace of recovery within our business. We expect jet engine product sales to recover slowly in the first half of 2020 with the pace increasing in the second half. Weakness in airframe materials will continue throughout 2021 consistent with our prior estimates. Our defense sales will likely grow it at a more modest pace, compared to 2020 rates. Recovery in our other significant markets, namely, energy, and medical is dependent on the global pace of containing the pandemic. Finally, our electronic sales should continue to expand. We expect adjusted earnings to improve in Q1 of 2021 relative to Q4 2020 due to a modest demand pickup in segments, continued cost management and lower pension expense. We expect to Q1 2021 adjusted earnings per share loss of between $0.23 and $0.30 per share. Let's talk about free cash flow. We expect to generate between $20 million and $60 million of free cash flow in 2021 prior to our required US defined benefit pension contributions. Although we get there using the same disciplined applied in 2020 by managing our cost, being disciplined with capital investments and reducing manage working capital and pursuit of our working capital targets. Now CapEx; we plan to spend between $150 million and $170 million on capital investments in 2021. We adjusted our 2020 capital spending to reflect the new demand levels. In 2021 we will maintain that discipline but plan to increase spending marginally in anticipation of coming market recovery. As announced in December, we will also invest modestly to enhance specialty finishing capabilities within our specialty rolled products operations. I have good news on our expected 2021 pension plan contributions. As you know contributions to the US pension plans in 2020 were $130 million. Due in part to strong 2020 pension asset returns required contributions to the US plans are anticipated to be $87 million in 2021, a reduction of more than $40 million year-over-year. 2021 pension expense will also decrease dropping $17 million year-over-year. Pension expense will be $23 million in 2021, down from $40 million of recurring pension expense in 2020. In regard to working capital, we expect to continue improving our levels in 2021. We will pursue our goal of returning working capital levels to 30% of sales as our key end markets recover. Working capital reductions related to our transformational project, but will also support the significant improvement. Overall we expect working capital to be a modest source of cash in 2021 even after contributing significantly to our cash balances in 2020. Finally, in terms of income taxes we do not expect to be a cash taxpayer in the US for years to come. That said, we do anticipate paying taxes in certain foreign jurisdictions. We are not able to provide an estimated annual tax rate for 2021 due to uncertainty of the rates and low earnings. However we can say that we expect to pay between $10 million and $15 million in cash taxes during the year. We are proud of what our team has achieved in 2020 and look forward to continuing to build on our efforts to make ATI a leaner and more profitable company. We are well positioned to benefit from the coming aerospace recovery. Well, there you have it some pretty good outcomes and we're proud of it, we accomplished a lot in 2020. Even still great to be starting 2021 was a clear plan and were boosted by the first signs of favorable multi market trends we've seen in over a year. As Don described, we ended the year with a strong performance in a challenging market environment. Our progress in 2020 was a total team effort that delivered results. We worked diligently to control what we could and responded nimbly to where we couldn't. Our entire organization remains relentlessly focused on cash generation. I'm proud of how we're living our values, guiding us every step of the way. Today, in 2021 we still battle a fair amount of uncertainty but there is already a lot less turbulence than we saw last year. We're gaining velocity aligned and accelerating in a clear direction as we move ahead. We're well positioned to emerging this downturn leaner more profitable ATI. A fierce competitor not waiting for markets to recover as we gain momentum. Scott, back to you. Operator, we are ready for the first question.

q4 adjusted loss per share $0.33. q4 sales rose 10 percent to $658 million. actions to exit standard stainless sheet products and enhance high-return capabilities on-track. looking ahead to q1, we expect a continued difficult market environment. q1 2021 compares to a robust pre-pandemic quarter for ati that included a surge in wide-body jet engine product sales. for full year 2021, we are optimistic that worst is behind us. expect our demand to improve in second half of year.

Today, we will discuss our operational and financial results for the three and 12 months period ended December 31, 2020. Also I'll discuss the impact of Winter Storm Uri that struck Texas in February, the volatility in Japan's wholesale markets as well as our operational and strategic responses to those of events. Avi Goldin, our Chief Financial Officer, will follow with a deeper dive into the quarter's and full year's financial results. We capped an outstanding 2020 with solid fourth quarter results. Let's start by looking at the most fundamental of our KPIs, our customer base. Despite the challenges of the global pandemic, we were able to increase our global customer base by 66,000 RCEs during the year to reach 440,000 RCEs at year-end, a 17% increase and a record for our Company. In the fourth quarter, historically our slowest sales quarter, RCEs decreased slightly from 442,000. Here in the U.S., GRE's customer acquisition program, specifically face-to-face sales channels, has been constrained since last spring by COVID-19-related restrictions on in-person solicitation. On the flip side, churn has also been lower because the COVID-related sales restrictions apply equally to our competitors. Nevertheless, we added 28,000 domestic RCEs during the year to end the year with 337,000 RCEs despite a fourth quarter decline from 350,000 RCEs. At GRE International, we increased our RCEs served by 58% during 2020 and a 12% during the fourth quarter to reach 103,000 RCEs at year-end. Our Scandinavian operation was the largest contributor to RCE growth year-over-year and sequentially. Given the challenges of COVID-19, our team did an outstanding job in 2020 to continue building our customer base. We are well positioned to build upon that success in 2021. Now, I'd address the weather and related challenges in Texas and Japan. As you know, Texas was hit by an extremely powerful series of winter storms in mid-February. The storms caused an unprecedented surge in electricity demand and at the same time, knocked some sources of supply offline. That imbalance led the PUC to manipulate spot market prices, moving them from the usual sub-$50 per megawatt hour to $9,000 per megawatt hour, where they were artificially maintained by ERCOT, a Texas grid manager, for five full days around the clock. Just to give you an idea of how completely unprecedented this was, in the previous 10 years, energy prices only hit $9,000 without government interference for a total of 16 hours. On top of these absurd prices for supply, Genie and other retail suppliers are being saddled with exorbitant load shedding and ancillary charges. For reference, in the week before the storm, ancillary charges amounted to approximately $2 per megawatt hour, while during the storm the prices spiked to over $20,000 per megawatt hour. While we were fully hedged for colder-than-normal seasonal weather having bought power well in excess of what our customers demand on a normal winter day, the unprecedented increase in ancillary charges, the artificially sustained period of $9,000 per megawatt hour supply pricing and the extraordinarily high usage led to significant losses. Since the storm, our meter data has been updated numerous times and our bills have been reissued and resettled multiple times. At this moment, the information we received to date from our supplier BP indicates that our costs as a result of the storm stand at approximately $12.8 million. We believe that we are close to receiving the final information about our total losses. And when we have a complete accounting, we will provide it to you. We are hopeful that new information and resettlements that have already been ordered by the PUC but not yet passed due to our bills will bring relief rather than add to the pain. We will know soon enough. Let's not forget that what happened in Texas as a result of this natural disaster caused very real suffering to many people throughout the region. Our hearts go out to them. But much of the suffering could have been prevented. The mistakes of ERCOT, the PUC and the generators compounded the storm's damage and I commend Governor Abbott, Lieutenant Governor Patrick, and the many members of the legislature who have come out the call for the PUC to take immediate corrective actions. We join them in asking the PUC to remove the financial repercussions for the decisions that culminated in epic market failure away from the REP industry and to be fairly distributed to the relevant market participants. However, to date, the PUC had allowed retailers who are protecting customers from the price increases that the PUC itself instituted to take the financial fall. The injustice is grave and we intend to fight it using [Indecipherable] necessary to protect our shareholders, and we intend to come out of this stronger than ever. Unfortunately, Texas is not the only market where we faced unprecedented wholesale price spikes in the first quarter. Energy suppliers in Japan, including at our subsidiary Genie Japan, were squeezed when generators were unable to meet a spike in demand caused by a recent cold snap. Prices on the Japan Electric Power Exchange surged to $2,390 per megawatt hour, becoming, for a while, the most expensive market in the world. With only four of its 33 nuclear power plants operating, the country is heavily relying on LNG to meet short-term burst in demand. But with less than two weeks of LNG supply and reserve, the country was unable to meet its needs after Korea and China snapped up the available supply. Once again as a result of the generators' and regulators' mistakes, the retail suppliers are bearing the cost even though many, including Genie, were well hedged going into the season. We have better information on the cost in Japan and our RCE base is smaller than in Texas, so we can say with some confidence that the hit in Japan will be approximately $2.5 million. As a result of these two events, our operating results and balance sheet position will take a meaningful hit in the first quarter. Our management team and Genie's Board have adopted a plan to replenish our cash war chest, prudently grow our core business in the U.S., while maximizing cash generation, take operational steps to lower our risk profile and to reevaluate underperforming assets and reform or shed higher risk longer-term opportunities. In light of this, we are pausing the dividend on our common stock to maximize our ability to grow the businesses that are generating rather than consuming cash. We are also using this opportunity to progress our other growth businesses such as the demand for renewables, which leverage our existing strengths and strategic assets to align more fully with the prevalent changes under way as energy market shift to renewables and other cleaner supply sources. We have already made some material strides in this regard. We hope to share good accretive news about this in future quarters. While I'm disappointed in the Texas and Japan results, you can be sure that we will do everything in our power to recoup those losses. I'm confident that our tightened focus on Genie's best performing assets will yield good results for shareholders. My remarks today cover our financial results for the three and 12 months ended December 31, 2020. Throughout my remarks, I will compare fourth quarter 2020 results to the fourth quarter of 2019, and full year 2020 results to full year 2019. Focusing on the year-over-year and quarterly comparison rather than sequential comparisons removes some consideration of the seasonal factors that are characteristic of our retail energy business. During the fourth quarter, we acquired the outstanding interest in Orbit Energy, our REP business in the U.K., and began consolidating its results on October 8. Because we have concluded our exploration activities [Indecipherable], we no longer report Genie Oil as a separate segment. This costs primarily related to the fourth quarter well test and the shutdown of operations [Indecipherable] are reported within our corporate results. Turning now to the fourth quarter and full year results. Genie's fourth quarter was comparable to the year ago quarter and capped off a very strong 2020, highlighted by record levels of consolidated revenue and income from operations, which drove significant top and bottom line improvements over 2019. Fourth quarter 2020 consolidated revenue increased by $21 million to $103 million, primarily reflecting the consolidation of Orbit Energy in the fourth quarter of this year. Quarterly revenue at Genie Retail Energy, or GRE, our domestic REP segment, decreased $4 million to $70 million, primarily on decreased gas sales. Both revenue per therm sold and meters served decreased compared to the year ago quarter, the latter because we have focused our efforts on acquiring more profitable electric meters in recent years. Electricity sales were relatively flat as increased consumption per meter was offset by decreased revenue per kilowatt hour sold. At GRE International, the segment that comprises our REP operations outside of the U.S., revenue in the fourth quarter increased by $26 million to $32 million, reflecting the inclusion of Orbit results, following its consolidation and increases in meters served at Lumo Energia, our Scandinavian REP. Genie Energy Services fourth quarter revenue decreased from $1.2 million to $876,000 as revenue realized in the year ago quarter pursuant to Prism Solar's contract for solar panels with JPMorgan Chase was not repeated. Prism fulfilled that contract earlier this year. Full year 2020 consolidated revenue increased $64 million to $379 million, a record for our Company. GRE contributed $19 million of the consolidated revenue increase, posting revenue of $305 million as the COVID-driven shift to work-from-home drove higher per meter electricity consumption. The increase in kilowatt hours sold more than compensated for decrease in revenue per kilowatt hour sold. GRE International revenue increased $33 million to $50 million in 2020, primarily reflecting the consolidation of Orbit results in the fourth quarter. Genie Energy Services revenue increased $12 million to $24 million in 2020, almost exclusively because of the JPMorgan contract revenues that were recognized in the first half of 2020. Consolidated gross profit in the fourth quarter, predominantly generated by GRE, was $22 million, unchanged from the year ago quarter. Gross profit at GRE decreased by $4.3 million to $17.7 million as gross profit per kilowatt hour sold decreased and was only partially offset by increases in per meter electricity consumption. GRE International contributed $4.4 million in gross profit compared to negative gross profit of $288,000 in the year ago quarter. The increase was primarily result of the inclusion of Orbit Energy's margin contribution for most of the fourth quarter as well as improved economics at Lumo Energia. Full year consolidated gross profit increased $14.8 million to $97.7 million. Gross profit increased $7.6 million at GRE on the strength of increased per meter consumption post-COVID, which was offset by a decrease in gross profit per kilowatt hour. GRE International's growth and the consolidation of Orbit drove a $6.8 million increase in the segment's full-year margin contribution to $7.2 million. SG&A spend in the fourth quarter of 2020 increased $3.4 million to $22.7 million and full year 2020 SG&A increased $4.3 million to $77 million. Both increases resulted primarily from the consolidation of Orbit Energy as well as increases in bad debt expense incurred as a result of our expanded presence in markets without POR programs. Our fourth quarter consolidated loss from operations was $1.1 million, compared to income from operations of $2.3 million in the year ago quarter, primarily as a result of the decrease in margin per kilowatt hour sold at GRE. GRE generated income from operations of $5.1 million, a decrease from $8.2 million in the year ago quarter, reflecting the decrease in margin per kilowatt hour sold as well as decreased gas sales. We continue to invest in building our book overseas. GRE International's loss from operations was $2.9 million compared to $3.2 million in the year ago quarter. Full year 2020 income from operations increased $9.5 million and $19.3 million. The improvement was primarily generated at GRE, where income from operations increased $9.2 million to $36.4 million on increased consumption, partially offset by narrowed margin per kilowatt hour sold. GRE's loss from operations narrowed to $7.6 million from $8.1 million. Consolidated adjusted EBITDA in the fourth quarter was $693,000 compared to $815,000 in year ago quarter. For the full year, the increase in residential electricity consumption in GRE drove an increase in GRE's full-year adjusted EBITDA to $37.3 million, which in turn [Indecipherable] consolidated adjusted EBITDA by $13.9 million to $24 million. Genie Energy's earnings per diluted share increased to $0.01 from nil in the year ago quarter and for the full year 2020 increased to $0.44 from $0.10 in 2019. In light of the situation in Texas that Michael highlighted, I'm particularly pleased by continued strength of our balance sheet. At December 31, we had cash, cash equivalents, restricted cash and short-term investments totaling $48.3 million. Working capital totaled $38.2 million. We again have no debt at quarter end and non-current [Phonetic] liabilities totaled just $3.8 million. To wrap up, results this quarter were generally consistent with year ago while the full year 2020 results were very strong with robust top and bottom line results. Our domestic business generated record levels of income from operations this year and again demonstrated its cash generation potential. That concludes my discussion of our financial results. Now, operator, back to you for Q&A.

q4 loss per share $0.06.4q20 consolidated revenue increased 25.5% to $102.9 million.

I appreciate it very much. And hoping everybody is staying safe and healthy as we continue to return to normalcy. And I know we're all looking for that pace to continue in the months ahead. We continue to have a high level of engagement with our clients, which is even more important as we navigate the market uncertainty brought about by the end of economic and market upside surprises we experienced from the depths of COVID. Helping our clients by providing insights and solutions, utilizing our broad range of capabilities. This approach has helped us deliver strong, consistent growth over the past five quarters. And as you can see on slide three, if you're following along on the deck, net long-term flows were $13.3 billion during the quarter. This represents over 4% annualized long-term organic growth for the quarter. Growth was driven by continued strength in a number of our key capabilities, including ETFs, fixed income, China solutions, alternatives and global equities. Strategically, we continue to invest in areas where we see client demand were a competitive strength. And since the third quarter of last year, we generated $86 billion of long-term inflows and an average quarterly organic growth rate of 6%. Five consecutive quarters of strong growth have the direct result of the investments we've made over time to enhance and evolve our business to meet client needs. ETFs, excluding the Qs, generated long-term inflows of $3.7 billion in the quarter with strong market share gains in our EMEA ETF range. In private markets, we generated net long-term inflows in our direct real estate business, $1.2 billion, and robust bank loan product demand resulted in net long-term inflows of $2 billion during the quarter. This included the launch of a new CLO. We generated net long-term inflows of $11 billion within active fixed income across the platform. And within active global equities, the developing markets fund a key capability that came over when we combined with Oppenheimer, continue to see net long-term inflows of $700 million during the quarter. That said, we remain focused and continue to work on areas where there's opportunity for improvement. In addition, our solutions-enabled institutional pipeline, accounts for 38% of the pipeline at quarter end. Third quarter flows included net long-term inflows of $6.8 billion from Greater China. Our China business continues to be a source of strength and differentiation for Invesco. We continue to expect the Chinese investment management industry to be the fastest growing market in the world for the foreseeable future. We were an early entrant 20 years ago, and we are benefiting from that commitment and investment, and we expect to see continued growth in the years ahead. The strong cash flow being generated from our business improved our cash position and helping build a stronger balance sheet and improving our financial flexibility for the future. Invesco's depth and breadth of capabilities and competitive strengths position us well as we look forward. We continue to focus our efforts on delivering positive outcomes for our clients while driving future growth. Moving to slide four. Our investment performance was strong in the third quarter with 72% and 74% of actively managed funds in the top half of peers for being benchmarked on a five-year and a 10-year basis. This reflected continued strength in fixed income, global equities, including emerging market equities and Asian equities, all areas where we continue to see demand from clients globally. Moving to slide five. We ended the quarter with $1.529 trillion in AUM, a net increase of $3.6 billion. As Marty noted earlier, our diversified platform generated net long-term inflows in the third quarter of $13.3 billion, representing a 4.4% annualized organic growth rate. Active AUM net long-term inflows were $6.8 billion and passive AUM net long-term inflows were $6.5 billion. Market declines in FX rate changes led to a decrease in AUM of $18.6 billion in the quarter. The retail channel generated net long-term inflows of $1.8 billion, driven by positive ETF flows and inflows in Greater China. The institutional channel demonstrated the breadth of our platform and generated net long-term inflows of $11.5 billion in the quarter, with diverse mandates, both regionally and by capabilities funding in the period. Regarding retail net inflows, our ETF, excluding the QQQ, generated net long-term inflows of $3.7 billion. Year-to-date, we have captured global ETF market share. Our global ETF platform, again, excluding the QQQ, captured a 3.8% market share of flows, which exceeded our 2.7% market share of AUM. We have also captured a higher share of the global ETF revenue pool over this period. Our market share of the revenue pool was 5.6%. Net ETF inflows in the United States does include net long-term inflows of $900 million into our QQQ innovation suite, which crossed $3 billion in AUM, one year after its launch. Our EMEA-based ETF range generated $2.5 billion of net long-term inflows in the quarter, with particular strength from the IBC's S&P 500 UCITS ETF and the gold exchange traded commodity fund. Looking at flows by geography on slide six, you'll note that the Americas had net long-term inflows of $4.8 billion in the quarter driven by net inflows into ETF, as mentioned, as well as our institutional flows. Asia Pacific, again, delivered another strong quarter with net long-term inflows of $9.3 billion. Net inflows were diversified across the region, reflecting $6.8 billion of net long-term inflows from Greater China, most of which arose in our JV and $3.1 billion from Japan. Turning to flows across asset classes. We continue to see broad strength in fixed income in the third quarter with net long-term flows of $11 billion. Drivers of fixed income flows include institutional net flows into various fixed income strategies through our China JV, global investment grade, stable value and municipal strategies. Our alternative asset class holds many different capabilities, and this is reflected in the flows that we saw in the third quarter. Net long-term flows and alternatives were $2.3 billion, driven primarily by our private markets business through a combination of inflows from direct real estate, the newly launched CLO that Marty mentioned and senior loan capabilities. When excluding global GTR net outflows of $1.7 billion, alternative net long-term inflows were $4 billion. The strength of our alternatives platform can be seen through the flow that is generated over the past five quarters with net long-term flows totaling $12 billion and organic's growth rate that's averaging nearly 6% per quarter over this time when excluding the impact of the GTR net outflows over this period. Turning to slide seven. I wanted to spend a few minutes on our business in China, particularly given the level of flows we have seen from the region over the last several quarters and the high level of interest in our business there. Invesco launched the first Sino U.S. JV in China in 2003 as Invesco Great Wall. We've been in the market for almost two decades with a unique JV structure and relationship with our partner. How we operate in China is differentiated from others that have joint ventures. While we have 49% ownership of the JV, our partner is a Chinese government-backed power company and has been a good partner. We've been leading the management of the JV, leveraging our global asset management expertise since the inception of this partnership. We run the business in China with Chinese management, and our clients are Chinese investors. China's fund management industry is a very significant opportunity. In 20 years, it has grown from almost nothing to around $3.5 trillion. It's expected to become the second largest fund management market in the world by 2025 with assets of over $6 trillion. Also, China is estimated to account for over 40% of global net flows through 2024. Invesco, as an early entrant in China, has developed a strong and comprehensive platform covering all business activities, including robust domestic investment capabilities with good long-term performance track records. We have very strong relationships with banks and insurance companies and digital distribution has been a major contributor in recent years in terms of bringing in new onshore business. Key opportunities for Invesco in China include mutual funds, institutional clients and sovereign wealth funds. As China continues to open up and improve its capital markets, we also expect opportunities in pension reform, global investors increasing interest in investing in Chinese investments and cross-border investment opportunities. The relationships, the unique business model we established with our JV partner and the amount of AUM we have sourced from Chinese onshore investors really sets us apart from other global asset managers who are newer entrants in the Chinese market. Moving to slide eight. We have built a diversified business in China with over $99 billion in AUM at the end of September. 60% of the AUM is from retail clients and 40% is institutional. We manage AUM in all asset classes and distribution is unique. Digital distribution to retail investors have become a mainstream channel, along with the traditional bank distribution channels, and this is not just for money market funds. With our market position in tenure in China, we are beneficiaries of this trend. Our long-term commitment and strong track record have put Invesco in an advantageous position and our strategic position and continued investment in China has resulted in a 42% annual growth rate over the last three years to date. In recognition of the strength of the business, Invesco was ranked the number one China onshore business and the number three for an asset management firm in overall China in 2020. Before we wrap up this discussion on China, in light of the recent developments around Evergrande, I want to note that our overall exposure of a direct equity or fixed income holding across the complex, including within our JV is de minimis. Market volatility in offshore markets, of course, doesn't impact AUM levels and the market has been and could be volatile for future real estate developments. We remain positive toward the fundamentals of China's economy, and most of the flows in our China business come from domestic onshore clients. So if anything, we've seen a flight to quality as investors look to NAV-based products like the ones IGW offers. Now moving to slide nine to look at the institutional pipeline, which was $32 billion at the end of September. The pipeline remains relatively consistent to prior quarter levels in terms of both asset and fee composition. Overall, the pipeline is well diversified across asset classes and geographies. Our solutions capability enabled 38% of the global institutional pipeline and created wins and customized mandates. This has contributed to meaningful growth across our institutional network. Turning to slide 10. You'll note that net revenues increased $31 million, or 2.3%, from the second quarter as a result of higher average AUM in the third quarter. The net revenue yield, excluding performance fees, was 34.4 basis points, a decrease of 0.4 on the basis points from the second quarter yield level. The decrease was mainly driven by asset mix shift, including higher QQQ and money market average balances. The incremental impact from higher discretionary money market fee waivers was minimal relative to the second quarter and the full impact on the net revenue yield for the third quarter was 0.6 of a basis point. Looking forward, we expect the dynamics impacting net revenue yield will continue, the degree of which will be influenced by market direction, especially if we see a divergence in performance in areas such as developing or emerging markets where fees tend to be higher than our firm average. We do expect the discretionary money market fee waivers to remain in place for the foreseeable future until rates begin to recover to more normalized levels. One other area I want to note before moving to expenses are performance fees. Historically, we have realized meaningfully higher performance fees in the fourth quarter. These have been driven typically by a few funds each year that have reached the point in their life cycle where they generate performance fees usually in the fourth quarter. This year, we do not expect to see performance fee increase in the fourth quarter. We expect performance fees in the quarter will be more in line with our experience across the first three quarters of the year. This is due to vintages in our portfolio not being at the life cycle stage of recognizing performance fees, which is typically near the end of the life of the fund and is in no way related to the performance of the funds. Total adjusted operating expenses increased 1.2% in the third quarter. The $10 million increase in operating expenses was mainly driven by variable compensation and property, office and technology expense. Higher variable compensation was driven by the revenue increase in the quarter, partially offset by savings resulting from our strategic evaluation. The increase in property, office and technology expenses was largely driven by changes to the pricing of transfer agency services that we provide to our funds as we noted last quarter. This change went into effect in the third quarter and resulted in a $6 million expense increase, which was offset by a corresponding increase in service and distribution revenue. As a reminder, we anticipate that our outsourced administration costs, which we reflect in property, office and technology expense, will increase by approximately $25 million on an annual basis or approximately $6 million per quarter. And offsetting this will be a corresponding increase in service and distribution revenues, resulting in a minimal impact to operating income. Operating expenses remained at lower-than-historic activity levels due to pandemic-driven impact to discretionary spending, travel and other business operations. However, we did see a modest increase in client activity and business travel in the third quarter, which is reflected in both marketing and G&A expense. As we look ahead to the fourth quarter, our expectations are for fourth quarter operating expenses to be relatively flat compared to the third quarter, assuming no change in markets and FX levels from September 30. Consistent with prior years, we expect a modest seasonal increase in marketing-related expenses in the fourth quarter. And one area that's still more difficult to forecast at this point is when COVID impacted travel and entertainment expense levels will begin to normalize. We are engaging in more domestic travel and in-person client activity, and we do expect to see continued modest resumption of these activities in the fourth quarter. Moving to slide 11, we update you on the progress we have made with our strategic evaluation. In the third quarter, we realized $5.8 million in cost savings. $4 million of these savings is related to compensation expense associated with reorganization and $2 million was related to property expense. A $5.8 million in cost savings, or $23 million annualized, combined with $125 million in annualized savings realized for the second in quarter 2021 brings us to $148 million in total, or 74%, of our $200 million net savings expectation. As it relates to timing, we expect to modestly exceed the $150 million target we have set for 2021, with the remainder realized by the end of 2022. We expect the total program savings of $200 million through 2022 would be roughly 65% from compensation and 35% spread across the other categories. In the third quarter, we incurred $18 million of restructuring costs. In total, we recognized nearly $190 million of our estimated $250 million to $275 million in restructuring costs that were associated with the program. We expect the remaining restructuring costs for the realization of this program to be in the range of $60 million to $85 million through the end of next year. As a reminder, the costs associated with the strategic evaluation are not reflected in our non-GAAP results. Now going to slide 12. Adjusted operating income improved $21 million to $562 million for the quarter, driven by the factors we just reviewed. Adjusted operating margin improved 60 basis points, 42.1% as compared to the second quarter. Most importantly, our degree of positive operating leverage reflected in our non-GAAP results was 1.7 times for the quarter, underscoring our focus on driving scale and profitability across our diversified platform. Nonoperating income was $29 million, driven primarily by unrealized gains in our co-investment portfolio. The effective tax rate for the third quarter was 24.4% compared to 22.8% in the second quarter. The rate increase is primarily due to an increase in the reserve for uncertain tax positions. We estimate our non-GAAP effective tax rate to be between 23% and 24% for the fourth 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. Looking at slide 13. We illustrate our ability to drive adjusted operating margin performance against the backdrop of the client demand-driven change in our AUM mix and the resulting impact on our net revenue yield, excluding performance fees. Our operating margin in the third quarter of 2019, which was the first full quarter following the acquisition of Oppenheimer, was 40.9%. At that time, we reported a net revenue yield of 40.7 basis points. In the third quarter of 2021, our net revenue yield had declined over six basis points to 34.4 basis points, yet our operating margin has improved to 42.1%. This chart starts at the third quarter of 2019, but in fact, our third quarter 2021 operating margin is the highest since Invesco became a U.S.-listed company in 2007. This is against the backdrop of a mix-driven decline in net revenue yield. We've been building out our product suite to meet client demand and client demand has been tilted toward lower fee products. In fact, the growth of the QQQ over this period is remarkable, almost tripling in size and going from 6% of our AUM mix in the third quarter of 2019 to 12% at the end of this quarter. Even though we do not earn a management fee, as a sponsor of the QQQ, we managed the over $100 million annual marketing budget generated by the product. The marketing budget has allowed Invesco to further raise awareness about the QQQ. That increased awareness has resulted in its ability to significantly increase our market share in the ETF space. Invesco is today the fourth largest ETF provider in the world. Growth in the QQQ accounts for two basis points of the net revenue yield decline over the period shown on this chart. And then as I noted earlier, discretionary money market fee waivers account for a six basis point decline in the net revenue yield. These two factors alone account for over 40% of the decline in the net revenue yield over this period. Realizing our business mix is shifting, we continue to be focused on aligning our expense base with the changes in our business mix, which has enabled the firm to generate positive operating leverage and operating margin improvements. Now a few comments on slide 14. Our balance sheet cash position was $1.8 billion on September 30 and approximately $725 million of this cash was held for regulatory requirements. The cash position has improved meaningfully over the past year, increasing by nearly $700 million, largely driven by the improvement in our operating income. Our debt profile has improved considerably as well with no draws on our revolver at quarter end. As a result, we have substantially improved our net leverage position as shown in the top right chart on this slide. Our leverage ratio, as defined under our credit facility agreement, declined from 1.43 times a year ago to under one times at 0.86 turns at the end of the third quarter. If you choose to include the preferred stock, the leverage ratio has declined from just over four times to 2.67 times at the end of the third quarter. Regarding future cash requirements, we recorded an additional downward adjustment to the MLP liability in the third quarter, reducing the liability from our previous estimate of nearly $300 million down to $254 million. We anticipate funding the liability this quarter, and we have ample cash resources to do so. While we anticipate a degree of insurance recovery related to this, the insurance claims process is inherently complex, and we do not have an update at this stage as to the exact timing or size of the recovery. Regarding our capital strategy, we are committed to a sustainable dividend and to returning capital to shareholders through a combination of modestly increasing dividends and share repurchases. As we look toward 2022 and beyond, we will be building toward a 30% to 50% total payout ratio over the next several years as we continue to modestly increase dividends and reinstate a share buyback program in the future. Overall, we believe we're making solid progress in our efforts to improve liquidity and build financial flexibility. In summary, we continue to see growth in our key capabilities. We remain focused on executing the strategy that aligns with these areas while completing our strategic evaluation and reallocating our resources to position us for growth. And finally, we remain prudent in our approach to capital management. We're 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. And with that, I'll ask the operator to open up the line for Q&A.

$1,528.6 billion in ending aum, an increase of 0.2% over prior quarter. qtrly operating revenue $1,750 million versus $1,721.4 million in q2 2021.

AMG entered 2021 in a position of strength, and our first-quarter results reflect the momentum that continues to build in our business. Economic earnings per share of $4.28 improved 35% year over year and represented the strongest first quarter in our history, primarily driven by EBITDA growth of 23% and ongoing share repurchase activity. Building on our strong start to the year and looking ahead to the second quarter and full year of 2021, we expect the growth in our business to accelerate, given the excellent affiliate investment performance, the ongoing contributions of the strategic actions we have taken and most significantly, heightened activity and new investments. With our increasing free cash flow and available capital in a favorable environment to establish new partnerships, we have a tremendous opportunity to invest in high-quality firms operating in areas of secular growth such as our recent investments in OCP Asia and Boston Common. The disciplined execution of our strategy, including the simultaneous return of excess capital to our shareholders, will further compound our earnings and free cash flow generation, and we are confident in our ability to create substantial shareholder value over time. Over the past year, our affiliates built on their long-term performance records, once again demonstrating their ability to distinguish themselves during periods of volatility. Excellent investment performance during this period generated meaningful first-quarter performance fees, increased asset levels and enhanced organic growth. As performance-driven improvements in organic growth trends continue across our business, we are also seeing investors rerisking portfolios as economies reopen worldwide. Investors are increasing allocations to high-quality active managers, especially independent firms to help navigate market volatility, protect capital and generate superior outcomes. In addition to ongoing growth and flows in private markets, specialty fixed income and wealth management, AMG is benefiting from growing demand for fundamental equities and liquid alternatives, particularly in our top-performing value-oriented affiliates and in our active ESG strategies. As these trends continue, and as we add new affiliates operating at secular demand areas, we expect ongoing improvement in our organic flow profile. Further supporting this improving profile, AMG-led distribution efforts are adding incremental growth and momentum to our affiliates' new business activity. Nearly 20 years ago, we began developing AMG-led distribution resources to complement the existing sales efforts of our affiliates. And over the past two years, we strategically evolved our platform for the benefit of our affiliate partners and their clients, focusing on the largest growth opportunities while also better aligning our affiliates' in-demand products with the success of AMG distribution efforts. wealth distribution, consistent with our institutional distribution strategy. This change provides a more competitively priced, higher quality and more differentiated set of strategies exclusively managed by AMG affiliates. With this repositioning now behind us, our distribution platforms are even more strategically compelling to both existing and new affiliates as well as our clients given the increased focus, resources and alignment. And as part of our strategy, we will continue to evolve our AMG-led distribution resources to reflect the composition and needs of our affiliates and their clients over time. AMG's enduring business model, providing a permanent solution for independent firms, enables us to be a true strategic partner to our affiliates distinct from any institutional competitor in the market today. Our partnership model is simple. We enhance our affiliates' ability to grow across generations, while preserving investment independence and operating autonomy. We provide a uniquely broad set of partnership solutions to independent firms having expanded our solution set over the years beyond succession planning to include minority investments, growth capital and centralized distribution services on behalf of our affiliates. As a result of this evolution, and given our strong competitive position, AMG's partnership approach today is even more attractive to a broader array of independent firms around the world. Our new investment strategy is generating both growth and return. Not only does our partnership approach self-select for growing firms, our discipline in structuring new investments generate meaningful returns for our shareholders across a range of business outcomes. Over the past two years, we have meaningfully stepped up our focus and resources devoting to identifying and executing new partnerships with independent firms. Additionally, we have concentrated our prospecting efforts on independent firms operating in areas of strong secular growth and client demand, including private markets, fixed income alternatives, the Asia Pacific region, ESG and multi-asset solutions. With this enhanced focus, we expect new investments to be a significant source of forward earnings growth. As we continue to execute on our growing opportunity set over the course of 2021, each new affiliate will add immediately to our earnings. And the full impact of AMG's earnings power and growth profile will only fully materialize starting in 2022. Evidencing the momentum we are seeing in new investments, last week, we announced our second partnership this year. Recognized as the leader in Asian private credit, OCP Asia, has consistently generated excellent returns for its clients. The cultural alignment between AMG and OCP Asia is very strong, and the key principles of OCP were attracted to our partnership approach and the opportunity to expand and extend our client reach through our global distribution capabilities. This new partnership enhances and diversifies our exposure both to private markets and to Asia, where we see increasing allocation. We are excited to partner with Stu, Teall, Dan and the broader team as they continue to provide differentiated investment returns and capitalize on their growth initiatives. Finally, as I said last quarter, the contributions from the strategic and growth investments that we have made over the past two years are not only materializing in our results today, but will also more fully manifest in the coming quarters. Since the beginning of 2019, we have invested in six new affiliates. We've invested in the growth of our existing affiliates. We have broadened our partnership solution set. We've enhanced our strategic capabilities. We have realigned our distribution platform. We have significantly enhanced our capital position and we repurchased nearly 20% of our shares outstanding. We have achieved all of this while reinvigorating AMG's entrepreneurial culture in reestablishing an ownership mindset across the organization. Looking ahead, we have significant momentum on our business, and we see AMG's growth accelerating. With strong affiliate investment performance and improving organic growth profile and increasing opportunities to invest in excellent partner-owned firms, we are confident in our ability to execute on our substantial opportunity set and continue to create shareholder value. As we discussed on our fourth-quarter call, focused execution against our strategy is producing significant growth, as was once again evidenced by our strong first quarter. Our earnings power and cash flow generation continue to increase, and our unique ability to deploy capital across our broad opportunity set to grow EBITDA and earnings per share is a key differentiator. Looking forward, the value proposition we offer independent partner-owned firms, together with an increasingly favorable environment for active managers, position AMG well to compound earnings growth over time and generate meaningful shareholder value. Our first-quarter results reflect the significant momentum we're seeing across our business. Adjusted EBITDA of $247 million grew 23% year over year, driven by strong affiliate investment performance and the impact of our growth investments. Economic earnings per share of $4.28 grew 35% year over year further benefiting from share repurchase activity. Net client cash flows for the quarter improved meaningfully versus prior periods, and flows representing the vast majority of our EBITDA turned positive, excluding certain quantitative strategies. Ongoing strength in private markets, specialty-fixed income and wealth management strategies continue to drive strong flows. Increased demand for fundamental equity and liquid alternatives, particularly top-performing value and impact-oriented strategies, also contributed, as clients continue to position portfolios for a post-pandemic world. Turning to performance across our business and excluding certain quantitative strategies. In alternatives, fundraising remains strong at Pantheon, Baring, EIG and Comvest as clients continue to steadily increase private market allocations globally, and we reported net inflows of $2.8 billion in the first quarter. Performance in this category is excellent, as our affiliates have been deploying dry powder into attractive return opportunities, including across Asia private equity, global secondaries, coinvestments and credit. Overall, our private markets book remains a significant source of earnings growth, accounting for nearly 20% of management fee EBITDA with increasing future carried interest potential. We continue to add high-quality partnerships in the sector, including our investment in OCP Asia, which I'll elaborate further on in a moment. Within liquid alternatives, our affiliates are posting strong performance across relative value fixed income in light of ongoing volatility in bond markets as well as in concentrated long-only strategies. We are seeing increased client interest in this category as clients look for alternative sources of yield and return. Capula, Garda and ValueAct continue to generate excellent investment performance, translating to strong performance fees and demonstrating the attractiveness and resiliency of these strategies. Moving to fundamental equities. We continue to see strong performance across a range of affiliates. In U.S. equities, we reported net inflows of $300 million. The outperformance of value strategies following decade-long headwinds is leading to increased conversations with clients and are focused on the highest quality independent firms in the industry, benefiting affiliates like River Road and Yacktman. In global equities, net outflows of $3.9 billion were driven by redemptions in regionally focused strategies. Affiliates continue to deliver strong investment performance across a range of strategies, including at Harding Loevner, Veritas and Artemis. Multi-asset and fixed income strategies continue to produce steady long-duration inflows, and we anticipate ongoing client demand trends will support future growth. These strategies generated $900 million in net client cash flows during the quarter, primarily driven by ongoing demand for muni bond strategy at GW&K and stable growth across our wealth management affiliates. Overall, affiliate investment performance and flow trends continue on a positive trajectory as clients increasingly turn to independent active managers to deliver superior investment outcomes. And we continue to pivot our business toward areas of secular growth through investments in existing affiliates and new affiliates, which will further enhance our organic growth profile going forward. Now, turning to financials. For the first quarter, adjusted EBITDA of $247 million grew 23% year over year, driven by strong affiliate investment performance. Adjusted EBITDA included $42 million of performance fees, reflecting outstanding performance in certain liquid alternative strategies. Economic earnings per share of $4.28 grew by 35% year over year, further benefiting from share repurchase activity. Now moving to specific modeling items for the second quarter. We expect adjusted EBITDA to be in the range of $210 million to $220 million based on current AUM levels, reflecting our market blend, which was up 3% as of Friday. Our estimate includes performance fees of up to $10 million and the impact of our newest investments in OCP Asia and Boston Common. As a reminder, the second and third quarters are typically lower performance fee quarters due to the timing of performance fee crystallization. Our share of interest expense was $27 million for the first quarter, and we expect interest expense to remain at a similar level for the second quarter. Controlling interest depreciation was $2 million in the first quarter, and we expect the second quarter to be at a similar level. Our share of reported amortization and impairments was $41 million for the first quarter, and we expect it to be $35 million in the second quarter. Our effective GAAP and cash tax rates were 24% and 20%, respectively, for the first quarter, and we expect similar levels for the second quarter. Intangible-related deferred taxes were $9 million in the first quarter, and we expect an $11 million level in the second quarter. Other economic items were negative $15 million and included the mark-to-market impact on GP and seed capital investments. In the second quarter, for modeling purposes, we expect other economic items, excluding any mark-to-market impact, on GP and seed to be $1 million. Our adjusted weighted average share count for the first quarter was $43.2 million, and we expect our share count to be approximately $42.4 million for the second quarter. Finally, turning to the balance sheet and capital allocation. Our balance sheet remains in an excellent position with significant access to liquidity and a flexible long-duration debt profile, and we continue to look for ways to further enhance our capital structure. We are generating strong and growing free cash flow and are well-positioned to invest our capital through the disciplined execution of our strategy, including through new investment partnerships that create significant value over time. First, we are focused on investing in high-growth businesses in areas of secular demand. So new investments are generally growing faster than our existing business in terms of both flows and revenues, enhancing our organic growth profile and our EBITDA growth. Next, new investments not only contribute immediately to our EBITDA, but we can also debt finance a portion of our purchase price and often achieve incremental tax benefits, enhancing the returns we deliver to our shareholders. And finally, as we execute on our strategy, we continue to take a disciplined approach to pricing and structure, targeting risk-adjusted returns well in excess of our cost of capital across a range of potential outcomes. Taken together, new investments generate immediate earnings and organic growth and are strategically important to the long-term growth and sustainability of our business. Our most recent investment in OCP Asia is a great example of the value of investing in new affiliates. We took a minority interest in the business through a revenue share, with a structure designed to minimize earnings volatility. The business is growing at double digits organically and is priced to deliver attractive returns across a range of outcomes. We expect the business to contribute $0.20 of incremental economic earnings per share in 2021 and $0.33 in 2022, including $16 million of EBITDA in 2022. Our renewed focus on disciplined capital allocation ensures that every dollar we invest runs through a common framework so that we are making growth investments that clearly meet our risk and return criteria and then returning excess capital to our shareholders through repurchases. In the first quarter, we repurchased $210 million of shares and now have repurchased nearly 20% of our shares outstanding over the past two years. We are focused on continuing to reduce our share count through repurchases over time, and we remain on track to repurchase $500 million of shares this year. As always, this is subject to change based on market conditions and the timing of new investments. We are well-positioned to compound earnings growth over time through new investments, investment performance, flows and share repurchases. The momentum in our business is accelerating and the combination of our strategy, our capital position and a favorable environment to invest for growth underscore the many reasons to be excited about AMG going forward.

qtrly economic earnings per share of $4.28.

I'm joined today by Ron Tsoumas, our Chief Financial Officer. Let's begin with the business highlights on Slide 4. Our sales for the quarter were $301 million. Excluding favorable currency translation, our organic growth was up 37% from the prior year. It should be noted, however, that our prior-year quarter was significantly impacted by the pandemic. In this year's fourth quarter, our team faced multiple challenges, first with the chip shortages and then with the plastic resin shortages, resulting from the freeze in Texas. These issues, along with the ongoing port congestion, created meaningful headwinds. In response the Methode team did what it does best, recognize the challenge early, work with the customers and suppliers to develop solutions and then execute. As a result, we were able to meet the high end of our sales guidance for the quarter. However, the supply chain disruptions required remedial actions such as expedited shipping and premium component pricing that significantly impacted our margins. Moving forward, these challenges are lingering into the first quarter and some may continue until the end of this calendar year. However, we have confidence in the situation improving as evidenced by our guidance for the full fiscal year. The growth that we realized in the fourth quarter was due to increased demand across most of our businesses that was especially focused in auto and commercial vehicle. We also saw growth in our Dabir business as a result of a major hospital system order. Overall, we had strong awards for EV, LED, lighting and e-Bikes. Last quarter we reported that sales into EV applications were over 12% of consolidated sales. This quarter, EV sales were over 13% of consolidated sales and we continue to expect the number to be in the mid-teens for fiscal 2022. Methode's combination of user interface, LED lighting and power distribution solutions is a winning formula in EV, but we are especially seeing growth in our power offering. Regarding our balance sheet. We generated $31 million in free cash flow and further reduced our net debt in the quarter. We continue to have ample liquidity and our net leverage ratio is now near zero. The strength and flexibility of our balance sheet allows us to consider multiple paths to invest in the business in order to drive growth and ultimately shareholder return. As an example, this quarter, we initiated a stock buyback program and purchased $7.5 million in Methode shares. After the quarter end, we also announced a 27% increase to our dividend. Methode's business model continues to generate excellent free cash and we are allocating capital per our balanced approach. Moving to Slide 5. Methode finished the fiscal year with another strong quarter of business awards. These awards continue to capitalize on key market trends like vehicle electrification, LED lighting in auto and cloud computing. The awards identified here represent a cross-section of the business wins in the quarter and represent over $40 million in annual business at full production. In vehicle electrification, we won awards for power distribution, user interface and LED lighting programs. We continue to win programs with OEMs globally in both auto and commercial vehicle applications. In non-EV LED lighting, we were awarded programs for automotive and motorcycle applications. In cloud computing, we continue to see demand for our power distribution products and data center applications. Additionally, we continue to participate in the growth of e-bikes which utilizes our proprietary magnetoelastic technology. We also won two awards for traditional user interface solutions as well as secured a power distribution award for our wind farm application. Turning to Slide 6. Despite having one less week, we were able to deliver year-over-year organic growth and finished with our good sales of $1,088 million for the year. Also a record for the year was our free cash flow of $155 million. The team's disciplined focus on working capital improvements throughout the year made this result possible. The strong fourth quarter drove our EV sales for the full year to over 12% of total consolidated sales. All of our key solutions, user interface, LED lighting and power distribution contributed to our EV growth. Lastly, for the full year Methode's business awards were over $200 million in estimated annual sales at full production with the majority being in our target markets of EV, commercial vehicle, e-bike and cloud computing. As I mentioned last quarter, our business awards over the last couple of years have put us on track in aggregate to replace the sales from the roll off of our largest auto program. As such our customer and program concentrations continue to improve and our foundation for organic growth is building. On a sidenote, moving to Slide 7, you will see that we recently celebrated our 75th anniversary. Methode Electronics was founded in 1946 by William J. McGinley in Chicago. The Company started with the production of tube-sockets used in radios and early television sets. It was named from an anagram of a good manufacturing method and the electrode and cathode of a vacuum tube, forming the word Methode. Today, Methode has grown into a world-class manufacturer and continues to develop new technology and innovative solutions for our customers worldwide. The entire Methode team is proud to carry on the legacy of Mr. McGinley. To conclude, given the recent supply chain challenges, I am extremely pleased that our team was able to deliver at the high end of our guidance, generate solid free cash flow and win substantial program awards in the quarter. As I articulated earlier, these supply chain issues are still present and are impacting our first quarter. However, we believe they will diminish over the course of our fiscal year, which would put us in a position to deliver strong organic growth for fiscal 2022. Fourth quarter sales were $301 million in fiscal year 2021 compared to $210.6 million in fiscal year 2020, an increase of $90.4 million or 42.9%. The year-over-year quarterly comparisons included a favorable foreign currency impact on sales of $11.5 million in the quarter. The increase was mainly due to lower sales in the prior-year quarter from the impact of the COVID-19 pandemic and to higher sales of electric and hybrid vehicle products. Fourth quarter net income increased $1 million to $31.1 million or $0.81 per diluted share from $30.1 million or $0.79 per diluted share in the same period last year. Net income benefited from lower income tax expense and favorable foreign currency translation, offset by higher costs from supply chain shortages, higher sales and administrative expenses and lower other income. Fourth quarter gross margins were lower in the fiscal year '21 as compared to fiscal year '20, mainly due to higher material costs, higher logistics costs, including freight and supply chain shortages. Fiscal year '21 fourth quarter margins were 25.1% as compared to 28.1% in the fourth quarter of fiscal year '20. This supply disruption accounted for over 200 basis points of the margin decrease. The higher logistics costs, including freight and supply chain shortages that were experienced in the fourth quarter, are expected to continue into fiscal '22. In addition, we anticipate a degree of cost inflation continuing into fiscal year '22. Fourth quarter selling and administrative expenses as a percentage of sales increased to 12.3% as compared to 8.6% in the fiscal year '20 fourth quarter. The fiscal year '21 fourth quarter percentage increase was attributable to higher stock-based and performance-based compensation expenses, mainly as a result of compensation accrual reversals in the prior-year quarter related to the negative impact of the COVID-19 pandemic on the fiscal 2020 financial performance measures. The fourth quarter fiscal '21 SG&A percentage is more in line with the historical norm which should still yield an efficient flow-through from gross margin to operating income. In addition to the gross margins and SG&A items mentioned above, two other non-operational items significantly impacted net income in the fourth quarter of fiscal year '21 as compared to the comparable quarter last fiscal year. First, other income net was lowered by $2.1 million mainly due to lower international government assistance between the comparable quarters. Second, income tax expense in the fourth quarter of fiscal year '21 was $5.5 million or 15% as compared to a tax expense of $10 million or 24.9% in the fourth quarter of fiscal year '20. The effective tax rate was higher in the fourth quarter of fiscal year '20 due to an increase in tax reserves in the quarter. Shifting to EBITDA, a non-GAAP financial measure, fiscal '21 fourth quarter EBITDA was $50.8 million versus $54.5 million in the same period last year. EBITDA was negatively impacted by lower operating income and lower other income. Net sales increased by $64.1 million to $1.088 billion of which $26.7 million was attributable to foreign exchange. The $1.088 billion in sales was a record for Methode. Net income was virtually flat as supply chain disruptions, higher performance-based compensation and increased restructuring, contributed to lower pre-tax income, which was partially offset by the lower income tax rate. In fiscal year '21, we reduced gross debt by $112 million resulting from the full repayment of the $100 million precautionary draw we initiated in March 2020. Since our acquisition of Grakon in September 2018, we have reduced gross debt by $118 million. Net debt, a non-GAAP financial measure, decreased by $127.9 million to $6.9 million in the fiscal year '21 from $134.8 million at the end of fiscal year '20. We ended the fourth quarter with $233.2 million in cash. Our debt to trailing 12-month EBITDA ratio, which is used for our bank covenants, is approximately 1.25. Our net debt to trailing 12-months EBITDA ratio was 0.04, virtually nil. Free cash flow, a non-GAAP financial measure, which effective in fiscal year '21 is defined as net cash provided from operating activities less capex. For fiscal year '21 fourth quarter, free cash flow was $31.2 million as compared to $47.8 million in the fourth quarter of fiscal '20. The decrease was mainly due to higher working capital in the quarter to support year-over-year increased sales. For the full fiscal year '21, we produced record net cash provided by operating activities of nearly $180 million and record free cash flow of $155 million. While we don't expect to equal the fiscal year '21 free cash flow results in fiscal '22, largely due to increased working capital to support fiscal year '22 sales growth and increased capex, we do expect to generate sizable free cash flow. We anticipate continuing our proven history of consistently generating reliable cash flows which allow for ample funding of future organic growth, inorganic growth and return of capital to the shareholders. In the fourth quarter of fiscal year '21, we invested approximately $4.8 million in capex as compared to $10.2 million in the fourth quarter of fiscal year '20. The lower fourth quarter capex was simply due to timing as opposed to a conscious effort to curtail capex. We approved capex during the quarter and the full fiscal year that is not yet reflected in the cash flow statement as the actual cash outlay for these approved expenditures will occur in future reporting periods. We have a strong balance sheet and we'll continue utilizing it by continuing investment in our businesses to grow them organically in the future. In addition, we continue to pursue opportunities for inorganic growth. Regarding capital allocation, we recently announced two initiatives. First, on March 31 we announced a $100 million share repurchase program, which we executed $7.5 million of repurchases during the fourth quarter of fiscal year '21. In addition, last week we announced a 27% increase in our quarterly dividend from $0.11 per share to $0.14 per share. We are confident in our cash-generating ability to simultaneously invest in organic growth, inorganic growth and provide an ample return of capital to the shareholders. Don mentioned in his remarks, we are providing revenue and earnings per share guidance in the first quarter of fiscal '22 due to the uncertain direct and indirect impacts from the ongoing semiconductor supply shortage and the continued challenges from other supply disruptions, including port congestion. The revenue range for the first quarter of fiscal year '22 is between $285 million and $300 million. Diluted earnings per share range is between $0.68 per share to $0.80 per share. The revenue range for the full fiscal year '22 is between $1.175 billion and $1.235 billion. Diluted earnings per share ranges between $3.35 per share to $3.75 per share. The midpoint of the range represents an 11% increase over fiscal '21 despite having a significantly higher tax rate in fiscal year '22. The wider range is due to the uncertainty from the supply chain disruption for semiconductors and other materials on both Methode and its customers. Factors that could result in us moving toward the higher end of the sales range include higher sales due to lesser disruption of supply to us and/or our customers which would result in higher demand for our products. Lesser disruption would also minimize the cost of sales impact from premium freight, factory inefficiencies and, to a lesser extent, tariffs and other logistic factors such as port congestion. Don, that concludes my comments. Kathryn, we are ready to take questions.

methode electronics inc - q4 sales $301 mln. sees q1 earnings per share $0.68 to $0.80. q4 earnings per share $0.81. sees q1 sales $285 million to $300 million. q4 sales $301 million. compname says for fy 2022, co expects net sales in range of $1.175 billion-$1.235 billion. compname says for fy 2022, co expects earnings per share to be in range of $3.35 to $3.75.

These statements are subject to change due to new information or future events. Assured Guaranty's insurance production loss mitigation and capital management strategies combined to deliver outstanding results in 2021. We had many notable accomplishments during the year, we earned $470 million of adjusted operating income, 84% more than in 2020. We more than doubled adjusted operating income per share to $6.32 per share. We brought all three of our measures of shareholder value to new highs. Over the year, shareholder's equity per share grew 9% to $93.19. Adjusted operating shareholder's equity per share increased 13% to $88.73, and adjusted book value per share rose 14% to $130.67. We repurchased $10.5 million common shares, or approximately 14% of our shares outstanding at December 31, 2020, at an average price of $47.19. Those repurchases totaled $496 million, with the addition of $66 million of dividends, we returned a total of $562 million to shareholders. Through strong new business production in each of our financial guarantee markets, U.S. public finance, international infrastructure finance and global structure finance, we generated a total of $361 million of PVP in 2021. Direct PVP exceeded $350 million for the third consecutive year, compared with an average annual direct PVP of $210 million from 2012 to 2018, making the last three years our best in more than a decade for direct new business production. With a more than 60% share of new issue insured par sold, we led the U.S. public finance bond insurance industry to its highest penetration, market penetration in a dozen years. And taking advantage of exceptionally low interest rates are U.S. holding company issued a total of $900 million, a 3.15% 10-year and 3.60% 30-year senior debt to refinance $600 million of debt with higher coupons ranging from 5% to almost 7%. As a result, annual debt service savings will be $5.2 million through the next maturity date. Our financial guarantee production was well-diversified across all of our markets. U.S public finance PVP of $235 million included in its second best direct production in at least a decade, surpassed only by the previous year's result, or $79 million of international infrastructure PVP marks the fourth year out of the last five that we have exceeded 75 million of direct PVP in that sector. Global structure finance PVP at $47 million was the second best and direct production since 2012. Our markets and economic environment offered both opportunities and challenges during 2021, issuance of U.S. municipal bonds reached a record par amount of $457 billion in 2021. This partly reflected investors increased demand for taxes on paper in expectation of higher tax rates and continued limitations on state and local tax deductions at the federal level. Additionally, -- issuers were eager to take advantage of extremely low municipal interest rates to refinance bonds issued in the path of higher rates, with the option to execute tax exempt advance refunding still off the table. Many issuers also turned to the taxable market to replace higher coupon tax exempt debt. Total insured market volume increased to 8.2% of par issued, the highest annual rate over the past 12 years, and up from 7.6% during 2020 and 5.9% during 2019. We believe this increased penetration in 2021 indicates that the risk of unpredictable developments, which is brought home by the onset of the COVID-19 pandemic in 2020, has made a lasting impression on investors. We have also seen that Assured Guaranty has the underwriting and risk management skills to construct an insured portfolio that experienced minimal claims from the economic disruption caused by the pandemic, most of which have already been reimbursed. The $37.5 billion of insured par in 2021 represented a 10% annual increase, on the heels of a 43% increase the prior year, resulting in a 57% growth of the insured market in just two years since 2019. Assured Guaranty's production was a leading force behind this growth, as we enjoyed over 58% of new issue insured par sold in 2020, and more than 60% in 2021. Our highest annual market share since 2013, Our $23 billion of insured new issue volume in 2021 was almost $3 billion more par than we insured in 2020, and was generated by more than 8,000 individual transaction. An important trend in recent years has been the use of our guarantee to help launch some of the municipal bond markets largest transaction, which indicates growing institutional demand for the security, relative price stability and significant market liquidity our guarantee can provide. We guaranteed $100 million or more on each of 48 large issues launched in 2021, up from 39 transactions in 2020 and 22 in 2019. Significantly, we continue to add value on credits with underlying ratings in the double aid category from one or both of S&P and Moody's, ensuring a 109 such AA transactions totaling more than $3.5 billion of insured par. U.S. public finance, forms the largest part of our uniquely diversified financial guarantee strategy. Our three pronged strategy also targets insurable transactions in both infrastructure finance outside the United States and structured finance throughout the world. This helps us in times when one market or another shows temporary weaknesses, and it drives great results in years like 2021, when we are thriving in all three of our markets. Further demonstrating the diversity of our business, in 2021, we guaranteed financing of a Spanish solar power facilities and UK higher education and healthcare projects. Additionally, we work with the UK water company to extend a debt service reserve guarantee, which is a unique product we developed as an alternative to bank liquidity facilities. We also provided a number of secondary market guarantees. Our European business was historically based in the UK, which previously allowed us to do business throughout the European Union. We have long been active and where we continue to believe that plentiful and diverse opportunities. Our Paris subsidiary, which we opened in 2020 to serve continental Europe more effectively, especially now that the UK has left the European Union, further grew its business around originations in 2021. A global structured finance and important part of our business is to provide institutions like banks and insurance companies with tools to optimize the capital utilization of their asset portfolios. During the year, we guarantee large insurance securitizations and significantly increase our CLO activity. Our guarantees of CLOs attract new investors who might otherwise be discouraged by the higher capital requirements on uninsured Clos. We are seeing more opportunities to help investors reduce the capital consume of both existing structured finance exposures and new investment. The new business we rode across all of our markets in 2021, enabled us to increase the year-end net par amount of our insured portfolio for the first time in many years. We believe the trend going forward will be to continue increasing the par amount of our insured portfolio, and increase our deferred premium revenue, which will further stabilize and grow our future earnings. We have continued to reduce the risk in our insured portfolio, and believe we can continue to do so as we continue to write new investment grade business. The below investment grade portion of our insured portfolio declined to barely more than 3% as of December 31, 2021. Almost half of our below investment grade net par exposure is to Puerto Rico, and we expect that with the court approved settlements pertaining to the GO and certain other credit scheduled to occur on March 15th of this year, that figure should drop below 2.5%, and continue to fall as more of our Puerto Rico settlements are executed. After years of twists and turns related to the restructuring of Puerto Rico debt, decisive progress occurred in 2021, we and the other creditors, along with the Commonwealth, agreed to support the final revision of the Oversight Boards restructuring plan for the central government, which the Title III court approved in January of this year. As a result, the Commonwealth government's exit from bankruptcy is expected to begin in mid-March. The Title III court also laid the groundwork for favorable consideration of additional agreements that support certain other Puerto Rico restructurings, such as for highways and transportation authority. All this means that Puerto Rico's long awaited resolution of its unpaid debt is proceeding well, and the island is positioned for years of fiscal stability, according to the Oversight Board's latest fiscal plan. In addition to our success in the financial guarantee business in 2021, we also made significant progress toward our goals for the asset manager business. Our overall investment performance was strong as one of the top 25 collateralized loan obligation managers by assets under management. We were well-positioned to participate in this CLO market that reached a record level of interest issuance. During 2021, we launched six new CLOs representing $2.5 billion of assets under management, more than double what we issued in 2020, and we converted non-fee earning AUM to fee earning at AUM by selling substantially all this CLO equity still held by a Assured IM legacy funds, where we had been rebating management fees. Through these efforts, we increased CLO management fees in 2021 to $48 million from $23 million in 2020. Additionally, we reset a refinance 10 CLOs in the United States and Europe. In the asset backed sector, we closed a continuation fund holding an auto finance investment. Additionally, the healthcare portfolio managed by Assured healthcare partners continue to grow as capital was deployed. Looking back on the year, we believe much of Assured Guaranty success reflected the market's growing appreciation of the reliability of our financial strength and the security we provide investors, while also delivering financial benefits and first class service to bond insurers and other clients, the responsibility embodied in our careful underwriting, discipline risk management, and tireless loss mitigation. The proven resilience or financial guarantee business model and our strategic approach to capital management to protect policyholders and create value for shareholders. In our view, this heightened recognition of our guarantees value could help to drive demand higher as interest rates rise. We expect market conditions in 2022 and beyond to be very different from those of 2021, as the Fed strives to contain inflation, the economic and social impact of the COVID-19 recedes, developing geopolitical events continue to disrupt markets, and municipal governments prepare for the end of extraordinary federal support. Rising interest rates, widening credit spreads, and the accompanying volatility tend to increase financial guarantee demand. We believe Assured Guaranty is better positioned for the long-term success than in any time in our history. Our financial strength has never been stronger. The credit challenges in our legacy insured portfolio are largely behind us. Our markets are large. Our opportunities are diverse. Our human capital exceptional. And our business model proven through decades of economic cycles. We look forward to fulfilling the high expectations of our policyholders, clients and shareholders. I am very pleased to report that our fourth quarter 2021 adjusted operating income was $273 million, or $3.88 per share, a significant increase over the adjusted operating income of the fourth quarter of 2020, which was $56 million, or $0.69 per share. The primary driver of the increase in fourth quarter 2021 total adjusted operating income was the insurance segment where adjusted operating income increased 134% over fourth quarter 2020 from $109 million to $277 million. Much of this benefit came from our loss mitigation strategies, particular for our Puerto Rico exposure. After many years of negotiation and other loss mitigation efforts, we are close to resolving $1.4 billion in gross par associated with our Puerto Rico GO, PBA, CCDA and PREPA exposures. The increased certainty of the settlement and Puerto Rico's improved economic outlook, combined with the increased value of our actual and expected recoveries under the settlement agreements, were the primary drivers of the $186 million economic benefit in the fourth quarter of 2021. During the fourth quarter of 2021, we sold a portion of our salvage and subrogation recovered bulls associated with certain matured Puerto Rico GO and PREPA exposures, resulting in proceeds of $383 million, thereby realigning some of our expected recoveries early. In 2022, we continued to sell portions of our GO, PBA and PREPA salvage and subrogation recoverable, resulting in an additional proceeds of $133 million. The prices at which we crystallized these recoveries, as well as observed market pricing for other similar instruments and the forward interest rate environment, are reflected in the updated assumptions of the value of the remaining recovery bonds and contingent value instrument that we project receiving in the various Puerto Rico settlements. Other components of the insurance segment also performed well in the fourth quarter of 2021. Total income from investments, which consists of net investment income on the fixed maturity portfolio and equity in earnings on short Im funds and other alternative investments, was $111 million, an increase from $94 million in the fourth quarter of 2020. Collectively, the investments in Assured IM funds and alternative investments generated $44 million in equity in earnings of investees in the fourth quarter of 2021, compared with $24 million in the fourth quarter 2020. With the increase mainly attributable to a large fair value gain on a specific investment in a private equity fund. As a reminder, equity in earnings and investees is a function of mark-to-market movements attributable to the Assured IM funds and other alternative investments. It is more volatile than the net investment income on the fixed maturity portfolio and will fluctuate from period-to-period. Our fixed maturity and short-term investments account for the largest portion of the portfolio, generating net investment income of $67 million in the fourth quarter of 2021, compared with $70 million in the fourth quarter of 2020. As we shift fixed maturity assets into alternative investments, net investment income from fixed maturities may decline, however, over the long-term, we are targeting enhanced returns on the alternative investment portfolio of over 10%, which exceeds our projected returns on a fixed maturity portfolio. In terms of premiums, scheduled net earned premiums decreased slightly in the fourth quarter of 2021 to $91 million, compared with fourth quarter 2020 of $94 million. Premium earnings due to refundings and terminations were $20 million in fourth quarter 2021, compared with $65 million in the fourth quarter of 2020, when two large transactions refunded. The asset management segment adjusted operating loss was $3 million in the fourth quarter of 2021, compared with $20 million in the fourth quarter of 2020. The improvement in asset management segment results is primarily attributable to increased management fees in the strategies we launched since the 2019 Blue Mountain acquisition, and a non-recurring impairment of a lease right of use asset of $13 million in 2020. Asset management fees on a segment basis were $21 million in the fourth quarter of 2021, compared with $20 million in the fourth quarter of 2020. Higher fees from healthcare opportunity funds and CLOs more than offset the decrease in fees from wind down funds as distributions to investors continue. As of December 31, 2021, AUM of the wind down funds was $582 million, compared with $1.6 million as of December 31, 2020. In the fourth quarter of 2021, the effective tax rate was 15.1%, compared with 12.7% in fourth quarter 2020, which included the release of a reserve for uncertain tax positions. The overall effective tax rate on adjusted operating income fluctuate period-to-period based on the proportion of income in different texture jurisdictions. Overall, the fourth quarter capped off a year of successful execution of our strategic initiatives. These achievements are reflected in our 2021 full year adjusted operating income of $470 million, which includes a loss on extinguishment of debt of $175 million pre-tax, or $138 million after tax. Despite the debt extinguishment charge, full year 2021 adjusted operating income represents an 84% increase compared with 2020 adjusted operating income of $256 million. The primary driver of this increase was the insurance segment, with 722 adjusted operating income in 2021, compared with $421 million in 2020. U.S public finance benefited from the increased recovery assumptions, the Puerto Rico exposures that I mentioned earlier and the U.S. RMBS benefit this primarily a function of home price appreciation. Economic loss development, which excludes the effects of deferred premium revenue, was a benefit of $287 million in 2021. Across the whole portfolio, loss expense in 2020 was $204 million, and was primarily attributable to Puerto Rico. On a full year basis, total income from the investment portfolio was $424 million in 2021, compared with $371 million in 2020. The investment returns on the portion of the portfolio invested in Assured IM funds demonstrates an important component of the benefits of the asset management segment, not only as a fee earning business but as an investment advisor for our insurance segments. Assured IM funds in which the insurance subsidiaries invest generated gains of $80 million in 2021, compared with gains of $42 million in 2020. The gains were across all strategies, particularly healthcare, CLOs, and asset based, and generated a year-to-date return of 20.8%. The third party alternative investments also generated gains of $64 million in 2021, compared with $19 million in 2020. These gains more than offset reduced net investment income on the available -- sale fixed maturity portfolio, which was $280 million in 2021, down from $310 million in 2020. Lower average balances, the fixed maturity portfolio reinvestment yields an income -- loss mitigation securities were the primary drivers of the year-over-year variance. Total net earned premiums in credit driven revenues were $438 million in 2021, compared with $540 million in 2020, including premium accelerations of $66 million and $130 million, respectively. In the asset management segment, we have continued to make great progress in 2021. We raised new third party capital in our CLO, healthcare and asset base strategies. We increased for earning for CLO AUM to the issuance of $2.8 billion in CLOs and the sale of CLO equity out of the legacy funds, and we continue to liquidate assets in the wind down funds. The improvement in the asset management segment operating loss from $50 million in 2020 to $90 million in 2021, was primarily attributable to an increase in management fees from $59 million in 2020 to $76 million in 2021. Higher free -- fees from CLOs and -- turning funds more than offset the decline in fees from wind down funds. The increase in -- opportunity fund fees was primarily attributable to the new healthcare funds launched in late 2020, which raise additional third party capital in late 2021. The corporate division had adjusted operating loss of $253 million in 2021, including a loss on debt extinguishment of $175 million, or $138 million on an after tax basis. Which resulted from a $600 million in debt redemptions that Dominic mentioned earlier, this charge is simply an acceleration of expenses that would have occurred over time. In the prior year, corporate division adjusted operating loss was $111 million. The debt redemptions were financed with the proceeds from the issuance of $900 million in new 10-year and 30-year debt, which resulted in a reduced average coupon and redeemed debt from 5.89% to 3.35%, and $170 million -- reduction in our 2024 debt refinancing needs. In addition to debt refinancing has generated annual debt service savings of $5.2 million until the next maturity date and provided flexibility to continue share repurchases. We were able to accomplish all of this without significantly affecting our debt leverage or interest coverage ratios, the additional $300 million of proceeds from the debt issuances were used primarily for share repurchases. In the fourth quarter 2021, where we purchased $3.7 million shares for $192 million at an average price of $51.47 per share. This brings full year 2021 purchases to $10.5 million shares, or $496 million, which represents 14% of the total shares outstanding at the beginning of the year. The continued success of this program helped to drive by our per share book value metrics to record highs as of December 31, 2021. Subsequent to the quarter close, we repurchased an additional $1.7 million shares for $91 million. Since the beginning of our repurchase program in January 2013, we have returned $4.2 billion to shareholders under this program, resulting in a 69% reduction in total shares outstanding. The cumulative effect of these purchases was a benefit of over $37 an adjusted operating shareholder's equity per share and $65 in adjusted book value per share, which helped drive these metrics to new record highs. From a liquidity standpoint, the holding companies currently have cash and investments of approximately $274 million dollars, of which $124 million resides in AGL. These funds are available for liquidity needs or for use in the pursuit of our strategic initiatives to [Inaudible] our business or repurchase shares to manage our capital. This week, the Board of Directors authorized the repurchase of an additional $350 million of common shares. Under this and previous authorizations, the company is now authorized to purchase $364 million of its common shares. In addition, we declared a dividend of $0.27 per share, which represents an increase of 13.6% over the previous dividend of $0.22 per share. As we look to 2022 and beyond, we are optimistic that our largest single BIG exposure, Puerto Rico, will be substantially resolved by the end of this year. The interest rate environment will be more conducive to new insurance business production and that the asset management segment and alternative asset strategies will continue to contribute to the company's progress toward its long-term strategic goals.

q4 adjusted non-gaap operating earnings per share $3.88.

dollargeneral.com under news and events. We also will reference certain non-GAAP financial measures. dollargeneral.com under news and events. Our fourth quarter performance was impacted by sustained and rising inflation, ongoing global supply chain pressure and a surge in Omicron cases, which impacted staffing levels at our distribution centers, contributing to elevated out-of-stocks. Despite these challenging conditions, our teams continued to focus on controlling what we can control and being there for our customers. Because of their efforts and great execution over the past two years, we believe our underlying business is even stronger than before the pandemic, which positions us well to deliver solid sales and profit growth in 2022 and beyond. And while we expect this challenging environment to persist over the near term, which is reflected in our Q1 and fiscal 2022 outlook, we're confident we are taking the appropriate actions to manage through this period and deliver on our full year plan. In fact, I'm pleased to report our staffing levels are back to 2019 pre-COVID levels in both our stores and distribution centers, and we are seeing a meaningful improvement in our in-stock positions. Additionally, although we experienced higher-than-expected product and supply chain cost in Q4, we are very confident in our price position as our price indexes, relative to competitors and other classes of trade, remain in line with our targeted and historical ranges. And because so many families depend on us for everyday essentials at the right price, we believe products at the $1 price point are important to our customers, and they will continue to have a significant presence in our assortment. In fact, approximately 20% of our overall assortment is $1 or less. And moving forward, we expect to continue to foster and grow this program where appropriate. population, we believe we are well positioned to continue supporting our customers through our unique combination of value and convenience, even in a challenging economic environment. Looking ahead, we remain focused on advancing our operating priorities and strategic initiatives as we continue to strengthen our competitive position while further differentiating Dollar General from the rest of the retail landscape. Turning now to our fourth quarter performance. Net sales increased 2.8% to $8.7 billion, following a 17.6% increase in Q4 of 2020. Comp sales declined 1.4% compared to the prior year period, which translates into a robust 11.3% increase on a two-year stack basis. From a monthly cadence perspective, Comp sales were lowest in January, with December being our strongest month of performance. Our fourth quarter sales results include a decline in customer traffic, which was largely offset by growth in average basket size. Notably, our average basket size at year-end was approximately $16 and consisted of nearly six items. This compares to an average basket size of about $13 and five items at the end of 2019, which we believe reflects the growing impact of our strategic initiatives and a degree of inflation. In addition, we are pleased with the market share gains as measured by syndicated data in our frozen and refrigerated product categories, where we have placed a good deal of emphasis over the past years in an effort to provide customers with an even wider variety of options. And even as our market share in highly consumable product sales decreased slightly in Q4, we feel good about our share gains on a two-year basis. We are also pleased with the retention rates of new customers acquired in 2020, which continues to exceed our initial expectations. For the full year, net sales increased 1.4% to $34.2 billion, which was on the high end of our full year guidance and on top of a robust 21.6% increase in fiscal 2020. Comp sales for the year decreased 2.8%, which translates into a very healthy 13.5% increase on a two-year stack basis. In total, we completed more than 2,900 real estate projects during the year, including the opening of our 18,000th Dollar General store and 50 stand-alone pOpshelf locations as we continue to build and strengthen the foundation for future growth. From a position of strength, we also made targeted investments in key areas, including the acceleration of our pOpshelf concept, as well as our most recent initiatives focused on health and international expansion as we continue to meet the evolving needs of our customers and further position Dollar General for long-term sustainable growth. Overall, we are proud of our fourth quarter and full year results, which further validate our belief that our strategic actions and targeted investments positions us well for continued success while supporting long-term shareholder value creation. We operate in one of the most attractive sectors in retail. And while our mission and culture remain unchanged as the foundation for our success, with our robust portfolio of short and long-term initiatives, I believe Dollar General is a much different company and is in a much stronger competitive position than it was just a few short years ago. As a result, I've never felt better about the underlying business model, and we are excited about the enormous growth opportunities we see ahead. Now, that Todd has taken you through a few highlights of the quarter and the full year, let me take you through some of its important financial details. Unless we specifically note otherwise, all comparisons are year over year, all references to earnings per share refer to diluted earnings per share and all years noted refer to the corresponding fiscal year. As Todd already discussed sales, I will start with gross profit. As a reminder, gross profit in Q4 2020 and fiscal year 2020 were both positively impacted by a significant increase in sales, including net sales growth of 24% and 28%, respectively, in our combined non-consumables categories. For Q4 2021, gross profit as a percentage of sales was 31.2%, a decrease of 131 basis points. The decrease compared to Q4 2020 was primarily attributable to a higher LIFO provision, increased transportation and distribution costs and a greater proportion of sales coming from our consumables category. Of note, while we expect some relief as we move through 2022, our Q4 supply chain expenses were significantly higher compared to Q4 2020, resulting in a headwind to gross margin of approximately $100 million. These factors were partially offset by a reduction in markdowns as a percentage of sales in higher inventory markups. SG&A as a percentage of sales was 22% in the quarter, a decrease of 16 basis points. This decrease was primarily driven by lower incremental costs related to COVID-19, lower hurricane-related expenses and a reduction in incentive compensation. These items were partially offset by certain expenses that were higher as a percentage of sales, including retail labor, occupancy costs, and depreciation and amortization. Moving down the income statement. Operating profit for the fourth quarter decreased 8.7% to $797 million. As a percentage of sales, operating profit was 9.2%, a decrease of 116 basis points. Our effective tax rate for the quarter was 21.2% and compares to 22.7% in the fourth quarter last year. Finally, earnings per share for the fourth quarter decreased 1.9% to $2.57, which reflects a compound annual growth rate of 10.6% over a two-year period. Turning now to our balance sheet and cash flow, which remained strong and provided us the financial flexibility to continue investing for the long term while delivering significant returns to shareholders. Merchandise inventories were $5.6 billion at the end of the year, an increase of 7% overall and 1.4% on a per store basis. Importantly, as Todd noted, we have begun to see a meaningful improvement in our in-stock levels since the end of the year and expect continued improvement as we move through 2022, underscoring our optimism that we are well positioned to serve our customers with the products they want and need. In 2021, we generated significant cash flow from operations totaling $2.9 billion. Total capital expenditures for the year were $1.1 billion and included our planned investments in new stores, remodels and relocations, distribution and transportation projects and spending related to our strategic initiatives. During the quarter, we repurchased 2.2 million shares of our common stock for $490 million and paid a quarterly dividend of $0.42 per common share outstanding at a total cost of $97 million. At the end of the year, the remaining share repurchase authorization was $2.1 billion. Our capital allocation priorities continue to serve us well and remain unchanged. Our first priority is investing in high-return growth opportunities, including new store expansion and our strategic initiatives. We also remain committed to returning significant cash to shareholders through anticipated share repurchases and quarterly dividend payments, all while maintaining our current investment-grade credit rating and managing to a leverage ratio of approximately three times adjusted debt to EBITDAR. Moving to our financial outlook for fiscal 2022. First, I want to remind everyone that our fiscal year 2022 includes a 53rd week which will occur during the last period of the fourth quarter. We also continue to operate in a time of uncertainty regarding, among other things, the impacts on the business arising from the current geopolitical conflict and the recovery from the global COVID pandemic, including recovery of the U.S. economy, changes in consumer behavior, labor markets and government stimulus and assistance programs. Despite these uncertainties, including cost inflation, ongoing pressure in the supply chain and rising fuel costs, we are pleased to provide annual guidance that reflects our confidence in the business. With that in mind, we expect the following for 2022. Net sales growth of approximately 10%, including an estimated benefit of approximately two percentage points from the 53rd week, same-store sales growth of approximately 2.5%, and earnings per share growth of approximately 12% to 14%, including an estimated benefit of approximately four percentage points from the 53rd week. Our earnings per share guidance assumes an effective tax rate range of 22.5% to 23%. We also expect capital spending to be in the range of $1.4 billion to $1.5 billion, which includes the impact of increases in the cost of certain building materials, as well as continued investment in our strategic initiatives and core business to support and drive future growth. With regards to shareholder returns, our board of directors recently approved a quarterly dividend payment of $0.55 per share, which represents an increase of 31%. We also plan to repurchase a total of approximately $2.75 billion of our common stock this year, reflecting our continued strong liquidity position, the benefit from the 53rd week and our confidence in the long-term growth opportunity for our business. Let me now provide some additional context as it relates to our outlook. In terms of quarterly cadence, we anticipate both comp sales and earnings per share growth to be much stronger in the second half of the year than the first half. As a reminder, we are lapping a significant stimulus benefit from Q1 2021, including gross margin expansion of 208 basis points. We also anticipate ongoing cost inflation, including elevated supply chain and fuel costs. While we do not typically provide quarterly guidance, given the unusual lap in the significant inflationary environment in Q1, we are providing more specific detail on our expectations for the first quarter. To that end, we expect a comp sales decline of 1% to 2% in Q1 with an earnings per share in the range of approximately $2.25 to $2.35. Turning now to gross margin for 2022. We expect to continue realizing benefits from our initiatives, including DG Fresh and NCI. In addition, we are optimistic that distribution and transportation efficiencies, including significant expansion of our private fleet, could drive additional benefits over the year despite continued cost pressures in the near term. Partially offsetting some of these benefits are rising fuel costs, as well as an expected return to recent historical rates of markdowns and shrink, all of which are expected to be headwinds in 2022. With regards to SG&A, we expect continued investments in our strategic initiatives as we further their rollouts. However, in aggregate, we continue to expect they will positively contribute to operating profit and margin in 2022 as we expect the benefits to gross margin from our initiatives will more than offset the associated SG&A expense. We also continue to pursue efficiencies and savings through our Save to Serve program, including Fast Track. And we believe these savings in 2022 will offset a portion of an expected increase in wage inflation. In summary, we are proud of our fourth quarter and full year results in 2021, which are a testament to the perseverance and execution by the team. Looking ahead, we are excited about our plans for 2022, including our outlook for sales and earnings per share growth, as well as our planned significant returns to shareholders via an increased dividend payout and increased share repurchases. As always, we continue to be disciplined in how we manage expenses and capital with the goal of delivering consistent, strong financial performance while strategically investing in our business and employees for the long term. We remain confident in our business model and our ongoing financial priorities to drive profitable same-store sales growth, healthy new store returns, strong free cash flow and long-term shareholder value. Let me take the next few minutes to update you on our operating priorities and strategic initiatives, including our plans for 2022. Our first operating priority is driving profitable sales growth. We have a growing portfolio of initiatives which are contributing to our strong results, as well as strengthening the foundation for future growth. Let me take you through some of the recent highlights, as well as some of our next steps. Starting with our non-consumables initiative, or NCI, which was available in more than 11,700 stores at the end of 2021. We continued to be very pleased with the strong sales and margin performance we are seeing across the NCI store base. Notably, NCI stores outperformed non-NCI stores in both average ticket and customer traffic, driving an incremental 2.5% total comp sales increase on average in NCI stores, along with a meaningful improvement in gross margin rate. We expect to realize ongoing sales and margin benefits from NCI in 2022, and we are on track to complete the rollout across nearly the entire chain by the end of the year. Moving to our newest store concept, pOpshelf, which further builds on our success and learnings with NCI. As a reminder, pOpshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience delivered through continually refreshed merchandise, a differentiated in-store experience and exceptional value, with the vast majority of our items priced at $5 or less. During the quarter, we opened 25 new pOpshelf locations, bringing the total number of stores to 55 and exceeding our initial goal of 50 stores. Additionally, we opened 11 new store within a store concepts during Q4, bringing the total number of Dollar General Market stores with a smaller-footprint pOpshelf store included to a total of 25 at the end of the year. And we continue to be pleased with the results. In 2022, we plan to nearly triple the pOpshelf store count and open up to an additional 25 store-within-a-store concepts, which would bring us to a total of more than 150 stand-alone pOpshelf locations and a total of approximately 50 store-within-a-store concepts. We continue to anticipate year one annualized sales volumes for our current locations to be between $1.7 million and $2 million per store and expect the average gross margin rate for these stores to exceed 40%. In addition to the early success of pOpshelf, we have been able to take some of our learnings and apply them in our Dollar General store base, particularly in further enhancing our nonconsumables offering. Overall, we are very pleased with the results from this unique and differentiated concept, and we are excited about our goal of approximately 1,000 pOpshelf locations by year-end 2025. Turning now to DG Fresh, which is a strategic, multi-phased shift to self-distribution of frozen and refrigerated goods, along with a focus on driving continued sales growth in these areas. As a reminder, we completed the initial rollout of DG Fresh across the entire chain in 2021 and are now delivering to more than 18,000 stores from 12 facilities. The primary objective of DG Fresh is to reduce product cost on our frozen and refrigerated items, and we continue to be very pleased with the savings we are seeing. Notably, DG Fresh was a meaningful positive contributor to our gross margin rate in 2021, and we expect to see continued benefits in 2022. Another important goal of DG Fresh is to increase sales in our frozen and refrigerated categories. We are pleased with the performance on this front, including enhanced product offerings in stores and strong performance from our perishables department. In fact, our perishables department had a high single-digit comp increase in Q4 and contributed more comp sales dollars than any other department for both Q4 and the full year. Importantly, the sales penetration of these categories has increased to approximately 9% as compared to approximately 8% prior to the rollout of DG Fresh. In 2022, we expect to realize additional benefits from DG Fresh as we continue to optimize our network, further leverage our scale and deliver an even wider product selection. And while produce is not included in our initial rollout, we continue to believe that DG Fresh provides a potential path forward to expanding our produce offering to more than 10,000 stores over time. To that end, at the end of Q4, we offered produce in more than 2,100 stores, with plans to expand this offering to a total of more than 3,000 stores by the end of 2022. Finally, DG Fresh has also extended the reach of our cooler expansion program. During 2021, we added more than 65,000 cooler doors across our store base. In 2022, we again expect to install more than 65,000 additional doors as we continue to build on our multiyear track record of growth in cooler doors and associated sales. Turning now to an update on our expanded health offering, which consists of up to 30% more feet of selling space and up to 400 additional items as compared to our standard offering. This offering was available in nearly 1,200 stores at the end of 2021, with plans to expand to a total of more than 4,000 stores by the end of 2022. As we move toward becoming more of a health destination, particularly in rural America, our plans include further expansion of our health offering, with the goal of increasing access to basic healthcare products and ultimately services over time. In addition to the gross margin benefits associated with the initiatives I just discussed, we continue to pursue other opportunities to enhance gross margin, including improvements in private brand sales, global sourcing, supply chain efficiencies and shrink reduction. Our second priority is capturing growth opportunities. Our proven high-return, low-risk real estate model has served us well for many years and continues to be a core strength of our business. In 2021, we completed a total of 2,902 real estate projects, including 1,050 new stores, 1,752 remodels and 100 relocations. For 2022, we remain on track to execute nearly 3,000 real estate projects in total, including 1,110 new stores, 1,750 remodels and 120 store relocations. As a reminder, we expect approximately 800 of our new stores in 2022 to be in our larger, 8,500 square foot store format, allowing for an expanded assortment and room to accommodate future growth as we respond to our customers' desire for an even wider product selection. Importantly, we continue to be very pleased with the sales productivity of all of our larger-format stores as average sales per square foot are about 15% above an average traditional store. In addition to our planned Dollar General and pOpshelf growth in 2022, and included in our expected new store total, we are very excited about our plans to expand internationally with the goal of opening up to 10 stores in Mexico by the end of 2022. Overall, our real estate pipeline remains robust with more brick-and-mortar stores than any retailer in the country. And we are excited about our ability to capture significant growth opportunities in the years ahead. Next, our digital initiative, which is an important complement to our physical footprint as we continue to deploy and leverage technology to further enhance convenience and access for our customers. Our efforts remain centered around building engagement across our digital properties, including our mobile app. We ended 2021 with over million monthly active users on the app and expect this number to grow as we look to further enhance our digital offerings. As with everything we do, the customer is at the center of our digital initiative. Our partnership with DoorDash is the latest example of these efforts as we look to extend the value offering of Dollar General, combined with the convenience of same-day delivery in an hour or less. This offering was available in more than 10,700 stores at the end of Q4, and we are very pleased with the early results, including our ability to generate profitable transactions, as well as better-than-expected customer trial, strong repurchase rates, high levels of sales incrementality and a broadening of our customer base. In addition, our DG Media Network is becoming increasingly more relevant in connecting our brand partners with our customers. To that end, we significantly grew the reach of this network in 2021, increasing from 6 million unique active profiles to more than 75 million, enabling our vendors to now reach over 90% of our DG customers through the DG Media Network. After establishing the foundation over the last few years, we are poised to meaningfully grow this business in 2022 and beyond as we expand the program and enhance the value proposition for both our customers and brand partners while increasing the overall net financial benefit for the business. Overall, our strategy consists of building a digital ecosystem specifically tailored to provide our customers with an even more convenient, frictionless and personalized shopping experience. And we are pleased with the growing engagement we are seeing across our digital properties. Our third operating priority is to leverage and reinforce our position as a low-cost operator. We have a clear and defined process to control spending which continues to govern our disciplined approach to spending decisions. This zero-based budgeting approach, internally branded as Save to Serve, keeps the customer at the center of all we do while reinforcing our cost control mindset. Notably, the Save to Serve program contributed more than $800 million in cumulative cost savings from its inception in 2015 through the end of 2021. Our Fast Track initiative is a great example of this approach, where our goals include increasing labor productivity in our stores, enhancing customer convenience and further improving on-shelf availability. The first phase of Fast Track consisted of both rolltainer and case pack optimization, which has led to the more efficient stocking of our stores. The second component of Fast Track is self-checkout, which provides customers with another flexible and convenient checkout solution while also driving greater efficiencies for our store associates. Self-checkout was available in more than 6,100 stores at the end of 2021. We continue to be pleased with our results, including strong and growing customer adoption rates and high scores on speed and ease of checkout. In 2022, we plan to expand this offering to a total of up to 11,000 stores by the end of the year as we look to further extend our position as an innovative leader in small box discount retail. Looking ahead, the next phase of Fast Track consists of increasing our utilization of emerging technology and data strategies, which includes putting new digital tools in the hands of our field leaders in 2022. When combined with our data-driven inventory management, we believe these efforts will reduce store workload and drive greater efficiencies for our retail associates and leaders. I also want to highlight our growing private fleet, which consisted of more than 700 tractors and accounted for approximately 20% of our outbound transportation fleet at the end of 2021. We are focused on significantly expanding our private fleet in 2022, as we plan to more than double the number of tractors, we expect will account for approximately 40% of our outbound transportation fleet by the end of the year. Importantly, we save an average of 20% of associated costs every time we replace a third-party tractor with one from our private fleet. Moving forward, we believe our private fleet will become an increasingly significant competitive advantage as it gives us greater operational control in our supply chain while further optimizing our cost structure. Our underlying principles are to keep the business simple, but move quickly to capture growth opportunities while controlling expenses and always seeking to be a low-cost operator. Our fourth operating priority is investing in our diverse teams through development, empowerment and inclusion. As a growing retailer, we created thousands of new jobs in 2021, providing career growth opportunities for existing associates and the start of a career for many others. In 2022, we now expect to create more than 10,000 net new jobs as a result of our continued growth. Our internal promotion pipeline remains robust, as evidenced by our internal placement of more than 75% of our store associates at or above the lead sales associate position. We also continue to innovate on development for our teams to provide ongoing opportunities for career advancement, and in turn, meaningful wage growth. These investments include offering an enhanced college tuition benefit for our associates and their families, as well as continuing to facilitate driver training programs for associates who would like to become drivers in our private fleet. In addition to our focus on development, we continue to focus on further enhancing the associate experience and our strong workplace culture. Collectively, these investments continue to yield positive results across our organization, including healthy applicant flow and strong critical staffing levels. We believe the opportunity to start and develop a career with a growing and purpose-driven company is a unique competitive advantage and remains our greatest currency in attracting and retaining talent. Overall, we made significant progress against our operating priorities and strategic initiatives in 2021. These efforts have further strengthened our foundation and position heading into 2022 as we continue to drive long-term sustainable growth. In closing, I'm proud of the team's strong and resilient performance in 2021. As we enter 2022, we are laser-focused on executing and delivering our robust plans, which we believe will further enhance our unique combination of value and convenience for our customers while delivering strong returns for our shareholders.

q4 same store sales fell 1.4 percent. sees q1 earnings per share $2.25 to $2.35. q4 earnings per share $2.57. q4 sales rose 2.8 percent to $8.7 billion. q4 same-store sales decreased 1.4%; increased 11.3% on a two-year stack basis.

Actual results may differ materially from these statements most notably from the ongoing impact of the COVID-19 pandemic and Benchmark undertakes no obligation to update any forward looking statements. For today's call, Jeff will begin by covering the framework of our COVID-19 emergency response protocol and providing a current status of our global operations. Roop will then discuss our first quarter results including a cash and balance sheet summary. Jeff will wrap up with a rundown of demand outlook by market sector and our near-term guidance, before we conclude the call with Q&A. I'd like to start off the call by offering our heartfelt condolences to all who have been affected by the COVID-19 crisis. I would also like to recognize the courageous healthcare workers and first responders, who are taking care of those impacted by the COVID-19 virus. For the past three months, we've been working very hard to maintain operations against the global spread of the pandemic with two priorities in mind. First, is the health and safety of our colleagues and their family. The second priority is to sustain the output of our operation so that we can continue to serve our customers during this critical time. Since the early outbreak and direct impact to our Suzhou, China operations, the senior leadership team have met daily and created a task force to centralize employee and operational safety protocols and to establish a global communications cadence. We receive a daily report on employee health and the status of our global manufacturing and engineering operation. We also established a critical work stream to deal with the ever-changing government requirement and regulation and to maintain alignment between the local authorities, our operations and our customers. I want to give tremendous kudos to our team for all they have accomplished. This is a 24-hour a day, seven day a week day-in and day-out effort to stay aligned, productive and coordinated. Our teams have approached this challenge with incredible result, and a sense of responsibility to our employees, customers, shareholders and local community. While some employees are being asked to work from home, this is not an option for many directly involved in the manufacturing or design of critical product. For our employees working in our facilities, we've added new protocols for extensive and frequent disinfecting and cleaning, facing of personnel and more. To those employees who could work remotely, we have invested in tools and equipment to allow them to continue to be productive. We are pleased with the results and creativity these teams have shown as they have found new ways to collaborate and to communicate with each other and our customer. As the coronavirus began to make its way around the world, we saw challenges imposed by governments from various forms of stay at home, shelter in place and lockdown orders and some imposed by our own health and human resources teams to ensure we are maintaining safe facilities. Benchmark provides critical infrastructure products and essential services in each of our location. However, government policies and implementations have still impacted operations. I'll start with our Suzhou site, which was impacted after the Chinese New Year. We were given early approval to reestablish operations to support critical medical products and were ramped back to full capacity by mid-March. Our China plant continues to operate at full capacity today. In mid-March there were new decrees that caused significant disruptions in our Penang, Malaysia operation which includes our largest precision machine facility. Unfortunately, local restrictions remain in force and we were only operating at 30% of capacity to start the quarter. This is now changing where we can move to full capacity starting this week. We worked hard to minimize the impact by staggering shifts, extending coverage and modifying our workflow. But we have not been operating at optimum level. Our European operations in the Netherlands and Romania have had some limited interruptions but continued to operate near full capacity. In the last few weeks of March and in early April we saw all states in the U.S. implement some form of shelter in place order. We were hit particularly hard in our California facilities where we have five operations, two in the Bay Area and three in Southern California, which are not yet back to full capacity. As we sit here today, we're still working through a major disruption in our two Tijuana, Mexico operation, which were shut down practically overnight by the Baja state despite previously passing an inspection and given the authorization to operate by the Central Mexican Government. These two locations currently remain closed with zero manufacturing output. Our Guadalajara facility is also not operating in full capacity due to government restriction. This has been and remains a highly dynamic environment and through the collective efforts of our incredible employees, we are managing priorities to meet and fulfill as much demand as possible. Our estimate today is that we are operating approximately at 75% to 80% of productivity. We are hopeful that shelter in place orders do as intended and the infection curve peak and starts to decline, so that normal operation can resume in all location. Benchmark began its journey as a medical device manufacturer more than 40 years ago and has maintained partnerships with some of the largest medical technology companies in the world. We are working with medical customers and governments to get lifesaving equipment, where it is needed most, by providing critical design services and expediting manufacturing capacity, even doubling or quadrupling production volumes for some customers. Demand has increased for diagnostic imaging products, including mobile X-ray and MRI products and handheld ultrasonic devices. We are supporting multiple ventilator projects with new and existing customers, which are in high demand to support those who need the most critical support in hospitals around the world. On the diagnostic front, we are supporting point of care devices, including a rapid one hour COVID-19 virus tester and a rapid sepsis testing device. Roop, over to you. I hope everyone and their families are healthy and safe. Let me start by echoing Jeff's sentiment on the incredible efforts of our teams to support our customers through a very dynamic environment to deliver our first quarter results. As we manage through the COVID crisis, our priorities remain centered on one, the health and safety of our employees; two, retaining the critical resources and capabilities to support our customers; three, maintaining a healthy balance sheet; and four, ensuring the financial flexibility to run our operations through uncertainty. I would discuss these priorities and our actions to support each as we step through our results. As a reminder, on March 16, 2020, we announced that the COVID-19 outbreak would negatively impact our first quarter results relative to the guidance that we had provided on February 6. Our first quarter results were below our February guidance driven by direct cost associated with labor expenses, personal protective equipment, supply chain inefficiencies and under absorption, all caused by the disruptive impact of COVID-19. Even considering the challenging environment, we achieved revenue of $515 million in the first quarter, which were supported by strong demand in our Semi-Cap, Medical, and A&D sectors. Our gross margins for the quarter were 8.4% and non-GAAP earnings per share were $0.22. Our non-GAAP earnings reflect revenue changes as well as costs associated with employees who were restricted, quarantined or otherwise affected by the COVID-19 condition. We also incurred higher overtime expenses and we've paid labor premiums to those employees working in our China factory as they worked to recover from the shutdown. And as a result, we estimate that our China factory inefficiencies impacted our global earnings per share by approximately $0.08. As the impact of COVID-19 conditions expanded globally as Jeff mentioned, there were further inefficiencies and other operations beyond China which, were reflected in our reported non-GAAP EPS. Our cash conversion cycle for the quarter was 81 days. We used $3 million in cash flow from operations and free cash flow was a negative $15 million as a result of $13 million spent on capex. Originally we expected to spend approximately $50 million in capital expenditures in fiscal year 2020. We now expect that our capital expenditures for fiscal 2020 will be reduced by approximately half and focus primarily on new product introductions and associated brands. Medical revenues for the first quarter increased 15% sequentially and were up 14% year-over-year from volume increases across several customers for new and existing programs. Demand through the quarter remained strong with -- in some cases increasing demand for products such as X-ray and scanning devices, controls for hospital equipment including ventilators and diagnostic devices that are critical to support the COVID-19 pandemic. Semi-Cap revenues were up 2% in the first quarter and up 25% year-over-year where increase in demand across the majority of our Semi-Cap customers along with the ramp of new customer to our portfolio. This sector was most significantly impacted by labor constraints related to aggressive shelter in place protocols in our Penang, Malaysia and California location, which began in mid-March. A&D revenues for the first quarter increased 13% sequentially and were up 15% year-over-year from new program ramps for defense satellite, munition and security. We did receive signals late in the quarter of demand decreases in Commercial Aerospace segment which is less than 30% of our A&D sector revenues. Industrial revenues for the first quarter decreased 4% sequentially and 12% year-over-year. The industrial sector was lower and had the largest variant of any sector as compared to our original Q1 expectation from COVID-related impact. Overall the higher value market represented 82% of our first quarter revenue. Turning now to our traditional market; computing was down 71% year-over-year from the completion of the legacy computing contract in 2019 and 18% sequentially quarter-over-quarter from lower data center storage and commercial printing product demand. Telco was down 15% sequentially and down 37% year-over-year from lower demand for infrastructure build out related products. Our traditional markets represented 18% of first quarter revenues. Our top 10 customers represented 42% of sales for the first quarter. Our GAAP earnings per share for the quarter was $0.10 and our GAAP results included $2.9 million of restructuring and other non-recurring costs in Q1. These costs included $1.9 million of cost-related to our previously announced site consolidation effort and other restructuring type activities around our network and $1 million for an impairment related to a building that is now being classified as held-for-sale. Our previously announced San Jose closure is on track to be completed in Q2. As a reminder, there were no GAAP to non-GAAP adjustments related to COVID-19. Turning to slide 10 for our non-GAAP financial information for Q1, our non-GAAP -- our Q1 non-GAAP gross margin was 8.4% a 100-basis-point increase quarter-over-quarter and 30-basis-point year-over-year. Q1 2020 results were impacted by labor inefficiencies due to the government mandated shutdown in China and shelter in place requirement throughout the rest of our global network and the incurrence from incremental expenses for personal protective equipment. Our SG&A was $31.6 million, an increase of approximately $7 million sequentially. Q4 2019 SG&A was lower due to reduced variable comp, including stock comp. Additionally in Q1 we have to restart a payroll [Indecipherable]. SG&A was flat on a year-over-year basis. Operating margin was 2.3%, a decrease from 2.6% in Q4 due to the lower than expected revenue and inefficiencies related to COVID-19. In Q1, 2020, our non-GAAP effective tax rate was 19%, which was lower than expected for the quarter due to the distribution of income across our network. We expect that for Q2, our non-GAAP effective tax rate will continue to be in the range of 20% to 22%, again because of the distribution of income around our global network. Non-GAAP earnings per share was $0.22 for the quarter and ROIC was 7.1%. Jeff will provide more details shortly about the strength we are seeing in Defense, Medical and Semi-Cap. We're also seeing a challenging supply chain environment and labor constraint due to the COVID-19 virus. As a result of these inefficiencies, we are proactively taking a series of actions to lower our cost structure and reduce capital expenditures. Our CEO, the board and our senior executive team will take a temporary 10% salary cut, while the rest of the senior leaders in the company will take a 7% salary cut through Q3 2020. Additionally, we expect to reduce variable compensation and other discretionary expenses such as travel. The cost reduction actions in our U.S. factories will consist of employees taking rotating time off depending on the factory loading levels. Cost reduction actions in our non-U.S. locations will depend on a local law requirement. In summary we're being vigilant and very much appreciate the support of our entire organization as we navigate the current environment. Our cash balance was $412 million at March 31 with $223 million available in the U.S. We have continued to repatriate cash from our foreign location and we will continue to repatriate in future quarters, while balancing our foreign side cash flow requirement. Our cash balances include $95 million of proceeds from borrowings under our revolving line of credit. We borrowed against our revolver proactively to support navigating through the current environment. We will continue to monitor our financial covenant and ensure compliance. We do expect our net interest expense to increase by $500,000 in Q2. Overall at the end of Q1 2020 we are in a positive net cash position of approximately $170 million. We believe we have a strong capital structure and our liquidity position provides flexibility to manage our business through the current environment. Our accounts receivable balance was $318 million, a decrease of $6 million from December 31. Contract assets were $160 million at March 31 and $161 million at December 31. Payables were up $13 million quarter-over-quarter. Inventory at March 31 was $338 million up $23 million quarter-over-quarter due to mix changes from customers late in the quarter and bringing in inventory to support long production cycles for product in our Semi-Cap and Medical sectors. We continue to make proactive investments to secure the critical components needed to support our customers while managing inventory balances. For Q1 2020, our cash conversion cycle was 81 which was within our expectations at the beginning of the quarter and was achieved even considering the challenging environment. This is consistent with our expectation. As discussed previously after the completion of the legacy computing contract in the third quarter of 2019, our cash conversion cycle will be between 78 and 83 days. Turning to slide 13 for our capital allocation update, in Q1 we returned approximately $25 million to shareholders, this included $5.5 million as part of our recurring quarterly cash dividend, which we recently increased to $0.16 per share and announced on February 3, 2020. We expect to continue the recurring quarterly cash dividend. We also repurchased approximately 724,000 shares or $19 million. As of the end of March 2020, we had approximately $210 million available under the current share repurchase program after an increase approved by the Board in February 2020. We are prioritizing cash usage for operational need and as such we are not planning to repurchase shares in Q2. Because of the uncertain conditions related to COVID-19 we will not provide our usual detailed level next quarter guidance. Jeff will provide a detailed view of demand in our end market by sector, an overview of recent new business wins and an update on our key strategic initiative. Turning now to the impact of the pandemic on Benchmark on slide 15, I want to provide some insights into what we're hearing from our customers by sector. I would like to focus on two dimensions, the current visibility of demand by each market vertical and our ability to translate that demand to revenue based on operational and supply chain constraint. In summary, the second quarter will be less about demand than our operational and supply chain capability to support it. Our supply chain team has been proactively managing parts supply during this pandemic, since the early days of the outbreak in China. The team is accessing risk areas with our suppliers every day and taking preventative steps to ensure our critical supply lines remain open. However, the global supply base remains subject to the same ordinances and decrees that affect our operation and are causing inevitable interruption in our suppliers, ultimately impacting our output. In the Medical sector, demand remains strong for the medical products we produce. Our medical design services and new program ramp. Furthermore, as I discussed, we have been engaged by existing and new customers and helping produce medical equipment to help fight COVID-19 and in some cases this has meant a significant increase in demand. This demand and our ability to support medical customers will result in sequentially higher revenues in Q2 and we expect our second half 2020 revenue in this segment will be higher than the first half. In Semi-Cap, the demand recovery for semiconductor capital equipment continues based on the current forecast from our customers. However, operations to supply chain challenges that exist in our California and Malaysia operations are impacting our ability to fulfill all of our demand backlogs in Q2. Our competitive position remains strong in the sector, where we have won new programs and expanded our penetration in key accounts over the past several years. We also expect increased revenue in the second half of the year in this area based on strong semiconductor capital equipment demand. Demand in the industrial sector is met and we expect some subsectors to be impacted more than other. Approximately 20% of our industrial customers support the oil and gas industry and we expect demand to be softer throughout the balance of the year. We also expect weakness in industrial transportation and infrastructure. A bright spot could be the automation and robotic sub-segment where we have a number of new wins. As a result, we expect the industrial sector to be down in the second quarter with some recovery in the second half. Similar to industrial, the traditional markets of computing and telco are met. At present satellite communication-related products are increasing, but datacenter and telco infrastructure buildup budgets are expected to be under pressure. In Q2, impact through our Tijuana and Malaysia operations and supply chain are impacting computing and telco revenues as well, but output should recover the demand in the second half. We also expect an increase in high performance computing projects and associated revenue in the back half of the year. Our A&D sector is comprised of approximately 70% defense related product and 30% aerospace. Demand remains strong for defense product, but we are challenged at this time to fully support these programs in our California location, including critical subcomponent shortages that are manufactured in Tijuana. As these issues improve, we expect higher defense related revenue. For our commercial aircraft program, we have seen a significant decline in demand and we anticipate much lower demand through the rest of the year barring any major improvement in commercial aviation. Despite the challenging global environment and disruption to our normal customer engagement workflows, we were pleased with our continued design and manufacturing win momentum accomplished in Q1 as shown on slide 16. In our Medical sector we were awarded programs for affordable ultrasound and a mobile imaging device both with existing customers. We also received a design win for an automated drug freezer with a new customer, which we expect to convert to a manufacturing win in the future. The new ventilator program that we were awarded will appear as new business wins in Q2. In Semi-cap we were awarded a precision machining program for a next generation in-chamber tool focused on wafer elimination along with a design and manufacturing award for an EUV electronics controller expanding our participation in this cutting edge technology. In aerospace and defense, we received additional award for munitions, electronics and a flight recorder in which we will perform process design and manufacturing. Our pipeline in the defense segment is very encouraging and we have bid on a large number of projects that we expect to hear the results of in the coming months. It's clear this segment has made a serious commitment to outsourcing more of their manufacturing needs but they require sophisticated partners who can meet their exacting standard. Benchmark is up to this challenge and has continued to invest in this segment. In Industrial, we're making process to new wins for a vehicle tracking and diagnostic devices and the design and manufacturing of a new artificial intelligence enabled LIDAR scanner. In addition to new business wins, we were pleased to be recognized by our customers for delivering complex products with high quality. For example, we announced that we were selected by Raytheon with an EPIC Award for Excellence related to the design and manufacturing of a ruggedized multi-domain router using critical communications supporting our military. Benchmark Secure Technology has been a Raytheon partner for almost 20 years and we look forward to supporting this expanding strategic relationship across Benchmark. Given the current environment, we've elected to suspend quarterly guidance for the second quarter. The quarter can unfold under a variety of scenarios, the magnitude of which remains uncertain depending on the timing of government action to allow the return to full production and supply chain improvement. Instead, we will offer some directional guide posts for now and resume guidance once we have more clarity and predictability. Given where we are in the quarter and our assessment of our operations, we expect revenue to modestly decline sequentially as we have lost manufacturing time which cannot be recovered. We also expect that second quarter will be the lowest revenue quarter of 2020 despite the stronger demand outlook in Medical, Semi-Cap and Defense. Second quarter margins will be down sequentially primarily from lower revenues and associated under absorption, lower productivity levels, incremental supply chain costs and employee-related expense. At present many of our operations which are shut down or operating at reduced capacity, payroll costs cannot be mitigated even if employees cannot come to work. Also given our demand outlook and new program ramp from wins in the past 24 months, we need to maintain critical resource capability, which Roop mentioned as a top priority. We also expect gross margins will recover to the 9% range in the second half of 2020. As Roop covered, we've taken a number of proactive actions during the quarter to manage expenses including compensation adjustments, merit and hiring delays and furloughs where permissible. We are biasing toward these actions versus headcount reductions in the near term to support our long term growth. As a result of some of the actions, we expect that SG&A will be reduced approximately 8% in Q2. Beyond Q2, we also -- have also run a number of scenarios for the remainder of the year and we will take appropriate actions to further reduce costs as appropriate if the pandemic continues or demand conditions change. We feel very confident that our experienced, disciplined execution and strong balance sheet will allow us to navigate this period of uncertainty, while continuing to invest in the future. As we enter 2020, we prioritize how we would spend our time this year to build a better Benchmark. Even with the significant challenges brought on by COVID-19, our key strategic initiatives remain unchanged. In fact, progressing these initiatives goes hand-in-hand with how we are managing the current price. One of the greatest testaments on progress has been the multiple calls and emails we receive from our customers on our effective and standardized protocols and efficient communication to make sure our priorities remain aligned. These endorsements confirm progress on our journey to be a trusted partner and service provider for our customers. We will continue to work on these longer term initiatives to prepare the company to capture the growth that lies ahead. Our competitive position remains strong and I have the utmost confidence in our leadership and our global team.

q1 non-gaap earnings per share $0.22. q1 gaap earnings per share $0.10. q1 revenue $515 million versus refinitiv ibes estimate of $510 million. unable to forecast with certainty effect on benchmark's financial and operational results for q2 of 2020.

The discussion today also contains non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, as well as earnings materials for the prior periods we discussed. All of these are posted on our website at ir. We will begin today with Steve Squeri, chairman and CEO, who will start with some remarks about the company's progress and results. And then Jeff Campbell, chief financial officer, will provide a more detailed review of our financial performance. After that, we will move to a Q&A session on the results with both Steve and Jeff. We also provided revenue and earnings per share guidance for 2022, and we announced a new growth plan that resets our longer-term aspirations for revenue and earnings per share growth to levels that are higher than what we were delivering in the years before the pandemic. I want to spend my time today talking about why these results and our progress over the last few years has me excited about the future and our aspiration to deliver higher levels of sustainable profitable growth. As we've seen in our results for Q4 and the full year, the capabilities we've built over the past few years by investing in our customers, our brand, and our talent are helping us drive share, scale, and relevance that leads to profitable growth. And we believe that will continue as the global economy continues to improve. Our strong performance across a number of key business metrics helped deliver revenue growth of 30% in the fourth quarter and 17% for the full year. Diluted earnings per share for the quarter was $2.18 and $10.02 for the full year. In the near term, we expect full-year revenue growth to remain at elevated levels, reaching 18% to 20% in 2022, driven by the execution of our growth plan and the recovery tailwinds we anticipate from continued improvement in the macroeconomic environment. We expect earnings per share of between $9.25 and $9.65 in 2022. As we think about 2023, the continuation of the recovery tailwinds could drive revenue growth in the mid-teens, which, in turn, should provide a platform for mid-teens earnings per share growth. Looking further out, as we return to a more steady-state economic environment, we aspire to achieve revenue growth in excess of 10% and earnings per share growth in the mid-teens under our new growth plan for 2024 and beyond. We've learned a lot over the past few years that we believe will help us achieve our growth plan aspirations. The business imperatives and strategies we focused on pre-pandemic, the decisions we made when COVID-19 first hit to protect our customers and colleagues, and our pivot early in the recovery cycle to ramp up investments in a number of key areas all proved to be the right moves that have been good for our business. Most importantly, our experience through this period has reinforced our conviction that investing strategically in our customers' brand and talent is absolutely critical to driving high levels of growth. We've seen that play out in the results we delivered throughout 2021. Our fourth-quarter performance continued the trends we saw all year in a number of areas that are core to our growth over the long term. Spending growth reached a record quarterly high, driven by continued increases in goods and services spending, which was 24% above pre-pandemic levels. Global Consumer goods and services spending in the quarter grew 26% versus 2019. And we saw continued robust growth in small business B2B spending, which increased 25% over Q4 2019 levels. Overall, T&E spending also continued to improve, reaching 82% of pre-pandemic levels, driven by stronger consumer travel spending. Customer retention and satisfaction continue to be very strong and remained above pre-pandemic levels. For example, retention rates in Global Consumer are above 98%. Power's annual credit card satisfaction study of U.S. consumers. Credit performance also continued to be outstanding, with key metrics near historical lows. And our Card Members are building loan balances at a modest pace. Customer engagement with our products, services, and capabilities continued at high levels in the quarter. The strong engagement, which is fueled by our ongoing investments in value propositions, marketing, and new digital services, is helping to drive the results I just spoke about in billings and loan growth, as well as customer retention and satisfaction levels. Additionally, our customer-focused innovation strategy, which has driven increases in customer engagement, has continued to attract large numbers of new customers. New card acquisitions reached 2.7 million in Q4, driven by strong demand for our premium fee-based products, where we saw acquisitions nearly double year over year. In Consumer, millennials and Gen Z customers are driving the growth in acquisitions, representing around 60% of the new accounts we acquired globally in 2021. In Commercial, Q4 closed out as one of the best years we've ever seen for U.S. SME new account acquisition. The momentum we generated throughout 2021 further strengthens our resolve to continue our focus on the strategic imperatives we laid out back in 2018: expanding our leadership position in the premium consumer space by providing a differentiated and ever-expanding range of services and lifestyle-focused value propositions, building on our strong leadership position in commercial payments by being the key provider of payments and working capital solutions for small and medium-sized businesses, expanding our merchant network globally to give our cardmembers more places to use their cards and staying on the leading edge of technology and digital payment solutions to make American Express an essential part of our customers' digital lives. We are entering 2022 in a position of strength. And based on the momentum with which we exited 2021 and the opportunities we see ahead, we feel very good about the future. We believe that continuing our strategy of investing at high levels in our customers' brand and talent as we implement our growth plan will position us well as we seek to achieve our growth aspirations in 2024 and beyond. It's great to be here to talk about our fourth quarter and full year 2021 results, the ambitious new growth plan that Steve just talked about, and what it all means for 2022 and beyond. You see the growth momentum that Steve just discussed in our summary financials on Slide 2, with fourth-quarter revenues of $12.1 billion, up 31%, and full-year revenues of $42.4 billion, up 17%, both on an FX-adjusted basis. In understanding our full-year net income of $8.1 billion and earnings per share $10.02, I would point out that we had around $3.5 billion of significant impacts from items that we do not expect to repeat in the same magnitude going forward, including a $2.5 billion credit reserve release benefit in provision, as well as a few sizable net gains on equity investments. Getting into a more detailed look at our results, let's start with volumes. You'll notice in the several views of volumes on Slides 3 through 9 that we continued to show 2021 volume trends on both a year-over-year basis and relative to 2019. There are a few key insights that I would highlight across these slides that strengthen our conviction in the investment strategy we have been focused on to deliver our new growth plan. To start, we saw record levels of spending on our network in both the fourth quarter and full year 2021, with total network volumes and Billed business volumes both up more than 10% relative to 2019 on an FX-adjusted basis in the fourth quarter, as you can see on Slide 3. This growth in Billed business, as shown on Slides 4 and 5, is being driven by continued momentum in spending on goods and services, which strengthened sequentially and grew 24% versus 2019 in Q4. This momentum is from the strong growth in online and card-not-present spending that continued throughout 2021, even as offline spending fully recovered and resumed growth, demonstrating the lasting effect of the behavioral changes we've seen during the pandemic. Importantly, this 24% growth versus 2019 in Q4 represents a cumulative growth rate over the past two years that is well above the growth rate we were seeing pre-pandemic. In our Consumer business, our focus on attracting and engaging younger cohorts of Card Members through expanding our value propositions and digital capabilities is fueling the 50% growth in spending from our millennial and Gen Z customers you see on Slide 6. And spending from all other age cohorts also showed steady improvement throughout 2021 and exceeded pre-pandemic levels in Q4. Our strategic focus on helping our small and medium-sized enterprise clients run their businesses by expanding the range of products and capabilities that meet their B2B payments and working capital needs is driving the strong SME spending trends you see on Slide 7. Global SME spending, particularly B2B spending on goods and services, has been driving the growth of our Commercial Billed business throughout 2021 and reached 25% above pre-pandemic levels in Q4. Now, turning to T&E spending. You can see on Slide 8 that it continues to recover in line with our expectations, with overall T&E spending reaching 82% of 2019 levels in the fourth quarter. We did see some modest impacts from the Omicron variant and T&E spending as the pace of recovery slowed a bit in December. But even with that modest slowdown, U.S. Consumer T&E was not only fully recovered in the fourth quarter but actually grew 8% above 2019 levels. On balance, the T&E trends we have seen throughout 2021 reinforce our view that travel and entertainment spending will eventually fully recover, but at varying paces across customer types and geographies. And we remain focused on maintaining our leadership position in offering differentiated travel and lifestyle benefits to our Consumer and Commercial customers as they return to travel. Finally, on Slide 9, you see that our Billed business momentum continues to be led by the U.S., where spending improved sequentially throughout 2021 and grew 16% above 2019 levels in the fourth quarter. International Billed business has also shown continued steady, though smaller, improvements, with spending almost fully recovered in Q4. Importantly, though, growth in goods and services spending continues to be strong, both in the U.S. and outside of the U.S. So, what do all of these takeaways mean for 2022 and beyond? Most importantly, we expect the strong momentum in goods and services spending to continue, given the investments we've made in premium Card Member engagement; prospect acquisition; value propositions that particularly appeal to our millennial, Gen Z, and SME customers; growing our coverage; and expanding relationships with key partners. The recovery will be slower for the international and cross-border components of the spend. We've also long said that large and global corporate T&E spending would be the last to recover across our customer types. So, these spending types may represent a steady tailwind in both '22 and 2023 as they gradually recover. Moving on to receivable and loan balances on Slide 10. We are seeing good sequential growth in our lending balances, but it is led by spending. And so, the portion of our lending balances that are revolving is recovering more slowly. Because our balances are spend-driven, we do expect to continue to see a strong rebound, with loan balances surpassing 2019 levels in 2022. But we expect it to take more time for the interest-bearing portion of these balances to rebuild as paydown rates continue to remain elevated due to the liquidity and strength among our customer base. Turning next to credit and provision on Slides 11 through 13. As you flip through these slides, there are a few key points I'd like you to take away. Most importantly, we continue to see extremely strong credit performance, with Card Member loans and receivables write-off and delinquency rates remaining around historical lows. As loan balances begin to rebuild more meaningfully, we do expect delinquency and loss rates to slowly move up over time, but we expect them to remain below pre-pandemic levels in 2022. The strong credit performance, combined with continued improvement in the macroeconomic outlook throughout 2021, drove a $1.4 billion provision expense benefit for the full year as the low write-offs were fully offset by the reserve releases, as shown on Slide 12. As you see on Slide 13, we ended 2021 with $3.4 billion of reserves, representing 3.7% of our loan balances, and 0.1% of our Card Member receivable balances, respectively. This is well below the reserve levels we had pre-pandemic given the strong credit performance we've seen. In 2022, we will be growing over the $2.5 billion reserve release benefit we saw in 2021 since I would not expect to see reserve releases of the same magnitude going forward. In fact, depending on credit trends and the pace at which our balance sheet grows, it's possible we may need to build some modest level of reserves. Moving next to revenues on Slide 14. Total revenues were up 30% year over year in the fourth quarter, up 17% for the full year. This is well above our original expectations for the year, driven by the successful execution of our investment strategy, and it is part of what emboldens us to launch our new growth plan. Before I get into more details about our largest revenue drivers in the next few slides, I would note that other fees and commissions and other revenue were both up year over year in the fourth quarter and for the full year, primarily driven by the uptick in travel-related revenues we began to see in the second half of 2021. These travel-related revenues still remain well below 2019 levels, however, and their complete recovery will likely lag and be a tailwind into 2023, along with international and cross-border travel. Turning to our largest revenue line, discount revenue, on Slide 15. You see it grew 36% year over year in Q4 and 25% for the full year on an FX-adjusted basis. This growth is primarily driven by the momentum in goods and services spending we saw throughout 2021. Net card fee revenues have grown consistently throughout the pandemic and, for the full year of 2021, were up 10% year over year and up 28% versus 2019, as you can see on Slide 16. The resiliency of these subscription-like revenues demonstrates the impact of the investments we've made in our premium value propositions and the continued attractiveness of those value propositions to both prospects and existing customers. As a result, I expect net card fee growth to accelerate from these already high growth rates in 2022. Turning to net interest income on Slide 17. You can see that it was up 11% year over year in the fourth quarter. This is the second consecutive quarter of year-over-year growth as we clearly hit an inflection point in the second half of 2021. The growth in net interest income is slower than the growth in lending AR due to the strong liquidity demonstrated by our customers that I spoke about earlier, which is leading to both our historically low credit costs and to high paydown rates that are driving lower net interest yields and a slower recovery in revolving loan balances. Looking ahead, we expect net interest income to be a tailwind to our revenue growth in 2022 and likely 2023 due to the slower recovery in revolving loan balances. So, to sum up on revenues, the successful execution of our investment strategy has driven the revenue recovery momentum you see on Slide 18. Looking forward into 2022, we expect to see revenue growth of 18% to 20%, driven by the continued strong growth in spend and card fee revenues and the lingering recovery tailwinds from net interest income and travel-related revenues. The revenue momentum we saw in 2021 was clearly accelerated by the investments we made in marketing, value propositions, technology, and people. And those investments show up across the expense lines you see on Slide 19. Starting with variable customer engagement expenses at the top of Slide 19, there are a few things to think about. Most importantly, the investments we are making in our premium value propositions are resonating with our customers and this, of course, is driving growth in these expense lines. In addition, over the course of the pandemic, we added some temporary incremental benefits to many of our premium products in an effort we refer to as value injection because our customers were not able to take advantage of many of the travel-related aspects of our value propositions. The cost of this value injection effort generally showed up in the marketing expense line. Throughout 2021, we gradually wound down the value injection offers as our customers were again engaging more with the travel aspects of our value propositions, as well as with the new rewards and benefits we introduced through recent product refreshes. This is all a good thing in terms of our long-term customer retention and growth prospects. It does, however, mean you see more year-over-year growth in these variable customer engagement costs. Putting all these dynamics together, I'd expect variable customer engagement costs overall to run at around 42% of total revenues in 2022. Moving to the bottom of the slide. Operating expenses were just over $11 billion for full year 2021 and in line with 2020. Understanding our opex results, however, it's important to point out that we benefited from $767 million in net mark-to-market gains in our Amex Ventures strategic investment portfolio in 2021 and that these gains are reported in the opex line. We also increased investments in the critical areas of technology and our talented colleague base in 2021 and expect to continue to grow our investments in these areas this year. For 2022, we expect our operating expenses to be a bit over $12 billion, and we see these costs as a key source of leverage relative to our much higher level of revenue growth. Last, our effective tax rate for 2021 was around 25%. And I'd expect a similar effective tax rate in 2022, absent any legislative changes. Turning next to our marketing investments we are making to build growth momentum. You can see on Slide 20 that we invested around $1.6 billion in marketing in the fourth quarter and $5.3 billion for the full year as we continue to ramp up new card acquisitions while winding down our value injection efforts. We acquired 2.7 million new cards, up 54% year over year. Steve emphasized the critical point, however, that, in particular, we see great demand for our premium fee-based products, with new accounts acquired on these products almost doubling year over year and representing 67% of the new accounts acquired in the quarter. Acquisitions of new U.S. consumer and small business Platinum Card members were at all-time highest this year, with Q4 being a record quarter of new account acquisitions from both of these refreshed products. Much more importantly, though, than just the total number of cards, we focus internally on the overall level of spend and fee revenue growth we bring on from these new acquisitions. We are pleased to see that the revenues from 2021's acquisitions are trending significantly stronger than what we saw pre-pandemic. Looking forward, we expect to spend around $5 billion in marketing in 2022. Turning next to capital on Slide 21. We returned $9 billion of capital to our shareholders in 2021, including common stock repurchases of $7.6 billion and $1.4 billion in common stock dividends on the back of a starting excess capital position and strong earnings generation. As a result, we ended the year with our CET1 ratio back within our target range, 10% to 11%. In Q1 2022 and another sign of our growing confidence in our growth prospects, we expect to increase our dividend by around 20% to $0.52 and to continue to return to shareholders the excess capital we generate while supporting our balance sheet growth. The combination of our pre-pandemic strategies, our learnings from the pandemic, and the strong momentum we have achieved have all come together to embolden us to announce our new growth plan. What does that mean financially? In the near term, we expect our revenue growth to be significantly higher than our long-term aspiration due to the range of pandemic recovery tailwinds that I've talked about throughout my remarks, which is why we have given 2022 guidance of 18% to 20% revenue growth. We've also given earnings per share guidance for 2022 of $9.25 to $9.65. Our 2022 guidance does assume an economy that will continue to improve and reflects what we know today about the regulatory and competitive environment. It also assumes that, based on current exchange rates, we would not see a significant impact from FX in our reported revenue growth in 2022. In 2023, we expect our revenue growth to remain above our long-term aspirational targets due to the lingering recovery tailwinds, which should create a platform for producing mid-teens earnings per share growth. Longer term, as we get to a more steady-state macro environment, we have an aspiration of delivering revenue growth in excess of 10% and mid-teens earnings per share growth on a sustainable basis in 2024 and beyond. In closing, we are committed to executing against our new growth plan, and we'll be running the company with a focus on achieving our accelerated growth aspirations. Before we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question.

compname reports q4 earnings per share $2.18. qtrly earnings per share $2.18. reached record levels of card member spending in quarter. expect to generate elevated levels of revenue growth in 2022 in range of 18% - 20% and earnings per share of $9.25 to $9.65. longer term, co expects to achieve revenue growth in excess of 10% and earnings per share growth in the mid-teens. plans to increase regular qtrly dividend by about 20%, to 52 cents per share beginning with q1 2022. compname posts q4 earnings per share $2.18. american express fourth-quarter revenue increases 30% to $12.1 billion, driven by record card member spending. q4 earnings per share $2.18.

During our call today, unless otherwise stated, we're comparing results to the same period in 2020. Future dividend payments and share repurchases remain subject to the discretion of Altria's board. Altria reports its financial results in accordance with U.S. generally accepted accounting principles. Today's call will contain various operating results on both a reported and adjusted basis. Adjusted results exclude special items that affect comparisons with reported results. Finally, all references in today's remarks to tobacco consumers or consumers within a specific tobacco category or segment refer to existing adult tobacco consumers 21 years of age or older. Altria delivered outstanding results in 2021 across our businesses, including strong financial performance, progress toward our vision and advancements in our ESG efforts. First, Altria grew its 2021 adjusted diluted earnings per share by 5.7% driven in part by the resiliency of our cigarette, cigar and moist smokeless tobacco businesses. Additionally, we returned more than $8.1 billion in cash to shareholders through dividends and share repurchases. This total represents the third largest single year cash return in Altria's history and the largest annual return since 2002. We have continued to make progress toward our vision of responsibly leading the transition of adult smokers to a smoke-free future. Our teams took several steps forward in 2021, including accelerating the retail share growth of on! and further enhancing the capabilities to expand heated tobacco and other new U.S. tobacco products. Advancing the science, research and development behind our smoke-free products, advocating for tobacco harm reduction by encouraging the FDA and other stakeholders to address the widely held nicotine misperceptions in society and we made excellent strides in establishing a best-in-class consumer engagement system to support smoker transition to smoke-free products. Our system leverages robust transactional data and our advanced analytic capabilities to engage with consumers at the point of purchase. Finally, some of our achievements across our responsibility focus areas,included publishing six corporate responsibility reports, summarizing our progress in critical areas, such as harm reduction and underage prevention and publishing our inaugural task force on climate-related financial disclosures report. We were recognized for the second consecutive year with a AA rating from CDP for climate and water stewardship. And we advanced our internal talent and cultural goals, embraced workplace flexibility and embedded inclusion and diversity considerations within our performance review process to hold our leaders accountable. We're excited to share more about our responsibility efforts and our consumer engagement system next month at CAGNY. 2021 was a dynamic year for the U.S. tobacco industry and total industry volumes were influenced by several factors, including pandemic-induced shifts in consumer purchasing behavior and tobacco usage occasions, a continued trend toward smoke-free alternatives and an evolving regulatory and legislative landscape. Despite year-over-year volatility due to pandemic-related factors, total tobacco volume trends remained stable. In fact, we estimate that overall tobacco space volumes have decreased by 0.3% annualized for the past two years and by 0.8% over the last five years on a compounded annual basis. Diving deeper, total estimated equivalized volumes for smoke-free products in the U.S. grew to 3.8 billion equivalized units in 2021 and represented approximately 24% of the total tobacco space. We estimate the year-over-year increases in smoke-free volumes were driven by the e-vapor category, which result -- resumed its growth after a temporary pause in 2020 and on! nicotine pouches, which continue to grow rapidly from a small base. 2021 smoke-free volumes also benefited from the geographic expansion of IQOS in the heated tobacco category, but we're pressured by modest declines in the MST category due to shifts in consumer purchasing behavior and movement to other smoke-free categories. And in combustibles, volume declined to approximately 11.8 billion equivalized units driven by several factors, which Sal will discuss later in his remarks. Turning to our smoke-free product portfolio. We're excited by the exceptional performance of on! retail share of oral tobacco increased by nearly a full share point sequentially, reaching 3.9 share points for the fourth quarter and nearly doubling its share over the past six months. These strong results were primarily driven by an increase in multi can purchases. As of the end of the year, on! was available for sale in approximately 117,000 U.S. retail stores. nicotine pouch category reached a total oral tobacco retail share of 17.9 percentage points in the fourth quarter, growing 7.4 share points year over year. We're encouraged that on! represented more than one-third of this growth and the brand is proving to be a highly competitive product in the space. Our premarket tobacco applications for the entire on! portfolio remained pending with the FDA and we believe that the FDA should determine that the marketing of these products is appropriate for the protection of public health. We are actively working on modified risk tobacco product applications for on! and expect to submit these applications to the FDA by the end of this year. We believe an MRTP claim would be an impactful point of differentiation for the brand and an important tool in educating and ultimately transitioning smokers to less harmful products. In heated tobacco, our teams made excellent progress with IQOS in the Northern Virginia market, with Marlboro HeatSticks achieving a 1.9% retail share of the cigarette category in stores with distribution for the month of October. Unfortunately, PM USA had to remove IQOS from the market in November due to the International Trade Commission's importation ban and cease and desist orders. PMI is responsible for IQOS manufacturing and we have been in contact regarding product availability. At the present time, we do not expect to have access to IQOS devices or Marlboro HeatSticks in 2022. However, we remain focused on returning IQOS to the market as soon as possible. Our teams are actively working on reentry plans and we expect to be ready to bring IQOS back to U.S. consumers when available. Our agreement with PMI contemplates disruptions, such as those caused by the ITC orders and requires the parties to negotiate in good faith to amend the agreement appropriately. In the second quarter of 2020, we disclosed two milestones in our IQOS agreement with PMI necessary for PM USA to maintain its exclusive license and distribution rights for IQOS in the U.S. and to earn the renewal option for an additional five-year term. The initial five-year term does not expire until April of 2024, but we believe that PM USA has already met these milestones based on the strong performance of IQOS in the Charlotte and Northern Virginia markets. PMI has communicated that it disagrees with our position. We expect to continue discussing these matters with PMI. We firmly believe that heated tobacco products can play an important role in U.S. harm reduction and we are continuing our efforts to support the category's growth. We have gained significant knowledge from our IQOS commercialization efforts, which we expect to use going forward. Our teams learned how to educate U.S. smokers on a brand-new tobacco category and how to effectively support their transition journey to smoke-free alternatives. We demonstrated improved performance in each successive market and gained valuable knowledge on leveraging MRTP claims to transition smokers. Additionally, we have built a robust post-market surveillance system, all of which we believe will position us to successfully achieve our objective of moving beyond smoking. Moving to the e-vapor category. The 2021 Monitoring the Future study was recently released and the data showed positive improvements in underage usage trends. Both underage use of nicotine vaping products and JUUL specifically show continued signs of decline. The latest data shows that JUUL underage usage is down by 70% from 2019, with total underage nicotine vaping down 27% over the same period. We are encouraged by the progress, but more still needs to be done and we remain committed to continuing our work to reduce underage use of all tobacco products. Turning to the regulatory environment. The FDA is currently weighing several decisions that we believe will shape the future of harm reduction in the U.S. In the e-vapor category, the FDA has issued marketing denial orders for many e-vapor PMTAs, predominantly, applications for open systems and flavored e-liquids. These denial orders have resulted in significant litigation across the country. In the meantime, PMTAs for most leading e-vapor products, including JUUL, are still on an FDA review. The FDA granted its first e-vapor market order last year for the tobacco variant of a cigar-like product. The FDA has not reached a final decision for that manufacturer's menthol variant, but did deny its submissions for its other flavored cartridges. In oral tobacco, PMTAs for the leading oral nicotine pouch products including on! , remain pending with the FDA. Last year, the FDA granted the first market authorizations among innovative oral tobacco products for our Verve discs and chews in the flavors of Green Mint and Blue Mint. These were also the first flavored product authorizations for newly deemed tobacco products. Additionally, MRTP applications previously submitted for Copenhagen Snuff and competitive snus products remain in FDA review. Finally, in combustibles, the FDA has stated that they are on track to issue proposed product standards by April 2022 regarding menthol in cigarettes and characterizing flavors in cigars. As a reminder, the FDA rule-making process for these and all potential product standards has multiple steps and provide several opportunities for stakeholders to provide input. There are formal requirements related to public notice and comment and steps requiring the office of management and budget to assess economic consequences at several points in the process. Importantly, if the FDA chooses to move forward with their final rules, they must address all comments received throughout the rule-making process. Of course, any final rule must take into account the potential for unintended consequences and would be subject to legal challenges. We plan to review the proposed rules in detail and intend to engage with the FDA throughout the rule-making process on each of these issues. We remain optimistic about the future of harm reduction in the U.S. We believe we have an unprecedented opportunity to lead the way in shifting millions of smokers away from cigarettes, if we follow the science and foster innovation with the support of reasonable regulation. We are encouraged that the FDA has authorized a product in each of the three major smoke-free categories. Going forward, this year, we expect the FDA to carefully consider the scientific merits of each remaining application and we're hopeful for significant progress in product marketing and claim authorizations. I would like to end my commentary regarding 2021 with the message to Altria's employees. We experienced several challenges last year in both our professional and personal lives and I admire your resiliency and fortitude. You are a driving force in moving beyond smoking and we are very appreciative of your efforts and commitment. Let's now move to our financial outlook for 2022. Our plans for the year ahead include a continuation of our strategy to balance earnings growth and shareholder returns, with investments toward our vision. For 2022, our planned investment areas include digital consumer engagement, smoke-free product research, development and regulatory preparations and marketplace activities in support of our smoke-free products. The external environment remains dynamic, however and we're monitoring various factors such as the economy, including the impact of increased inflation; the impact of current and potential future COVID-19 variants and mitigation strategies; tobacco consumer dynamics, including tobacco usage occasions and available disposable income and regulatory and legislative developments. Taking these factors into consideration, we expect to deliver 2022 full year adjusted diluted earnings per share in a range of $4.79 to $4.93. This range represents an adjusted diluted earnings per share growth rate of 4% to 7% from a $4.61 base in 2021. We expect 2022 adjusted diluted earnings per share growth to be weighted toward the second half of the year. Our guidance includes anticipated inflationary increases in master settlement agreement expenses and direct materials expenses and our current expectation that we will not have access to the IQOS system in 2022. I'd like to begin with an update on consumer disposable income, mobility and retail store traffic. We believe rising gas prices, inflation and the reduction of COVID-19 relief programs led to a decrease in disposable income on a sequential and year-over-year basis. In addition, increased consumer mobility versus the prior-year offered consumers more options for their discretionary spending and led to fewer tobacco usage occasions. At retail, fourth quarter trends were unchanged sequentially. We estimate that compared to pre-pandemic levels, the number of tobacco consumer trips to the store continued to be depressed, but tobacco expenditures per trip remained elevated. Moving to our businesses. The smokeable product segment delivered excellent financial performance once again. Our strategy for this segment continues to be maximizing profitability, while balancing investments in Marlboro, with funding the growth of our smoke-free portfolio. We believe our teams are successfully executing this strategy and the segment has delivered strong profit growth and stable Marlboro marketplace performance throughout the pandemic period. In the fourth quarter, the segment grew its adjusted OCI by 4.9% and expanded its adjusted OCI margins to 56.2%. The segment also reported strong net price realization of 8.8%. Fourth quarter smokeable segment reported domestic cigarette volumes decline by 5.9%. When adjusted for trade inventory movements and other factors, we estimate that segment domestic cigarette volumes for the fourth quarter declined by 8% and that industry volumes declined by 6.5% over the same period. As a reminder, adjusted cigarette volumes were strong in the fourth quarter of 2020, with our smokeable segment adjusted cigarette volumes declining by just 1% and industry volumes growing by one half percent. For the full year, smokeable segment adjusted OCI grew 3.1% to $10.4 billion. Adjusted OCI margins expanded by 1.2 percentage points to 57.6%. These strong full year results were supported by robust net price realization up 9.1%. Full year smokable segment reported domestic cigarette volumes declined 7.5% due to the strong comparison period and the continuation of pandemic driven changes in the consumer behavior. When adjusted for trade inventory movement, calendar differences and other factors, we estimate that smokable segment cigarette volumes declined by 6% and that the full industry declined by 5.5%. We believe it's important to analyze cigarette volume trends over the longer term as decline rates in any one year can be influenced by various factors. The COVID-19 pandemic has certainly been one of these distorting factors and we believe the best way to assess cigarette volumes during this period is looking at 2020 and 2021 volumes combined. In fact, the two-year average decline rates for adjusted smokable segment and industry cigarette volume declines were 4% and 3%, respectively, well within the range of historic norms. Turning to marketplace performance. Marlboro remains strong and has demonstrated resilience. The cigarette category remains very competitive. After market share gains in the first half of 2021, Marlboro did see share in the fourth quarter. We believe the sequential share decline occurred due to macroeconomic pressures on consumer disposable income. While the vast majority of Marlboro consumers are highly brand loyal, we do know that cigarette brand selection for a subset of smokers is dependent on economic conditions. These consumers are more likely to select premium brands during economic upswings, as demonstrated by Marlboro share gains in the first half of 2021, but they are also more likely to trade down in tougher economic situations. We remain focused on the long-term strength of Marlboro and we are very pleased that its full year share grew 0.2 to 43.1% and that the brand remained stable since the beginning of the pandemic. In discount, total segment retail share in the fourth quarter continued to fluctuate, increasing 0.7 sequentially to 26% driven primarily by deep discount products. We believe the share increases observed in the discount segment are due to the previously mentioned macroeconomic factors that pressured the consumer in the fourth quarter. For the full year, discount segment share increased five-tenths to 25.4%, which was at the high end of its historical ranges. We expect fluctuation in discount segment shares to continue as the cohort of price sensitive consumers react to their short-term economic conditions. And in cigars, Middleton provided strong contributions to smokable segment financial results. Reported cigar shipment volume was essentially unchanged for the year, as Middleton maintained the strength of the iconic Black & Mild brand and successfully managed the supply chain during a challenging year. Turning to the oral tobacco product segment. Adjusted OCI and adjusted OCI margins contracted for the full year primarily due to increased investments behind on! Total segment reported shipment volume was unchanged for the year. When adjusted for trade inventory movements and calendar differences, we estimate that total oral tobacco segment volumes declined by 0.5%. We remain pleased with the overall performance of the segment as Copenhagen continues to generate significant income in the high-margin MST category and we're excited about the growth demonstrated by on! Oral tobacco product segment retail share for the fourth quarter was down slightly sequentially as strong share gains from on! nearly offset declines in MST. The segment declined 1.6 percentage points versus the fourth quarter last year due to the continued growth of the oral nicotine pouch category. Turning to our investment in ABI. We recorded $172 million of adjusted equity earnings in the fourth quarter, representing Altria's share of ABI's third quarter results. For the full year, we recorded $639 million in adjusted equity earnings, up 18.3% versus 2020. As we shared in our previous earnings call, we view our ABI stake as a financial investment and our goal is to maximize the long-term value of the investment for our shareholders. In our all other operating category, we continue to make progress on our wind down of Philip Morris Capital Corporation. At year-end, the net finance assets balance was $114 million, down more than $200 million since the end of 2020 due to rents received and asset sales. As previously announced, we expect to complete the PMCC wind down by the end of 2022. Turning to capital allocation. We remain committed to creating long-term shareholder value through the pursuit of our vision and our significant capital returns. These record cash returns included paying $6.4 billion in dividends, raising the dividend for the 56th time in 52 years and repurchasing nearly 36 million shares during the year totaling $1.7 billion. We also sold Ste. Michelle Wine Estates and expanded our share repurchase program from $2 billion to $3.5 billion. We have approximately $1.8 billion remaining under this expanded program, which we expect to complete by December 31, 2022. We continue to have a strong balance sheet and our goal is to maintain an investment-grade credit rating. As of year-end, our debt to EBITDA ratio was 2.3 times and our weighted average coupon was 4%. We've also posted our usual quarterly metrics, which include pricing, inventory and other items. Let's open the question-and-answer period. Operator, do we have any questions?

sees fy adjusted earnings per share $4.79 to $4.93. expect to deliver 2022 full-year adjusted diluted earnings per share in a range of $4.79 to $4.93. qtrly net revenues $6,255 million, down 0.8%. altria's tobacco businesses have not experienced a material adverse impact to date due to covid-19 pandemic. altria group - expects 2022 capital expenditures to be between $200 million and $250 million. abi continued to be impacted by covid-19 pandemic in 2021, including effects of covid-19 variants, supply-chain constraints, others. altria group - as of december 31, 2021, altria's net finance assets balance was $114 million, down $206 million since end of 2020 due to rents received and asset sales. expects 2022 adjusted diluted earnings per share growth to be weighted toward second half of year. qtrly total cigarette shipment volumes 22.42 billion, down 5.9%.

Before we begin, however, I will remind you that this conference call might include statements that are forward looking in nature. During the call today we might also discuss non-GAAP financial measures. Jim, over to you. What a difference a year makes. Twelve months ago we were all facing tremendous uncertainty about the future. A year later, all the personal, social and economic effects of COVID-19 are still impacting each of us individually and collectively. The outlook at Loews has significantly improved. Each of our subsidiaries has been affected differently by the pandemic, but across the board, their responses have been extraordinary and each business has found its footing in 2021. First, let's look at our largest subsidiary, CNA. The company's operational strength and resilience is evident not only in its underlying combined ratio and rate increases, but also on its ability to respond nimbly to ongoing challenges. In the first quarter, CNA did experience higher-than-usual cat losses from what I call the Texas Freeze-Off, but its basic business continued to perform well. CNA's underlying combined ratio of 91.9% improved nearly 2 points over the prior year quarter of 93.7%, with a 1.6 percentage point improvement in the expense ratio. Rate continues to be strong with an 11% increase in the quarter. CNA's investment portfolio ended the quarter with $4.3 billion in unrealized gains, down from a high of $5.7 million last quarter, primarily due to higher interest rates. Over the long term, higher interest rates will be beneficial to CNA, allowing it to invest its cash flow at higher rates than today. Boardwalk Pipelines has substantial operations in Texas, but the February storm had little financial impact on the company. Boardwalk's revenues slightly increased due to higher system utilization during the freeze-off as was the case with other companies in the natural gas transportation industry. The company's solid performance during this crisis was not a lucky accident. Rather, it was a result of significant preparation, planning and hard work by the Boardwalk team. The company's considerable efforts paid off and Boardwalk was able to deliver gas to its customers with minimal disruption. Boardwalk's revenue increased to $370 million in the first quarter of 2021 that was due to growth projects that had been placed into service and the colder winter weather. Of all our subsidiaries, Loews Hotels has been hit the hardest by the pandemic. However, as travel picks up across the country, we are seeing gradual progress at Loews Hotels, especially at the company's resort destinations. By the end of the first quarter of '21, 23 of the company's 27 hotels were open. In further good news, the company expects to have hotels opened in all its markets by the end of the second quarter. Comparing the first quarter of 2021 to the final quarter of 2020, we saw continued improvement in trends. The average daily room rate of our owned and JV hotels that are open increased by 25% to $234. Leisure travel continues to improve at a faster pace than business travel, and while we expect that circumstances will vary by hotel property, occupancy at hotels should increase gradually as the economy recovers from the pandemic. Loews Hotels has an ownership interest in nearly 15,000 rooms, approximately 11,000 of which are located in resort destinations. So we think that Loews Hotels is well positioned to benefit from this leisure-led recovery. When acquiring a subsidiary, our long-term goal is to have that subsidiary return capital to Loews when the time is appropriate. Loews acquired Altium in 2017 for $1.2 billion; that was $600 million in equity and $600 million in debt at the Altium level. In February of 2021, Altium refinanced its term loans and replaced its roughly $850 million of debt with a new $1.05 billion seven-year term loan, allowing the company to pay $200 million dividend to Loews. And a month later, on April 1, Loews sold 47% stake in Altium to GIC, the Singapore wealth fund, for gross cash proceeds of $422 million. With these two transactions, Loews has recouped its entire initial investment in Altium while still retaining a 53% ownership interest in the company. From a portfolio optimization standpoint, we felt the time was right for us to monetize a portion of Loews's ownership stake in Altium. We believe strongly in the long-term prospects of Altium's business and it's our opinion that the Altium management team is second to none in the industry. By retaining a majority ownership position, Loews will be able to capitalize on the future growth trajectory of the company. Additionally, we have gained a strong and like-minded partner in GIC. Under the new ownership structure, Altium has increased in financial flexibility when it comes to larger acquisitions. Finally, so far in 2021 Loews has purchased more than 6,150,000 shares of our common stock at an average price of $49.58 per share for a total of $305 million, representing 2.3% of our outstanding shares. Many a time you've heard me bemoan the discount at which Loews trades. So I'll spare you the rant this time and just let our repurchase activity speak for itself. David, over to you. For the first quarter, Loews reported net income of $261 million or $0.97 per share, a sharp rebound from last year's first quarter net loss of $632 million or $2.20 per share. As a reminder, last year's net loss had two main drivers. One, investment results at CNA and the Loews parent company stemming from financial market disruptions as the pandemic spread; and second, rig impairments at our former consolidated subsidiary, Diamond Offshore. This year's first quarter benefited from dramatically improved investment results at CNA and the parent company; strong P&C underwriting income at CNA before catastrophe losses; and favorable results posted by Boardwalk Pipelines. Also, the year-over-year comparison benefited from the absence of losses from Diamond Offshore. Conversely, losses at Loews Hotels reduced quarterly results as the pandemic continued to mute travel and thus hotel demand. Additionally, earnings in the corporate segment were reduced by some items related to Altium, our packaging subsidiary. Let me get into more detail about the quarter. CNA contributed net income of $279 million, up dramatically from a $55 million net loss in Q1 2020. The year-over-year turnaround was driven primarily by investment results, both net investment income and net investment gains. But before I discuss investment results, I wanted to highlight CNA's continued solid property/casualty underwriting performance. CNA's core property/casualty business posted terrific underwriting results before catastrophe losses. Net earned premium was up almost 6% year-over-year, and the combined ratio, excluding cat losses, was 91.3%, 1.7 points better than last year's first quarter and 1.1 points better than full year 2020. The loss ratio, excluding cats, was 59.5%, an excellent result that was in line with last year's first quarter and with full year 2020. I would note that prior-year development was comparable this year and last, with less than 1 point of favorable development in both periods. CNA's expense ratio, which, together with the loss ratio, makes up the combined ratio, declined to 31.5%, which was 1.6 points better than in Q1 2020. The Company's expense ratio improvement is notable and results from both expense management and premium growth. As an historical footnote, the Company's expense ratio in, say, 2017, was over 34%, so you can see how far CNA has come in a few short years. CNA booked 6.8 points of cat losses in Q1, up from 4.3 points in last year's first quarter. As a result, the Company's overall combined ratio was up slightly to 98.1% from 97.3% last year. I would highlight that CNA's Q1 cat losses were essentially in line with its market share in the affected areas. CNA's after-tax net investment income increased $133 million or 48% from last year, with common stocks and limited partnership investments accounting for the entire improvement. The S&P 500 returned 6.2% in this year's first quarter as compared to a negative 19.6% total return in Q1 of last year. The turnaround in CNA's net investment gains were substantial, swinging from net pre-tax investment losses of $216 million in Q1 '20 to investment gains of $57 million in Q1 '21. Last year's large losses were mainly attributable to market value declines of non-redeemable preferred stock as well as impairment losses on corporate bonds. Taken together, the uplift in CNA's net investment income and the turnaround in its net investment gains benefited Loews' year-over-year net income by $306 million. In summary, CNA's investment and non-cat underwriting results were strong during the quarter, with CNA and its peers impacted by an unusually high level of natural catastrophes. Boardwalk posted an over 8% increase in net revenue and a net income contribution of $85 million, up from $65 million in last year's first quarter. Turning to Loews Hotels. While the company continues to suffer from the COVID-induced downturn in travel, business is gradually improving, as Jim described. The company posted a net loss of $43 million in the quarter versus a net loss of $25 million in Q1 '20. GAAP operating revenue was $39 million, down from $109 million last year, and the pre-tax equity loss from joint venture properties was $12 million as opposed to a $4 million loss last year. In last year's first quarter, business was quite strong during January and February and into the first week of March, only to decline precipitously thereafter; so precipitously, in fact, that most properties suspended operations between March '19 and the end of the quarter. To provide a comparative sense of the hotel company's results, let's look at adjusted EBITDA, which is defined and reconciled in our earnings supplement. It includes all properties and excludes non-recurring items. Adjusted EBITDA was $61 million in Q1 of 2019 and declined to $17 million in Q1 of 2020 and was a loss of $13 million in this year's first quarter. The low point for profitability was last year's second quarter when Loews Hotels posted an adjusted EBITDA loss of $54 million. Adjusted EBITDA has improved steadily since that low point as business has steadily come back. For a good snapshot of this operational improvement, I would encourage you to review page 11 of our quarterly earnings supplement, which shows the increase in available rooms, occupancy and average daily rate since Q2 last year. We currently expect, absent any divestitures or development projects, to make a net cash contribution to Loews Hotels of less than $80 million in 2021, down materially from our earlier estimates, given better-than-anticipated cash flow. During the first quarter, we invested $32 million in Loews Hotels. Turning to the Corporate segment. The parent company's investment portfolio generated net pre-tax income of $46 million as compared to a loss of $166 million last year. Like at CNA, equities and alternatives led the decline last year and the rebound this year. The remainder of the corporate sector generated a $75 million pre-tax and $106 million after-tax loss in the quarter. Two main factors, both connected to Altium, drove this larger than normal loss. One, Altium undertook a recapitalization during the quarter, refinancing its existing term loans with a single $1.05 billion term loan; the company booked a $14 million pre-tax debt extinguishment charge in connection with the recap. And second, the sale of a 47% stake in Altium to GIC, which was pending at quarter-end, required Loews to book a $35 million deferred tax liability which impacted net income but not pre-tax income. Diamond Offshore materially affected our year-over-year earnings comparison, given Diamond's $452 million net loss in last year's first quarter, driven largely by rig impairments. Diamond was consolidated effective April 26, 2020 and had no impact on our results this past quarter. A few words about the parent company. As always, we remain determined to maintain a strong and liquid balance sheet. During the quarter, we repurchased 5.6 million shares of our common stock for $274 million, and we received about $274 million in dividends from CNA in the quarter, including the $0.38 regular quarterly dividend and the $0.75 special dividend. We also received, as Jim mentioned, $199 million dividend from Altium pursuant to its recapitalization. The parent company portfolio of cash and investments stood at $3.6 billion at quarter-end, with about 80% in cash and equivalents. After quarter-end, we received about $410 million in net proceeds from the sale of 47% of Altium and have repurchased another 599,000 shares of common stock for about $32 million. Finally, let me clarify some details relating to the sale of a stake in Altium to GIC. The transaction price implied a total enterprise value of $2 billion for the company and a total equity value of about $900 million. As a reminder, we purchased the company for a total enterprise value of $1.2 billion in 2017 and have not invested any additional capital in Altium since the acquisition. In the second quarter, upon deconsolidation, we will book a net pre-tax gain of approximately $560 million, which reflects both the net realized gain on the stake sold to GIC and the unrealized gain on our retained 53% stake. The 53% stake will be held as an equity investment in a non-consolidated subsidiary at approximately $475 million, reflecting the valuation implied by the price paid by GIC for its 47% stake. I will now hand the call back to Mary. Moving on to the Q&A portion of the call.

compname reports net income of $261 mln. compname reports net income of $261 million for the first quarter of 2021. q1 earnings per share $0.97.

Actual results may differ materially from those indicated. The non-GAAP financial measures are not meant to be considered superior to or a substitute for results from operations prepared in accordance with GAAP. In accordance with Regulation G, you can find the comparable GAAP measures and reconciliations on the Investor Relations section of our website. I'm very pleased to speak with you today about another exceptional quarter at Charles River. Our robust first quarter financial performance, highlighted by 13% organic revenue growth and 170 basis points of year-over-year operating margin improvement demonstrates the strength of the biopharmaceutical market environment and the power of our unique portfolio, both of which we believe are as strong as they have ever been. We believe clients are increasingly choosing to partner with us for our flexible and efficient outsourcing solutions, with scientific depth and breadth of our portfolio and our unwavering focus on seamlessly serving their diverse needs. Clients are opting to work with a smaller number of CROs who offer broader scientific capabilities which enables them to drive greater efficiency and accelerate the speed of the research, nonclinical development and manufacturing programs. The complexity of scientific research is also increasing our clients' reliance on a high-science outsourcing partner like Charles River. To further differentiate ourselves from the competition, we are strategically expanding our portfolio in areas that deliver the greatest value to clients and offers significant growth potential. Already this year, we have enhanced our scientific capabilities for advanced drug modalities through the acquisitions of Distributed Bio, Cognate BioServices and Retrogenix. Distributed Bio and Retrogenix strengthen our discovery portfolio. And the acquisition of Cognate, which was completed on March 29, provides an excellent growth opportunity by allowing us to offer CDMO services in the high-growth, high-science cell and gene therapy sector. We believe the strength of our portfolio and robust industry fundamentals are leading to unprecedented client demand across most of our businesses. In the first quarter, we experienced a continuation of the robust demand from the end of last year, including new record booking and proposal levels in the Safety Assessment business. Organic revenue was about 10% for a second consecutive quarter, even after normalizing for last year's COVID-19 impact. Overall, we believe our robust first quarter performance and solid business trends support our improved outlook for the year. I will now provide highlights of our first quarter performance. Quarterly revenue surpassed $800 million for the first time and an $824.6 million for the first quarter of 2021 represented a 16.6% increase over last year. Organic revenue growth of 13% was driven by double-digit growth across all three segments. The year-over-year comparison to last year's COVID-related revenue impact, which primarily affected the RMS segment, contributed approximately 140 basis points to the revenue growth rate this quarter. We experienced broad-based growth across all client segments, with biotech clients leading the way as they continue to benefit from a robust funding environment. The operating margin was 20.7%, an increase of 170 basis points year-over-year. The improvement was driven by RMS and DSA segments and reflected operating leverage and the robust revenue growth as well as our continued efforts to drive efficiency. We expect the same factors will drive margin improvement for the year and believe the operating margin will approach 21%, above our prior target. Earnings per share were $2.53 in the first quarter, an increase of 37.5% from $1.84 in the first quarter of last year. This outstanding earnings growth principally reflected the double-digit revenue growth and meaningful operating margin improvement. Based on the first quarter performance and our positive outlook for the remainder of the year, we are meaningfully increasing our revenue growth and non-GAAP earnings per share guidance for 2021. We now expect organic revenue growth in a range of 12% to 14%, a 300 basis point increase from our prior range. Normalized for last year's COVID-19 impact, we would still expect low double-digit organic revenue growth this year. Non-GAAP earnings per share are expected to be $9.75 to $10, which represents 20% to 23% year-over-year growth and an increase of $0.75 at the midpoint from our prior outlook. I'd like to provide you with details on the first quarter segment performance, beginning with the DSA segment. Revenue was $501.2 million in the first quarter, an 11.6% increase on an organic basis over the first quarter 2020 driven by broad-based demand for both Discovery and Safety Assessment. Safety Assessment business continued to perform exceptionally well, reflecting robust demand from both biotech and global biopharma clients and price increases. Bookings and proposal volume reached record highs in the first quarter, with strength across all regions and major service areas. Bookings increased substantially more than our target. Clients are expanding our preclinical pipeline and intensifying their focus on complex biologics. And we believe they are securing space with us further in advance to ensure they do not delay the research, which in turn provides us with greater visibility. We believe this positions the Safety Assessment business extremely well and supports low double-digit organic revenue growth in the DSA segment this year, which is higher than our prior outlook. We are pleased with the extensive depth and breadth of our Safety Assessment portfolio and remain intently focused on continuing to enhance the value we provide to our clients. The Discovery business had another exceptional quarter, led by broad-based demand for oncology, early discovery and CNS services. Our efforts to broaden and strengthen our discovery capabilities and enhance our scientific expertise are enabling us to expand the support we provide for our clients' discovery research, and clients increasingly view Charles River as a premier scientific partner who can support their efforts to identify new drug targets and discover novel therapeutics. We intend to build our Discovery portfolio so that clients can outsource complex discovery projects to us, including for advanced modalities. Our recent acquisitions Distributed Bio and Retrogenix enhance our large molecule discovery capabilities. Retrogenix through its proprietary cell microarray technology offers target receptor identification and off-target screening services, which will enhance our clients' early discovery efforts and also enable them to explore potential preclinical safety liabilities. Combination of Distributed Bio, our large molecule discovery platform, and Retrogenix capabilities will further strengthen our integrated end-to-end solution to therapeutic antibody and cell and gene therapy discovery and development. We are also continuing to add cutting-edge technologies through our strategic partnership strategy, most recently with the new artificial intelligence or AI drug discovery partner, Valence Discovery. The DSA operating margin increased by 180 basis points to 23.8% in the first quarter. Leverage from the robust DSA revenue growth was the primary driver of margin improvement, and we expect this trend will continue to propel the DSA margin into the mid-20% range for the year. RMS revenue was $176.9 million, an increase of 14.8% on an organic basis over the first quarter of 2020. Robust demand for research models in China was the primary driver of first quarter RMS revenue growth, and higher revenue for research model services, including GEMS and our CRADL initiative, also contributed. Approximately 620 basis points of the increase was attributable to the comparison to last year's COVID-related revenue impact from client site closures and disruption. Demand trends for the research models were largely consistent with those prior to the pandemic, with growth in China widely outpacing mature markets. Research models business in China had an exceptional quarter even after normalizing for last year's COVID-19 impact, driven by a resurgence in demand across all segments. Biomedical research in China has returned to pre-COVID levels, and in some areas, even greater levels. In the U.S. and Europe, client order activity has also rebounded. Research Model Services also continued to perform well. GEMS is benefiting from renewed outsourcing demand as our clients seek greater flexibility and efficiency afforded to them when we manage their proprietary model colonies, as we did for many clients during the COVID-19 pandemic. In addition, complex research models will play an increasingly critical role as drug research continues to shift to oncology, rare disease and cell and gene therapies, which reinforces the value proposition for the GEMS business. We are also continuing to generate substantial client interest for our CRADL initiative or Charles River accelerator and development labs, as both small and large biopharmaceutical clients increasingly seek turnkey research capacity, which allows them to invest in people and research instead of infrastructure. We have CRADL sites in the Boston, Cambridge, Massachusetts area and South San Francisco biohubs and are actively expanding in these regions to accommodate client demand. Utilizing CRADL also provides clients with collaborative opportunities to seamlessly access other Charles River services from Discovery to GEMS, which further enhances the speed and efficiency of their research programs. Revenue growth for our cell supply businesses, HemaCare and Cellero, remained below the targeted level in the first quarter due to some limitations on donor access. We believe cell supply revenue will increase during the year as donor availability continues to improve. We are also continuing to work diligently to expand our donor base in the U.S. and add more comprehensive capabilities at all of our sites to accommodate the robust demand in the broader cell therapy market. We believe that the acquisition of Cognate is particularly timing -- timely because it creates new business opportunities for HemaCare and Cellero in the cell and gene therapy development area. Our expanded capabilities are expanding -- are establishing Charles River as a trusted partner, who can move clients programs forward using the same cellular products through each step of research and early stage development phases and into CGMP production. In the first quarter, the RMS operating margin increased 570 basis points to 28.7%. This significant improvement is due to two factors. First, last year's 23% margin was depressed by the onset of COVID-related client disruptions and the resulting impact on the research model order activity. In addition, this year's performance reflects the operating leverage attributable to the robust revenue growth, particularly for research models in China. Revenue for the Manufacturing segment was $146.5 million, a 15.6% increase on an organic basis over the first quarter of last year. The increase was driven by double-digit revenue growth in both the Biologics Testing Solutions and Microbial Solutions businesses. The Manufacturing segment's first quarter operating margin was stable at 35.5%. This is consistent with the historical trend in the first quarter and in line with our revised expectations in 2021 for a mid-30% operating margin when factoring in the Cognate acquisition. Microbial Solutions growth rate rebounded above the 10% level in the first quarter, reflecting strong demand for our Endosafe endotoxin testing systems, cartridges and core reagents for all geographic regions. We continue to work through the delayed instrument installations that resulted from COVID-19 restrictions and are gaining access to more client sites. We are pleased with the strength of the underlying demand for our endotoxin testing platform, which performs FDA-mandated lot-release testing for our clients' critical quality control testing needs. Clients prefer our comprehensive and efficient microbial testing solutions because of the quality, speed and accuracy of our testing platform. The Biologics business reported another exceptional quarter of strong double-digit revenue growth, principally driven by robust market demand for testing cell and gene therapies and COVID-19 therapeutics. We believe cell and gene therapies will continue to be significant growth drivers for the years to come. And demand for COVID-19 vaccine testing is intensifying as these therapies move on to the commercial production phase even as some of the early stage testing activity subsides. Given the strength of the demand environment, we are continuing to build our extensive portfolio of services to support the safe manufacture of Biologics to ensure we have available capacity to accommodate client demand. We believe the acquisition of Cognate will be highly complementary to our Biologics business and our portfolio as a whole. The acquisition establishes Charles River as a premier scientific partner to cell and gene therapy development, testing and manufacturing. Our broader services will provide clients with an integrated solution from basic research through CGMP production, enabling them to outsource CGMP cell therapy production and the required analytical testing to one scientific partner, reducing the bottlenecks and efficiencies of utilizing multiple outsourced providers. Because we already were a provider of extensive nonclinical services for cell and gene therapies, our integration process, which is proceeding smoothly, is particularly focused on unlocking new business opportunities across our portfolio. The acquisition of Cognate is part of our ongoing strategy to broaden our unique portfolio and scientific expertise in order to support new paradigms in therapeutic areas of research. As biopharmaceutical clients seek to drive greater efficiency and leverage scientific benefits by working with fewer trusted partners who have broad integrated capabilities, we have transformed our business over the last decade to accommodate their needs through M&A, scientific partnerships, internal investment and by promoting a culture of continuous improvement in everything that we do. We built the leading safety assessment franchise in the world and established an integrated end-to-end discovery offering for both small and large molecules. So given the emerging importance of complex biologics and cell and gene therapies, adding CDMO capabilities is a logical extension for our portfolio. We will continue to move our growth strategy forward. Disciplined M&A and strategic partnerships remain vital components of our strategy as we endeavor to further enhance the scientific expertise, global reach and innovative technologies that we can offer clients across all three of our business segments. Investing in our scientific capabilities as well as internally in the necessary staff and resources will help us ensure that we can meet the needs of our clients and support the robust growth in our markets. The biotech funding environment has never been stronger. Clients are investing more in research and development, and it is incumbent upon us to be the scientific partner who can help them move their programs forward, from concept to nonclinical development, to the safe manufacture of their life segment therapeutics. We look forward to discussing our strategy with you and where we think that we can take the company over the next several years at our upcoming virtual Investor Day on May 27. Now David Smith will give you additional details on our first quarter results and 2021 guidance. Before I begin, may I remind you that I'll be speaking primarily to non-GAAP results, which exclude amortization and other acquisition-related charges, costs related primarily to our global efficiency initiatives, our venture capital and other strategic investment performance and certain other items. Many of my comments will also refer to organic revenue growth, which excludes the impact of acquisitions and foreign currency translation. We're very pleased with our accomplishments in the first quarter, which widely outperformed our outlook. We delivered strong revenue growth, well above the 10% level on an organic basis and significant operating margin expansion of 170 basis points, which drove earnings-per-share growth of 37.5% to $2.53. The operating margin performance was particularly encouraging as the consistent margin improvement reflects our efforts to build a more scalable and efficient infrastructure and leverage the robust growth in our end market. As Jim mentioned, we have increased this year's financial guidance to reflect the enhanced growth profile for the full year, including the strong performance for the first quarter and the addition of Cognate and other acquisitions that we have completed. We now expect to deliver reported revenue growth of 19% to 21% and organic revenue growth in a range of 12% to 14% for the full year. Given the robust top line performance, we expect to drive meaningful operating margin improvement this year with the full year margin approaching 21%. This is expected to drive better-than-expected earnings per share in a range of $9.25 to $10, which represents year-over-year growth above 20%. By segment, our outlook for 2021 continues to reflect the strong business environment and the differentiated capabilities we provide to support our clients' needs. RMS organic revenue growth guidance for the year is unchanged from our initial high-teens outlook, reflecting recovery from the impact of the COVID-19 pandemic last year, exceptional growth in China and the expectation of our cell supply revenue growth will improve during the year. The DSA segment is now expected to deliver low double-digit growth for the full year, reflecting the strong first quarter performance and intensified early stage research activity. For the Manufacturing segment, we now expect to achieve mid-teens organic revenue growth, with both the Biologics and Microbial Solution businesses contributing. Including the acquisition of Cognate, Manufacturing's reported revenue growth rate is expected to be in the high-30% range. With regard to operating margin, RMS will continue to be a primary contributor to the overall improvement for the year, with the segment margin meaningfully above 25%. We also expect the DSA segment operating margin to increase over the prior year into the mid-20% range. When factoring in Cognite, the Manufacturing segment's operating margin is expected to be in the mid-30% range this year or moderately below its 2020 level. Unallocated corporate costs was slightly higher than our expectations, totaling 6.2% of total revenue or $51.2 million in the first quarter compared to 5.6% of revenue in the first quarter of last year. The increase was primarily the result of continued investments to support the growth of our businesses and higher performance-based compensation costs due in part to the first quarter operating outperformance. Despite the higher expenses in the first quarter, we continue to expect unallocated corporate costs to be in the mid-5% range as a percentage of revenue for the full year. The first quarter tax rate was 14.5%, a 20 basis point increase year-over-year and consistent with our outlook in February, which calls for a tax rate in the mid-teens due to the gating of the excess tax benefit from stock-based compensation. We continue to expect our full year tax rate will be in the low-20% range on a non-GAAP basis, which is unchanged from our outlook provided in February. Total adjusted net interest expense for the first quarter was $17.1 million, which was essentially flat sequentially and a decrease of nearly $2 million year-over-year due to lower average debt levels, which resulted in interest rate savings based on our leverage ratio. At the end of the first quarter, we had $2.2 billion of outstanding debt, representing a gross leverage ratio of 2.3 times and a net leverage ratio of 1.9 times. In March, we issued $1 billion of senior notes to further optimize our capital structure and take advantage of the attractive interest rate environment. The proceeds of this bond offering we used to redeem a previously issued higher-rate $500 million bond to pay down the existing term loan and a portion of the revolving credit facility and to finance a portion of the Cognate acquisition. In April, we also amended our existing credit agreement to establish a new revolver with borrowing capacity of up to $3 billion. The net result of these actions will reduce our average interest rate on debt by approximately 50 basis points to 2.65%. An overview of our current capital structure is provided on slide 36. On a pro forma basis, including the Cognate and Retrogenix acquisitions, our gross leverage ratio was just under three times, and we had total debt outstanding of slightly below $3 billion. For the year, the higher debt balances due primarily to Cognate acquisition will be partially offset by the lower average interest rate from these refinancing activities, which is expected to result in total adjusted net interest expense of $83 million to $86 million. Free cash flow was $142.2 million in the first quarter, a significant increase compared to $42.9 million last year. The primary reason for the improvement was the strong first quarter operating performance, along with our continued focus on working capital management. Capital expenditures were $28 million in the first quarter compared to $25.7 million last year. Looking ahead, we are increasing our capex guidance for 2021 by $40 million to approximately $220 million. The increase primarily reflects the investments we are making in Cognate to support its high-growth business. Even with the additional capital, we expect capex will remain below 7% of our total revenue this year, which is consistent with the target that we provided at our last Investor Day in 2019. For the full year, we are updating our free cash flow guidance to the upper end of the prior range and now expect free cash flow of approximately $435 million for the full year. We are pleased to be able to increase free cash flow due primarily to the strong first quarter operating performance, even after incorporating the transaction costs and capital needs of Cognate. A summary of our revised financial guidance for the full year, including Cognate, can be found on slide 38. For the second quarter, our updated outlook reflects a continuation of the strong demand environment. We now expect second quarter reported revenue growth at or near the 30% level, including the contribution of Cognate. On an organic basis, we expect second quarter growth rate to be at or near 20%. This reflects the prior year comparison to the COVID-related revenue impact, which will contribute approximately 700 basis points to the second quarter revenue growth. As a result of the impact of COVID-19 on the second quarter of last year, we expect this year's second quarter non-GAAP operating margin and earnings per share to increase significantly versus the prior year. Our expectation for non-GAAP earnings per share is a growth rate of more than 50% year-over-year. In conclusion, we are very pleased with our strong first quarter performance, which included robust revenue aims and free cash flow growth. We remain confident about our prospects for the year and our ability to consistently grow the top line, bottom line and cash generation, and as such, believe this is reflected in the substantial improvement in our outlook. We look forward to hosting our upcoming virtual Investor Day in a few weeks. At that time, we plan to update our longer-term financial targets, which we believe will reflect the strong demand environment.

compname reports q1 non gaap earnings per share of $2.53. q1 non-gaap earnings per share $2.53. q1 revenue rose 16.6 percent to $824.6 million. updates 2021 guidance. sees 2021 reported revenue growth of 19% - 21%. sees 2021 organic revenue growth of 12% - 14%. 2021 gaap earnings per share estimate of $5.95 - $6.20.2021 non-gaap earnings per share estimate of $9.75 - $10.00.

This is Shawn Collins. The new Director of Investor Relations at Harley-Davidson. You can access the slides supporting today's call on the Internet at investor. In addition, Chief Commercial Officer, Edel O'Sullivan will join for the Q&A. With that, Jochen why don't we get started? We delivered a solid quarter, and are pleased with our year-to-date performance where you've seen many proof points that our Hardwire strategic initiatives are setting up a solid foundation for future growth at Harley-Davidson. As part of the Hardwire strategy, we renewed our focus and profitably driving our core business. Through 2021 we've been encouraged by the recovery of the Touring market. Grand American Touring sits at the core of our mission and our brand. We are committed to defending and expanding our share in the segment and see potential for future growth. By selectively targeting high potential categories such as Adventure Touring with Pan America and sports with Sportster S we are also maintaining our focus on long-term profitability and potential alinged to our brand and product capabilities. The increased demand that we have seen across both our core and expanding categories underscores the momentum behind the Harley-Davidson Brand and all it stands in the pursuit of freedom and adventure. We've also seen interest increasing across new riders with a marked increase in the participation in the Harley-Davidson Riding Academy. Through September, we've seen Riding Academy participation and completion increased 20% over 2019. In addition to our strategic changes as part of our streamline market strategy, macro headwinds, including a variety of challenges from supply chain shortages to congestion at ports and increased shipping times that have been impacting our production and our other suppliers in Q3, in particular in our international markets. The supply chain challenges are likely to continue into 2022, our team remains committed to managing the effects of the disruption, leveraging the scale of our global network and infrastructure to mitigate the impact on our business. That said, I'm very excited by the global potential of Harley-Davidson brand in the coming years. And, as we focus on more profitable motorcycle unit as part of our strategy, we continue our journey toward a more efficient use of inventory. While we are below our intended inventory strategy, we've seen our dealer community adapt, improve the profitability and therefore improve the overall health of our dealer network. I'll now hand over to Gina to provide more details on our financial performance for the quarter and year-to-date. Third quarter results reflect continued demand momentum as evidenced by our strong wholesale and unit growth and share performance across the market. As Jochen said we did experience increased supplier volatility, which impacted our production and supply levels for the quarter. Despite this, our financial results demonstrate our agility in maximizing profitability, including the execution of a pricing surcharges in the US, optimizing production schedules to prioritize our most profitable models and markets and enacting tighter operating expense controls. In the quarter, total revenue of $1.4 billion was 17% ahead of last year behind increased shipments and favorable motorcycle unit mix, primarily driven by the actions undertaken as part of the rewire. Total operating income of $204 million was ahead of last year with growth across both of our reported segments. The motorcycle segment, which includes our general merchandise and parts and Accessories products delivered $98 million of operating income, which is $51 million better than last year. And the Financial Services segment delivered $107 million of operating income, which is $15 million better than last year. Third quarter GAAP earnings per share of $1.5 is $0.78 better than last year or up 35% year-over-year. When adjusting to exclude the impact of EU tariffs and restructuring charges our adjusted earnings per share was $1.18 and up 12% year-over-year. Turning to Q3 year-to-date results, revenue of $4.3 billion is 30% ahead of 2020 and operating income of $831 million was $701 million ahead of last year. Year-to-date results reflect the strong unit growth over the pandemic impacted results of 2020 as well as the positive impact from last year's Rewire actions. GAAP year-to-date earnings per share was $4.06, up $3.42 from a year ago, while adjusted earnings per share was $4.29 up $0.03 from last year. Global retail sales of new motorcycles were down 6% in the quarter with growth in North America offset by declines in our international market. North America Q3 retail sales were up 2% versus last year driven primarily by 5% growth in Grand American Touring, our most profitable segment and the successful launches of Pan American and Sportster S. Pan America maintained its status as the number one selling adventure touring model in the US since its launch earlier this year, capturing a 16% market share in the third quarter in a rapidly growing adventure touring segment and after much anticipation beyond these Sportster S motorcycles began shipping to dealers late in Q3 and we have seen very strong sell-through today. In our international markets the retail sales declines were primarily driven by the actions taken during Rewire to exit markets and prune unprofitable models. EMEA, and APAC sales were disproportionately impacted by the decision to exit the unprofitable Street and Legacy Sportster bikes, and in LATAM the declines in the model pruning and market exits were accompanied by pricing actions taken across select models. Through these actions the LATAM region has improved their profitability, which we expect will set up a solid foundation for future growth. Worldwide retail inventory of new motorcycles was down 30% versus last year and relatively flat to the previous quarter. Q3 inventory has been impacted by stronger demand in the US as well as supplier challenges, which impacted our ability to produce to planned levels. while inventory levels are lower than our original plan We have seen improvement in desirability as measured by stronger pricing dynamics across both new and used motorcycles and strong dealer profitability. international markets continue to be impacted more profoundly by global transport challenges, which resulted in higher cost and longer ship times to key ports. Looking at revenue, total motorcycle segment revenue was up 20% in Q3, and up 36% on a year-to-date basis. Focusing on current quarter activity 9 points of growth came from higher year-over-year volume from motorcycle units, including the new Pan America and Sportster S motorcycle, 8 points of growth for mix driven by a larger percentage of touring bikes in the quarter and reductions across Legacy, Sportster and Street, 2 points of growth from pricing and incentives, and during the quarter we increased the pricing surcharges in the US from an average of 2% taken in Q2 to 3.5% to partially offset raw material inflation and finally, one point of growth from foreign exchange. Q3 gross margin percent of 26.7 was down 3% points versus prior year. Our margin benefit from stronger volume, profitable profitable mix and pricing was more than offset by the negative cost headwinds across the supply chain and higher EU tariffs. Q3 operating margin finished at 8.4% and was up 3.6% points over the prior year. The positive margin benefit from volume, mix, pricing and reduced restructuring expense was able to offset the negative gross margin drivers already noted. Year-to-date operating margin is significantly ahead of last year given the COVID impact and it is also 4.6 points ahead of 2019. Despite absolute unit decline versus 2019 profit per unit has increased behind a stronger mix, pricing, lower incentives and an overall lower cost structure. These results validate the efforts that we took during the rewire in a set up a more profitable foundation for future growth. As mentioned previously, the global supply chain remains volatile, not only for our business, but across the global manufacturing sector. Our team has continued to do a great job navigating through the unprecedented challenges and demonstrating agility and managing production schedules to optimize output. We have continued to see increasing inflation within raw materials in all modes of freights and we are forecasting this to continue at least through the balance of the year. To help provide additional insight into the supply chain Slide 9 provides a detail on our cost of sales mix as well as the estimated inflation impact across the major components. As you can see, logistics cost began to increase early in the year and peaked in Q2 at 2.5 times our prior year cost before settling down a bit in Q3 at two times prior year. Q3 was better than Q2 as we move past the cost incurred with our 3PL conversion in North America. Materials and components cost inflation accelerated through the third quarter, where we experienced a 6% to 7% increase versus last year. This includes the cost of raw materials and higher cost of purchase components. And finally, manufacturing inflation which includes labor cost has been relatively consistent throughout the year at 3%. We're forecasting continued inflation pressure across all three buckets in the fourth quarter at similar levels to what we've seen in Q3. The Financial Services Segment operating income in Q3 was $107 million, up $15 million compared to last year, primarily driven by $23 million of interest expense favorability. HDFS's retail credit loss ratio remained historically low at 0.8%, a 56 basis point improvement over last year. Overall retail delinquency rates have been favorably impacted by improved economic conditions and the benefits provided to individuals under the federal stimulus packages earlier this year. Delinquency rates have continued to run much lower than pre-pandemic historical levels and what we do expect delinquency rates to normalize over time we believe losses will continue to remain lower in the short term. Looking at HDFS's base business, retail originations in Q3 were up 13% versus last year behind strong new and used motorcycle origination volume. As a result, ending retail finance receivables in Q3 were $6.7 billion, which is up 2.2% from last year. In addition, the retail allowance for credit losses at the end of Q3 was 5.1%, which is flat sequentially and down from 5.9% at the end of Q3 last year. A year ago the US economy was restrained by the pandemic and this is reflected in higher allowance rate. While today's allowance rate has improved versus the peaks of 2020, it is still above pre-pandemic levels, given the continued uncertainties surrounding the pace of economic recovery. Wrapping up with Harley-Davidson Inc financial results, we delivered year-to-ate, operating cash flow of $926 million, down $210 million from the year-over-year period. The key driver of unfavorable cash flow was an increase in wholesale finance receivable originations. Total cash and cash equivalents ended the quarter at $2.1 billion, which is $1.5 billion lower than Q3 last year as we worked down higher cash balances held as a result of the pandemic. As we look to the balance of the year, we are maintaining our guidance on the Motorcycles segment revenue growth of 30% to 35%. We are also maintaining our GAAP Motorcycles segment operating income margin guidance of 6% to 8%, which is inclusive of the full impact of the incremental EU tariff and the supply chain inflation laid out earlier. Our estimated EU tariff impact for 2021 has been adjusted to approximately $54 million in line with our unit forecast. We are lowering our capital expenditures guidance to $135 million to $150 million from the previously communicated range of $190 million to $220 million. The spending change is driven by tighter cash management across projects as well as changes in the cash flow phasing across key initiatives. And lastly, we are increasing the Financial Services segment operating income growth guidance to 95% to 105% which is an increase from the previously communicated range of 75% to 85%. The improved outlook takes into account the year-to-date loss favorability, the reserve releases early in the year and our outlook for Q4. Cash allocation priorities remain to first fund growth through the Hardwire initiatives then to pay dividends, and the company may also choose to execute discretionary share repurchases in 2021 and 2022. As we look ahead to the fourth quarter, On slide 14 there are a few known and expected factors to consider regarding our revenue and profitability. First, as we've discussed, we will be shifting our motorcycle production in the middle of the quarter to begin producing the 2022 model year product. While we will continue to run the plant this dynamic will limit the amount of wholesale shipments and revenue during the fourth quarter as bikes builds will go into company-owned inventory ahead of the model year launch. We expect the financial impact was very similar to the impact we saw last year in Q4. Other Q4 factors include higher expected expense and capital spending to support upcoming launches and marketing campaigns, and as we previously mentioned, we also expect to see supply chain inflation consistent with what we experienced in Q3. This will be slightly offset by lower Q4 restructuring spending versus last year. Restructuring charges in Q4 2021 will not be material and we no longer plan to spend the $20 million full-year estimate mentioned in previous quarters. As we pursue our Hardwire goals we continue to enhance our organization and processes, focusing on alignment and efficiency. Underpinned by drive to win as a team, which is the basis for our culture, we will look to ensure that Harley-Davidson as a company and as a brand is getting stronger than ever and is positioned for long-term success. By designing, engineering and bulding the most desirable motorcycles in the world reflected in quality innovation and craftsmanship we continue to further our legacy as the only American motorcycle brand with 118 years of uninterrupted heritage. As you know desirability provides the framework for our Hardwire strategic plan, our 5-year roadmap to both enhance and grow our position as the most desirable motorcycle brand in the world. Desirability not only impacts those new to our sport and our brand, but also a dedicated community of riders and non-riders alike. As we recognize the post pandemic conversations around the sport of motorcycling have changed, we also see a rider base that has a desire to escape, explore the outdoors and rediscover passion for riding, all of which fits squarely in the Harley-Davidson mission of delivering freedom for the soul in the pursuit of adventure. Desirability is also a motivating factor for getting people into the sport. We know there are plenty of people who are interested in riding, but more importantly interested in riding Harley-Davidson. The Harley-Davidson Riding Academy is an important way in which would build ridership and deepen our connection with our customers. Already we are focused on North America we have plans to take the HD Riding Academy to high potential markets across the world including China, where we see a high potential to leverage our brand and introduce new riders to the sport. We are also mindful of the need for riders to hone their riding skills at this part of their journey in pursuit of adventure. The latest offering from the Harley-Davidson Riding Academy [Indecipherable] the adventure touring rider course specifically designed the offering to complement our Pan American motorcycle. This course which we are planning to expand strategically over time is a perfect experience for new and existing adventure touring riders offering the skills and knowledge to get more out of the offroad experience by prioritizing rider safety. With improved market conditions we've seen growing consumer appetite for our brand and our iconic motorcycles, including the new products we launched this year. Since launching Hardwire we've experienced strong demand for our products and our brand and the demand that we have seeing is in our strongest and most profitable segments. Despite the continued impact of the pandemic and related supply chain challenges we can see the potential of our streamlined market strategy as we maintain a long-term focus on profitable growth in line with our Hardwire ambitions. As we continue to execute against our strategy of 70-20-10 SKUs two of our stronghold segments of Touring, Large Cruiser and Trike we remain guided by our commitment to two critical conditions, profitable segments, improving volume, margin and potential and segments aligned to our brand capabilities with a clear path to leadership. [Technical Issues] work hard to continue to solidify and grow our position as leaders, acknowledging that these segments are the most attractive of the global market in terms of our profit focus, another component of the Hardwire selective expansion. The focus on selective expansion also allows us to target segments that deliver balanced combination of volume, margin and growth potential and that are aligned with our brand capabilities and identity. Again, we run these segments supported by the right allocation of time and energy balanced with the right investments in product, brand and go-to market capabilities. In February, this year we launched our first adventure touring motorcycle to Pan America. Taking inspiration from our heritage we wanted to create a motorcycle that redefine the category. The Pan America squarely built in our mission to the deliver to adventure for our riders on and off the road. The performance of the Pan America has recently been demonstrated by a group of riders who reached the summit of the Key La Pass in the Himalayas, the highest unpaved motorable road in the world at some 18,600ft, a feat at first for Harley-Davidson. This quarter saw the Pan America [Indecipherable] to become the number one selling adventure model in the United States, an accolade that we are very proud of. We believe we will continue to grow the category in North America and the potential of the Pan America across the world is significant. For example, the North America the category accounts for 5% of the overall market and has grown 51% since 2017. When you look to Europe Adventure Touring currently represents 33% of the motorcycle market as a whole, growing 33% since 2018 and we believe it's continuing to grow. We see great opportunity to build on the success of Pan America in the first 6 months in markets and look to win in Europe and further as we actively target new Harley-Davidson riders in the Adventure Touring space. In July, we also launched the latest information of the iconic Sportster, the Sportster S at our Global Reveal event. Immediate response to the Sportster S has been exceptional with positive reviews including motorcycle.com praising the Revolution Max as their new favorite motorcycle engine, [Indecipherable] calling out the bike as a pillar [Indecipherable]. At launch we saw one of the largest engagement rates on our Harley-Davidson social channels. We've been pleased to see this excitement translating into orders for the Sportster S allocation being sold out through our integrated pre-order system. With our pre-order system, our dealers are able to effectively create an integrated reservation system. This direct line of communication has allowed us to work through manufacturing allocations and improves the overall dealer visibility on orders. In Q4 this year Harley-Davidson will officially launch the reservation process in the US and Canada to capture early demand on select 2022 models. This process will provide a consistent experience both in Harley-Davidson.com and at the dealership network and will allow dealers to engage with customers on contributing and customizing the new motorcycle, keep them notified of when to expect delivery, and inform future enhancements that strengthen and support the Harley-Davidson community online and on the road. With our ambition to put our customers at the forefront of everything we do aligned to our Hardwire goals. By facilitating early engagement between dealers and customers, we are investing in strengthening this important relationship to move and integrated tools that we creating. For dealers we believe this new reservation process will improve the sell-through rate and for Harley-Davidson, it will help ensure production better match customer demand. We are excited to see the Sportster S make its way into the hands of our customers around the world and look forward to this new generation of Sportster hitting the streets in full force. As evidenced by strong performance this quarter, HDFS's strategic asset with [Technical Issues] growth and profitability. With HDFS Harley-Davidson is uniquely positioned to be able to offer our customers value the financing options for their motorcycles. With over 65% of Harley-Davidson motorcycles financed by HDFS. Going forward, it is our goal to make HDFS the preferred choice for all Harley-Davidson riders, but in the new capabilities that rival the innovators of financial services. HDFS is integral to the Harley-Davidson success and with the plant expansion in Europe in the near-to-medium term, I'm excited for the future. With HD1 marketplace I think for HDFS it was our intention to change the face of the online market for pre-owned Harley-Davidson motorcycles blaming the best of digital and in dealer experiences aligned to our Hardwire priorities. Since launching in July H-D1 marketplace has become the go to online Harley-Davidson marketplace for dealer based listings, with the largest selection of dealer pre-owned Harley-Davidson motorcycles in the United States, including the largest selection of HD-certified motorcycles ensuring the ultimate choice in preowned. We've seen the power of the HD certified program driving desirability and enhancing the overall consumer experience while providing customers with an extra level of confidence in their purchases. As of this month, H-D1 marketplace features over 25,000 owned Harley-Davidson motorcycle listing,1200 Harley-Davidson certified motorcycles, over 500,000 units released since launch and over 550 participating Harley-Davidson dealers. Backed by the strength of our dealer network we want to continue to ensure that our riders have access to the largest selection of the best Harley-Davidson motorcycles. We believe the H-D1 will drive connectivity and engagement with our Harley-Davidson customers and dealers, acknowledging the important part that riders of pre-owned Harley-Davidsons play in our community. While we have achieved this initial goal in the United States, it is our ambition that marketplace will continue to evolve and that it will become the the ultimate column for pre-owned Harley-Davidson motorcycles. For over a decade, Harley-Davidsons has produced and published Annual Sustainability Report, ahead of many in our sector. Over that time we've made solid progress and that progress has reinforced the importance of inclusive stakeholder management as a key [Technical Issues] as we recognize that our future will be defined not only by our product and experiences, but how we deliver value for all our stakeholders. In publishing our 2020 inclusive stakeholder management report, we made a commitment to create a high performing, engaged and diverse workforce, create an inclusive and more sustainable dealer network and supply base, create a path to net zero environmental impact by 2050 at the latest, deliver positive impact in our communities, and aling the rewards of inclusive shareholders. By making inclusive stakeholder management a key part of our strategy, we are prioritizing long-term profitable growth and value for our stakeholders, our communities, our people and our planet. I will invite you all to read our report in full. The initial proof points of our 5-year strategy. I believe there is tremendous potential for our brand and business globally and we will not rest until we have the best in class in every marketing segment in which we compete. In closing, before we go to questions, I would also like to provide a brief update on EU tariff situation so far to the fact our company. At the negotiations between EF and EU continue, we are quite optimistic that a resolution will be found. We've been especially encouraged by the positive media reporting of the negotiations that we have seen over the past few weeks. We've actively engaged with both the US administration and EU as we expect throughout, we believe that Harley-Davidson bear has place in this political dispute that is not of our making.

sees fy financial services segment operating income growth of 95 to 105 percent,. full-year 2021 motorcycles segment guidance remains unchanged relative to prior guidance. compname says fy 2021 capital expenditures of $135 million to $150 million, decrease from previously communicated range of $190 million to $225 million. sees fy 2021 motorcycles segment revenue growth to be 30 to 35 percent. qtrly motorcycle shipments, in thousands, of 47.9, up 12%. sees fy 2021 financial services segment operating income growth of 95% to 105%, increase from prior range of 75% to 85%. sees fy capital expenditures of $135 million to $150 million. harley-davidson - qtrly motorcycles segment operating margin was driven by unit mix, pricing & reduced restructuring expense.

Click the earnings materials box in the center of the page. Jochen, let's get started. We delivered a solid performance in the second quarter and first half of this year. I'm pleased with the pace of improvements we've seen with today's numbers reflecting the execution of our Hardwire strategy as demonstrated by the positive financial results despite significant supply chain challenges. As a company, we continue to manage through the impacts of COVID-19 with the extraordinary efforts of our global team keeping employees' safety and community well-being a priority. The supply chain and logistics challenges linked to the pandemic faced by our industry and many others continue to impact the sector with our teams managing the effects of disruption to ensure that we are able to continue building and delivering iconic Harley-Davidson products to the world. We are seeing the initial proof points of our Hardwire execution and the positive impact of this strategy on our results, particularly in the strategically important North America region. While the pandemic and the related supply chain complications continue to impact our international business with certain regions at different stages of post-pandemic recovery, we can see the consumer excitement and optimism is returning, and we are encouraged by the signs of positivity in the market. I also want to note our continued fight against the proposed EU tariffs that we discussed at the last quarter. We continue to pursue all remedies to the additional EU tariffs. We believe these tariffs relate to a trade dispute not of our making and that it's unfair for our business to be targeted as part of this dispute. The initial outcomes of the trade talks at the G7 meeting are encouraging, and we remain hopeful for resolution. But first, I'll let Gina provide more details on the financial performance of the quarter and first half of the year. Second quarter results reflected continued strong demand and improved operating margins as we manage through a volatile supply chain environment. Total revenue of $1.5 billion was 77% ahead of last year as we lapped the impacts of the COVID shutdown. Given the 2020 dynamic to help contextualize this year's performance, we've included comparisons back to 2019 for this quarter. Revenue was down 6% versus 2019, primarily driven by the actions taken as part of the Rewire to prune unprofitable motorcycles as well as exit unprofitable markets. Total operating income of $280 million was significantly ahead of 2020 and 9% ahead of 2019 with growth across both of our reported segments. The Motorcycles and Related Products segment delivered $186 million of operating income, which is $307 million better than 2020 and 3% better than 2019. Even though the quarter had 12,000 fewer units than 2019, we benefited from improved motorcycle unit mix, significantly lower sales incentives as we focused on building desirability, and a reduced cost structure behind our Rewire actions. The Financial Services segment delivered $95 million of operating income, $90 million better than 2020 and 25% ahead of 2019. Second quarter GAAP earnings per share of $1.33 was $1.93 ahead of Q2 2020. When adjusting to exclude the impact of EU tariffs and restructuring charges, our adjusted earnings per share was $1.41, up $1.79 over prior year. Turning to year-to-date results. Total revenue of $3 billion was 37% ahead of 2020 and 2% behind year-to-date 2019. Again, the decline versus 2019 was primarily driven by the actions taken as part of Rewire to prune the portfolio and partially offset by increased volume driven by the shift in model year launch timing and improved unit mix. Total operating income of $627 million was $635 million ahead of 2020 and 48% ahead of 2019. This strong growth versus 2019 was driven by the Rewire actions noted as part of our Q2 performance, including favorable mix, lower sales incentives, and reduced operating expense. The shift in timing of the model year launch had a positive impact as well. GAAP year-to-date earnings per share was $3.01, up $3.16 from a year ago, while adjusted year-to-date earnings per share was $3.11, up $2.98 from last year. Global retail sales of new motorcycles were up 24% in the quarter behind strong demand for core Touring and large Cruiser products in the U.S. as well as a successful launch of our Pan America motorcycle into the Adventure Touring space. North America Q2 retail sales were up 43% versus 2020 and up about 5% over Q2 2019. Growth over 2019 was driven primarily by improved sales in our core segments, Touring and large Cruisers. In our international markets, COVID continued to have an impact, with many key countries in various states of lockdown and reopening throughout the quarter. We also experienced a continuation of the logistics challenges noted in Q1, which resulted in longer ship times to key ports. EMEA sales recovered after much larger declines in Q1 as sales of Touring and Cruisers rebounded. This improvement was offset by our decision to not sell Street and legacy Sportster bikes. The TAM declines were driven primarily by Rewire actions to close certain dealers, exit countries, and take pricing actions across select models. We believe these actions are working to restore profitability across the market in spite of the retail unit declines. In Asia Pacific, in particular, in India and Australia, Q2 retail sales were negatively impacted by the discontinuation of Street motorcycles. The region was also disproportionately impacted by global transportation headwinds. Worldwide retail inventory of new motorcycles at our dealers was down over last year and down versus the previous quarter. Inventory levels were lower than originally planned, driven by stronger-than-anticipated demand, coupled with longer shipping times in our international markets. While we originally have planned for Q2. Inventory levels to build coming out of Q1, we have seen that these lower levels have helped to foster increased desirability as evidenced by strong new and used motorcycle retail prices in the U.S. and continued improvement in dealer profitability in the quarter. International markets have seen a much larger impact in the global transportation challenges and it's likely some markets have seen retail sales impacted. Looking at revenue, total motorcycle segment revenue was up 99% in Q2 and up 45% on a year-to-date basis. Focusing on current quarter activity, 81 points of growth came from higher year-over-year volume and motorcycle units and parts and accessories as we lap last year's pandemic impact and work to meet the strong current year demand for our motorcycles, which includes the new Pan America; 13 points of growth from mix driven by a larger percentage of Touring bikes in the quarter along with favorable regional mix behind strong U.S. shipments; 5 points of growth from foreign exchange; and finally, one point of growth from pricing and incentives as we eliminated a majority of corporate discounts and incentives as part of the Hardwire strategy. Absolute Q2 gross margin of 30.6% was up 14.5 points versus prior year driven by stronger volumes and favorable unit mix. Higher logistics and raw material inflation and incremental EU tariffs were more than offset by volume leverage and other savings across our supply chain. Q2 operating margin finished at 14% and was up significantly versus prior year due to the drivers already noted. The gross margin gain was partially offset by higher operating expense as we lap the cost savings initiatives undertaken last year to preserve cash at the onset of the pandemic. The supply chain remains very fragile, not only for our business but for every global manufacturer. Our team has continued to do a great job managing through the unprecedented challenges, and to date, we've had no sustained downtime in our factories. We have continued to see inflation across all modes of freight as well as within raw materials, and we are forecasting this to continue throughout the fiscal year. To help offset, we implemented an average 2% pricing surcharge on select models in the U.S. effective July 1st for the remainder of model year '21. Financial Services segment, operating income in Q2 was $95 million, up $90 million compared to last year. Net interest income was favorable for the quarter driven by lower average outstanding debt and cost of funds as compared to the second quarter of last year. The total provision for credit losses decreased $75 million year-over-year, primarily due to the reserve rate changes of $63 million as we lapped last year's increase, which was largely driven by the economic impacts of the pandemic. In addition, actual credit losses were $12 million lower. The favorability in credit losses was due in part to benefits provided to individuals under the recent federal stimulus packages. Additionally, motorcycle values at auction remained elevated as the supply of used motorcycles was limited and demand remained strong. Looking at HDFS's base business, new retail originations in Q2 were up 29% versus last year behind higher new motorcycle sales and strong used motorcycle origination volume. At the end of Q2, HDFS had approximately $820 million in cash and cash equivalents on hand and approximately $1.3 billion in availability under its committed credit and conduit facilities for a total available liquidity of $2.1 billion. Cash and cash equivalents remained elevated but were down, approximately, $900 million from Q1 as we continued to pull cash back down to normalized levels. HDFS's retail 30-day plus delinquency rate was 2.21%, up 46 basis points compared to the second quarter of last year, which is the high point in issuance of pandemic-related extensions. The delinquency rate continues to be favorable when compared to recent history. The retail credit loss ratio remained historically low at 0.84%, a 103 basis point improvement over last year. While we do expect the delinquency rate to normalize over time, given the influx of stimulus funding and the improved economic conditions, we believe it's likely losses will continue to remain low through the remainder of the year. Wrapping up with Harley-Davidson Inc. financial results. We delivered year-to-date operating cash flow of $644 million, up $34 million over prior year. The key driver of improved cash flow was higher net income, partially offset by an increase in wholesale finance receivable originations. As we look to the balance of the year, we are maintaining our guidance on the Motorcycle segment revenue growth of 30% to 35%. For the Motorcycle segment operating income margin, during the second quarter the European Union made a decision to implement a six-month stay on raising the incremental tariffs from 31% to 56%, while negotiations occur between the U.S. and the EU. The step-up in tariffs was originally planned for June 1st and it will now be in effect in December if a resolution does not take place prior to then. Last quarter we provided two margin guidance ranges due to the uncertainty and how the tariff situation would evolve. We had stated our official guidance to be 7% to 9%, which assumed complete mitigation of the incremental tariffs. With the full impact of the incremental tariffs, our guidance was 5% to 7%. Given the developments throughout the quarter, our tariff exposure in 2021 is more certain but less than what we originally communicated. Based on what we know today, our estimated tariff impact for this year is, approximately, $80 million versus the initial estimate of $135 million. This improvement would result in our estimated GAAP operating income margin moving from 5% to 7% to our revised guidance of 6% to 8%. If we are successful in materially mitigating the incremental EU tariffs for the remainder of 2021 and get back to the planned tariff rate of 6%, our operating margin range would remain 7% to 9%. We are increasing the Financial Services segment operating income growth guidance to 75% to 85%, which is an increase from the previously communicated range of 50% to 60%. The improved outlook takes into account the loss favorability we had seen year-to-date as well as the outlook for the rest of the year. Lastly, capital expenditures remain flat to our original guidance of $190 million to $220 million. Slide 14 provides additional context on how our seasonality and strategy shift impact the back half of the year. This chart is largely unchanged from the previous quarter with the one exception that it now includes the impact of the EU tariffs. Assuming the $80 million tariff impact, we expect the back half operating margin percent to be negative mid-single digits. This back half guidance incorporates the impact in the shift in model year launch timing, logistics and raw material inflation rates in line with what we've seen throughout Q2, the approximately 2% pricing surcharge, and a step up in operating expense as we invest into the Hardwire and prepare for the launch of model year '22. As the Hardwire strategic plan is implemented, we continue to enhance organizational speed, alignment, and efficiency, which we believe has set us up to win. The changes implemented through Rewire in 2020 and the intentional Hardwire-related outcomes underscore the significant transformation of Harley-Davidson over the course of the past year. We continue to be guided by H-D1 as a high-performing winning organization based on our 10 defined leadership principles, built on the powerful vision and mission of Harley-Davidson. Across our company, we continue to see the desire and growing capabilities of our team to win. We know our future successes will only come from an effort by everybody on our team. I know many of you are listening in today. Talking about winning, I'm excited that this month our Harley-Davidson Screamin' Eagles team rider Kyle Wyman won the inaugural MotoAmerica King of the Baggers championship series aboard his Harley-Davidson Road Glide special. Everyone at Harley-Davidson is immensely proud of our racing team and for the tireless commitment to securing this championship. Kyle's incredible dedication and focus on winning was matched by the passion and energy of the team of Harley-Davidson engineers who developed these Baggers race bikes constantly working to improve the performance of these remarkable motorcycles. This team and their success truly exemplifies the spirit of H-D1. Not to mention, Kyle won this race despite having his arm in a cast following an injury and surgery only a couple of weeks before the final race, a true Harley-Davidson hero. This win is a strong statement for our ability to lead and innovate in our core Grand American Touring segment. As I've said since we started this journey, the Hardwire strategic plan and success is underpinned by desirability and our ambition to enhance and grow our position as the most desirable motorcycle brand in the world. Desirability is our DNA. It's embedded in our vision; it's at the heart of our mission; and it's part of our 118-year legacy. Harley-Davidson's desirability preserves the value of our customers' purchases, builds our brand beyond our riders, ensures loyalty, and drives engagement. By designing engineering and advancing the most desirable motorcycles in the world reflected in quality, innovation, and craftsmanship we are building our legacy. In building a lifestyle brand valued for the emotion reflected in every product and experience for riders and non-riders alike, desirability will continue to provide the framework for our Hardwire strategic plan and the framework for our success measures. I'd now like to address a few specific highlights delivered against some of the Hardwire strategic priorities. It's been a busy few months at Harley-Davidson. Aligned to our desirability and core product and category focus in Touring and Cruises, we continue to see an increase in consumer appetite and demand for our brand, our iconic motorcycles and our other products. The pandemic has provided a reminder of the power of getting outside, reconnecting with the Harley-Davidson community and the unique freedom and adventure that our brand represents. We continue to experience significant demand for our products and our brand with solid demand for our most profitable segments. This improved product mix is resulting in stronger year-over-year motorcycle segment margins and can be attributed directly to our desirability and Rewire efforts. This strong quarter underlines the increased strength of the market and of our brand, in particular in the U.S. and Canada. And while we've continued to see demand in Europe and Asia, these regions are also being affected by both, the enduring impacts of the pandemic and the wider global logistics challenges. In line with the Hardwire and our streamlined market strategy, we continue to maintain a long-term focus on profitability, and we are pleased with the initial outcomes as we continue to execute against the strategy. Aligned with our focus on our core segments, in April we launched our Icons Collection. Produced only once, these extraordinary adaptations of production motorcycles look to our storied past and bright future. We've seen a fantastic customer response to the first model, the Electra Glide Revival with these limited serialized models selling out immediately. The focus on selective expansion allows us to target segments that deliver a balanced combination of volume, margin, and potential, and that are aligned with our brand capabilities and identity. We are in these segments to win, supported by the right allocation of time and energy, balanced with the right investments in product, brand, and go-to-market capabilities. As highlighted at the last quarter, we've seen an exceptional response to our first adventure touring bike based on the Rev Max platform, the Pan America following its very successful launch earlier this year. Dealers and riders have been taking delivery of Pan America motorcycles as part of the sellout pre-order allocation since May, and the response from riders on and off the road has been overwhelmingly positive, reinforcing our strategic launch within the adventure touring market. We believe the opportunity within the Adventure Touring segment is significant, not just in Europe, the largest adventure touring market in the world, but in North America where the market remains a great opportunity, and we are now using our power to grow it. We believe that with Pan America, we are well placed to take market share in Europe and to become the number one model in the segment in North America. With Pan America, we've seen outstanding sell-through with the initial run selling out globally. Looking ahead, we see great potential to build on the success of Pan America and to target new riders in the Adventure Touring space. By targeting new audiences, we will continue to look to further unlock a whole new dimension of customer and opportunity for the company as we continue to grow our global market share in the Adventure Touring segment. The success of Pan America reflects our focus and is an integral part of our Hardwire strategy of selective expansion. We saw the potential built on our off-road heritage and to compete and win in what we believe is the high growth and attractive margin segment of Adventure Touring. Aligned to Hardwire, we will continue to strategically pick and compete in categories where we see high potential and where we have a clear path to winning. On July 13th we launched the Sportster S at our Global Reveal event from Evolution to Revolution. Sportster is not only one of the longest continuously produced motorcycles in history, but also one of the most iconic. The Sportster S is the latest all-new motorcycle built on the Revolution Max platform setting a new performance standard for the Sportster line. The launch of this next-generation Sportster defined by power, performance technology, and style reinforces our commitment to introduce motorcycles that align with our strategy to increase desirability and to drive the vision and legacy of Harley-Davidson. The Sportster S is equipped with a host of technologies designed to enhance the riding experience, including three pre-programmed ride modes with which electronically control the performance characteristics of the motorcycle and the level of technology intervention. The global reveal event generated over 127 million PR impressions with overwhelmingly positive sentiment, with many publications heralding the return of the iconic Sportster. We also saw one of the highest social engagement rates on our H-D social channels. It is clear that riders around the world are excited for Sportster S. As we approach a week since launch, we have seen exceptionally strong customer engagement for Sportster S with the highest leads generated for a new model in recent years. We're excited about the potential of this bike and look forward to seeing it hit the streets this fall. As we continue to increase our customer focus, we're also driving an updated product segmentation that better reflects our customers' needs and preferences and our unrivaled combination of product, heritage, and innovation. Sportster S will be the first motorcycle in the all-new sport category. This category showcases how Harley-Davidson's innovating and redefining core motorcycle segments with unmatched Harley-Davidson technology, performance, and style. The touring category has been renamed Grand American Touring, denoting our legacy and stronghold position in a key market segment. Adventure Touring will represent our entry into critical global segment where we're competing to win. Each of these segments, along with other existing segments, such as Cruisers, will build their own personalities and products, further enhancing the customer appeal and relevance. As part of the Hardwire strategy, we also made a commitment that Harley-Davidson will lead in electric. While we are clear that combustion remains the core for our Harley-Davidson business for the foreseeable future, we believe there is great potential for long-term growth in electric vehicles. Earlier this year, we announced our intentions to launch a dedicated EV division to allow the strategic focus to deliver desirable growth in this high-growth segment. We recognize the pioneering spirit and brand value in LiveWire for our community and took the decision to evolve the original LiveWire motorcycle into a dedicated EV brand. On July 8th, we presented the evolution of LiveWire as a stand-alone brand and the introduction of LiveWire ONE, the electric motorcycle built for the urban experience with the power and range to take you beyond. With the MSRP at launch in the US for $21,999, pre any applicable tax credit, we believe LiveWire ONE will redefine the segment through innovative engineering and digital capabilities and bring a whole new generation of riders and non-riders into our company's fold. Innovating to win is core to our focus, and as the first OEM with a hybrid omni-channel model, LiveWire combines the best in digital and physical retail allowing the customer to interact with the brand on their own terms. By launching online at LiveWire.com and at 12 LiveWire brand dealers in California, New York, and Texas, we placed geographic focus on EV customers and relevant charging infrastructure. As this develops, we plan to increase the physical LiveWire footprint across the U.S. and the whole of North America. We also plan to open our first LiveWire Experience Gallery designed to facilitate a fully immersive brand experience in fall-winter of this year in Malibu, California. Our focus on the digital experience is aligned to the EV customer. LiveWire.com, the new dedicated LiveWire app, and a new interactive bike build present a heightened ownership experience for the customer, including a digital path to purchase, a first for the LiveWire brand. We've had a tremendous launch response to the new brand, and building on the U.S. launch, we intend to take LiveWire to international markets in '22. By investing in electric technology, it remains our intent to be at the forefront of innovation and development as we look to lead the EV segment. We've always been about more than a machine, and we believe our complementary businesses are huge opportunities for long-term global growth of the Harley-Davidson brand. Parts and accessories and general merchandise form part of the Harley-Davidson lifestyle, and together with HDFS, play a valuable role in our overall vision and mission and inspiring existing and new customers to discover the adventure that is uniquely Harley-Davidson. We believe there is great potential to grow our customer base, both with the riders and non-riders and to add to customer lifetime value shaping our future success as a global lifestyle brand. Customization is a key part of our heritage, and this quarter in parts and accessories, we have seen a strong performance despite substantial supply chain challenges. We continue to develop and evolve our product offering as we work toward enhancing our leadership position as a definitive destination for authentic parts and accessories for our riders of both new and used Harley-Davidson. For many non-riders, general merchandise is the entry point to the brand. We will be talking more about our H-D lifestyle in the fall, but we're excited by the long-term potential to leverage our brand value, to invest in our on and offline retail channels, and grow our general merchandise business globally. For both, parts and accessories and general merchandise, aligned to our hardwire ambition, we continue to evaluate opportunities to redesign our supply chain and go to market capabilities to drive further efficiency and growth. We also expect brand collaborations to be integral to our general merchandise strategy and allow us to leverage the unique and powerful brand that is Harley-Davidson. Last week, we launched our first product collaboration of the year with Jason Momoa and the Harley-Davidson Museum as a limited production American-made collection of 16 vintage inspired men's apparel and accessory styled sold exclusively on Harley-Davidson.com and in our museum store. Jason's genuine passion for the brand reinforces how collaborations such as this one line with our hardware strategy to expand our complementary businesses with engaging products, services, and experiences. The response from our community to this collection has been terrific, and we expect full sell-through of the collection in the coming days. Last but not least, building on the successful launch of H-D Certified last quarter, the first certified pre-owned Harley-Davidson motorcycle program ever, we're excited to launch H-D1 marketplace today on Harley-Davidson.com, the ultimate online destination for used Harley-Davidson motorcycles in North America. By blending the best of a digital and in dealership experience, H-D1 marketplace is designed to facilitate the confident and seamless purchase journey for used Harley-Davidson motorcycles for the first time in our history, H-D1 marketplace will allow all Harley-Davidson pre-owned motorcycles, including H-D Certified bikes of every participating Harley-Davidson dealer to be online in one place making it easier for customers to find that unique pre-owned motorcycle that they had been searching for. All, I repeat, all qualified dealers have signed up to participate. With financing provided by HDFS, our goal is for H-D1 Marketplace to be the number one destination for anyone looking to buy used Harley-Davidson. Additionally, customers will have the opportunity to sell their Harley-Davidsons directly through the H-D dealer network through the Sell My Bike feature. We believe the H-D1 Marketplace will drive connectivity and engagement with our Harley-Davidson customers and dealers, acknowledging the important part that riders of pre-owned Harley-Davidsons play in our community. The launch of H-D1 marketplace is also the first step in transforming H-D.com into the home of all things Harley-Davidson, from enhanced omni-channel purchase experiences to unique community engagement to exclusive content and learning on a global scale as we look to innovate online to lead the industry. Before we head to questions, I'd like to summarize some of the highlights since we launched our new Hardwire strategy. Following the new 21 motorcycles introduction, we successfully launched Pan America, our first Adventure Touring bike. We introduced H-D Certified, our first ever pre-owned program. We launched our Icons Collection with Electra Glide Revival selling out instantly. We created a new EV division and stood up LiveWire as an independent EV brand with LiveWire ONE as its first product. We launched Sportster S, the evolution of the iconic Sportster as part of a reclassification of our overall market segmentation. And today, we introduced H-D1 Marketplace, the ultimate digital destination for pre-owned Harley-Davidson motorcycles in North America. We delivered strong Q2 and first half financial performance despite the unprecedented pandemic-related supply and logistics challenges in the sector. We expect these challenges to continue and recognize the potential associated risks to our business for the remainder of the year. Harley-Davidson is a brand with global recognition and appeal. With 118 years of uninterrupted heritage, craftsmanship, and unrivaled iconic design, we are truly unique. We believe there is tremendous potential for our brand and business globally, and we will not rest until we are the best-in-class in every market we compete in.

harley-davidson inc - delivered q2 gaap diluted earnings per share of $1.33. delivered q2 gaap diluted earnings per share of $1.33. qtrly revenue $1,532 million, up 77%. qtrly adjusted earnings per share $1.41. for fy 2021, continues to expect a. motorcycles segment revenue growth to be 30 to 35 percent. for fy 2021, continues to expect capital expenditures of $190 million to $225 million. for fy 2021, expects financial services segment operating income growth of 75 to 85 percent.

On the call today, we have Dun & Bradstreet's CEO, Anthony Jabbour; and CFO, Bryan Hipsher. Our actual results may differ materially from our projections due to a number of risks and uncertainties. Today's remarks will also include references to non-GAAP financial measures. We are off to a strong start as we continue with our transformation and the execution of our near-term and long-term objectives. We finished the first quarter with solid financial results and made significant progress with the integration of Bisnode. Overall, we are pleased with the start of the year as adjusted revenues for the quarter increased 29% and adjusted EBITDA increased 37%. Organic constant-currency revenues increased 1.3% as strength in international was partially offset by the final quarter of COVID-19 headwinds and Data.com in North America. Total company revenue retention was 96.3% and we now have approximately 48% of our business under multiyear contracts. The enhancements we have made to data quality and our underlying technology are resulting in positive feedback and deeper customer relationships, allowing us to have more productive conversations about cross-sell and price opportunities of both existing and new products. As we reach the two-year anniversary of our cost savings program, we finished the quarter with $246 million of annualized run-rate cost savings. Despite COVID-19 delaying some of our planned cost savings initiatives, we exceeded our original target by 23%, which ultimately contributed to the expansion of adjusted EBITDA margins by over 800 basis points from when we took the company private. While this marks the completion of our formal cost savings program, we will continue to drive ongoing improvement in terms of operational efficiency through optimizing our geographic footprint, modernizing back-office technologies, and further integrating our solutions to reduce cost and complexity. It's important to note that the cost savings figure we just discussed is a net number, meaning that while we took a significant amount of cost out of the business, we also continue to invest a significant amount in the business, primarily by enhancing and expanding our data and technology assets. While much of the heavy lifting was completed in 2019 and 2020, our transformation is ongoing as we look to leverage the foundational enhancements we've made during that time to more rapidly and effectively deploy new and innovative solutions. Our key priorities for 2021 are to continue to grow our share of wallet with our strategic customers; approach and monetize the SMB space in new and innovative ways; launch new products domestically; localize new and existing products globally; and lastly, to integrate the Bisnode acquisition. We're pleased with the ongoing success we're having with our strategic clients as they renew near 100%, while continuing to expand their relationships with us. In North America, we signed an expanded multiyear renewal with the largest online retailer to support their third-party risk management strategy. As the client continues to expand and enhance their controls around their global supply chain, we are pleased to continue to support their growing needs. We also signed a multiyear renewal with one of the largest multinational retail corporations, expanding their use of data across their business. The client leverages our third-party risk and compliance solutions to mitigate risk throughout their extremely large and complex supply chain, and we are glad to extend and broaden this relationship with such a key customer. We renewed business with another strategic client, a global property and casualty insurance firm who needed access to timely, high-quality data on their current client base to ensure proper underwriting methodologies, ongoing monitoring, as well as access to data for new customer acquisition. The result was a multiyear deal for both core risk and marketing solutions. In our international business, there's been significant focus on rearchitecting our go-to-market efforts to better capture the large global opportunity. In the first quarter, we rolled out a Global 500 account program simultaneously with the close of Bisnode, prioritizing the most strategic accounts. I'm pleased with the early traction we are seeing from these efforts demonstrated by several wins in the first quarter. Our U.K. team is working with Generali, a Global 500 global insurance and asset management provider with a leading position in Europe and a growing presence in Asia and Latin America, to help them identify ways to improve consistency of screening across their global, corporate, and commercial businesses, as well as reduce risk. The result is a multiyear deal for the integration of D&B Data by Direct+ and our third-party risk solution into their CRM and underwriting system to provide a flexible end-to-end solution that was fully compliant with the global requirements. Another Global 500 company, Linde Region Europe North, member of Linde PLC, is a leading global industrial gas and engineering company that wanted to improve their credit checks and risk monitoring of B2B customers in a more data-driven way. We are pleased they chose D&B Finance and Risk solutions, bringing us both new business and a multiyear deal. We are pleased with the momentum we have with our growing roster of clients and expanding existing client relationships worldwide, particularly with our strategic clients. One segment that we continue to see immense opportunity in is the small and midsized business market. I'm excited to update you on the progress we have been making to enhance our SMB strategy through a mix of digital marketing and delivery efforts, as well as through innovative partnerships. After a difficult 2020, the SMB market is beginning to reemerge. As existing small businesses begin to recover from the effects of COVID-19, we are also seeing a significant rise in the formation of new businesses, especially gig economy start-ups that would benefit significantly from our self-service finance, risk, and sales and marketing solutions, along with software and services offered from our partners. This was the driving purpose behind the first-quarter launch of our improved digital platform. This includes personalized small business resources and offerings for each dnb.com user, driven by the utilization of our visitor intelligence solution, as well as the D&B marketplace, which makes it easier for small businesses to identify and purchase D&B solutions and those from our partners. The marketplace has two primary sections: a product section called D&B Product Marketplace and a dataset section called the D&B Data Marketplace. The D&B Product Marketplace includes a curated set of our solutions along with those of our partners that creates a combined set that allows a small business to operate in a much more sophisticated manner, much earlier in their stage of maturation. But we will continue to add new D&B solutions and partners in the coming quarters. We are mindful of keeping the number of partners limited as this is not a broad-based marketplace, but one that has preferred solutions that we believe will drive the best outcomes for our SMB customers. A few examples of solutions that are available in the marketplace today are funds manager integrated with Plaid, CreditSignal, Credit Monitor, Email IQ, Analytics Studio, Hoovers Essentials, and D&B Connect. We also have partner offerings such as KPMG Spark, SAP Ariba with D&B Direct+ integration, and Amazon business access with special rates. Within the D&B Data Marketplace, users can buy a broad range of data sets from alternative data providers to help them identify opportunities and mitigate risks. These data sets are already curated and matched to a DUNS number to make it easy to append to a client's existing D&B data. Today, we have 22 partner datasets, including healthcare reference data from IQVIA and commercial fleet data from IHS Markit, and we're adding more partners monthly. User feedback has been overwhelmingly positive around the power of the DUNS number and how it's the key to unlock the power of the data and it's something that meaningfully differentiates us competitively. The D&B customer portal, also launched in the first quarter, allows existing clients to log in and access their already purchased products through a single sign-on, unified digital experience. While inside the portal, we offer personalized offerings of our and our partner's solutions, which has already resulted in a 60% increase in cross-sells during the first quarter. And while we continue to grow our solution set within D&B, we're also expanding our reach outside of our core ecosystem. A great example of this is what we're doing with Bank of America. Bank of America became the first major financial institution to offer millions of small businesses the ability to get ongoing insights into their D&B business credit score directly through their Business Advantage 360 banking platform. This is exciting for D&B because it is driving net new paid subscriptions and increased engagement with our small business digital platform. We also partnered with Plaid to bring their network to our solutions. By integrating Plaid capabilities to our digital platform, small businesses can securely permission access to their bank account information for authentication purposes. This gives them instant access to update their D&B business credit profile. In addition, small businesses can share their bank transaction details, enabling us to explore new ways to establish business credit outside of traditional payment data, which many smaller businesses may lack. We're really excited as this is the first of its kind in the business credit space. In the first quarter, subscriptions to our freemium products were up 43% from the prior year. The investments into our small business and digital go-to-market strategy, products, and groundbreaking partnerships are clear evidence of our determination to make this segment a priority and deliver more innovative solutions to our small business clients. The third critical priority is launching new products and use cases. Yesterday, we announced D&B Rev. Up, a solution that simplifies and automates marketing and sales workflows by providing data, targeting, activation, and measurement in a single platform that easily integrates to a customer's existing martech or sales tech stacks through the use of open architecture integrations. Clients can purchase the full breadth of D&B Rev. Up capabilities or even start with a specific channel and build up from there. We have also collaborated with Bambora and Folloze to further extend the insights and capabilities of the D&B Rev. Up offerings by adding best-in-class intent and personalized omnichannel experiences to help increase demand generation. In addition, we've entered into an accelerate partnership with a leading data-driven martech company in support of this platform. This is a game-changer in how we approach account-based marketing through the integration of our solution sets along with complementary partnerships. We look forward to providing more updates on Rev. Up as it progresses, and it's just a great example of how we're thinking more holistically about serving clients through an integrated platform. This is the vision behind Rev. Up, as well as the late 2020 launches of D&B Finance Analytics, an integrated and powerful credit to cash platform; and D&B Risk Analytics, an integrated third-party risk, and compliance platform, both within our Finance and Risk business unit. In our international segment, we continue to focus on rolling out localized solutions across our growing territories. After 20 new product launches in 2020, we continued the momentum in the first quarter, introducing the Finance Analytics platform in the U.K., Data Vision in Greater China and India, and data blocks in three additional worldwide network partner markets. We're also launching multiple new products in D&B Europe, which is a newly created region that describes our recently acquired Bisnode markets. Leveraging our solutions in these markets is a key pillar of our playbook, which we're starting to execute. Regarding the Bisnode transformation, we're leveraging the same playbook that led to the successful transformation of D&B these past two years, and we're off to a great start coming together as one D&B. In Q1, we completed the first phase of synergy actions immediately following close, principally, senior leadership rationalization. Overall, we have actioned approximately $12 million of annualized run-rate savings and continue to see significant efficiencies through the combination of our two companies. We also established a new European operating model and expect this to be fully implemented during Q2, delivering a more streamlined and integrated business with corresponding operational synergies consistent with our business model. We developed a robust product plan for D&B Europe to accelerate sales of our modern global product solutions and support the sundown of legacy Bisnode products. Several product launches are slated for the second half, including Finance Analytics, Risk Analytics, D&B Hoovers, and data blocks, to name a few. The team is also accelerating rollouts of several solutions Bisnode had recently launched prior to the acquisition. Overall, we are really excited about the progress we are making and look to capitalize on the strong momentum we have built in our first quarter together. Overall, I'm pleased with our start to 2021, and I'm excited about the progress we continue to make in terms of increasing share of wallet with strategic clients, better serving SMBs in innovative ways, developing new products domestically, and localizing them internationally and integrating Bisnode. These, along with many other projects the teams are working on are laying the foundation for accelerated, sustainable growth throughout the remainder of 2021 and into 2022. Today, I will discuss our first-quarter 2021 results and our outlook for the remainder of the year. Turning to Slide 1. On a GAAP basis, first-quarter revenues were $505 million, an increase of 28% or 27% on a constant-currency basis compared to the prior-year quarter. This includes the net impact of a lower purchase accounting deferred revenue adjustment of $17 million. Net loss for the first quarter on a GAAP basis was $25 million or a diluted loss per share of $0.06, compared to a net income of $42 million for the prior-year quarter. This was primarily driven by a change in fair value of the make-whole derivative liability in connection with the Series A preferred stock in the prior-year quarter and a higher tax benefit recognized in the prior-year period due to the Cares Act. This was partially offset by lower interest expense, preferred dividends in the prior-year period, improvement in operating income, largely due to lower net deferred revenue purchase accounting adjustments and the net impact of the Bisnode acquisition, partially offset by higher costs related to ongoing regulatory matters. Turning to Slide 2. I'll now discuss our adjusted results for the first quarter. First-quarter adjusted revenues for the total company were $509 million, an increase of 28.6% or 27.7% on a constant-currency basis. This year-over-year increase includes 22 percentage points from the Bisnode acquisition and 4.4 percentage points from the net impact of lower deferred revenue purchase accounting adjustments. Revenues on an organic constant-currency basis were up 1.3%, driven by growth in our International segment, partially offset by the final quarter of headwinds in North America from COVID-19 and the Data.com wind down. Excluding these headwinds, the underlying business grew approximately 3%. First-quarter adjusted EBITDA for the total company was $186 million an increase of $50 million or 37%. This increase includes the net impact of lower deferred revenue purchase accounting adjustment, a 15-percentage-point impact on year-over-year growth. The remainder of the improvement is due to the net impact of the Bisnode acquisition, as well as increased revenues in international and lower net personnel expenses overall. First-quarter adjusted EBITDA margin was 36.5%. Excluding the impact of the deferred revenue adjustment and the net impact of Bisnode, EBITDA margin improved 220 basis points. First-quarter adjusted net income was $98 million or adjusted diluted earnings per share of $0.23, an increase from first quarter's 2020 adjusted net income of $50 million. Turning now to Slide 3. I'll now discuss the results for our two segments, north America and International. In North America, revenues for the first quarter were $339 million, an approximate 1% decrease from prior year. Excluding known headwinds, North America grew approximately 2%. In Finance and Risk, we continue to see strength in our government solutions and risk aversion as both private and public sector enterprises continue to need solutions to deal with a rapidly evolving global supplier landscape. The growth in these solutions was offset by approximately $3 million of lower revenues attributable to COVID-19 and $1 million of revenue elimination from the Bisnode transaction. For sales and marketing, we're excited to see double-digit growth in our digital solutions as customers continue to leverage more and more of our modern intent-enabled solutions. And while data sales also had another solid quarter, the overall growth in sales and marketing was partially offset by $5 million from the Data.com wind down. North America first-quarter adjusted EBITDA was $151 million, an increase of $7 million or 5% primarily due to lower operating costs resulting from ongoing cost management efforts. Adjusted EBITDA margin for North America was 44.5%, up 220 basis points versus prior year. Turning now to Slide 4. In our international segment, first-quarter revenues increased 137% to $179 or 131% on a constant-currency basis, primarily driven by the net impact from the acquisition of Bisnode and strong growth in our sales and marketing solutions. Excluding the impact from Bisnode, International revenues increased approximately 9%. Finance and Risk revenues were $107 million, an increase of 83% or an increase of 78% on a constant-currency basis primarily due to the Bisnode acquisition. Excluding the net impact of Bisnode, revenue grew 7% with growth across all markets, including higher worldwide network cross-border sales and higher revenues in Greater China from our risk and compliance solutions and newly introduced API offerings. Sales and marketing revenues were $63 million, an increase of 382% or an increase of 359% on a constant-currency basis, primarily attributable to the Bisnode acquisition. Excluding the net impact of Bisnode, revenue grew 18% due to new solution sales in our U.K. market and increased revenues from our worldwide network product loyalty. First-quarter international adjusted EBITDA of $52 million increased $28 million or 114% versus first-quarter 2020 primarily due to the net impact of Bisnode acquisition, as well as revenue growth across our international businesses, partially offset by higher net personnel costs. Adjusted EBITDA margin was 30.3% or 37.8%, excluding Bisnode, which is an increase of 430 basis points versus prior year. Turning now to Slide 5. I'll walk through our capital structure. At the end of March 31, 2021, we had cash and cash equivalents of $173 million, which when combined with full capacity of our $850 million revolving line of credit through 2025, represents total liquidity of approximately $1 billion. As of March 31, 2021, total debt principal was $3,674 million, and our leverage ratio was 4.8% on a gross basis and 4.6% on a net basis. The credit facility senior secured net leverage ratio was 3.6%. And finally, on March 30, we executed $1 billion floating to fixed swaps at an all-in rate of 46.7 bps. These are three-year slots and bring our fixed floating debt ratio to approximately 50-50. Turning now to Slide 6. I'll now walk through our outlook for full-year 2021. Adjusted revenues are expected to remain in the range of $2,145 million to $2,175 million, an increase of approximately 23.5% to 25% compared to full-year 2020 adjusted revenues of $1,739 million. Revenues on an organic constant-currency basis, excluding the net impact of the lower deferred revenues, are expected to increase between 3% to 4.5%. Adjusted EBITDA is expected to be in the range of $840 million to $855 million, an increase of 18% to 20%. And adjusted earnings per share is expected to be in the range of $1.02 to $1.06. Additional modeling details underlying our outlook are as follows: We expect interest expense to be $200 million to $210 million; depreciation and amortization expense of approximately $90 million, excluding incremental depreciation and amortization expense resulting from purchase accounting; an adjusted effective tax rate of approximately 24%; weighted average shares outstanding of approximately $430 million; and finally, capex, we anticipate, of around $160 million, including $7 million due to a small asset acquisition we completed in the first quarter. Overall, we continue to see the year shaping up as previously discussed, with revenue growth accelerating throughout the year as we transition from the middle of the range in Q2 to the high end of the range in the fourth quarter. And finally, as previously discussed, we continue to expect adjusted EBITDA for the second and third quarter to be below the low end of the range due to timing of certain expenses in the fourth quarter to be above the high end of the range of our guide. Overall, we are pleased with the start of 2021 and look forward to continuing the strong momentum in our building both North America and international. Operator, will you please open up the line for Q&A?

compname reports q1 loss per share $0.06. q1 loss per share $0.06. reiterating its previously provided full year 2021 outlook. q1 adjusted earnings per share $0.23.

As you have seen throughout the week, no company is immune including the L3Harris to global supply chain pressures, a risk we highlighted at the last earnings call. In recent months, shortages of electronic components began adversely impacting our company at a time when our product is strong. Our updated full-year guidance now accounts for these impacts. We've revised our organic revenue growth expectations to approximately 2% primarily due to delays for these components weighing on the CS segment. Absent such delays, we would have comfortably been within our prior 3% to 5% range. Ultimately, this is a timing shift, with no anticipated effect on our industry-best market position for radios. And with our broad and diversified portfolio, along with continued execution elsewhere, especially on the margin front, we've increased our range on earnings per share to $12.85 to $13 per share and still expect to deliver free cash flow per share of around $14, up double-digit on both accounts. Shifting over to the third quarter, following organic revenue growth of 6% in the second quarter, we saw a decline of 1% due to timing associated with supply chain delays at CS and in ISR aircraft award with IMS. While I'm disappointed by the soft top-line results, I'll note that the order momentum remained strong with a book-to-bill of 1.07 and we delivered record-high margins at 19.6%. EPS was $3.21, up 13% versus the prior year with solid free cash flow of $673 million, that contributed to shareholder returns of $1.5 billion in the quarter. Our execution against the company's strategic priorities have been a key factor and value creation for all stakeholders, in spite of the pandemic, and we made progress in the quarter by advancing topline opportunities, improving operational performance, wrapping up portfolio shaping and returning capital to our owners. Starting with the top line, the revenue decline in the quarter fell short of our internal targets, largely due to two-timing factors. At CS, the global electronic component shortage has led to a supply chain disruption for our product and electronics-focused businesses notably tactical communications. In the third quarter, the impact was nearly $100 million or approximately 2 points of revenue. And in the fourth quarter, our expectation is for the backlog of unfilled orders to grow and all told, we foresee a roughly $250 million to $300 million revenue impact for the year, implying another step down in the fourth quarter. This is a primary driver of our revenue guidance adjustment at CS. Having said that, we do not anticipate any impact to our bookings nor our win rate and expect the segment to end the year with a book-to-bill well over 1 time. In addition, despite the supply chain challenges we faced in Q3 and ongoing headwinds, we were able to meet delivery requirements on all of our key US DoD modernization programs and are on track to continue to do so in the fourth quarter including deliveries on the recently awarded HMS full-rate production contract with the US Army. Second, in IMS we had a follow-on ISR aircraft order with a NATO customer that booked late in the quarter, causing revenues to slip to Q4 representing roughly a 2.5 point shift between quarters. While the supply chain headwinds limit upside opportunities to our revenues for this year, I've been pleased with the team's traction against our strategy of delivering end-to-end solutions to global militaries as a trusted disruptor across all domains, and it's reflected in our order activity and operational milestones. Within the space domain, on the classified side, we continued to advance our responsive and exquisite satellite business with several earlier stage awards, both with the Intel community and DoD which have follow-on opportunities of nearly $2 billion. And on the unclassified side following the Imager award in Q2, NOAA is progressing on the recapitalization of its GOES weather satellite system and awarded us a study contract for a sounder payload as part of a $3 billion opportunity over the next decade. On the operational front, we completed the preliminary design review in the development of the missile tracking satellite prototype for the Space Development Agency, progressing toward the launch over the coming years and reflecting yet another significant accomplishment for L3Harris. Moving to the air domain, key awards within the quarter spanned both legacy and next-generation aircraft. On the B-52, we received a 10-year $1 billion IDIQ that has the potential to expand our scope on the program to include EW hardware upgrades, such as radar warning receivers, building on our existing software sustainment work. In addition, on the international front, we were awarded an initial $100 million contract to provide capabilities on 12 multi-mission aircraft to the UAE, with the potential to double these amounts, further demonstrating the breadth of our RSR capabilities that range from turboprops to business jets to larger aircraft. And in the land domain, we were awarded several contracts with the US Army to advance its modernization priorities. Under the Army HMS program, we received over $200 million in awards for the Manpack and Leader radios taking a majority share on both products. These were the first full-rate production award out of a multi-billion dollar IDIQ and represents less than 15% of the acquisition objective pointing to considerable runway ahead. We also won a majority share on the second program of record for the ENVG-B program with $100 million order setting us up to ramp production on the army's next-generation field-ready Goggle. So we were three for three on strategically significant programs in the land domain this quarter. Within the maritime domain, the team continues to progress on the US Navy constellation class frigate with follow-on awards for the next ship sets of electrical propulsion and navigation systems as part of a several hundred million dollar opportunity for L3Harris. We're also awaiting decisions on two major prime awards over the coming months. One, to provide electro-optical infrared capabilities on a broad range of the US Navy surface combatants. And another within international allies highlighting our superior undersea sensor capabilities, both would expand our market reach in this domain. Operationally, the team delivered power conversion's fleet hardware as part of the Virginia-class Block 5 upgrade and completed qualifications for a portion of the power distribution system on the Columbia class, advancing the US Navy's top priority. We also had a key award within our Mission Networks business. We leveraged the Air Traffic Management capabilities we provide to the FAA winning a new international franchise with the Australian government to modernize the nation's air traffic control and surveillance networks. This program is over $300 million opportunity and strengthens L3Harris's long-standing relationship with Australia. Finally, we received a strategic award on the revenue synergy front as we signed a $130 million contract with the Mid-East customer to provide modernized software-defined radios through a localized joint venture. And this customer channel synergy award opens the door to a long-term opportunity for up to 50,000 radios. When combined with other orders in the quarter, revenue synergy awards to date totaled roughly $900 million on the win rate that remains at 70%. With a pipeline of over $7 billion, these synergies will be a notable contributor to our top line growth. These wins supported another strong quarter for a book-to-bill of 1.07 and 1.06 times year-to-date, increasing our organic backlog to $21 billion or up 9% from last year and 4% year-to-date. This is a validation of our internal investments in leading R&D spend, as well as confirmation of our alignment with government priorities. Shifting over to the outlook for budgets, we're pleased with the progress made on the FY '22 defense spending bills. They continue to prioritize near-peer threats notwithstanding another CR. The plus-ups from the HASK, SAFC and SAC-D along with steadiness from HAQ-T [Phonetic] combined with recent global events provide a degree of comfort that we should expect stability in military spending over the coming years. And in my personal discussions with senior leadership of the administration and Congress, I have consistently heard of a growing need for innovative resilience and affordable solutions, which we're focused on providing. All in all, as we consider the trajectory of our top line, we remain confident in our ability to deliver sustainable growth through our domestic positioning, revenue synergies and international expansion that stem from a pipeline of opportunities, well in excess of $100 billion. Pivoting to margin performance, our team delivered a stellar quarter at 19.6%, the best post merger results and an indication of the company's potential over the next couple of years as we further build a culture of operational excellence. Our performance was the result of delivering another $15 million of incremental cost synergies and we're well on track to hit our $350 million targets. We continue to manage our overhead costs and drive our E3 program to more than offsetting supply chain headwinds, due primarily to our year-to-date results, we now see margins for 2021, exceeding our prior expectation of 18.5% by 25 basis points. Beyond 2021, our E3 program will remain a key contributor to steady expansion in our operating margins, net of inflationary pressures. This program is one of our key discriminators, and let me highlight just a couple of examples. First is factory optimization that represents half of this opportunity set through streamlining and simplifying our manufacturing processes, be it from a redesign of our factories layout for integrating automation tools, we can shorten cycle times, increase labor efficiency and continue to drive our cost. A great example is a pilot program in our Amityville facility in New York. We're in augmented reality assembly aid that electronically displays and validates our processes, helps reduce cycle time by 25% and higher first-pass yields by several points. And we're in the early stages of the strategy with the three-year rollout ahead of us. The other half of our opportunity comes from the engineering excellence and supply chain on the former through the deployment of our digital ecosystem, front-loading our program activities, and enhancing training for our roughly 20,000 engineers and 1500 program managers, we're able to increase commonality and better manage cost and schedule across the company. These have been key with some of our stand out wins within the space domain enabling a foray into missile defense as well as with driving favorability in our EACs. On supply chain, the global disruption we've highlighted have been largely contained to about 15% of the company and are temporary in nature. The focus we've had be it on reducing the number of suppliers or leveraging our roughly $7.5 billion spend as an enterprise remain in place with further opportunities in the years ahead. Moving over to the portfolio, we put a bow on the post-merger shaping activities in the quarter and closed on the Electron Devices divestiture for $185 million while announcing the sale of two small businesses within AS for a combined $130 million, bringing total gross proceeds since the merger to $2.8 billion. And as we consider our portfolio moving forward, we'll be opportunistic with our balance sheet as a buyer and a seller focusing on long-term growth and value creation. Having said that, we don't see any gaps in the portfolio, nor is there any urgency at this time. Consistent with our prior commitments, proceeds from the divestitures will be part of our capital return program. Our expectation now is for buybacks to be roughly $3.6 billion this year versus our prior $3.4 billion. When combined with dividends, capital returns will be about $4.5 billion in 2021. So overall, I'm pleased with the L3Harris team's ability to execute against our strategic priorities and deliver bottom line results despite unanticipated setbacks. With that, I'll hand it over to Jay. First, and starting on Slide 4, I'll provide more detail on the quarter before I get into segment results and our updated outlook. In the quarter organic revenue was down 1% lower than our internal expectations by about 4.5 points from the supply chain delays and ISR aircraft award timing. IMS and CS were down 3% and 5% respectively, and absent these impacts would have been up closer to the mid-single-digit range for both. The SAS segment was up 3% and led by strong growth in our responsive Space business, while AS was up 1% including the benefit from recovery in commercial aerospace. Margins expanded 170 basis points to 19.6% with the most notable drivers being from E3 performance and cost management, which more than offset volume-related supply chain headwinds. We exceeded our internal expectations by more than 100 basis points from favorable mix related to award timing and strong E3 performance. The team continues to drive margin upside by delivering on E3 improvements that lead to outperformance in scheduled milestones costs and retirement of risk. These drivers along with our share repurchase activity drove earnings per share up 13% or $0.37 to $3.21 as shown on Slide 5. Of this growth synergies and operations contributed $0.39, lower share count contributed another $0.20 and pension and tax accounted for the remaining $0.08 then more than offset a $0.14 headwind from divested earnings and a $0.16 headwind from supply chain delays. Free cash flow was $673 million and we ended the quarter steady with working capital days at 56. This supported robust shareholder returns of $1.5 billion, comprised of $1.3 billion in share repurchases and $202 million in dividends. Integrated Mission Systems revenue was down 3% driven by follow on ISR aircraft award timing from the NATO customer that would have contributed 8 points of growth for which revenue has now been booked in October. Revenue was also impacted by the expected timing of WESCAM turret deliveries from a completed facility move. By contrast, our maritime business grew in the mid-single digits from a ramp on key platforms including the constellation class frigate and classified programs. Operating income was up 4% and margins expanded 110 basis points to 16.6% from operational excellence, integration benefits and pension. Funded book-to-bill was 1.04 in the quarter and 1.05 year-to-date with strength across the segment. In Space and Airborne Systems, revenue increased 3% driven by double-digit growth in space, primarily from our ramping missile defense and other responsive programs. The space growth was more than offset -- from the production transition -- I'm sorry the Space program more than offset headwinds from the production transition of the F-35 Tech Refresh 3 program within Mission Avionics, as well as program timing and electronic warfare, and Intel & Cyber. We expect an overall ramp in the quarter -- in the fourth quarter for the segment. Operating income was up 5% and margins expanded 30 basis points to 18.8% as E3 performance, increased pension income and integration benefits more than offset higher R&D investments and mix impacts from growth programs such as in space. And funded book to bill was about 1 for the quarter and 1.05 year-to-date, driven by responsive and other space awards. Next, Communication Systems organic revenue was down 5% due primarily to product delivery delays within tactical communications that stemmed from the global electronic component shortages, creating an approximately 8.0 headwind year-over-year and versus expectations, as well as lower volume for our legacy unmanned platforms in broadband due to the transition from permissive to contested operating environments. In addition, the integrated vision and global communication solutions businesses were impacted by delivery timing and contract roll-offs on international programs, respectively. Conversely, our public safety business was up double digits versus the prior year and sequentially, and strong radio sales following the State of Florida Law Enforcement System award in the prior quarter. Operating income decreased to 1% and margins expanded 130 basis points to 26.3%. From operational excellence, including program performance within broadband, favorable mix on public safety radios and integration benefits that outweighed supply chain impacts and higher R&D investments. And funded book-to-bill was above 1.1 for both the quarter and year-to-date from strong product bookings within tactical communications and in Integrated Vision for modernization alongside key state-level awards within public safety. Finally, in Aviation Systems, organic revenue increased 1%, by our commercial aerospace business that was up over 40% from recovering training and air transport OEM product sales. This growth was weighed down by flattish sales in mission networks, as well as lower fusing and ordinance systems volume due to contract roll-offs along with the late awards within defense aviation. Operating income decreased 13% primarily due to divestitures while margins expanded 140 basis points to 14.4% and expense management, the commercial aerospace recovery and integration benefits more than offset divestiture related headwinds. And funded book-to-bill was 1.1 for the quarter and about 0.9 year-to-date. Now shifting to our updated 2021 outlook. Organic revenue is now anticipated to be up about 2% with the different versus our prior guide largely attributable to supply chain delays. At a segment level, we maintained our sales guides but foresee us, where we now anticipate revenue to be down 2.5% to 4.5% versus our prior range of up 2.5% to 4.5%. This is largely due to the global supply chain disruptions mainly within tactical communications, that will now be down about 10% versus our prior view of up in the low to mid-single digits. For the remaining segments, we expect IMS to be in the upper half of the range based on traction with international ISR aircraft while SAS will likely be around the midpoint and driven by growth within Space and Intel & Cyber. And at AS, we expect the segment to be at the lower end of the range due to award timing slipping to the fourth quarter within our classified business. By end market, our US government and commercial businesses are now expected to be flattish to up in the low single digits, while our international businesses are expected to be up mid-single digits plus. This implies fourth quarter sales growth will be in the 1% to 2% range for the company, which includes CS down in the mid-teens, and our other segments up in the mid to high single-digits on average. Turning to margins, we've raised our outlook to 18.75% from 18.5%, due to performance to date E3 progress and favorable mix from award timing. Margins will step back in the fourth quarter due to increased supply chain delays along with mixed effects on new earlier-stage programs, but still strong progress for the full year. From a segment perspective, we've improved the outlook for each with CS above the prior midpoint of its range and IMS, SAS, and AS above the top end of the prior ranges. On earnings per share we are raising the lower end of the prior guide by $0.05 to $12.85 to $13 per share, reflecting 11% growth from 2020 at the midpoint. Delivering on our double-digit aspiration in spite of dilution from divestitures and supply chain headwinds, which otherwise would have put us at or above the top end. As shown on Slide 11, the midpoint is now at $12.93 and $0.55 from improvement in operations and other items, including the release of contingencies, offset additional divested earnings about $0.03 and $0.49 from supply chain delays. As mentioned previously, we continue to expect about $0.15 of net dilution from divestitures. Moving to free cash flow, our guide of 2.8% to 2.9% remains intact. However, due to prior divestiture headwinds and now supply chain delays of over $150 million in the aggregate, we'll likely be toward the lower end. On working capital, we expect to end the year in the low '50s in terms of days, reflecting a three to five-day sequential improvement in the fourth quarter, and capex is now expected to be around $350 million, about $15 million lower versus the prior expectation primarily from completed divestitures. Lastly, our guidance now reflects approximately $3.6 billion in share repurchases, an increase of $200 million from our prior guide to account for net proceeds from recently closed divestitures. Net of these puts and takes, we're in a position to deliver free cash flow per share in the double digits in 2021. Okay, let me make a few comments on 2022. The L3Harris business fundamentals are sound and we continue to succeed in our strategy of moving up the value chain to capture more prime positions on core and adjacent applications. Examples include our leadership positions in space missile tracking, ISR aircraft Missionization, DoD and international soldier modernization, undersea sensing, and cyber resiliency. These and others will lead to solid growth for the foreseeable future. As we look specifically at 2022, we are expecting the supply chain impacts to persist into the first half of next year with recovery starting in the back half. As visibility improves over the coming months, we will provide a more comprehensive update on these expectations in January. For now, we are expecting some of the shortfall to be recovered by the end of next year and we'll monitor other watch items including the timing of awards, vaccine mandates, and tax rules. Having said that, we remain focused on delivering sustainable revenue growth, steady to rising margins, and leading cash flow conversion on a declining share count. So to sum it all up, we've managed the pandemic-related headwinds for seven straight quarters and delivered strong bottom-line performance, and remain on track to meet our commitments for the year and beyond in a dynamic environment.

l3harris technologies q3 revenue down 5% to $4.2 bln. q3 revenue fell 5 percent to $4.2 billion. qtrly orders of $4.5 billion. q3 non-gaap earnings per share $3.21. sees 2021 non-gaap earnings per share $12.85 - $13.00.

We are executing the integration plan and have exceeded many of our targets despite challenges such as the pandemic. The high-performance culture and leadership team we've created are set to carry this momentum forward, which is elected in today's results. We reported a strong second quarter. Organic revenue was up over 6%, with growth across our key end markets and all four business segments. Funded book-to-bill was 1.0 for the quarter and 1.05 year-to-date. Margins increased to 18.6%, resulting in earnings per share of $3.26, up 15%. We had solid free cash flow of $685 million, which contributed to shareholder returns above $1 billion, including repurchases of $850 million in the quarter and over $1.5 billion year-to-date. Our first half performance, coupled with our expectations for continued execution in the back half, more than offset the divestiture headwinds and supports another raise to our earnings per share guidance, which Jay will cover. Execution against our strategic priorities, that are on Slide three, continue to deliver results and create value for the company's stakeholders as we make progress and build momentum with top line opportunities, operational performance, announcing and closing divestitures and delivering on our capital return commitments. In terms of the top line, we had our best quarter since the start of the pandemic, with progress against our key end market growth objectives, while seeing data points that validate our focused R&D strategy. Our government businesses were up 6% in the second quarter, driven by double-digit growth internationally. Our international revenue benefited from increased aircraft ISR and radio sales to regions in the Asia Pacific and Europe. And on the domestic front, the growth was broad-based with our responsive space and maritime programs as well as land modernization for night vision and SATCOM products leading the way. Our strategy to deliver end-to-end mission solutions utilizing the capabilities and scale across the broader organization continues to gain momentum. Our space business strategy is working as we grew 10% in the quarter, capturing classified awards totaling over $300 million for ground and responsive satellite solutions. These awards are also part of the revenue synergy capture efforts and bring awards to date to over $700 million on a win rate of 70% from our growing $7 billion-plus pipeline. Turning to our Commercial Aerospace and Public Safety businesses, they were up over 5% in aggregate and were led by our Commercial Aerospace business up double digits off a low base and from strength in product sales. On the Public Safety side, there was a modest decline, but with sequential improvement and increased bid and proposal activity from a more stable backdrop. Our solid top line was accompanied by backlog growth as we continue to win strategic programs that includes several prime roles. Backlog increased 7% organically year-over-year to over $20 billion, with notable award activity across all domains. On the space side, our revenue synergy awards came from combining electronics and optics capabilities across the company to deliver solutions for an increasingly contested environment. These are incremental to the pathfinder programs we previously won, which have billions of dollars of potential over time. Customers are viewing L3Harris as a trusted disruptor. They see us as a company that understands the complexity of the mission and can offer fresh and creative solutions. With a three year space pipeline of nearly $20 billion, there's more opportunity for continued growth. Within the air domain, we strengthened our existing F-35 franchise with initial production awards for the Aircraft Memory System and the Panoramic Cockpit Display Electronic Unit under the TR3 program. This brings total orders year-to-date on the platform to about $500 million. We're progressing on all three TR3 systems through integration and qualification this year, and in support of the planned lot 15 cut in of the production hardware. We are also secured a roughly $100 million IDIQ with SOCOM for infrared EO sensors on rotary platforms furthering our modernization opportunities across L3Harris. Moving over to the land side. We signed several key contracts that touch both international and domestic markets. First, we received a $3.3 billion five year IDIQ for foreign military sales to a range of partner countries from our new broader portfolio of products, including radios and SATCOM terminals. This replaces our prior five year $1.7 billion contract, which supports and validates the continued modernization across geographies and expands our product scope. Second, in the U.K., we received a logistic support contract covering legacy Bowman and future Morpheus radios, positioning us well for a $1 billion modernization opportunity in that country. And third, we won a competitive 10-year IDIQ to supply the U.S. Air Force with our T7 multi-mission robots, further expanding our customer reach. After launching the T7 with the U.K. a few years back, we're now pursuing other international opportunities in the robotic area. Within the C domain, our team was successful in extending its leading prime position in undersea sensor systems and warfare training for a range of the U.S. Navy platforms and support of distributed maritime operations. This undersea warfare training range program, called U.S. litter, has an award value of nearly $400 million and further builds our credibility to pursue additional domestic international opportunities. In the cyber domain, while limited to what we can say due to the classified nature, our $1 billion Intel & Cyber business received over 250 million in orders for complex mission solutions and specialized communications for both domestic and international markets, leading to another quarter of book-to-bill above 1.0 for this business. We also had a key award in an adjacent market with our Public Safety business with a 15-year $450 million contract from the state of Florida to upgrade and continue operating its law enforcement system for first responders. Moving over to the budgets. While the process is ongoing and we await a fight up, we were pleased with the initial request for the FY 2022 budget as a support stability in the DoD, NASA and FAA spending and is aligned with our capabilities and investment priorities. For the DoD, it's focused on continuing to revolve around and address near-peer threats through high-value technology, which Congress is revealing. And when we look at the portfolio and the relevant line items, our programs are well supported. This builds on the trend we've seen in international markets where there's a broad stability in military spending, including key countries such as the U.K., Australia, Canada, Japan, among others. We're also seeing growing demand for the type of defensive systems we offer for our alignment with the U.S. export policies to ensure partner security. Our most significant opportunities remain for ISR aircraft missionization and other upgrades, land force modernization and enhanced maritime systems. All in all, as we consider the trajectory of our top line over the coming years, we remain confident in our ability to outgrow the budget and deliver reasonable growth through our domestic positioning, revenue synergies and international expansion that drive a large pipeline of opportunities underpinned by our leading R&D investments. Shifting to operational performance. We continue to surpass milestones for priority programs. For example, at SAS, the team completed a successful preliminary design review for an advanced EW solution called Viper Shield that can deliver self-protection capability for Block 70 F-16s. At IMS, we advanced our unmanned maritime strategy with several customer engagements and demonstrations, highlighting differentiators in predictive autonomy on USVs as well as a submerged Torpedo tube launch and recovery for our small UUVs. We also successfully completed a prototype demonstration for SOCOM multi-role aircraft in a variety of challenging conditions, while utilizing the breadth of L3Harris offerings. And financially, we had another quarter of strong margins as the team continues to offset mix impacts from early stage programs with three key initiatives, including program excellence and factory productivity, allowing us to flow through cost synergies totaling an incremental $27 million in the quarter. In addition, the first half synergy run rate is now $350 million, driven by progress on facilities, consolidation and IT efficiencies. We see this as the minimum level we'll deliver on this year, up from the $320 million to $350 million range we discussed in April and still a year ahead of schedule. Any upside from here will be incorporated in our E3 program, with our integration blending into operational excellence initiatives. On margins for the year, this leaves us at about 18.5% for the top end of the prior guide and a level we'll look to build on in the years ahead. Next, on capital allocation. Today, we announced the sale of two small businesses within our Aviation Systems segment for $185 million in cash, and these should close before year-end. When combined with the roughly $2.5 billion divested under our portfolio shaping initiative, total gross proceeds are set to be $2.7 billion. We have now divested nearly 10% of our revenues. And with the completion of a few others in process, our portfolio shaping program announced in 2019 is largely complete. Proceeds from divestitures, including those from the recently completed military training and combat propulsion businesses, will be part of our capital returns program consistent with our shareholder-friendly capital allocation approach. Our expectation now is for buybacks to be roughly $3.4 billion this year, up versus our prior guide of $2.3 billion. When combined with dividends, capital returns will be about $4.2 billion in 2021. So to wrap up, I'm pleased with the execution against our strategic priorities, confident in our ability to consistently deliver double-digit earnings per share and double-digit free cash flow per share growth, and I'm excited about the next phase for L3Harris. With that, I'll hand it over to Jay. First, I'll provide more color on the quarter. I'll cover also the segment results and finish with our updated outlook. Starting with the second quarter. Organic revenue was up 6.2%, with a return to growth in all four segments. IMS led the way up 12%, followed by a return to growth at AS of 4.7%. Margins expanded 40 basis points to 18.6%, primarily from E3 productivity, program performance and integration benefits, partially offset by higher R&D. The sequential decline in margin was also due to timing of R&D as expected. These drivers, along with our share repurchases, led to earnings per share being up 15% or $0.43 to $3.26, as shown on Slide five. Of this growth, volume, synergies and operations contributed $0.18, a lower share count contributed another $0.18 and pension, tax and interest accounted for the remaining $0.07. Free cash flow was $685 million, while working capital days stood at 57 due to receivables timing. And shareholder returns of over $1 billion were comprised of $850 million in share repurchases and $207 million in dividends. Of note, our last 12 months of share repurchases have totaled over $3 billion at an average price of $195 per share, well below our current share price. Now turning to the quarterly segment results on Slide six. Integrated Mission Systems revenue was up 12%, led by double-digit growth in ISR aircraft missionization on a recently awarded NATO program. In addition to mid-single-digit growth in Maritime from a ramp on key platforms, including the Virginia-class submarine and constellation class frigate. This more than offset the low single-digit decline in our Electro Optical business that was due to the timing of WESCAM turret deliveries, which we expect to increase in the back half. Operating income was up 2%, while margins contracted 150 basis points to 15.3%, reflecting expected mix impacts, including a ramp on growth platforms and programs. Pointed book-to-bill was 0.81 in the quarter and 1.06 for the first half with strength across the segment. In Space and Airborne Systems, organic revenue increased 3.2% from our missile defense and other responsive programs, driving 10% growth in space, along with mid-single-digit classified growth in Intel & Cyber. This strength outweighed the impact from modernization program transitions in our airborne businesses, the F-35 Tech Refresh three program within Mission Avionics and F-16 Viper Shield advanced electronic warfare system. Operating income was up 7.7%, and margins expanded 90 basis points to 19.7% as operational excellence, including program performance, increased pension income and integration benefits more than offset higher R&D investments. And funded book-to-bill was over one for both the quarter and first half, driven by space. Next, Communication Systems' organic revenue was up 3.2% with mid-single-digit growth in Tactical Communications that included international up double digits, driven primarily by modernization demand from Asia Pacific and Europe and an anticipated decline in DoD from last year's second quarter 40%-plus growth. USD -- U.S. DoD modernization continued to benefit the integrated vision and global communication businesses, leading to high single-digit and double-digit growth, respectively. Conversely, broadband was down low single digits on lower volume for legacy unmanned platforms due to the transition from permissive to contested operating environments, as expected. And public safety was down 7% from residual pandemic-related impacts. Operating income was up 8.3% and margins expanded 170 basis points to 25.5% from higher volume, operational excellence and integration benefits. And funded book-to-bill in the quarter and first half were about 1.3% and 1.1%, respectively. Finally, in Aviation Systems, organic revenue increased 4.7%, driven primarily by our commercial aerospace business that was up 20% from recovering training and air transport OEM product sales. We also saw mid-single-digit growth in Defense Aviation from a ramp on fusing inornate programs and emission networks from higher FAA volume. Operating income was up 17% and margins expanded 200 basis points to 14.5% from operational excellence, integration benefits and higher volume. Funded book-to-bill was about 0.9 for the quarter and first half. Shifting over to our 2021 outlook. Overall, organic revenue growth is unchanged at 3% to 5%, with our top line trending as expected at 4% for the first half and supported by a 1.05 funded book-to-bill year-to-date. Our U.S. government businesses are expected to accelerate in the back half, driven by space, tactical communications, integrated vision solutions and classified growth within Intel & Cyber and Defense Aviation. On the international side, we continue to expect mid-single-digit plus growth for the year as a strong first half, led by aircraft ISR and international tactical radios, moderates. And lastly, the encouraging results in our commercial businesses in the second quarter build confidence in a flattish outlook for the year, with double-digit growth in the back half. Consistent with our overall guidance at the consolidated level, we've also maintained our segment sales guide as well. And as we think about the second half of the year, our key watch items will be the timing of awards, the continued performance of our supply chain and the pace of the commercial recovery. We have raised our outlook to approximately 18.5%, a 25 basis point increase to the top end of the previous range, due to our strong performance to date and confidence in our ability to execute on cost synergies, E3 and program deliverables. We do continue to expect margins to move lower in the back half due to higher R&D investment and stronger growth on new earlier-stage programs. From a segment perspective, we're holding to our prior margin guidance ranges across the board, but we're expecting IMS and SAS to be at the upper end of their ranges, given their strong performance to date and are holding AS and CS steady at their midpoints given divestiture dilution at AS and expected mix pressure at CS. On EPS, we're raising our full year guide to a range of $12.80 to $13, with the midpoint now toward the upper end of our previous range and reflecting 11% growth from 2020, delivering on our double-digit commitment in spite of dilution from divestitures. As shown on Slide 11, the increase of $0.05 from the prior midpoint is driven by $0.13 improvement in operations and synergies and $0.19 from a lower share count at 203 million shares, along with a lower tax rate of about 16%, all of which more than offset divested earnings of $0.31. On a stand-alone basis, we expect about $0.15 of net dilution from divestitures. Moving to free cash flow. Our guide of $2.8 billion to $2.9 billion is intact, despite divestiture-related headwinds are roughly $80 million. It continues to reflect the three day working capital improvement from year-end to around 49 and 50 days. That's now adjusted for divestitures. capex is expected to be about $365 million, $10 million lower versus the prior guide due to completed divestitures. Our guidance also now reflects approximately $3.4 billion in share repurchases, an increase of $1.1 billion from our prior guide to account for net proceeds from recently closed divestitures. All told, we expect to return about $4.2 billion to shareholders this year. So let me sum it all up. We delivered strong performance in the quarter and first half, solid revenue and book-to-bill growth, further expansion of industry-leading margins and consistent cash generation and deployment, all enabling another guide raise as we continue to execute on our strategic priorities and drive double-digit annual growth in earnings and free cash flow per share.

q2 revenue $4.7 billion versus refinitiv ibes estimate of $4.63 billion. qtrly non-gaap earnings per share of $3.26. sees 2021 non-gaap earnings per share $12.80 - $13.00. sees 2021 revenue $18.1 billion - $18.5 billion.

These statements are not guarantees of future performance or events and are based on management's current expectations. Actual performance and events may differ materially. Factors that could cause results to differ include the factors described in our third quarter 2021 report on Form 10-Q and our 2020 annual report on Form 10-K and other recent filings made with the SEC. Additionally, some remarks may refer to non-GAAP financial measures. Shane Fitzsimons, who became AIG's CFO on January 1st, will be available for Q&A, along with David McElroy and Kevin Hogan. Today, I will cover four topics: First, an overview of General Insurance fourth quarter and full year performance, where we continue to drive meaningful underwriting profitability improvement. I will also briefly touch on the 1/1 reinsurance renewal season. Second, I will review results from our life and retirement business, which continues to be a meaningful contributor to our overall results. Third, I will provide an update on our progress toward an IPO of life and retirement and operational separation of the business from AIG. And fourth, I will review our current plans regarding capital management. Before turning to those topics, I want to take a few minutes to highlight some noteworthy achievements in 2021, which were significant for AIG. 2021 was a pivotal year and one in which our team executed on several strategic priorities. We produced strong liquidity throughout 2021, which provided flexibility and allowed us to return $3.7 billion to shareholders through share repurchases and dividends. We also repurchased $4 billion of debt, which reduced our debt leverage by 380 basis points to 24.6%. Notwithstanding these actions, we ended 2021 with $10.7 billion in parent liquidity. As I said on prior calls, the path we've taken to improve AIG and our portfolio in general insurance, in particular, with a significant undertaking. In general insurance, given the portfolio we started within 2018, we needed to make fundamental changes. We quickly overhauled our underwriting standards and developed a culture of underwriting excellence, including significantly reducing gross limits. To give you a sense for the magnitude of what we needed to do, we reduced gross limits by over $1 trillion in our property, specialty, and casualty businesses. In addition, we took a conservative approach to volatility by reducing net limits and exposure through strategic implementation of reinsurance. As a result of this strategy, since 2018 and through 2021, we've been able to grow net premiums written in commercial by over $3 billion, while ceding an additional $2 billion of reinsurance premium to further reduce volatility and protect the balance sheet. At the same time, we improved the combined ratio, excluding CATs by 1,000 basis points. Simply put, today, we have a different portfolio with a markedly different risk profile, which we believe is significantly stronger by all measures. Turning to life retirement, we again had solid and consistent results throughout 2021, benefiting from product diversity within the business. Return on adjusted segment common equity was 14.2% for the full year. Throughout 2021, we also made tremendous progress on the separation of life retirement from AIG. We're executing on multiple workstreams to operationally separate the business, and we closed on the sale of 9.9% equity stake and transferred $50 billion of assets under management to Blackstone. Additionally, we achieved significant milestones at AIG 200 and remain on track to deliver $1 billion in run-rate savings by the end of 2022 against the spend of $1.3 billion. I could not be prouder of what the team has accomplished. While we still have plenty of work ahead of us, it would be remiss of me not to recognize these accomplishments and the significant momentum we have heading into 2022. Now let me turn to our business results in general insurance for the fourth quarter of 2021. Mark is going to go into more detail, but we had a terrific quarter to close out the year. In the fourth quarter, general insurance net premiums written increased 8% overall on an FX-adjusted basis, with another strong quarter of 13% growth in commercial, which was tempered somewhat by a slight contraction in Personal, with a 1% reduction in net premiums written. The growth in commercial lines was balanced with 11% in North America and 16% in international. Personal lines net premium growth contracted by 1% in the quarter due to a 5% reduction in international, driven by our repositioning of the Personal Property portfolio in Japan, offset by 17% growth in North America, which largely reflects less year-over-year ceded reinsurance. Looking at fourth quarter profitability, I'm very pleased with the accident year combined ratio ex CATs, which improved 310 basis points year over year to 89.8%, the first sub-90% quarterly result since the financial crisis. This improvement was driven by commercial, which achieved an accident year combined ratio ex CATs of 87.9%, a 380 basis point improvement year over year and the third consecutive quarter below 90%. Personal report 130 basis points of improvement in the accident year combined ratio ex CATs to 94.3%. Pivoting to the full year 2021, we made enormous progress in improving the quality of the underwriting portfolio and driving growth throughout the year. Net premiums written grew 11% on an FX-adjusted basis, driven by global commercial growth of 16%. Growth in commercial was particularly strong in both North America at 18% and international at 13%. We had very strong retention in our in-force portfolio with North America improving by 300 basis points and international improving by 500 basis points for the full year. Gross new business in Global Commercial grew 27% year over year to over $4 billion, with 24% growth in international and 30% in North America. Overall, global commercial saw increases of 13%, and strong momentum continued in many lines. In global personal, we had some growth challenges in this segment, but accident and health performed very well, and overall, we had a solid year with net premiums written up 1% on an FX-adjusted basis. These results also reflect less reinsurance cessions in our high net worth business and some growth in warranty. Turning to underwriting profitability for full year 2021. general insurance's accident year combined ratio ex CATs was 91%, an improvement of 310 basis points year over year. The full year saw 140 basis point improvement in the accident year loss ratio ex CATs and 170 basis point improvement in the expense ratio, split evenly between the GOE ratio and the acquisition ratio. These positive results were driven by our improved portfolio mix, net earned premium growth, achieving rate in excess of loss cost trends, continued expense discipline, and the benefits we are receiving from AIG 200. Global commercial achieved an impressive accident year combined ratio ex CATs of 89.1%, an improvement of 410 basis points year over year. The accident year combined ratio ex CAT for North America commercial and international commercial were 91% and 86.7%, which reflected improvements of 450 basis points and 340 basis points, respectively. In global personal, the accident year combined ratio ex CATs was 94.9%, an improvement of 120 basis points year over year, driven by improvement in the expense ratio. These notable combined ratio improvements across general insurance reflected improved higher-quality global portfolio driven by the strategic underwriting actions and strong execution, which have enabled us to shift our focus toward accelerating profitable growth in areas of the market where we see attractive opportunities. We are very pleased with these materially improved results, which provide tangible evidence of our successful underwriting strategy and the significant progress we have made. Turning to January 1 renewals with respect to our ceded reinsurance, we were very pleased with the outcome of our reinsurance placements. While the markets presented significant challenges across the industry, with retrocessional limited along with other capacity issues, our reinsurance partners recognize the strength of our improved underwriting portfolio and reduced aggregation exposure, which translated to many improvements in our reinsurance structures, along with better terms and conditions. It's important to keep in mind that we placed over 35 treaties at 1/1, with over 65 discrete layers and over $12 billion of limit placed and we cede over $3 billion of premium in the market. As you can imagine, we're not an index of market pricing because of the significant improvement in the portfolio, along with the size and complexity of our placements. We continue to maintain very strong relationships with our reinsurance partners. And the support we receive in the marketplace is evident in the quality of the overall reinsurance program. We continue to make meaningful improvements to our core placements in every major treaty on January 1, and as a result, continue to reduce volatility in our portfolio. For our Property CAT treaty, we improved the per occurrence structure and improved our aggregate structure for our global commercial businesses. For the North America per occurrence property CAT treaty, we lowered our attachment point to $250 million for all perils, which is a reduction from our core 2021 program that had staggered attachment points, depending on apparel, that range from $200 million to $500 million. And we maintained our per occurrence attachment points in international, which are $200 million for Japan and $100 million for the rest of the world. For our global shared limit aggregate cover, we were able to reduce our attachment point in every region across the world, most notably, $100 million reductions in the attachment point in North America. Our global shared limit, each and every deductible remain the same or reduced in every global region, most notably $25 million reductions in North America-named storms. Our attachment point return periods are the same or lower in every region across the world when compared to our 2021 core reinsurance program, and our exhaustion period returns are higher in every instance across the world on an OEP and AEP basis. And we achieved these significant improvements while modestly reducing the total aggregate reinsurance CAT spend. On our core casualty treaty, we reduced our net limits on our excess to loss treaty in both North America and international. On our proportional core North America placement, we maintained the same session amount while improving our ceding commission by 400 basis points, which represents an 800 basis point improvement over the last 24 months, reflecting our significantly improved underwriting and recognition from the reinsurance market. Lastly, we renewed our cyber structure at 1/1, with additional quota share seed increasing from 60% to 70% and the aggregate placement attaching at 85% versus a 90% loss ratio. Given the tight terms and conditions and discipline in our portfolio, along with significant rate increase we achieved during the year, we were able to secure more quota share authorization, which is a great example of the reinsurance market's flight to quality. As we discussed on last earnings call, we've spent considerable time through AIG research and our chief underwriting office analyzing the impact of climate change and the increased frequency and severity of natural catastrophes. A few observations about 2021. It was the sixth warmest year on record since NOAH began tracking global temperatures in 1880. Hurricane Ida estimated at $36 billion of insured loss was the third largest hurricane on record. In North America, $17 billion of winter weather losses was the largest on record for this peril. And $13 billion of insured loss for European flooding was the costliest disaster on record for the continent. While we've been working over the past few years to reposition our portfolio to limit exposure and dampen volatility, changing weather patterns and increased density of risk in peak zones have caused stress on aggregation and anchored the ability of property underwriters to make appropriate risk-adjusted returns on capital deployed. These changes have caused us to look deeper into the exposures we are underwriting in several lines of business. An example of a business that needs further attention and strategic repositioning is our high net worth property portfolio within our personal insurance segment. By the nature of the business, it's exposed to peak zones and is susceptible to increased frequency and severity. This reality, together with secondary perils that have become primary perils in the underwriting and modeling process, as well as secondary perils and modeling, have all driven up loss costs, creating a significant issue that needs to be addressed. When analyzing the portfolio over the last five years, we've seen catastrophe levels that are 10 times the level the portfolio dealt with in the prior 10 years for losses in excess of $50 million. The inability to reflect emerging risk factors, the effects of changes to modeling, increased loss costs from cats has put the profitability of the business under pressure. In addition, when you consider the increased exposure in most peak zones in the United States over the last few years, with significantly increased total insured values, in some cases, greater than 100%, more density, supply chain issues, reinsurance availability, and increased reinsurance costs, and all this with heightened complexity the pandemic has caused, along with the impact of demand surge post-CATs, not being tested, the business model simply needs to change. Recognizing these realities, after careful review, we decided to take meaningful steps to address this risk issue in our high net worth business, which will allow us to continue to offer comprehensive solutions to our clients that are more consistent and sustainable. Aggregation and profitability challenges led us to the conclusion that we have to offer the property homeowners product as an example, through excess and surplus lines on a non-admitted basis in multiple states. For example, in December, we announced that we would no longer be offering admitted personal property homeowners policies in the state of California. We cannot maintain our current level of aggregation in the state nor have we been able to achieve any profitability from this line of business. Being a prudent steward of capital, these actions will enable us to segment the portfolio, achieve an acceptable return, reduce volatility, and offer clients more comprehensive policy wordings and services. Now turning to life retirement. Full year results were driven by improved equity markets, strong alternative investment income, higher interest rates, higher call, and tender income, and higher fee income, partially offset by elevated mortality and base spread compression across products. Adjusted pre-tax income in the fourth quarter and full year was $969 million and $3.9 billion, respectively. The full year growth of 11% was driven by strong alternative investment and fee income. Full year sales were strong with premiums and deposits increasing 15% year over year to $31.3 billion. Sales within our individual retirement segment grew 34% across our three product lines for the year. Assets under management were $323 billion, and assets under administration increased to $86 billion, benefiting both from strong sales activities and favorable economic conditions. We also made excellent progress with Blackstone in the fourth quarter, completing the initial $50 billion asset transfer, incorporating them into our asset-liability management process, finalizing the investment guidelines, and developing initial product offerings based on Blackstone's origination platform. Lastly, having analyzed our exposure to long-duration target improvements, or LDTI accounting, based on the current interest rate and macro environment, we expect the transition impact of LDTI is well within Life Retirement's current balance of AOCI. Mark will provide more detail on this topic in his remarks. Turning to the separation and IPO of life retirement. In addition to closing Blackstone transactions, we also continue to make significant progress on operationally separating life retirement from AIG, both with respect to what can be done by the IPO and longer-term to transition service agreements. We are applying the same rigor and discipline to our separation workstreams as we have with our AIG 200 transformation program, but with a clear focus on speed to execution. We continue to work toward an IPO in the second quarter of this year, subject to regulatory approvals and market conditions. As I mentioned on our last call, due to the sale of our affordable housing portfolio in the fourth quarter, and the execution of certain tax strategies, we are not constrained in terms of how much of life retirement we can sell in an IPO. Having said that, the size of the IPO will be dependent on market conditions. We continue to expect to retain a greater-than-50% interest immediately following the IPO and to continue to consolidate life retirement's financial statements at least until such time as we fall below the 50% ownership threshold. Finally, turning to capital management. We've been giving significant thought to both life retirement as a stand-alone business and AIG as we continue the path to separation. With respect to life and retirement, our goal remains to achieve a successful IPO of a business with a capital structure that is consistent with its industry peers. Life and retirement has a strong balance sheet and limited exposure to legacy liabilities, and its insurance operations have a history of strong cash flow generation. We expect that over time, this business will sustain a payout ratio to shareholders of 60% to 65% between dividends and share repurchases on a full calendar year basis. We also expect that post IPO, life and retirement will pay an annual dividend in the range of $400 million to $600 million, which equates to roughly a 2% to 3% yield on book value. Additionally, as part of the separation process, in the fourth quarter of 2021, life and retirement declared a dividend payable to AIG in the amount of $8.3 billion, which will be funded by life and retirement debt issuances and paid prior to the IPO. Our expectation is that a vast majority of this dividend payment will be used to reduce debt at AIG, and therefore, the overall amount of debt across our consolidated company will remain relatively constant at the time of the life retirement IPO. Post deconsolidation, we expect life retirement to maintain a leverage ratio in the high 20s, with AIG maintaining a leverage ratio in the low 20s. Regarding our current capital management plan for AIG, ending 2021 with $10.7 billion in parent liquidity provides us with a significant amount of flexibility. Our capital management philosophy will continue to be balanced to maintain appropriate levels of debt and to return capital to shareholders through share buybacks and dividends, while also allowing for investment in growth opportunities across our global portfolio. This will also be true post-IPO and over time as we continue to sell down our stake in life retirement. With respect to share buybacks, we have $3.9 billion remaining under our current authorization and expect to complete this amount in 2022, weighted more toward the first half of this year. We do not expect the life retirement IPO to impact AIG's dividend and expect to maintain our current annual dividend level at $1.28 per share. With respect to growth opportunities, our priorities will be to allocate capital in general insurance, where we see opportunities to grow and further improve our risk-adjusted returns. We believe there are excellent opportunities for continued growth in global commercial Lines, which Mark will cover in more detail in his remarks. As we move through 2022 and are further along with the IPO and separation of life retirement, we will continue to provide updates regarding capital management. As you can see, we made significant progress in 2021 and had a terrific year. 2022 will be another busy and transformational year for AIG. We started 2022 with a significant amount of momentum, and our colleagues continue to demonstrate an ability to execute on multiple fronts as we continue our journey to be a top-performing company. Given Peter's comments, I will head directly into the fourth quarter results. Diluted adjusted earnings per share were $1.58, representing 68% growth over the prior year. This material improvement in adjusted earnings per share was driven by an over 1,000 basis point reduction in the general insurance calendar quarter combined ratio; 9% growth in net earned premiums, led by global commercial with 13% net earned premium growth; and an improvement in the underlying accident year combined ratio ex CATs to 89.8%, as Peter mentioned, our first sub-90% quarterly results since before the financial crisis, which also represented a 310 basis point improvement from the prior-year quarter. Life and retirement delivered another quarter of solid returns and remained well-positioned, with a 13.7% return on adjusted segment common equity for the fourth quarter and 14.2% for the full year 2021. The strength of our operating earnings and capital actions in the quarter helped drive a near 10% adjusted annualized ROE and growth in adjusted tangible book value per share of nearly $7, which represents a sequential increase of 12% and a full year increase of 23%. We fulfilled our capital management commitments and finished the year with a GAAP leverage ratio of 24.6%, a reduction of 150 basis points in the quarter and 380 basis points over the course of the year, which is another milestone, as we stated, our goal was to be at or under 25% on this important metric. This improvement was driven by approximately $4 billion of debt and hybrid retirement, along with $2.6 billion of share repurchases, nearly $2.1 billion of which occurred in the second half of 2021, which was slightly above our guidance. Moving to general insurance. Catastrophe losses of $189 million were significantly lower this quarter, compared to $545 million in the prior-year quarter. This quarter's main drivers were the Midwest tornadoes and the Colorado wildfire. Prior year development was $44 million favorable in the fourth quarter compared to unfavorable development of $45 million in the prior-year quarter. As usual, there was net favorable amortization from the ADC, which was $45 million this quarter. So PYD was essentially flat without this amortization. On a full year basis, net favorable development amounted to $201 million relative to $43 billion in net loss and loss adjustment expense reserves. In 2020, we released $76 million of net favorable development. Shifting to premium growth. Overall global commercial Insurance net premiums grew 13% on a reported and constant dollar basis for the quarter, and growth in North America commercial was 11%, driven by casualty, which increased 50%; Lexington, which increased 14%; and financial lines, which increased over 10%. In international commercial, growth was 16% on an FX-adjusted basis. And by line of business, global specialty, which is booked in international, grew over 25%. Talbot had 20% growth, and property grew by 13%. Overall growth in the fourth quarter was driven by strong incremental rate improvement, higher renewal retentions, and strong new business volumes. Commercial retention improved by 300 basis points year-over-year in North America to 80% and by 400 basis points in international to 86% in the period. This increase in wholesale business in North America commercial brings with it lower channel retention ratios in addition to purposefully lower retentions in cyber and private D&O. Excluding these items, the retention ratios between North America and international commercial are comparable. Commercial new business grew by 33% in the fourth quarter with 41% growth in North America and 25% growth in international. Turning to rate, where overall global commercial Lines saw increases of 10% in the quarter, we achieved the third straight year of double-digit increases. Strong momentum continued across most lines, and we continue to achieve rate above loss cost trends. North America commercial's overall 11% rate increases were balanced across the portfolio and led by financial Lines, which increased by 15%; excess casualty, which increased by 14%; retail property, which was up 13%; and Lexington, which increased by 11%. International commercial rate increases in the aggregate were 9%, driven by EMEA, which increased by 18%; the U.K., which increased by 12%; financial lines, which increased 18%; and energy, which was up 11%, which is also its 11th consecutive quarter of double-digit rate increases. Shifting now to a calendar year combined ratio comparison. General insurance produced a 95.8% combined ratio for 2021, an improvement of 850 basis points over 2020 and nearly 1,600 basis points better from 2018's 111.4% calendar year combined ratio. Peeling back a bit more, the combined CAT and prior period development improvement has been 720 basis points since 2018, indicating both a material CAT exposure reduction, in line with the movement we have shown in our PMLs, and a much stronger loss reserve position than three years ago. Turning to additional pricing. Rate increases continue to be favorable and outpaced loss cost trends in most areas of the portfolio. With the level of rate that we have achieved in just the last 12 months, we expect that margin expansion will continue at least through 2022 and likely into accident year 2023. Getting more specific for illustrative purposes, we have communicated written rate changes during prior earnings calls and will continue to do so. However, since earned rate changes more directly impact reported results, and given recent discussions around the inflation component of loss cost trend, I thought I'd go over a few areas on an earned rate basis for full year 2021. In North America commercial, for example, excess casualty business that focuses on our national and corporate accounts has achieved an approximate earned rate increase approaching 40% in 2021 over 2020's earned rate level, as has cyber. D&O and non-admitted casualty achieved earned rate increases in the mid-20s. And importantly, retail and wholesale property achieved earned rate increases during 2021 in the low 20s. This is noteworthy because property is getting most of the inflation attention, and yet the level of earned rate that was achieved is, in my view, still materially ahead of property and loss cost trend. And the same could be said for both excess casualty and D&O. Recent property written rate increases are still in the low teens, and looking into policy year 2022 should keep them above loss trend even with an inflationary spike. Property pricing needs to remain firm to cover these increased costs of labor, materials, and transportation. Turning to international commercial. Similar to North America, there are large areas of material earned rate increases for full year 2021. International financial Lines achieved a 23% earned rate increase over 2020's earned rate level. The international property book achieved an 18% earned rate increase, and the energy book achieved earned rate increases in the mid-20s. Let's now step back and look at the last three years of cumulative written rate increases achieved at a high level during 2019 through 2021. North America commercial across all lines of business had a 47% cumulative written rate increase, and international commercial's cumulative written rate increase during that same time period was 40%. These measures, although they don't take into account improved terms and conditions and other difficult-to-track impacts, indicate, on their own, a significant ingredient of margin improvement as evidenced by the material reduction in our reported accident year results. As we think about moving forward into calendar year 2022 and 2023, we need to be cognizant about the absolute, significantly favorable impact on combined ratios over the last three years and realize that most lines of business are well into the green. Although there are several opposite forces that work, such as economic and social inflation, my sense is that the 2022 market will continue to produce tight terms and conditions and strong pricing to sustain additional margin expansion into calendar 2023. As we think about 2022, major areas of growth for North America would be accident and health as the economy is expected to begin rebounding, and Lexington on a non-admitted basis. And on the international side, we see growth in our global specialty operations, A&H as well and select casualty and financial Lines areas around the globe, whereas AIG Re sees growth mostly in casualty business. The AIG Re portfolio strategically took the opportunity to further derisk and rebalance the portfolio away from property CAT due to our view of less-than-adequate returns in that space and expanded further into casualty and specialty Lines and expects to continue that trend. zone PML down meaningfully across most points in the return period curve. Moving to life and retirement. Premiums and deposits grew 19% in the fourth quarter, excluding retail mutual funds, relative to the comparable quarter last year. Growth was driven by individual retirement and $2.1 billion of pension risk transfer activity. APTI for the quarter was $969 million, down 6%, driven primarily by lower net investment income and unfavorable COVID-19 base mortality, although non-COVID-19 mortality returned to being better than pricing expectations. On a full year basis, APTI increased to $3.9 billion, reflecting higher net investment income and fee income, partially offset by adverse mortality. Our investment portfolio and hedging program continued to perform extremely well for both the quarter and the year. Composite base spreads across individual and group retirement, along with institutional markets, compressed 12 basis points during 2021 within the sensitivity guidance we've previously provided. Within individual retirement, Index Annuities continued to be the net flows growth engine with $880 million of positive net flows for the quarter and $4.1 billion of the full year. APTI was essentially flat for full year 2021 over full year 2020, but premiums and deposits were up 34% and AUM was up 2% year over year to $159 billion. Group retirement had APTI of $314 million for the fourth quarter, virtually flat with last year's comparable quarter, but was up 27% on a full year basis, with premium and deposits up roughly 4% and assets under administration up over 7.5% on a full year basis to $140 billion. Life insurance APTI was a negative $8 million in the fourth quarter, but had a gain of $106 million for the full year. Premiums and deposits grew 4% from fourth quarter of 2020 and over 5% for the full year to $4.7 billion. Additionally, total insurance in-force grew to $1.2 trillion, representing over 3% growth. Institutional markets grew premiums and deposits by 74% relative to last year's comparable quarter, primarily due to the significant pension risk transfer sales. Moving to other operations. The adjusted pre-tax loss before consolidation and eliminations was $178 million, a $250 million improvement versus the prior-year quarter, with the primary drivers being higher net investment income of $237 million; a lower corporate interest expense on financial debt of $51 million, resulting from our debt redemption activities; partially offset by higher corporate GOE of $12 million, which include increases in performance-based compensation. Heading to Peter's comment about AIG 200, $810 million of run-rate savings are already executed or contracted toward the $1 billion run rate savings objective, with approximately $540 million recognized to date in our income statement and $645 million of the $1.3 billion cost to achieve having been spent to date. Total cash and investments were $361 billion, and fourth quarter net investment income on an APTI basis was $3.3 billion, which was essentially the same both sequentially and year over year and was aided by higher alternative investment income, particularly within private equity. NII for the full year of $12.9 billion was up over $600 million from 2020. Private equity returns were nearly 32% for the full year, up from approximately 10% last year. Hedge funds returned approximately 14% each year, and mortgage loan returns were stable at 4.2%. We ended the year with our primary operating subsidiaries being profitable and well capitalized, with general insurance's U.S. pool fleet risk-based capital ratio for the fourth quarter estimated to be between 460% and 470%. And the life and retirement [Inaudible] is estimated to be between 440% and 450%, both well above the upper bound of our target operating ranges. With respect to share count, our average total diluted shares outstanding in the fourth quarter were 847 million, a reduction of 2%, as we repurchased approximately 17 million shares in the quarter. The end-of-period outstanding shares for book value per share purposes was approximately 819 million at year-end 2021. Now I'd like to address the forthcoming LDTI accounting changes affecting our life and retirement business. First, this is a GAAP-only accounting standard, and there should not be impacts to cash flow or statutory results. As this continues to be a work in progress for us and the industry at large, I'd like to provide a range toward the transitional balance impact at January 1, 2021, as being between $1 billion and $3 billion decrease to shareholders' equity, with our current point estimate being toward the lower end of this range. This decrease represents a netting between an increase to retained earnings and a decrease to AOCI. Once again, life and retirement's breadth of product offerings provides value as the LDTI impact of old traditional products covered by FAS 60 involving mortality are roughly offset by the elimination of historical AOCI adjustment associated with certain longevity products. Also, current GAAP accounting for living benefits is at fair value, and changes go through the income statement, whereas under LDTI, a portion of that charge will be recorded in AOCI, pertaining to the company's own credit spreads, which, for that piece, will help to dampen some volatility. But mortality benefits will now also be at fair value and will act as an offset to take volatility in the other direction within the GAAP income statement. Turning now to the recent S&P capital model changes. The deadline to respond has been extended to March of 2022, and S&P will presumably conclude shortly thereafter. Both the property, casualty, and the life retirement insurance industries will likely see higher capital charges for in insurance exposures as well as for asset credit and asset market risks. Additionally, reduced benefits of holding company cash liquidity and lower levels of accessible debt leverage is an indicated outcome, but all with material offsets due to increased diversification benefits. We have spent considerable time on the analysis of this proposal so far, but it is probably premature to make any predictions at this point before S&P in the industry have had more time to land upon the exact details of the final framework. Now in conclusion, by virtually all measures, growth, profitability, returns, margin expansion, adjusted book, adjusted tangible book value, debt leverage reduction, EPS, adjusted pre- and after-tax income, and net income all point to an outstanding year for AIG. When you also factor in our global platform, our marketplace actions and impact, the strength of our loss reserves, a robust reinsurance program, and massive portfolio reconstruction AIG is exceedingly well-positioned as we look to the separation of L&R, completing AIG 200, maintaining our path toward increasing profitable growth and for whatever else the future holds.

qtrly earnings per share $4.38; qtrly adjusted earnings per share $1.58. qtrly general insurance net premiums written increased 7% from prior year quarter to $5.96 billion. as of december 31, 2021, book value per common share was $79.97, up 5% from december 31, 2020. qtrly general insurance underwriting income of $499 million included $189 million of catastrophe losses, net of reinsurance mainly from tornadoes in southern u.s., wildfires. return on common equity and adjusted roce were 23.0% and 9.9%, respectively, on an annualized basis for q4 2021. co sees ipo of life and retirement unit in q2 of 2022. completed initial asset transfer of $50 billion to blackstone. co continues to make significant progress towards separating life and retirement unit. co sees ipo of life and retirement unit in second quarter of this year. size of life and retirement unit's ipo will depend on market conditions but aig will retain over 50% stake immediately after ipo. co expects that over time, life and retirement unit will sustain an annual payout ratio to shareholders of 60% to 65% between dividends and share repurchases. co believes life and retirement unit will pay an annual dividend in the range of $400 million to $600 million post ipo. $8.3 billion dividend paid by life and retirement business to aig will be used to reduce debt. post deconsolidation, co expects life and retirement unit to maintain a leverage ratio in the high 20s. co does not expect life and retirement ipo to impact aig's dividend. co expects to complete in 2022 the $3.9 billion remaining under current share buyback authorization. will prioritize allocating capital in general insurance segment.

Neil, you may begin. As always, I'm here with Jay H. Shah, our Chief Executive Officer; and Ashish Parikh, our Chief Financial Officer. When we last spoke in late July, demand for travel and hotels was the highest since March 2020, and projections were shaping up for a very strong second half of the year. The delta variant made for a choppy seasonal shift in demand in late August and early September, but we were able to meet our internal forecast each month through a combination of aggressive revenue management and strict cost controls, allowing us to drive strong GOP margins even compared to the same period in 2019. Despite a slow start on the top line shortly after Labor Day, we were encouraged by the positive momentum we are seeing over the last few weeks, coinciding with the decline in COVID cases and notable green shoots indicating that travel is ramping up meaningfully. TSA data shows the beginning in mid-September, we have seen consecutive weeks of more than 12 million travelers. And if you zoom in on our markets, New York City, Boston, Philadelphia, San Jose and Washington, D.C., have all seen a rebound over the last few weeks of at least 7.5% in air travel. Additionally, Uber recently reported a 15% increase in airport rides during the last two weeks of September. And U.S. car traffic in major cities like New York and Los Angeles was significantly higher in September versus August. In New York, weekday ridership of trains and subways have each increased about 30% since the end of August. While Times Square foot traffic reached a record high since the start of the pandemic with 270,000 people visiting last Saturday, 80% higher than the same day in 2020. Robust leisure demand post-Labor Day is encouraging for the upcoming holiday season as well. And our booking pace for weekends in New York City and the holiday weeks in South Florida and California is noteworthy. And beginning next week, our borders will open to fully vaccinated international travelers. One week after the announcement, airlines such as JetBlue and American, reported positive trends. JetBlue said it had seen a 5 times increase in bookings to the U.S. from the U.K., while American noted it expects international revenues to surpass 2019 levels in December and throughout 2022. On the hotel booking front, many OTAs have noticed an uptick of almost 20% international bookings in the week since the announcement in major feeder markets like New York City. With an expectation for 2022 bookings to materially increase across the next several weeks. The international demand is diverse, but Canada, Mexico, the United Kingdom, Brazil and even several Asian countries are booking again. Ash and I will discuss in more detail our top line and bottom line results. But first, a quick recap of third quarter performance for our portfolio. We began the third quarter on strong footing as our portfolio RevPAR ended July near $150, approximately 15% higher than June as peak summer travel translated into robust results across the portfolio. The first half of August was equally strong. But due to the delta variant and typical seasonality with the resumption of the new school year, demand began to moderate during the second half of August, which stretched through the middle of September after the Jewish holidays. Despite the occupancy decline, our revenue managers continued their strategy of holding rates, resulting in our comparable portfolio ADR for the quarter coming in only 1% below third quarter 2019. Rate integrity remains key to the lodging recovery and based on year-to-date performance from our resorts and our urban clusters, we believe strong ADRs will prove sustainable on a portfoliowide basis for years to come. Our resorts portfolio was strong again this quarter as the group generated weighted average occupancy of 68% and ADR growth of 30%, leading to weighted average RevPAR growth of 20% compared to the third quarter 2019. Performance this quarter continued to stem from robust demand in South Florida, despite what is typically the slowest period for travel to this region. The Parrot Key Hotel and Villas was our best-performing asset during the third quarter from a RevPAR growth perspective as 71% occupancy and a $409 average daily rate resulted in a $290 RevPAR, which surpassed third quarter 2019 RevPAR by 73%. The Keys continue to garner unprecedented demand, and we expect the Parrot Key to continue its robust performance into year-end. Performance on Miami Beach was also encouraging as the Cadillac and the Winter Haven on South Beach each exceeded their third quarter 2019 occupancy, ADR and RevPAR levels. Even in the more business-oriented submarket of Coconut Grove, we were able to drive 36% ADR growth during the quarter as we captured local business from a variety of industries, law, universities, financial services, consulting, technology, healthcare and advertising, which is leading to stronger weekday demand post-Labor Day. Out in California, the Sanctuary Beach Resort continues to lead our resorts from a rate perspective as a $669 ADR and 78% occupancy resulted in 30% RevPAR growth versus the third quarter of 2019. The Our Hotel Milo in Santa Barbara reported 22% RevPAR growth this quarter, recording 75% occupancy at a $446 average daily rate. Both of these hotels set record ADR levels under our ownership last quarter during the peak travel season on the California Coast, further proving that the leisure traveler is not price-sensitive for high-quality, well-located, differentiated hotels. Back East, our Annapolis Waterfront Hotel occupies an irreplaceable position on the Chesapeake Bay and was our strongest performing hotel from an occupancy perspective during the third quarter. We recorded an 86% occupancy and an average daily rate of $332 last quarter, which led to a 24% RevPAR growth over the period. Annapolis in the summer was primarily leisure transient but the hotel has seen significant demand continue post-Labor Day, highlighted by weddings, smaller conferences and corporate groups, collegiate sports and alumni reunions at the Naval Academy and the historic vote show that took place just a few weekends ago. Our regional resort destinations have provided robust results for the portfolio year-to-date and continue to show strong pace heading into year-end. But our core urban portfolio, 75% of our rooms has also seen a steady demand increase over the last several months. Weekday ADRs in our urban portfolio exceeded $195 in July, surpassed $200 in August and ended September at approximately $225, 15% higher than July. From June to September, our urban portfolio saw a 7.5% CAGR in weekday RevPAR, supported by notable increases in both rate and occupancy. And weekday demand has continued to accelerate in the fourth quarter. As the month-to-date ADRs in October are higher than the same time in September, with occupancy up approximately 650 basis points to 54%. This performance has led to substantial weekday RevPAR growth over the last 30 days as RevPAR for our urban portfolio is up 15%, with increased demand across each of our major northeastern cities. Despite the third quarter being predominantly leisure-driven, and the business transient recovery clearly slowed by the delta variant, we have seen a steady return of corporate business across our markets. Airlines have reported that the larger corporate accounts are beginning to fly again and domestic business demand has rebounded to pre-delta levels or better. And we are seeing the shift in our hotels. After months of healthcare workers, sports teams, design and construction and other small- and medium-sized companies, we are now seeing the return of our more traditional corporate accounts midweek, Accenture, Deloitte, JPMorgan, Goldman Sachs, Bank of America, McKinsey, Boston Consulting Group and General Dynamics remain active across our portfolio. Our urban luxury hotels have enjoyed meaningful rate growth across the last several months, as the Rittenhouse Hotel in Philadelphia and the Ritz-Carlton in Georgetown, outperformed our third quarter 2019 ADRs by 17% and 7%, respectively. Demand at these assets was broad-based and supported by leisure and social groups such as weddings and entertainment over the last few months, the reopening of universities and parents weekends, and the blending of leisure and business travel in luxury. But in September and October, we've seen an increase in corporate guests for stays and catering events, healthcare, consulting, financial services, media, software have all been gathering and traveling at our hotels. Weekday trends have been clearly accelerating, but the return to more stable business travel is closely correlated with employees going back to the office and resuming traditional travel to conferences and group meetings. Although many of the world's largest corporations have postponed their return to office plans, third-party data providers indicate that major cities like Boston and New York saw a 30% month-over-month increase in workers returning to the office in September. And conversations with our corporate accounts indicate that we should continue to see a resumption in companies opening their doors and encouraging travel through the end of the year. But anticipate the first quarter as the next inflection point in demand growth from the business traveler. Gateway urban markets have been more impacted by this pandemic than any other segment, and offers the longest runway for growth as we look forward to the next several years of this cycle. Last month, we saw the return of traditional major events in Manhattan, the U.S. Open, which benefited our assets in the JFK submarket. Fashion Week, which led to the compression at our Hilton Garden Inn Tribeca. And the UN General Assembly, we saw increased demand at our Hilton Garden Inn Midtown East from foreign delegates and secret service personnel. Despite attendances below pre-pandemic levels, it was great to have these events back in person as they help drive hotel demand in Manhattan to its highest levels since the beginning of the pandemic. And New York has more citywides occurring in Q4. Comic Con took place a few weekends ago, the NYU Lodging Conference and the New York City Marathon is resuming next month, and several trade shows and medical conferences remain on schedule. Pockets of corporate strength remain across our assets in Manhattan from the traditional accounts I noted earlier, but we believe they will continue to expand as more corporations reopen their offices. With the first mover advantage of remaining open throughout the pandemic, our clustered sales effort in the marketplace should yield additional revenue opportunities. New York City has historically been the market leader in occupancy and we remain confident that it will revert back to prior levels over the next few years with our operating and data advantage driving meaningful outperformance throughout the recovery. During the last cycle, we had record demand for hotel rooms in New York, but year-over-year mid-single-digit supply growth resulted in a very challenging operating environment for owners. Although we have seen new hotels open again this year with more on pace to open over the next 12 months, it is important to note that many hotels have permanently closed. And although a few have recently reopened following the passage of the severance law in the city, the midterm supply picture looks very encouraging. Based on our internal projections as well as some recent third-party studies, it is estimated that 10,000 keys may be removed from inventory for the foreseeable future, if not permanently by way of demolition, resizing or alternate use conversions. When we factor in this in the analysis and the aforementioned new supply, net supply over the next few years will actually be negative 1% to 2%. And with the cost of construction financing remaining exorbitantly high and the recent approval by the New York City Planning Commission of the special permit for all new hotel construction, supply should remain in the low single-digit range for years to come. Earlier this year, we completed the sale of six noncore hotels that had substantial capital improvements on the horizon. And we also took necessary steps to infuse the portfolio with nondilutive equity through our notes placement with Goldman Sachs Merchant Bank. We believe that our unique collection of hotels and our advantaged operating strategy allow us to manage cash burn in the worst of times and drive out performance early in the recovery. We have and continue to actively monitor the capital markets for the best opportunity to increase our operating capital without diluting shareholder valuation. The capital markets for almost every level of financing remains extremely competitive. And with improving fundamentals in each of our markets, we will remain opportunistic with both asset sales and financing opportunities across the next several quarters. At current prices, we see no better value in the marketplace than our existing collection of hotels. Second quick topic, sustainability, which has been at the core of our strategic operations since we launched our EarthView program in 2010. Since inception, we have saved over $20 million from energy efficiency initiatives that generate recurring savings year-over-year and help to alleviate expense growth and improve margins, vital over the past 18 months as we navigated the COVID crisis. We have also had a very positive environmental impact. We have reduced energy use per square foot by 15% and greenhouse gas emissions by 44% since 2010. And we announced our 2030 targets in our robust annual report on our website, disclosures that contributed to Hersha ranking #1 among our U.S. hotel peer set in the Global Real Estate Sustainability Benchmark public disclosure for the second year in a row. We continue to be proud of the work of our teams in the field and in our headquarters, to ensure our hotels continue to operate not only efficiently, but are positioned for sustainable long-term growth. As I mentioned earlier, the resumption of business travel is closely correlated with the return to office. And this will present a major inflection point for our hotels, with 75% of our rooms situated in major gateway cities. Performance at our resorts has led to significant growth this year and allowed us to generate property level cash flow quicker than most of our peers. But our growth runway remains long with the pending rebound of business travel demand to our urban gateway markets. With few capital expenditures on the horizon over the next few years, we can focus on hotel operations to drive high absolute RevPAR on industry-leading margins, resulting in significant EBITDA and free cash flow growth in the coming years. And with the delta variant peaking, our borders reopening and businesses ramping up travel, we expect 2022 will be an inflection point for the lodging recovery. So as Neil mentioned, my comments will focus on the continued growth in our margins and cash flow, and I'll close with an update on our balance sheet and outlook for the current quarter. Top line performance from July to September continue to provide a boost to bottom line results. During the third quarter, 31 of our 33 hotels were cash flow positive, a 21% increase versus the second quarter. Results last quarter highlight the efficiency of our portfolio in the merits of our operating model, leading to cash flow generation in an extremely volatile environment that is still reeling from the effects of the pandemic. These factors allowed our portfolio to generate $25.4 million in property level earnings and $4.5 million of positive corporate cash flow after all corporate expenses, debt service and the payment of dividends on all tranches of our preferred equity. Based on month-to-date trends and forecast for the remainder of the year, we anticipate continuing to achieve positive corporate level cash flow for the fourth quarter. The asset management initiatives we've implemented over the past 18 months, combined with our flexible operating model and continued top line improvement showed early signs that our margin expansion goal through the recovery is moving in the right direction. As GOP margins of 45% during the third quarter were in line with the forecast we outlined on our July earnings call and approximately 100 basis points higher than our third quarter 2019 GOP margin. On the EBITDA line, we witnessed sustained margin improvement as our comparable hotel EBITDA margin of 30% and was 360 basis points higher than the second quarter 2021 and just 230 basis points lower than third quarter of 2019. From a profitability perspective, our resort portfolio continued to deliver meaningful EBITDA margin performance as the group ended the third quarter with a weighted average EBITDA margin of 38%, 1400 basis points higher than the third quarter 2019. Results out west were highlighted by our Sanctuary Beach Resort in Hotel Milo as both finished the quarter with a 50% EBITDA margin. In South Florida, the Parrot Key and Cadillac each surpassed their third quarter 2019 EBITDA margin by at least 1,800 basis points while the Annapolis Waterfront Hotel aided by a strong end to the summer, recorded a 55% EBITDA margin, the highest margin in our comparable portfolio last quarter. Primary source of savings at our hotel has been the significant reduction in total labor. Over the past 18 months, we've been able to run our properties on a lean staffing model with occupancies between 35% and 60% at many of our hotels. As demand started back in the spring, we began to expand our open positions across our portfolio. to rehire staff to support increasing occupancies. Over the past few months, our on property and corporate level management and HR teams have been very focused on our recruiting efforts. And over that period, we have seen a 44% rise in applicants for new posting with total hires in September, up 12% versus August following the expiration of additional unemployment benefits. Over the last two years, we have absorbed 10% to 15% wage growth in each of our markets. But despite this increase, our total cost per occupied room remains approximately 15% below pre-pandemic levels, with total nonmanagement contracted labor 40% below the same time in 2019. We are encouraged by recent trends, but the hiring market, especially for hourly employees remains challenging. Fortunately, our cluster strategy and close relationship with our third-party management company allows us to run our properties with staffing levels capable of offering our guests a service expected at our hotels, all while continuing to drive GOP and EBITDA. As RevPAR and out-of-room revenues increasing in 2022 and beyond. Our current operating model will yield much higher levels of absolute GOP dollars and allow us to amortize our fixed operating expenses as well as our property taxes and insurance expenses. This provides us confidence in our ability to forecast post-pandemic EBITDA margin growth as our ability to drive ADR in tandem with applied expense savings initiatives, provides us continued confidence in our ability to generate 150 to 250 basis points of sustainable long-term margin savings for the portfolio. For the second consecutive quarter, we saw substantial growth in food and beverage revenues at a few of our hotels. This was led by the Envoy in Boston, which generated $3.6 million in food and beverage revenues, 80% higher than the second quarter. The hotel's very popular Lookout Rooftop Bar was the primary driver of profit again this quarter, generating $2.4 million in revenues from beverage sales. Meanwhile, down in Key West, revenue generated from the food and beverage outlets at our Parrot Key Resort was 48% higher than the third quarter of 2019. We expect our recently renovated outlets at the Parrot Key will remain popular as we enter the peak season of travel to the Keys. So just a few closing remarks on our balance sheet and outlook for the fourth quarter. We ended the third quarter with $83.7 million in cash and cash equivalents and deposits. In September, we successfully refinanced the $23 million mortgage loan on the St. Gregory Hotel, eliminating all debt maturities until third quarter 2022. The interest-only loan was completed at prime plus one and matures in October of '23. As of September 30, 78% of our debt is fixed or swapped with our total debt weighted average interest rate of 4.41% and 2.9 years life-to-maturity. During the quarter, we spent $2.6 million on capital projects, and we continue to limit our capital expenditures strictly to maintenance and life safety renovation. Year-to-date, we have spent $7.9 million on capital projects, and we anticipate our full year Capex load to be more than 50% below our 2020 spend. We project very little disruption or capital spend for our portfolio across the next few years, which is materially beneficial from a cash flow perspective as the supply chain continues to tighten in conjunction with elevated construction costs, labor and oil prices. Month-to-date in October, we continue to see incremental growth across our portfolio, but especially in our urban markets, which are running close to 10% ahead of forecast. The largest outperformance from an occupancy perspective has been our Boston portfolio, which is currently running at a 77% occupancy month-to-date up approximately 1,800 basis points from September. Our Manhattan portfolio occupancy is approaching 70%, 1,200 basis points higher than September. While our Philadelphia and Washington, D.C. clusters are above 60% occupancy month to date. From a revenue perspective, our Philadelphia and Manhattan hotels are surpassing initial forecast by 15% and 12%, respectively, while our Boston and D.C. portfolios are exceeding revenue forecast, by approximately 8% thus far in October. Our weekday improvement post Labor Day has shown that business travelers are hitting the road, and we expect this will continue to accelerate across the next several months as more companies reopen their offices, reinstate in-person meeting some staff that is widely dispersed across the globe, resume group attendance and encourage travel to reengage with customers in order to gain market share, which will provide a strong boost to our urban-centric portfolio. With our balance sheet rightsized to allow for accretive opportunities through the recovery and our on-property operations set to capture continued demand at our hotels. We look forward to continued robust leisure demand at our resort properties and an inflection point in the return of meaningful and sustained business travel to drive outperformance across our portfolio for the next several years. So this concludes my portion of the call, and we will be happy to address any questions that you may have at this time.

will forego providing full-year 2021 guidance at this time.

Overall, the third quarter reflected a continuation of our strategy of investing in our North American assets to further reposition the company with lower cost, sustainable free cash flow and solid returns over longer mine lives. As you can see, it was a quarter with several significant developments and decisions. Results were in line with our internal forecast and we're set up to deliver a strong finish to the year and achieve our original production guidance. Mick will go through the operations in more detail shortly, but I'll quickly touch on a few main points. Wharf led the pack and achieved its second highest operating cash flow and free cash flow since we acquired the operations 6.5 years ago. Palmarejo and Kensington were largely on plan and are on track to deliver strong fourth quarters and Rochester's results reflect steady progress despite devoting 38.5 days, or about 45% of the quarter, to crushing and hauling over-liner material to the new Stage VI leach pad before winter. It's worth pointing out that Rochester's year-to-date results reflect 2.5 months of essentially no stacking on the legacy Stage IV pad as they prioritize activities to support the POA 11 expansion. On the exploration front, results continue to validate our ongoing commitment to these higher levels of investment. We invested $20 million in exploration during the quarter alone. This commitment to drilling has led to double-digit reserve and resource growth over the past few years and we look forward to hopefully delivering further growth again at the end of this year. We anticipate investing $70 million in exploration in 2021, which is nearly 40% higher than the record we set last year and is one of the largest programs in our sector. We remain on track to achieve our full year drill footage targets, yet investing slightly less than originally anticipated, which reflects efficiencies we are realizing from these larger programs. We will plan to provide another exploration update before the end of the year that will focus on exciting new results at our assets in Nevada, both at Rochester and from the Crown district in Southern Nevada where there continues to be a lot of activity. Switching over to our expansion projects, I want to walk through some updates starting with the Rochester POA 11 expansion. This project remains our top priority and is a transformative well-funded source of production and cash flow growth for the company. Things are moving right along. Overall progress stood at 42% complete at the end of the third quarter. In addition to completing the crushing of over-liner for the new Stage VI leach pad, the team also kicked off foundation work for the Merrill Crowe plant and the crusher corridor during the quarter. As we mentioned on our last conference call, we're experiencing the impact of inflation on remaining unawarded work, like most companies are reporting. Overall, we're fortunate to have had the vast majority of our contracts locked in prior to the current spike in costs and supply and labor disruptions. We're trying to mitigate some of these impacts by rescoping and rebidding unawarded contracts, but we currently estimate that we're likely to see a 10% to 15% overall increase to the POA 11 construction costs. We have kicked off detailed engineering and we'll be evaluating the merits of implementing this process improvement over the coming months. Assuming we elect to pursue this opportunity, it could potentially extend the timetable for completion and commissioning of the crusher by three to six months. In the meantime, we plan to install pre-screens on the existing crusher during the first half of next year to give us some full scale run time and experience that we can potentially incorporate into the new crusher configuration. Now switching over to Silvertip. Given the current inflationary environment and pandemic-driven supply and labor disruptions, it's not an ideal time to be kicking off a new capital project on an accelerated timetable despite multi-year high zinc and lead prices. Fortunately, Silvertip expansion and restart is still in the early innings, which gives us a lot of flexibility. Despite the uncertain macro-environment, which contributed to higher-than-expected capital estimates for an accelerated expansion in restart, one thing we are certain of is the quality and prospectivity of the Silvertip deposit. The exploration results, along with the knowledge and new discoveries the team is generating, have led us in the direction of evaluating a larger Silvertip expansion and restart on a potentially slower timetable. To take advantage of such a high-grade and significant resource, a 1,750 ton per day processing facility isn't likely large enough to maximize Silvertip's value. We're going to take some additional time to evaluate what a larger design and footprint could represent in terms of economics and overall flexibility. This approach will give us time to continue drilling and hopefully keep growing the resource, allow for the dust to settle on many of these current macroeconomic factors and allow us to focus on delivering POA 11 while not straining the balance sheet. Finishing out the highlights. We're pleased to announce that we entered into an agreement with Avino Silver & Gold to sell them the La Preciosa project in Durango, Mexico. This transaction offers some real potential synergies to unlock value from that asset with their nearby Avino mine. Strategically, the transaction checks a lot of boxes for us with respect to further enhancing our geopolitical risk profile, our metals mix and the timing of our development pipeline. We can deploy some of the fixed cash consideration into the Rochester expansion and into our highly prospective exploration programs. The transaction provides a lot of upside to the asset through the equity ownership we will have, along with contingent payments and two royalties we will retain. Shifting gears, I want to quickly bring your attention to a set of slides starting on Slide 17 that highlight the great culture and diversity efforts we have at Coeur. To be a high performing organization, a company's culture, strategy and capabilities need to be aligned, something that I believe we've achieved over the past few years. To that end, I want to recognize our Head of Human Resources, Emilie Schouten, for her efforts on DE&I and for recently winning the industry's Rising Star Award from S&P Global Platts. We continue to integrate our ESG efforts into our strategy and overall decision making. Before having Mick provide an overview of our operations, I'd like Hans to follow-up on my Silvertip comment by providing a brief overview of the Silvertip exploration results and why we are so positive about its potential. We bought Silvertip in late 2017 with the recognition that the asset has excellent growth potential. We now have almost 3.5 kilometer of potential growth defined based on step-out drill holes or more than triple what we knew in 2017, as highlighted on Slide 8. This year, we are completing the largest exploration program in the history of the project. Impressively, Silvertip accounts for roughly 25% of our $70 million overall budget at Coeur. The site team led by Ross Easterbrook has done an outstanding job managing the 1,000-meter drill program. Drilling from underground has given us the ability to conduct exploration year-round and test different parts of the ore body from different angles, which has been a crucial part of the Silvertip growth story. Underground drilling in early 2021 has led to the discovery of the Southern Silver Zone vertical feeder structures and thick manto ore zones and, more recently, vertical feeder structures under the Discovery South Zone. These structures represent significant resource tonnage potential and demonstrate excellent upside. We now have two rigs active underground with plans to add a third rig early next year. We also expect to continue with three surface rigs testing resource growth to the south in the 1.5-kilometer gap between Southern Silver and Tour Ridge zones. With the larger drill budget this year, we expect to continue significant growth at Silvertip, which will give our development team confidence to right-size the future operation to fit the potentially increased scale of the ore body. The team reported last week they've cut the best hole ever with 11 mineralized manto horizons. The hole is located under Silvertip Mountain about 500 meters or 1,500 feet south of the Southern Silver and Camp Creek zones in an area with no resource shapes at this time. This new step-out hole is the significant indicator of the growth potential we expect for 2022 and beyond. I'll now pass the call over to Mick. Before diving into operational results, I want to recognize the team for continuing to prioritize health and safety and driving continuous improvement in this area. Flipping to Slide 24, I'm proud to report that we recently received the NIOSH Mine Safety and Health Technology Innovation Award for our cross-functional COVID-19 response efforts. I'm truly honored to be part of such a great team that is relentless in its efforts to work together and look after the well-being of our people. Now turning to Slide 5 to cover the operations and starting off with Palmarejo. The team did an excellent job maintaining higher throughput levels and maximizing recoveries to offset some of the lower grades that we've been experiencing with our resequenced mine plant. We've also continued advancing development while focusing on increasing rehabilitation rates across the mine, which helps ensure that we've appropriately prioritized the health and safety of our workforce. Quarterly operating costs remain within guidance helping to counterbalance lower realized prices and generate $15 million of free cash flow. We expect a strong finish to the year at Palmarejo and we're excited to see how much production growth we can achieve here in this fourth quarter. Switching over to Rochester. We crushed just under 1.3 million tons of over-liner for the new Stage VI leach pad during the quarter, completing the necessary requirements for POA 11. It's important to note, when we are generating over-liner, we were not crushing materials stacked on the legacy Stage IV leach pad, which had a knock-on effect for production during the third quarter. Despite the near-term production impact, all-time energy and resources used to finish crushing overlay now was an important step toward completing this highly anticipated expansion project. Now turning to Kensington. Production was slightly higher during the quarter as better agreed [Phonetic] help to offset lower mill throughput caused by stope sequencing and drill parts availability. The good news is that we anticipate more high grade Jualin material over the coming months and have already received the necessary spare parts for stope drills, leaving us very well positioned for strong production growth in the fourth quarter. The Kensington team did an excellent job balancing multiple priorities and maintaining solid cost controls throughout the quarter, which helped generate nearly $15 million of free cash flow. Finishing with Wharf, I want to start by acknowledging the tremendous achievement. On October 3, the team at Wharf celebrated one year without a recordable safety incident, truly an amazing accomplishment. From a results standpoint, Wharf put together yet another great quarter, which marks back to back periods of strong performance. Gold production was up 17% and cash flow figures was the second highest since Coeur's acquisition back in 2015. With that, I'll pass the call over to Tom. First, I wanted to add a bit of color on the non-cash adjustments that impacted our third quarter earnings. We wrote off $26 million of Mexican VAT refunds, to which we strongly believe we are entitled, but like many other multinational companies doing business in Mexico, we have experienced significant challenges from SAT in the Mexican courts in obtaining these payments. We also had a mark-to-market adjustment on our equity investments, primarily related to Victoria Gold. However, the carrying value of the investment remains above our original cost. Turning over to Slide 4, I'll quickly run through our quarterly consolidated financial results. Revenue of $208 million was driven by relatively stable metal sales and a lower average realized silver price versus the second quarter. Operating cash flow totaled $22 million, which was lower than last quarter but also negatively impacted by changes in working capital. Removing working capital, operating cash flow improved by more than 10% quarter-over-quarter. Like most companies, we've seen cost pressures related to consumables and labor across all of our operations. With stronger expected Q4 production, we anticipate operating cash flow levels to continue climbing as we finish out the year. Turning over to Slide 12 and looking at the balance sheet, we ended the quarter with approximately $330 million of liquidity, including $85 million of cash and $245 million of availability under our revolving credit facility. Also, it's worth highlighting that these numbers do not include the $140 million of equity investments on our balance sheet. We did draw down modestly on the revolver. We ended the period with a net debt to EBITDA leverage ratio of 1.4 times. We will continue adhering to our disciplined capital allocation framework and remain focused on our goal of keeping net leverage below 2 times and maintaining liquidity of at least $100 million throughout the entire Rochester construction period. However, we expect the revised timeline for Silvertip, along with the current robust metals price environment, will leave us well positioned to maintain a strong and flexible balance sheet. I'll now pass the call back to Mitch. Before moving to the Q&A, I want to quickly highlight Slide 13 that outlines our near-term priorities as we approach the end of the year. With production guidance reaffirmed and a strong expected fourth quarter underway, we're feeling confident about our 2021 results and in our ability to carry this momentum into next year. We'll continue pursuing a higher standard and execute at a high level to deliver consistent results and industry-leading organic growth from our balanced portfolio of North American-based precious metals assets.

q3 revenue $208 million versus $229.7 million. reaffirms production guidance; updates cost and capital expenditure guidance. full-year 2021 capital expenditures are expected to be slightly lower at about $35 million - $40 million.

Neil, you may begin. We are pleased to kick off earnings season this quarter and glad that you could all join us. During last quarter's call in late April, all indicators were setting up for a summer of strong leisure travel, and it appears that expectations were appropriately set. We significantly outperformed our internal forecast for the second quarter on both top line and profitability metrics. We saw increased demand portfoliowide this quarter and are expecting this trend to incrementally build through the second half of the year. Property level cash flow sequentially improved from $3.8 million in April to $7.7 million in June. In June, our 33 hotels generated 59% occupancy at an average daily rate of $220 and comparable GOP margins for the month came in at above 45%. We are encouraged to see both ADR and GOP profitability metrics begin to approach 2019 levels, well before recovery in business transient and group gets underway in our gateway markets. Gateway market occupancy will push RevPAR higher from here. Achieving solid profitability and generating free cash flow a little over a year from the start of the worst crisis in this industry's history is testament to the quality of our hotels, the effectiveness of our cluster operating strategy and our mix of urban and resort markets. These three advantages are our core pillars of growth for the early stages of this cycle. Our operating leverage positions us for outsized growth in a stabilizing environment. We began the second quarter on strong footing as our portfolio RevPAR in April exceeded $100 and was 10% higher than March, which had been elevated due to spring break travel and stimulus spending. Absolute RevPAR ticked sequentially higher during the balance of the second quarter, growing to $116 in May and exceeding $130 in June, resulting in second quarter RevPAR of $116, more than 50% higher than the first quarter 2021. Rate integrity was a common concern this time last year. But compared to prior demand shocks such as the Great Financial Crisis, revenue managers have not sacrificed rate to put heads in beds during this recovery. In this environment, we've been able to strategically drive rates across our portfolio. Last quarter, our comparable portfolio ADR grew from $193 in April to $220 in June. That's just 13% below June 2019 without the core business traveler in the marketplace. In July, month-to-date, we are actualizing 2019 ADR levels. Based on pricing power at our resorts and the return of the price elastic business traveler in the fall to boost demand at our urban clusters midweek, we believe elevated ADR will prove sustainable on a portfoliowide basis through the recovery. Let's start to dig in with the two largest EBITDA-producing assets in our portfolio, the Cadillac Hotel and Beach Club on Miami Beach and Parrot Key Hotel & Villas in Key West. They led the portfolio again this quarter on sustained demand to South Florida despite what is typically the start of reduced travel to the region. Back in 2018, we reinvested approximately $74 million in major upgrades of these resorts, and they are now firmly on target to achieve our expected post-renovation ROIs. At prior peak in 2015, the Cadillac and Parrot Key generated $9.5 million and $7.8 million in EBITDA, respectively. This past quarter, the Parrot Key and Cadillac generated $3.8 million and $3.2 million in EBITDA, respectively, for the quarter. And based on current projections, both hotels are expected to surpass prior peak and combine to exceed $20 million in EBITDA generation for the full year 2021. As the lodging recovery continues to take shape across the next few years, we anticipate meaningful EBITDA contribution from these assets as they ramp toward stabilization. The Parrot Key was our best-performing asset during the second quarter, generating 92% occupancy on a $454 average daily rate, resulting in a $416 RevPAR, which surpassed second quarter 2019's RevPAR by more than 80%. The Keys have seen unprecedented demand year-to-date and the Parrot Key's performance has proven it is one of the most sought-after hotels in the marketplace. Despite inclement weather from tropical storm Elsa deflecting demand a few weeks ago, performance in July remains in line with our forecast at the beginning of the month. Performance on Miami Beach was similarly encouraging as the Cadillac surpassed 80% occupancy for the quarter on a $235 ADR, which drove 39% RevPAR growth versus the second quarter of 2019. Demand trends for the third quarter remain robust at our three beach hotels as well as our more business-oriented Ritz-Carlton Coconut Grove, which is beginning to capture corporate business this summer across a variety of industries: financial services, defense, technology, healthcare and advertising, and broke through 2019 levels with 8.7% year-over-year RevPAR growth for the quarter. Despite August and September being traditionally slower in South Florida, our portfolio is forecasted to meaningfully outperform those periods in 2019 on the heels of continued price-elastic leisure demand and growth from both business transient and group. There are a number of events, festivals and conventions returning to Miami in the near future. Miami Beach Pride in September, the South Beach Food & Wine Festival and Art Basel later in the fall and Formula One Grand Prix next year. Beyond tourism, there remains significant corporate relocations and transportation-related infrastructure growth in the region, leading to robust near-term and long-term demand fundamentals for Miami that will be captured through this recovery. Our drive-to resorts also continued their recent outperformance during the second quarter as the group generated weighted average occupancy of 72% and ADR growth of 23%, leading to weighted average RevPAR growth of 17% compared to the second quarter of 2019, further proving that the leisure traveler is not price sensitive for high-quality, well-located, differentiated hotels. The Sanctuary Beach Resort continues to lead our resorts from a rate perspective as its $506 ADR and 82% occupancy resulted in 21% RevPAR growth versus the second quarter of 2019. Our Hotel Milo down in Santa Barbara reports 77% occupancy at a $333 ADR, and a very similar 21% RevPAR growth versus prior year. We anticipate these resorts, in addition to our Ambrose in Santa Monica, will continue to garner robust occupancies and rates in the third quarter as travelers flock to the California coast. Back East, our Annapolis Waterfront Hotel occupies an irreplaceable position on the Chesapeake Bay. And after a significant renovation of the hotel, we are driving rates and occupancy. We recorded a 77% occupancy and an average daily rate of $294 last quarter, which led to 7% RevPAR growth over the period. Annapolis in the summer is primarily leisure transient, but social and sports groups provide a strong base of business to kick off the season. Looking further out toward the end of the third quarter, the hotel has several rebooked corporate and retreats that are helping to drive 15% ADR growth for Q3 versus 2019. Our Marriott in Mystic, Connecticut is also on pace to achieve peak summer leisure demand from weddings, leisure travelers and rebooked corporate and government groups during the third and fourth quarter at a better pace than was anticipated. Across the quarter, we saw cities and states reopen their local economies and remove restrictions for gatherings and experiences, enabling the surge that we are seeing in domestic leisure travel today. This fall, we expect to see the next inflection in demand growth as large employers return to the office and encourage travel, and our cities begin to host conventions and major citywide events. Gateway urban markets have been more impacted by the pandemic than any other segment and offer the longest runway for growth as we look forward to the next several years of the cycle. With summer travel underway, demand across the portfolio continues to be heavily weighted on weekends versus weekdays, but weekdays have shown a noticeable increase compared to just 90 days ago. Month-to-date results in July for our portfolio versus March show average weekday occupancy growth of more than 1,200 basis points, leading to RevPAR growth of approximately 55%. Removing our resort markets, our urban cluster saw weekday RevPARs grow more than 100% over that same period, indicating our gateway cities remain attractive to all segments of the traveler. When the higher-rated business traveler returns and replaces primarily leisure business, we would expect a meaningful increase in weekday ADRs. During the second quarter, we began to see traditional business travelers return to our hotels from one and two night stays to corporate groups. At the Philadelphia Westin, we saw transient business from many pharmaceutical companies, in addition to Accenture and Deloitte employees. Our West tech-related businesses are beginning to return with corporate groups from both Google and Facebook booked at our Sunnyvale hotels during the third quarter. McKinsey, JPMorgan, Goldman Sachs, IBM, General Dynamics and other traditional large accounts have become more active at several of our hotels in the portfolio. While we are seeing early stages of business travel returning in each of our urban centers and expect continued improvements throughout the summer, we anticipate the next big leg up in the recovery to be after Labor Day when schools reopen in-person and employees return to the office. Despite our hotels being primarily transient, we have seen an increase in group activity over the last few months across our portfolio. The majority of the business has been through social groups and sports. But as cities have reopened, larger events are occurring and being scheduled in our markets, resulting in increased group activity at our hotels. Our luxury hotels have benefited from not only strong leisure business and social group but also the first signs of corporate group, small meetings and retreats. The Ritz-Carlton Georgetown finished the quarter with nearly 72% occupancy at a $456 ADR. The Rittenhouse Hotel in Philadelphia also turned cash flow positive this quarter as ADR reached $478 with occupancy growing by more than 2,500 basis points versus the first quarter. Many of our hotels are located near major universities and health systems, and these significant demand generators have mobilized and are leading to increased production and group bookings at many of our Boston, New York, Philadelphia and Washington, D.C. hotels in the third quarter. Larger events are taking place in the third and fourth quarters across many of our markets, highlighted by healthcare-related conventions in Washington, D.C., boston and Philadelphia. Otakon in August in Washington, D.C. and the Boston and New York City marathons in the fourth quarter. The Javits Center in New York is slated to host a few larger citywides in August, including the New York Auto Show, but the major events in New York will return in September. The U.S. Open for tennis, Fashion Week and the UN General Assembly. And for the first time, Salesforce's Dreamforce event will occur across multiple cities, including New York. Our New York City portfolio saw occupancies incrementally build throughout the balance of the quarter. Visitation remains primarily transient, and this leisure demand should continue as Broadway reopens this fall and more events occur. But as noted in other markets, first signs of corporate travel have emerged across the past few months, and we are encouraged by the return of our more traditional large corporate accounts in the market. We are very well positioned with our locations in several high-growth submarkets. We supported teams during the mayoral election race early in the quarter at our Hilton Garden Inn Midtown East and have since transitioned to JPMorgan as our top account. Our Hyatt Union Square has seen a pickup in travelers from entertainment, media and technology: AT&T, Discovery and Apple. And downtown at the Hampton Seaport and the Hilton Garden Inn Tribeca, business travel has increased from major financial services companies and GE, Blackstone. Pockets of corporate strength have taken shape across the city. And we believe they will continue to expand after Labor Day when schools fully return and more workers across all industries return to the office on a consistent schedule. Conversations with our larger corporate accounts indicate that September is the month when the switch for business travel and in-person office work turns on. And with our first-mover advantage of remaining open throughout the pandemic, our clustered sales effort in the marketplace should yield additional revenue opportunities. Momentum is clearly building in New York, and our operating and data advantage can drive meaningful outperformance as supply remains significantly below pre-pandemic levels. The lodging recovery is clearly underway. Near-term results have exceeded expectations, and there is a long runway of value creation ahead. During the first half of the year, we took swift action to rightsize our balance sheet and evenly reduced our exposure to our core markets by divesting of a lower-growth hotel in each market. With few capital expenditures on the horizon over the next few years, we can focus on hotel operations to drive high absolute RevPAR on industry-leading margins, resulting in significant EBITDA and free cash flow growth in the coming years. Results this past quarter illustrate the merits of this strategy and the growth profile of our unique portfolio. We are looking forward to a continued recovery in earnings in what we anticipate to be the start of a long up cycle in lodging. So my comments will focus on the demand improvement across our portfolio throughout the second quarter and its impact on our margins and cash flow before closing with an update on our balance sheet and outlook for the current quarter. Demand fundamentals continue to improve from March over the balance of the second quarter and ultimately led to the company achieving corporate-level cash flow for the first time since the onset of the pandemic. In what is typically our best quarter of the year with meaningful business travel, group and conference demand and the beginning of peak summer leisure travel boosting results, demand trends during the second quarter were still heavily weighted toward leisure. RevPAR and occupancy were up meaningfully from the first quarter, but RevPAR was still down approximately 45% from the second quarter of 2019. The strong demand at our leisure-oriented properties and weekend demand at our urban hotels allowed us to maintain our average daily rates, less than 18% below 2019, all without any meaningful business travel or group demand in the marketplace. On the weekends from March to June, we were able to achieve ADR growth at our resorts approximating 13%, while our urban portfolio captured 46% increase in rates with occupancies up 1,000 basis points. Incremental growth in occupancies, combined with our rate first strategy and expense savings initiatives, resulted in margin expansion and material cash flow generation at our hotels throughout the quarter. During the second quarter, 24 of our 33 hotels broke even on the EBITDA line, a 71% increase versus the first quarter. In June, each of our 33 operational hotels broke even on the GOP line, with 24 achieving EBITDA break-even levels, representing 79% of open hotels breaking even on EBITDA versus 58% in March. We originally forecasted levels needed to break even at the corporate level, approximately 60% of occupancy with a 40% RevPAR decline from 2019. Results from June cemented these projections as our comparable portfolio generated 59% occupancy with a 40% RevPAR decline. And combined with our $7.7 million in property level earnings, resulted in $334,000 of positive corporate cash flow. The asset management initiatives we implemented in 2020, in conjunction with our flexible operating model, showed early signs that our margin improvement goal following the pandemic is beginning to take shape, as GOP margins of 44% during the second quarter were 830 basis points higher than the first quarter and just 260 basis points below our second quarter 2019 GOP margin. Based on current forecasts, we believe our third quarter GOP margins will actualize in line to slightly ahead of our third quarter 2019 GOP margins. As RevPAR and out-of-room revenues increase in 2022 and beyond, our current operating model will yield much higher levels of GOP and allow us to amortize our fixed operating expenses as well as our property taxes and insurance expenses. This provides us confidence in our ability to forecast post-pandemic EBITDA margin growth as our ability to drive ADR in tandem with applied expense savings initiatives should allow us to generate 150 to 250 basis points of sustainable long-term margin savings for the portfolio. From a profitability perspective, our South Florida cluster led the portfolio again this quarter with 41% EBITDA margins, highlighted by our Parrot Key and Cadillac assets. The Parrot Key and Cadillac finished the quarter with 58% and 43% EBITDA margins, respectively, both exceeding second quarter 2019 EBITDA margins by more than 2,000 basis points. Robust results were also seen at our California and Washington, D.C. drive-to resorts as our Sanctuary Beach Resort and Hotel Milo generated a 49% and 38% EBITDA margin, respectively. While outside D.C., a strong start to the summer travel season from a rate and occupancy perspective, coupled with proprietary operational initiatives we have implemented since acquiring the hotel in 2018, led to a 59% EBITDA margin at the Annapolis Waterfront Hotel, 1,200 basis points higher than the second quarter of 2019. Our asset management strategy since the onset of the pandemic focused on driving margins through aggressive cost control. This was done primarily through the reduction in labor, but we have also utilized various technology platforms at our hotels, such as mobile check-in and concierge services, guestroom energy management systems and water reuse systems to lower utility costs, and smartphone ordering systems at our food and beverage outlets. We have been more nimble in this strategy at our independent hotels, which has resulted in significant margin savings versus our brand-oriented portfolio, as our independent and Autograph Collection hotels generated a weighted average 38% EBITDA margin for the second quarter. Strong performance at our properties this quarter was not limited to just increased occupancies and our ability to push rate as we also saw substantial growth in our restaurant and bars. At our Parrot Key, revenue generated from our outlets during the second quarter was 58% higher than the second quarter of 2019. Meanwhile, up in Boston, our Envoy in the Seaport District saw meaningful revenue generation from its Lookout Rooftop and our newly installed taqueria pop-up Para Maria, both of which have been well received by guests and locals alike. The Envoy boasts the premier rooftop in the city and its popularity helped the hotel achieve close to $2 million in revenues during -- in food and beverage revenues during the second quarter, $1 million of which was generated in June alone. We expect our restaurant and bars and our outlets at The Envoy will remain popular during the peak summer months. Based on strong demand at our resorts and increased travel to urban markets from the leisure traveler, our ability to strategically and effectively drive rates and a return of more consistent business travel on the horizon, we believe we are past the inflection point of corporate level cash burn and expect month-over-month positive cash flow for the remainder of 2021. A few closing remarks on our balance sheet and outlook for the third quarter. We ended the second quarter with $80.2 million in cash and cash equivalents and deposits. As of July 1, we had approximately $46 million in capacity on our $250 million senior revolving line of credit, and $50 million of undrawn credit from the unsecured notes facility we placed with affiliates of Goldman Sachs Merchant Bank. Additionally, we received approximately $1 million in business interruption proceeds in the second quarter from the impact of COVID-19 at several of our hotels. Based on discussions with our insurance providers, we do not anticipate receiving additional recoveries for business interruption related to the pandemic. During the second quarter, we successfully refinanced mortgage debt on four hotels: The Hilton Garden Inn Tribeca, Hyatt Union Square, Hilton Garden Inn 52nd Street and the Courtyard L.A. Westside. As of June 30, 79% of our debt is fixed or swapped with our total debt weighted average interest rate of 4.48% and 3.1 years life to maturity. We spent $2.6 million on capital projects last quarter, and we continue to limit our capex spend strictly to maintenance and life safety renovations. During the first half of 2021, we spent $5.3 million on capital projects, and we anticipate our full year capex load to be roughly 40% below our 2020 spend. We project very little disruption or capital spend for our portfolio across the next few years, which is materially beneficial from a cash flow perspective as the sustained surge in construction costs, freight rates, oil prices, and the continued tightening of the supply chain remain elevated. Month-to-date in July, we have seen continued growth in our portfolio occupancy and revenues, with the majority of our portfolio in line to slightly ahead of our internal forecast. The largest outperformance month-to-date in July has been our New York portfolio, which is currently trending up approximately 20% from June on occupancy growth, both on weekdays and weekends. Month-to-date in July, we are up over 1,000 basis points in occupancy in our Manhattan portfolio, and our New York City Metro, which includes the Boroughs, White Plains and Mystic, are running close to 80% occupancy. With our sights set on the recovery, which has already commenced, we remain laser-focused on operational performance of the portfolio and accretive opportunities that become available throughout the cycle. So this concludes my portion of the call. We're happy to address any questions that you may have at this time.

not providing full-year 2021 guidance at this time.

I will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion. Our conference call slides and our third quarter Form 10-Q are on our website and provide additional information that you may find helpful. Yesterday, Graco reported third quarter sales of $487 million, an increase of 11% from the third quarter of last year. The effect of currency translation added two percentage points of growth or approximately $6 million in the quarter. Reported net earnings were $104 million for the third quarter or $0.59 per diluted share. After adjusting for the impact of excess tax benefits from stock option exercises and certain nonrecurring tax adjustments, net earnings were $100 million or $0.57 per diluted share. Gross margin was down 110 basis points from the third quarter of last year as the favorable effect from realized pricing, increased factory volume and currency translation were not enough to offset the unfavorable gross margin rate impact of higher product costs. These higher product costs, such as material, labor and freight, decreased our gross profit by $14 million in the quarter with $10 million of this impacting the Contractor segment. At current cost and volumes, we estimate that on a dollar basis, realized price and increased factory volumes will offset higher product costs for the full year; however, these costs will continue to be decremental to the gross margin rate. Supply chain constraints, such as logistics capacity and component availability, also had an unfavorable impact on our factory's ability to deliver in the quarter and will likely persist for the remainder of the year. These challenges were predominantly felt in the Contractor segment as this is our highest volume business. Operating expenses increased $20 million or 19% in the quarter. Sales and volume-based expenses increased $9 million, new product spending increased $2 million and changes in currency translation rates increased operating expense by $1 million in the third quarter. The adjusted tax rate for the quarter was 18%. Cash flows from operations are $357 million for the year compared to $263 million last year. This increase is due to the improvement in earnings, partially offset by increases in working capital that reflects the growth in business activity. Significant uses of cash are dividend payments of $95 million and capital expenditures of $83 million, including $33 million for facility expansion projects. A few comments as we look forward to the fourth quarter. Subsequent to the end of the third quarter, Graco entered into an agreement, in which approximately $63 million of pension obligations were transferred to an insurance company through the purchase of an annuity contract. The annuity contract purchase will be funded with existing plan assets. This arrangement is part of the company's effort to reduce the overall size and volatility of its pension plan obligations. We expect to recognize a noncash pre-tax pension settlement charge of approximately $12 million in other nonoperating expense in the fourth quarter. Based on current exchange rates, the full year favorable effect of currency translation is estimated to be 2% on sales and 4% on earnings, with the most significant impact having occurred in the first half of the year. Also for the remainder of 2021, we expect unallocated corporate expense to be approximately $26 million to $28 million. The decrease from prior estimates is due to lower stock compensation expense for the year. Our full year adjusted tax rate is expected to be 18% to 19%. Capital expenditures are estimated to be $150 million, including $80 million for facility expansion projects. Finally, 2021 will be a 53-week year with the extra week occurring in the fourth quarter. Sales in the third quarter grew high single digits, driven by the continued recovery in both our Industrial and Process segments. Contractor North America had difficult comparisons from last year's record third quarter. Contractor demand was solid in Europe and Asia with double-digit gains in both regions. Heading into the fourth quarter, business remains robust. For the first three weeks of October, our global orders continued to outpace billings in all three segments. Normally, we don't talk about backlog since most of our business is book and ship. However, given the current environment, which is rife with component shortages and logistical disruptions, backlogs are worth mentioning. At the end of the third quarter, our consolidated backlog was approximately $280 million, which is $25 million higher than what it was at the end of the second quarter, and $121 million higher than our backlog at the end of last year. Orders are abundant; however, our biggest challenge is getting the materials and components we need and then navigating the logistical challenges inherent in today's environment. We expect conditions to remain this way for a while, and there is nothing unique to what Graco is experiencing when it comes to these issues. One more thing before commenting on our segments. It's anticipated that our planned pricing actions in 2022 will be enough to fully offset current cost pressures. Our annual pricing cadence has been appreciated by our channel partners and has tangible commercial value in the marketplace. Now turning to some commentary on our segments. I'll start with Contractor equipment. The residential construction and home improvement markets remained strong globally. On a dollar basis, incoming order rates have been relatively stable and overall demand has exceeded our expectations, given the surge that we experienced last year. Contractor backlogs are elevated at $46 million, which is up $6 million from June and up $22 million from the same time last year. The overall pace of business, including out-the-door sales, is robust. The Industrial segment grew at high teens for the quarter, with year-to-date sales exceeding previous high set in 2018. We experienced broad-based growth in all major end markets and reportable regions, which is a nice bounce back from what we faced a year ago. Consistent with our other businesses, the biggest challenge in this segment is getting product out the door. And user demand is very strong, and we anticipate this to continue for the balance of the year. Process segment sales grew 21% for the quarter, with year-to-date sales exceeding previous high set in 2019. Similar to Industrial, broad-based growth continues in all major end markets and reportable regions. The recovery of both our lubrication and process pump businesses drove sales and earnings growth for the quarter in the segment. Moving to our outlook. With demand persisting, we confirm our full year outlook of mid- to high-teen organic revenue growth on a constant currency basis for the full year 2021. While we expect continued headwinds from raw material costs, logistics, component availability in the fourth quarter, we believe we are positioned to deliver a record year.

qtrly diluted net earnings per common share $0.59. qtrly adjusted diluted net earnings per common share $0.57. continues to target mid to high teen organic sales growth on a constant currency basis for full-year 2021.

These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2020, Form 10-Q for the quarter ended September 30th, 2021, recent current reports on Form 8-K, and other Securities and Exchange Commission filings. Our comments today also include non-GAAP financial measures. 2021 finished strong for Halliburton, and I'm excited about the accelerating upcycle as we enter 2022. We have an effective value proposition and benefit from increasing activity both in North America and international markets. At the same time, we see improving service pricing in both markets. Throughout this upcycle, I expect Halliburton to grow profitably, accelerate free cash flow generation, strengthen our balance sheet, and increase cash returns to shareholders. But first, I want to take a minute and recognize the men and women of Halliburton for their execution on every dimension of our business: safety, service, quality, and financial results. In spite of global complexity in 2021, you outperformed. I believe 2022 will be a strong year for our industry and especially for Halliburton. While global energy demand and economic growth demonstrated resilience, global energy supply has shown its fragility. The impact of several years of underinvestment in new production is now apparent. And the structural requirement to invest around the wellbore is crystal clear. We see increasing customer urgency and a pivot back to what creates value for Halliburton. Our customers demand reliable execution, dependable supply chains, effective technology, and a collaborative service provider to maximize asset value. And this is at the core of Halliburton's unique value proposition. But first, I'll highlight some of our 2021 accomplishments. We finished the year with total company revenue of $15.3 billion and operating income of $1.8 billion. Both of Halliburton's divisions grew revenue and margins this year. Our completion and production division finished the year with 15% operating margin, driven by activity improvement despite inflationary pressures. We expect to build on this margin growth in 2022 as global activity and pricing improve. Our drilling and evaluation division margins remained firmly in double digits throughout 2021 and achieved full-year margins of 12% for the first time since 2014. This is a good demonstration of our steady march forward, and we are not done. I am pleased with the trajectory of our international business. International revenue and operating income increased every quarter in 2021. In North America, Halliburton achieved 36% incrementals year on year as U.S. land activity rebounded and we maximized the value of our business. We announced our science-based emission reduction targets, added 11 new participating companies to Halliburton Labs, and were named to the Dow Jones Sustainability Index, which highlights the top 10% most sustainable companies in each industry. Finally, we generated strong free cash flow of $1.4 billion and ended the year with $3 billion of cash on hand, even after the retirement of $685 million of long-term debt in 2021. Next, let me share a few highlights from our fourth quarter performance. Total company revenue increased 11%, and operating income grew 20% sequentially. Our completion and production division revenue increased 10% sequentially, and operating income increased 8%, with completion tool sales showing the highest third to fourth quarter improvement in the last 15 years. Equally important, our current completion tool order book has more than doubled from a year ago, signaling strong growth and profitability again in 2022. Our drilling and evaluation division grew revenue 11%, which outperformed the global rig count growth for the quarter and delivered over 300 basis points of sequential margin improvement. International and North America revenue grew 11% and 10%, respectively, due to strong year in sales and activity increases across all regions. Building on this strong foundation of disciplined execution, today, we announced two important strategic steps we are taking to further create value for our shareholders. First, our board of directors increased our quarterly dividend to $0.12 per share in the first quarter of 2022. This action reflects our confidence in Halliburton's strong cash generation capacity. Second, in order to accelerate debt retirement and strengthen our balance sheet, we are redeeming $600 million of our $1 billion in debt maturing in 2025. When these notes are redeemed in February, we will have retired $1.8 billion of debt since the beginning of 2020. These steps demonstrate my confidence in our business customers, employees, and value proposition. As I discussed with you on recent earnings calls, I expect the macro industry environment to remain supportive. And as we saw in 2021, the international and North America markets will continue their simultaneous growth. This is momentum that I have not seen in a long time. With this momentum, we plan to execute our unique strategic priorities, deliver profitable growth internationally, maximize value in North America, accelerate digital and automation deployment, improve capital efficiency, and advance a sustainable energy future. Let's discuss how we plan to do this. First, internationally, our strategy is to deliver profitable growth. We allocate capital to the highest-returns opportunities, which means we are selective on what we bid for and when. Our D&E margin performance in 2021 as a demonstration of this discipline. We continue to invest in technology, both digital and hardware, that maximizes asset value. In 2021, we brought to market over 50 new technologies, including our iStar Intelligent Formation and Evaluation Platform and the next generation of our iCruise system for harsh drilling environments. Our multiyear investment in drilling technologies is paying off. And we expect to outgrow the market as international drilling activity ramps up. We have unique international growth opportunities in specialty chemicals and artificial lift. As Halliburton expands the international footprint of these businesses, we have a pipeline of opportunities that are longer cycle and should be margin accretive. Halliburton's size, scale, and sophisticated supply chain and HR teams reliably execute for our customers in the face of supply shortages and labor tightness. Second, in the structurally smaller North American market, our strategy is to maximize cash flow, and it dictates how we approach our North America business. Strong cash flow starts with strong margins, and Halliburton's margins are the best in class. We completed the most aggressive set of structural cost reductions in our history. We also made significant changes to our processes that drive higher contribution margin, for example, how we perform equipment maintenance and provide engineering support. These changes give us meaningful operating leverage as North American activity accelerates. We consistently replace equipment as it wears out and avoid outsized recapitalization requirements. And we have the right type of equipment. We are the leaders in the low-emissions equipment segment. We believe this gives us a structural pricing advantage as operators are willing to pay a premium for differentiated, more environmentally friendly solutions. Our second-generation ZEUS electric fracturing technology is working in the field today and delivers results for a growing list of customers. Importantly, in addition to emissions reduction, electric fracturing technology provides unprecedented operational control and precision. For example, this makes pumping rate adjustments at least four times faster than a diesel pump, allowing us to respond to surface and subsurface changes more quickly than with a conventional frac spread and precisely execute the job design. We expect fully electric locations to become a larger share of the market. Halliburton has the right kit, including our ZEUS electric pumping unit, the ExpressBlend blending system, the eWinch electric wireline unit, and the electric tech command center to meet the market demand for lower-emitting fracturing operations. We developed differentiated technologies that focus around the wellbore. As the oil price and customer urgency increase, these technologies become more valuable to operators. For example, our SmartFleet intelligent fracturing solution helps customers optimize fracturing performance and maximize production. Several large operators will have SmartFleet working on multi-pad completion programs this year. Additionally, SmartFleet delivers fully automated frac operations, which ensures more consistent fracture placement on every stage, improves cluster uniformity, and manages offset frac hits. Finally, I want to highlight the importance of our well construction and production service lines. They each have unique competitive advantage and technology to maximize value in North America. Third, our strategy is to advance digitalization and automation in all aspects of our business. Our digital investments drive higher margins through customer purchases of software, smarter tools and answer products, and cost savings for Halliburton. Let me give you an example. Currently, 100% of Halliburton's drilling jobs run on a cloud-based real-time system to deliver data and visualization to our customers around the world. Close to 60% of iCruise operations are fully automated, allowing for up to a 70% reduction in headcount per rig. Automation alleviates health and safety concerns by removing personnel from rigs, accelerates service delivery improvements, and reduces the environmental footprint of oil and gas operations. Our fourth strategic priority is to drive capital efficiency across the balance sheet. This positions Halliburton to generate industry-leading returns and strong free cash flow as markets grow. We will optimize the working capital required to grow our business and maintain our capex in the range of 5% to 6% of revenue. Our business thrives in this range because of our research and development efforts and process changes. These allow us to build tools cheaper, lengthen their run life, and move assets quicker to where they make the most money. Our final strategic priority is to advance a sustainable energy future. Our clean energy accelerator, Halliburton Labs, continues to add new participants. We help these early stage companies achieve important scaling milestones and significantly increase their enterprise value. Through Halliburton Labs, we are actively participating in the clean energy space without committing shareholder capital. Halliburton will evolve as energy evolves. And we will add to our already expanding opportunities to participate as clean energy value chains mature. However, we will do so consistent with our capital allocation strategy and mindful of our commitment to deliver industry-leading returns and free cash flow generation. We will proceed with patience, discipline, and resolve. Now, let's review our fourth quarter 2021 performance and expectations for 2022. As OPEC Plus spare capacity returns to normalized levels this year, we believe sufficient pent-up oil demand will support a call on both international and U.S. production, and lead to increased activity. International activity accelerated in most markets in the second half of the year and finished strong in the fourth quarter with a 23% rig count increase year on year. All Halliburton regions grew revenue, led by Asia-Pacific, the Middle East, and Africa, with both of our divisions contributing to the revenue and margin expansion. I'm excited about our future international growth. Despite typical first quarter seasonality, we're starting 2022 a lot higher than where we entered 2021. I expect our customers international spend to increase by mid-teens this year. We anticipate projects in the Middle East, Russia, and Latin America to attract the most investment, with activity increases in Africa and Europe limited to a few markets. Asset owners are eager to reverse base production declines caused by multiple years of underinvestment. We expect that operators will focus on shorter-cycle production opportunities to meet increasing oil demand. This disproportionately benefits Halliburton as these short-cycle barrels require higher service intensity and spending directly focused on the wellbore as opposed to long-cycle infrastructure investments. In 2022, we expect to deliver steady, profitable growth across the international markets. Our tender pipeline is strong. We anticipate higher utilization for existing equipment in busy markets like the Middle East, Russia, and Latin America. We plan to allocate our capital dollars to the opportunities that generate the highest return. Given the tool tightness that exists today in some product lines and geographies, we intend to strategically reallocate assets to drive improved utilization and returns. A tightening market focuses our ongoing pricing discussions with customers. We see pricing traction on new work and contract renewals, including integrated contracts. Additionally, we have introduced pay-for-performance models, negotiated favorable terms and conditions, and applied price escalation clauses. While large tenders remain competitive, we are consistent with our strategy to pursue profitable growth. Turning to North America. In 2021, the recovery in North America was faster and more pronounced than in the international markets. In the fourth quarter, U.S. land rig count increased 84% year on year, and drilling activity outpaced completions as operators prepared well inventory for 2022 programs. Completed stage count growth moderated slightly due to the holidays, sand supply tightness, and lower-efficiency levels typically experienced in the winter months. In the fourth quarter, we finished the planned upgrade of all fracturing fleets to the next-generation fluid end technology that extends the life of our equipment and helps reduce maintenance cost. We expect a busy 2022 in North America. Given a strong commodity price environment, we anticipate North America customer spending to grow more than 25% year on year. We believe the highest increase will come from private operators. Public E&Ps will continue to prioritize returns while delivering production into a supportive market. In North America, Halliburton uniquely benefits as the largest oilfield services provider in the largest oilfield services market in the world. We anticipate solid net pricing gains in North America throughout 2022. The North America completions market is approaching 90% utilization, and Halliburton is sold out. Pricing for our fracturing fleets is moving higher across the board, both for our market-leading low-emissions equipment and our Tier 4 diesel fleets. As a result, we expect to see over 30% incremental than our hydraulic fracturing business in the first quarter. Anticipated demand growth for equipment provides a runway for us to increase pricing throughout the year. We expect some marketwide operational efficiencies afforded by completing a backlog of DUCs in 2021 to reverse as frac fleets return to the usual mode of following drilling rigs. This will further increase the call on equipment as operators add rigs throughout the year. Finally, during the tendering season, we secured net pricing increases across several different non frac product service lines: drilling, cementing, fluids, drill bits, and artificial lift. As activity accelerates, the market is seeing tightness related to trucking, labor, sand, and other inputs. While we pass these increased costs on to operators, Halliburton has effective solutions that minimize the operational impact of this tightness and provide reliable execution for our customers. As an example, in 2021, we expanded our collaboration with Vorto and now benefit from 5F, the largest integrated transportation platform in the oil and gas industry. This platform has several thousand drivers, hundreds of carriers, and a chain of asset-managed yards. It allows us to effectively manage trucking inflation and availability constraints and significantly reduce logistics-related, nonproductive time. Our human resources team and systems effectively mitigate local labor tightness. We recruit nationally and hire, train, and manage a commuter workforce that makes up to 80% of our personnel in some areas. There is no doubt, the much-anticipated multiyear upcycle is now underway. North America production growth remains capped by operators' capital discipline, while meaningful international production growth is challenged by years of underinvestment. Energy demand has proven its resilience, fueled by pent-up economic growth and a global desire to return to normalcy. This is a fantastic set of conditions for Halliburton. In a strong commodity price environment with limited production growth options, operators turn to short-cycle barrels and increase spend around the wellbore. Our value proposition works. We have the right strategies for both international and North America markets. We are leaders in digital and automation, and we drive capital efficiency while advancing a sustainable energy future. I fully expect that Halliburton will accelerate cash flow generation, strengthen our balance sheet, and increase cash returns to shareholders in this upcycle. Let me begin with a summary of our fourth quarter results compared to the third quarter of 2021. Total company revenue for the quarter was $4.3 billion, an increase of 11%. Operating income was $550 million, a 20% increase compared to the adjusted operating income of $458 million in the third quarter. These results were primarily driven by increased global drilling activity and end-of-year product and software sales. Now, let me discuss our division results in a little more detail. Starting with our completion and production division, revenue was $2.4 billion, an increase of 10%, while operating income was $347 million, or an 8% increase. These results were primarily driven by higher completion tool sales globally, as well as increased pressure pumping services in North America land and the Middle East Asia region. These improvements were partially offset by reduced stimulation activity in Latin America, Canada, and the Gulf of Mexico; lower pipeline services in Europe, Africa, CIS, and Asia; reduced well intervention services in Brazil; and decreased artificial lift activity in North America land. In our drilling and evaluation division, revenue was $1.9 billion, an increase of 11%, while operating income was $269 million, or a 45% increase. These results were due to increased drilling-related services globally, wireline sales in Guyana, improved project management activity in Ecuador and India, increased wireline activity in the Middle East Asia region, and higher software sales in Latin America and Middle East Asia. Partially offsetting these increases were decreased project management activity and testing services in Mexico, as well as lower drilling-related activity in Russia. Moving on to our geographic results. In North America, revenue increased 10%. This increase was primarily driven by higher pressure pumping activity and drilling-related services in North America land, in addition to higher completion tool sales and fluid services in the Gulf of Mexico. These increases were partially offset by a reduced stimulation activity in Canada and the Gulf of Mexico, coupled with reduced artificial lift activity in North America land. Turning to Latin America. Revenue increased 7% sequentially. This improvement was driven by higher project management activity in Ecuador, increased drilling-related services in Mexico, increased activity across multiple product service lines in Brazil, wireline sales in Guyana, and higher activity across multiple product service lines in Colombia. These increases were partially offset by reduced project management and simulation activity and testing services in Mexico. In Europe, Africa, CIS, revenue increased 8% sequentially. These results were partially driven by higher software and completion tools sales across the region, improved activity across multiple product service lines in Norway and Egypt, and increased well control activity in Nigeria. These improvements were partially offset by a reduced activity in multiple product service lines in Russia, reduced pipeline services and well construction activity in the United Kingdom, and decreased stimulation activity in the Congo. In the Middle East Asia region, revenue increased 16%, resulting from higher completion tool sales and wireline activity across the region, improved well construction services in Saudi Arabia and Oman, higher software sales in Kuwait and China, improved project management activity in India, and increased stimulation activity throughout Asia. These increases were partially offset by reduced pipeline services in Asia, along with lower activity across multiple product service lines in Vietnam. Now, I'd like to address some additional financial items. In the fourth quarter, our corporate and other expense totaled $66 million, which was slightly higher than expected due to an increase in legal reserves. For the first quarter, we expect our corporate expense to be about $60 million. Net interest expense for the quarter was $108 million, slightly lower than anticipated due to higher interest income from our cash balance. Today, we announced our decision to redeem $600 million of the 2025 senior notes using cash on hand. This action will reduce future cash interest expense and reflects our desire to continue reducing debt balances. As a result of the debt retirement in late February, our net interest expense should remain roughly flat in the first quarter. During the quarter, we recognized a noncash gain of approximately $500 million due to the partial release of a valuation allowance on our deferred tax assets. This reversal is based on the improved market conditions and reflects our increased expectation to utilize these deferred tax assets going forward. Our normalized effective tax rate for the fourth quarter came in at approximately 23%. Based on our anticipated geographic earnings mix, we expect our 2022 first quarter effective tax rate to be approximately the same. Capital expenditures for the quarter were $316 million, with our 2021 full year capex totaling approximately $800 million. In 2022, we intend to increase our capital expenditures to approximately $1 billion while remaining within our target of 5% to 6% of revenue. We believe that this level of spend will equip us well to execute on our strategic priorities and take advantage of the accelerating market recovery. Turning to cash flow, we generated nearly $700 million of cash from operations during the fourth quarter and delivered approximately $1.4 billion of free cash flow for the full year. As a result, we ended the year with approximately $3 billion in cash. I've spoken before about our ability to concurrently reduce debt and increase the return of cash to shareholders. And today, we put that into action. This is a great start to a longer-term goal of returning more cash to shareholders. Now, let me provide you with some comments on how we see the first quarter playing out. As is typical, our results will be subject to weather-related seasonality and the roll-off of year-end product sales, which will mostly impact our international and Gulf of Mexico businesses. However, we expect pricing recovery in North America to help offset these dynamics. As a result, in our completion and production division, we anticipate sequential revenue and margins to be essentially flat to the fourth quarter. In our drilling and evaluation division, we expect revenue to decrease in the mid-single digits sequentially, while margins are expected to be flat to down 50 basis points. To summarize our discussion today, we see customer urgency and demand for our services increasing internationally and in North America. We expect our strong international business to continue its profitable growth as activity ramps up throughout the year. In the critical North America market, we expect our business to grow and improve margins. We prioritize our investments to the highest returns opportunities and remain committed to capital efficiency. We continue to play a role in advancing cleaner and more affordable energy solutions. In 2022, I expect Halliburton to deliver margin expansion, industry-leading returns, and solid free cash flow.

q4 revenue $4.3 billion.

On the call today are William Eccleshare, Chief Executive Officer of Clear Channel Outdoor Holdings, Inc.; and Brian Coleman, Chief Financial Officer of Clear Channel Outdoor Holdings, Inc., who will provide an overview of the fourth quarter and full year 2020 operating performance of Clear Channel Outdoor Holdings, Inc., and Clear Channel International BV. These statements include management's expectations, beliefs, and projections about performance and represents management's current beliefs, there could be no assurance that management's expectations, beliefs or projections will be achieved or that actual results will not differ from expectations. During today's call, we will provide certain performance measures that do not conform to Generally Accepted Accounting Principles. They provide a detailed breakdown of foreign exchange and non-cash compensation expense items, as well as segment revenue, adjusted EBITDA, among other important information. For that reason, we ask that you view each slide as William and Brian comments on them. Despite the unprecedented challenges brought on by the pandemic and the sporadic nature of the global recovery, we are heartened by the progress being made with regards to development and distribution of vaccine, and we remain confident that our business will return to growth in 2021. It's worth noting that the out-of-home industry has consistently accounted for 5% to 6% of global advertising spend, and was one of the only growing traditional mediums pre-COVID. Our industry has proven to be very resilient coming out a previous downturn, and we fully expect this will once again be the case as we emerge from the pandemic. Longer term, the digital out-of-home sector is projected to grow at 13% compound annual growth rate from 2022 to 2025, according to data published by MAGNA Global in December 2020. We hope to capture a significant share of this growth, and we believe the actions we've taken during the past 12 months from strengthening our liquidity and implementing cost restructuring efforts, to the adjustments we've made to our sales approaches, to the continued expansion of our digital platform and data analytics product, put us in a stronger position to return to revenue growth as the recovery ultimately takes hold. As we previously noted, while we continue to focus on carefully managing our expenses, we have begun to play offence. Throughout the pandemic, we have focused on strengthening our relationships with our advertising partners, with an emphasis on collaborating more closely with them as they tap into the flexibility and immediacy of our platform. We have increasingly utilized our RADAR tweaked solutions to help our customers understand how that target customers have changed their movement patterns. In turn, we have still to demonstrate our ability to deliver real-time content changes depending on audience traffic, as well as weather, day-part and other relevant variables. Overall, we are united across our organization in executing a clear strategic plan, and fully capitalizing on the fundamental strength and growth drivers of our global asset base, in order to unlock shareholder value. There are four key components that will continue to define our success now and well into the future. And we have continued to deliver progress across all of them. These imperatives include, first and foremost, we are continuing to invest in our business, including secure in premier contracts and integrating the right technology to strengthen and expand the effectiveness of our assets. We continue to grow our digital footprint and demonstrated effectiveness in dynamically targeting, influencing and delivering audiences on the move. Complementing our digital portfolio, we've added to our data analytics capabilities and further strengthened our RADAR tweak of tools through key partnerships in both the US and Europe, and we continue to expand our integration with programmatic buying platform. All of these investments around monetizing our portfolio by delivering the data, targeting and ease of ad placement that our customers increasingly appreciate. We also finalized our new contract with the Port Authority of New York and New Jersey during the fourth quarter. This venture is aimed at capturing the incredible potential of our platform and technology in a very big way as we emerged in the pandemic and audience travel begins to normalize. Second, we are focused on maximizing revenues by doing what we do best, partnering politely with our customers to deliver compelling advertising solutions, strengthening long-term relationships and remaining agile and flexible. In the US, we're doubling down on our client direct selling initiatives and emphasizing selling creative ideas rather than specific billable locations. Similarly in Europe, we are working with advertisers and agencies to develop unique network solution, which exploit the flexibility of our medium. These approaches along with the integration of RADAR's broadening suite of related data analytics tool are supporting deeper conversations with brands, who are selling the unique strength of our platform. Third, we have remained diligent in prudently managing our cost structure and cash flow. These initiatives have included negotiating reductions in site leases, temporary reductions in compensation and reductions in certain discretionary spending, as well as deferring capital expenditures. We've also moved forward with the restructuring plans to reduce headcount throughout our organization. And fourth, we are committed to maintaining ample liquidity and continuingly -- continually reviewing parts to strengthen our balance sheet over the long term. This includes the recent refinancing of a portion of our debt through the issuance of $1 billion senior notes, which extended our maturity profile and reduced our cash interest expense going forward. And Brian will provide more details following my remarks. The strength of our assets and our focus on remaining agile in terms of maximizing our inventory in a difficult environment was evident in the fourth quarter as we continued to post sequential improvement in our performance. We delivered consolidated revenue of $541 million, down 27% compared to the prior year. Excluding China and FX, the decline would have been 25% in the fourth quarter, an improvement over the third quarter. In Americas, we delivered results ahead of our expectations in both sequential revenue and adjusted EBITDA margin. Our performance in Europe reflected the impact of the increased mobility restriction as government thought to contain the second wave of the virus. These results were also ahead of our expectations as we work diligently to adjust our selling approaches and maximize our asset in an unprecedented and volatile climate. Similar to the third quarter, we saw promising signs regarding the resilience of our platform in select markets, particularly in the UK where our business significantly outperformed the roadside market. We believe this reflects both the premium locations of our roadside inventory, as well as the success of our digital screens which generated close to 70% of our fourth quarter revenue in the UK. These results, as well as our progress in continuing to drive operating efficiencies are certainly encouraging given the pandemic related circumstances we have faced globally. I'd like to call out all of our employees for their outstanding commitment to our mission and their contributions to our business during this extraordinary operating period. We truly have a first rate talented team laying the groundwork to deliver improved results this year and beyond. Our people have adjusted brilliantly to new ways of working and their productivity and commitment through the crisis have been outstanding. There are many steps they are taking to further strengthen our operations while adjusting our approach to serving our clients during the pandemic will pay dividends well into the future. Looking ahead, we will be facing a very tough comparable first quarter given our strong performance in the first three months of 2020, and the continued impact of COVID 19. This is also traditionally our smallest quarter in terms of revenue. Based on the information we have as of today, we expect Americas segment revenue to be down in the high 20 percentage range as compared to the prior year. The recent mobility restrictions in European countries, following mutations of the virus have continued to cause significant volatility in our European segment booking activity. Due to this, for the first quarter of 2021, with the Europe segment revenue to be down in the mid 30% range, as compared to prior year. Latin American bookings continue to be severely constrained as the pandemics' impact continues in all four of our markets in the region. Turning to our fourth quarter performance. In the Americas segment, while year-over-year revenue was down 25%, we continue to show a sequential improvement, which was better than expected. Local continues to show recovery and we're seeing national rebounding, it is not only the number of sales RFPs increasing, but we're also seeing an increase in the size of those RFPs, which is certainly a good sign. As a reminder, in 2019 National revenue was up 9%. We've begun to gain traction with the large agencies and brands on the ability of the out-of-home medium to deliver results. They were however the first to pullback as the pandemic hit. So we're now beginning to rebuild interest with them, which bodes well as we exit the pandemic. In the US, programmatic purchasing grew encouraging the year-over-year during the fourth quarter, although off a small base. And we believe programmatic could grow substantially over time. We've built a robust set of SSP partners and a rich network of more than 20 DSPs, providing avenues to sell our inventory alongside other digital media. Our early entry into programmatic relative to the rest of the out-of-home industry positions us well as we work to introduce our platform and capabilities to a greater number of brands across the larger media buying universe. Europe's fourth quarter revenue, adjusted for foreign exchange, was down 23%. While our performance was ahead of our internal expectations due to the second wave of COVID and associated travel restrictions, specifically in our largest market, France, we did not deliver sequential improvement. During the quarter, we continued to benefit from our strategic focus on roadside locations, which accounted for about two-thirds of our total European revenue and are far less affected by COVID-19 driven restriction than the transit environment which has historically accounted for just over 10% of our European revenues. Similar to the Americas, one encouraging outcome of the pandemic is that in Europe, we have witnessed increased opportunities to demonstrate the flexibility, immediacy and creativity of our platform from multiple standpoint, including messaging context, contract flexibility and the ability to use mobile data to better target specific audiences. Moving on now to our outlook for the Americas business. As I mentioned, we expect the Americas to be down in the high 20 percentage range as compared to the prior year. This is slightly weaker than the fourth quarter, due in part to the tough comps of 2020, as well as increased pressure on airports. As a reminder, in last year's first quarter, Americas segment revenue was up 8.5% on 2019. We are heartened by the increased audience movement with trends that we're seeing. Our data is showing that travel has actually remained close to normal with some weeks even exceeding the same week in the prior year. So audiences are back on the highways and we have no doubt advertisers will ultimately come back to the market. The encouraging news is that, similar to the fourth quarter, we are continuing to see an improvement in the volume and the size of RFPs, and it appears that advertisers are getting more confident and starting to plan for the future in a more structured manner. The beverage vertical continues to improve with the restaurant up versus prior year. But it's also clear that advertisers are continuing to delay decision making and booking campaign later reducing our visibility. We're continuing to leverage our RADAR platform, an expanded portfolio of partner tool to adjust to evolving travel patent to maximize our inventory for our customers, and this is helping to strengthen our relationships and demonstrate the unique attributes of our platform. Turning to a review of the Americas technology initiatives and new contracts. During the quarter we continued to invest in the right technology, including increasing our digital footprint, strengthening our data analytic capabilities and expanding in the programmatic space. We added seventeen new digital billboards in the fourth quarter for a total of 74 new digital billboards in 2020, giving us a total of more than 1,400 digital billboards across the United States. We also continue to strengthen our RADAR platform through partnerships aimed at further improving our data analytics and directly addressing our customers' needs. We entered into a partnership with Bombora, a leading provider of B2B intent data. An out-of-home industry first, we are integrating Bombora data with RADAR viewed audience insights, demographics, and location targeting. So advertisers can now understand how each of our display impacts more than 100 B2B audience segment, making targeting the B2B customer more accessible and measurable. Our partnership with Bambora followed the recent addition, the partnerships with Tremor Video and Geopath, which we've also added to the integrated suite of solutions we deliver through RADAR. As an example of the benefits of our technology investment, we leveraged our billable presence in Florida and our RADAR-Connect mobile retargeting capabilities to deliver a campaign for Game Day vodka. The brand reported that the campaign was responsible for 65% of website traffic and achieved a take through rate that was twice the industry average. As repeated case studies have shown, combining billboard ads with mobile is far more effective than just using one or the other. The success was such that Game Day Vodka was subsequently selected as an official committee sponsor by the Tampa Bay Super Bowl Host Committee. This relationship is a very powerful example of RADAR-Connect's ability to take our out-of-home footprint to another level through smart targeting of the right audiences at the right time. As I noted, we are continuing to expand in the programmatic space. Our programmatic platform introduces ease and efficiency to the out-of-home sales process by enabling marketers to buy our out-of-home inventory in audience based packages, giving them a level of flexibility closest to the online platforms relative to other traditional ad medium. As I've noticed -- as I've noted on previous calls, it's my firm belief that if you make something easier to buy, you inevitably grow your business and our growth in programmatic presence would certainly ensure that we continue to capture advertising dollars from other media and grow our share of the pie. Finally, we are off to a good start with our Port Authority contracts. We have the inventory up and running on our platform and have begun selling at it. As we noted last quarter, the 12 year deal is the largest airport advertising contracts in the US, panning JFK, LaGuardia in Europe, and Stewart Airports. With the addition of these tremendous airport assets, brands will have the unique ability to execute campaigns that reach a vast array of consumers as they drive local site throughout a vast metro area. Despite the short-term challenges related to pandemic, we remain confident in the growth potential of these contracts. Looking ahead in Europe where we're seeing a range of performances within our markets due to the resurgence of COVID 19 cases, new variants in the virus and related government restrictions, particularly in France and the UK. As I noted earlier, we expect Europe revenues to be down in the mid 30 percentage range as compared to 2020. Visibility into the remainder of the quarter continued to be impacted as some advertisers pause their activity pending greater clarity on the pace of the vaccination and timing of market reopening. In addition, advertisers are making buying decisions later in the buying cycle which can delay bookings and impact our visibility. Having said that, it is important to note that the impact of current government restrictions remains well below impact that we saw in March and April of last year. And longer term, as we've continued to emphasize, the resilience of the business is clear and when audiences returned to the streets, our out-of-home business will rebound soundly. At this point, we believe restrictions across our European market will begin to lift the spring, and we're working closely with our advertisers to develop campaign targeting audiences as they return. For example, in the UK, where the roadmap to lifting lockdowns was reviewed earlier this week, the expected rebound is being marketed as a renaissance moment, highlighting why out-of-home is better positioned than ever to help brands reach and engage audiences as they emerge from their restrictive stay at home orders. Turning now to our European technology investments, we continue to make progress in utilizing smart data to help advertisers plan and adjust their campaigns. Our sales team has integrated the RADAR technology in Spain and the UK, and advertiser interest has been very positive, particularly as we demonstrate the agility of our platform in using aggregated anonymous data to target audiences, as they return to the street. In Spain, we recently launched RADAR driven campaign, centered on driving consumer interest for Disney Plus and CaixaBank. The Disney Plus campaign is for the many theories one division and targeted in 18 to 45-year-old demographics with interest in comic, cinema and video games. And the CaixaBank campaign was for their Young ID products and targeted 14 to 30-year-old with interest in music, museums and other cultural locations in Barcelona. We're also rolling out a programmatic offering in Europe, similar to the Americas, our programmatic offering will build over time, simplifying the buying process, providing us with additional revenue stream and a growing avenue to leverage our scale and technology to target new advertising partners. Our digital footprint continues to expand in Europe. We added 545 digital displays in the fourth quarter and 1,244 in 2020 for a total of over 16,000 screens now live. Overall, we have a broad asset base in Europe, which is enabling us to develop and market scale digital networks with a focus on road side, which can be sold flexibly by time of day and day of week. This aligns well with rising advertiser expectations regarding our scale and the strength of our technology in targeting the right audiences on the move. I should also note that we recently secured several key contracts in Europe, including winning the bid to renew the rain contract, covering bus shelters, pull banners and stopping points across the city and we've secured a renewal in Spain for the Madrid outskirts on January 1st of this year. As you would expect, the past year was not particularly active for big tenders given COVID and several were pushed out to this year. Nevertheless, we were successful in securing these major contracts. So, in summary, we are intently focused on executing on our strategy, which is centered on strengthening our technology with the aim of fully monetizing our digital board and expanding our customer base. Notwithstanding the challenges we have faced, the pandemic has also presented us with a number of opportunities to demonstrate the flexibility and immediacy of our platform with a broad range of advertisers as we look to deepen our relationships and accelerate our digital conversion. It remains early in the recovery and as our market gradually open up, we will continue to take steps to preserve our liquidity, including balancing the need to defer capital expenditures, and reduce costs while still investing in strengthening our platform. Overall, we believe we remain in a strong position to capitalize as audience ability increases, given the steps we have taken and continue to take throughout the global crisis. As William mentioned, the past year was challenging, but we moved quickly to address our cost base, strengthen our liquidity and improve our financial flexibility. As we look to build a stronger company, we have also continued to make strategic investments in critical areas aimed at strengthening and expanding the effectiveness of our assets, while also refining our sales approach. Taking together these initiatives and our improved cost structure place us in a solid position to benefit as the worldwide economy recovers. Moving on to the results on Slide 4. Before discussing our results, I want to remind everyone that during our GAAP results discussions, I'll also talk about our results adjusted for foreign exchange, which is a non-GAAP measure. We believe this provides greater comparability when evaluating our performance. Additionally, as you know, we tendered our shares in Clear Media in April of last year, and therefore our Q4 results in 2020 do not include Clear Media. However, our results in Q4 and full year 2019 did include Clear Media's results. In the fourth quarter, consolidated revenue decreased 27.4% to $541 million. Adjusting for foreign exchange, revenue was down 29.3%. If you exclude China and adjust for currency, the decline in revenue was 24.5%. The finish was better than our internal expectations due to stronger-than-expected performance in United States and certain markets in Europe. As William mentioned, this was sequentially better than the third quarter. Consolidated net loss in the fourth quarter was $33 million compared to net income of $32 million in the fourth quarter of 2019. Consolidated adjusted EBITDA was $101 million, down 51.1%. Excluding FX, consolidated adjusted EBITDA was down 52.1% compared to the fourth quarter of 2019. For the full year consolidated revenue decreased 30.9% to $1.9 billion, excluding foreign currency exchange impact, consolidated revenue for 2020 declined 31.4%. Consolidated net loss for the full year was $600 million compared to $362 million in 2019. And consolidated adjusted EBITDA for 2020 was $120 million, down 80.8% compared to 2019. Excluding FX, adjusted EBITDA was down 82% for the full year. These are certainly not the results we anticipated delivering when we started 2020. But we do believe the team did an exceptional job responding to the pandemic and taking the necessary steps to adapt to the dynamics in the marketplace. Normally during the fourth quarter earnings call I review both the fourth quarter and full year results for each of our business segments. But this year for efficiency, I will focus only on the fourth quarter. The Americas segment revenue was $258 million in the fourth quarter, down 25.3% compared to $345 million last year. As William noted, this marked further sequential improvement compared to the previous two quarters. Total digital revenue which accounted for 32% of total revenue was down 29.6%. Digital revenue from billboards and street furniture was down 15.4%. Digital revenue as compared to the prior year improved sequentially over the third quarter, which was down 34.8% and print continues to perform a bit better than digital due to our [indecipherable] inventory. National was down 27% and accounted for 37% of total revenue, with local down slightly less at 24%, accounting for 63% of revenue. Both national and local improved over the third quarter. Our top-performing categories in the quarter included business services, our largest category, as well as beverages. Regionally, we are still seeing strength in our small markets and weakness in the largest cities. Direct operating and SG&A expenses were down 16.8%, due in part to lower site lease expenses related to lower revenue and renegotiated fixed-site lease expense, as well as lower compensation costs from lower revenue and operating cost savings initiatives. Adjusted EBITDA was $94 million, down 34 -- 35.4% compared to the fourth quarter of last year with an adjusted EBITDA margin of 36.5%. Europe revenue of $268 million was down 17.9% and excluded -- excluding foreign exchange, revenue was down 23% in the fourth quarter. This was a bit weaker than the performance in the third quarter as the stricter lockdowns in key European countries, including France impacted our results. However, our results for the quarter finished ahead of our expectations, which speaks to the execution of our team, as well as the strength of our assets. The level of restrictions varied by country, with seven of our top 10 European markets posting sequential revenue improvements in the quarter, with the majority showing topline declines, less than half of what we saw at the outset of the pandemic and last year's second quarter. Digital accounted for 34% of total revenue and was down 18.8% excluding the impact of foreign exchange. Adjusted direct operating and SG&A expenses were down 17% compared to the fourth quarter of last year, excluding the impact of foreign exchange. The decline was driven primarily by lower direct operating expenses in large part due to our success in renegotiating fixed lease expenses. Additionally, SG&A expense was down slightly due to lower compensation due to lower revenue, operating cost savings initiatives and government support and wage subsidies. And adjusted EBITDA was $35 million, down 46.9% from $65 million in the year ago period, excluding the impact of foreign exchange. This was driven by lower revenues in the period. In August, as you know, we issued senior secured notes through our indirect wholly owned subsidiary, Clear Channel International BV, which we refer to as CCIBV. Net proceeds from the note offering provides incremental liquidity for our operations. Our European segment consists of the business is operated by CCIBV and its consolidated subsidiaries. Accordingly, the revenue for our Europe segment is the revenue for CCIBV. Europe segment adjusted EBITDA does not include an allocation of CCIBV's corporate expenses, are deducted from CCIBV's operating income and adjusted EBITDA. As discussed above, Europe and CCIBV revenue decreased $59 million during the fourth quarter of 2020 compared to the same period of 2019 of $268 million. After adjusting for $16.5 million impact from movements in foreign exchange rates, Europe and CCIBV revenue decreased $75 million during the fourth quarter of 2020 compared to the same period of 2019. CCIBV operating income was $0.8 million in the fourth quarter of 2020 compared to operating income of $38 million in the same period of 2019. Now let's move to Slide 7 and a quick review of other, which includes Latin America. As a reminder, the prior year results include Clear Media, which was divested in April of 2020. Latin American revenue was $15 million in the fourth quarter, down $11 million compared to the same period last year. Revenue was down due to widespread impact of COVID 19. Direct operating expense and SG&A from our Latin American business were $15 million, down $4 million compared to the fourth quarter in the prior year due in part to lower revenue, as well as cost savings initiatives. Latin America adjusted EBITDA was $1 million, down $6 million compared to the fourth quarter in the prior year due to the impact on revenue from COVID 19, partially offset by cost savings initiatives. Now moving to Slide 8, and review of capital expenditures. CapEx totaled $31 million in the fourth quarter, a decline of $62 million compared to the prior year period as we continued to focus on preserving liquidity, given the current operating conditions. CapEx was also lower due to the sale of Clear Media, which as I mentioned, occurred in April of 2020, although fourth quarter CapEx did include a small amount related to the port authority contract. For the full year, total CapEx was $124 million, down $108 million compared to the full year 2019. Again the reduced CapEx for the full year was primarily due to our liquidity preservation measures and the divestiture of Clear Media. Now on to Slide 9. Clear Channel Outdoor's consolidated cash and cash equivalents totaled $785 million as of December 31st, 2020. Our debt was $5.6 billion, an increase of just over $500 million during the year as a result of our drawing on the cash flow revolver at the end of March and issuing the CCIBV notes in August. Cash paid for interest on debt was $22 million during the fourth quarter and $324 million during the full year ended December 31st, 2020. This was in line with our expectation and up slightly compared to the prior year due to the timing of interest payments, which was partially offset by lower interest rates. Our weighted average cost of debt was reduced from 6.8% in 2019 to 6.1% in 2020. Moving on to Slide 10. As mentioned, we continue to focus on managing our cost base and strengthening our liquidity and financial flexibility. In September we announced restructuring plans throughout our organizations. In our Americas segments we completed our restructuring plans in the fourth quarter and we expect annualized pre-tax cost savings of approximately $7 million to begin in 2021. However, our plans for Europe have been delayed due to the evolving nature of COVID 19 impacts and the complexity of executing the plans. We now expect to substantially complete the plan by the first half of 2022. In conjunction with and in addition to these plans, we expect an additional annualized pre-tax cost savings of approximately $5 million in our corporate operations. Additionally, as I mentioned in my remarks on both the Americas and Europe segments, we continue to work on negotiating fixed-site lease savings and have achieved $28 million in rent abatements in the fourth quarter for a total of $78 million year-to-date. Also, we received European government support in wage subsidies in response to COVID 19 of $1 million in the fourth quarter and $16 million year-to-date. The duration and severity of COVID 19's impacts continue to evolve and remain unknown, as such, we will consider expanding, refining or implementing further changes to our existing restructuring plans and short-term cost savings initiatives as circumstances warrant. Moving onto our financial flexibility initiatives, earlier this month we successfully completed an offering of $1 billion of 7.75% senior notes due 2028. Proceeds from the offering will be used to redeem $940 million of our 9.25% senior notes due 2024, as well as to pay transaction fees and expenses including associated call premium and accrued interest. The timing was right for this offering, giving the strength in the high-yield credit market, as well as our improving outlook. In addition, we've de-risked our maturity profile by refinancing approximately half of our 9.25% notes which were unsecured and represent our next nearest material maturity. Our weighted average maturity is now 5.6 years, up from 4.9 years with a run rate cash interest savings of approximately $10 million per year, due to lower coupon rate. All-in-all, the offering speaks to the continued support the financial markets half for Clear Channel Outdoor and reflect our improving outlook, strong global assets and leading market position. Turning to Slide 11 and our outlook for the first quarter of 2021. As William mentioned, Americas first quarter 2021 segment revenue is expected to be down in the high 20% range as compared to the prior year. This is slightly weaker than the fourth quarter, due in part to the tough comps. With the first quarter of 2020 when revenue increased 8.5% over the prior year, as well as the continued impact of COVID 19. In our Europe segment we expect revenue to be down in the mid 30% range in the first quarter, historically the first quarter of the year is the smallest quarter for revenue. The weakness is due to the resurgence of COVID 19 cases, new variants of the virus and related government restrictions, particularly in France and the UK. Latin America bookings continued to be severely constrained. Additionally, we expect cash interest payments in 2021 of $362 million and $335 million in 2022. The increase in 2021 is primarily due to the interest payments on the CCIBV notes issued in 2020, as well as various timing differences. So, to reiterate, despite the near-term challenges we continue to face and the uncertainty regarding the pace of the worldwide recovery, we are encouraged by the resilience of our business and the fact that infection rates are in decline in the majority of our markets, which together with the vaccination programs gathered pace is leading to a real sense of optimism. Our national and local businesses in the US continue to recover. And in Europe we are confident that the restrictions of starting to lift and our pipeline is strengthening. As we exit the first quarter and the environment continues to improve, we remain committed to executing against our growth strategy and delivering year-on-year growth in 2021. We believe are focused on working closely with our customers to give them real time audience insight they need, including our effort to expand our technology initiatives spanning our digital platform, data analytics capabilities and programmatic capability put us in an even stronger position to return to revenue growth and benefit from our operating leverage as the recovery takes hold in the second quarter and beyond. We are now a stronger and more efficient company in the way that we operate, both in terms of the unique value proposition we deliver and the manner in which we run our business. Our people have shown that creativity and commitment and we are poised to maximize the opportunities ahead. I look forward to providing updates regarding our progress in the months ahead.

for q1 of 2021, we expect americas segment revenue to be down high 20 percentage points. for q1 of 2021, we expect europe segment revenue to be down mid 30 percentage points. both our americas and europe segments are experiencing customer advertising buying decisions later in buying cycle. latin america bookings continue to be severely constrained. will consider expanding or implementing further cost savings initiatives throughout 2021 as circumstances warrant. qtrly consolidated revenue $541.4 million, down 27.4%.

I will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion. Our conference call slide and our second quarter Form 10-Q are on our website and provide additional information on our quarter. Yesterday, Graco reported second quarter sales of $507 million, an increase of 38% from the second quarter of last year. The effects of currency translation added 4 percentage points of growth or approximately $12 million in the second quarter. Reported net earnings were $110 million for the quarter or $0.63 per diluted share. After adjusting for the impact of excess tax benefits from stock option exercises, net earnings were $108 million or $0.62 per diluted share. Gross margin rates were up 220 basis points from the second quarter of last year as a favorable effect from realized pricing, increased factory volume, product and channel mix and currency translation offset the unfavorable impact of higher product costs. Mix was favorable in the quarter due to the strong sales in the higher margin Industrial segment. Supply chain constraints such as logistics capacity and component availability had an unfavorable impact in the quarter and will likely persist for the rest of the year. On a sequential basis, gross margin rates were down 250 basis points as we saw cost pressures such as material, labor, freight and volume-based costs increased throughout the quarter. The majority of these cost increase impact the Contractor segment as that is our highest volume business. We also saw unfavorable mix on a sequential basis due to projects in Asia-Pacific in the Industrial segment. At current cost and volume, we are estimating that realized price, strong factory performance and current production activity will offset the higher product costs on a full year basis. Our operating teams are working diligently to minimize the disruptions and have been effective at keeping pace with our incoming order rates. Operating expenses increased $27 million or 26% in the quarter. Sales and volume-based expenses increased $18 million against a very low comparable in the prior year. New product development and currency translation rates each increased operating expenses by $3 million. The adjusted tax rate for the quarter was 18%. Cash flows from operations are at $220 million for the year compared to $143 million last year. This increase is due to the improvement in earnings in the quarter, partially offset by increases in accounts receivable and inventories that reflect the growth in business activities. Significant uses of cash are dividend payments of $63 million and capital expenditures of $55 million, including $21 million for facility expansion projects. A few comments as we look forward to the rest of the year. Based on current exchange rates, the full-year favorable effect of currency translation is estimated to be 2% on sales and 5% on earnings, with the most significant impact having occurred in the first half of the year. We expect unallocated corporate expense to be approximately $30 million and can vary by quarter. Our full-year adjusted tax rate is expected to be approximately 18% to 19%. Capital expenditures are estimated to be $150 million, including $90 million for facility expansion projects. Finally, 2021 will be a 53-week year with the extra week occurring in the fourth quarter. Sales in the second quarter grew by double-digits in every segment and every region. Broad-based growth for the quarter and for the year continued in all major product categories, resulting in record quarterly sales and operating earnings. Growth in Contractor continues. This is its fourth consecutive quarter with near 30% sales growth. The residential construction and home improvement markets have been strong in North America. Demand in EMEA and Asia-Pacific has accelerated, resulting in sales exceeding pre-pandemic levels. We are optimistic that incoming order rates will remain good in all regions during the second half of the year. However, from a growth rate perspective, our comparisons become much more difficult due to the large increases experienced in the second half of last year. The Industrial segment grew substantially during the quarter and for the year with sales volume either near or exceeding pre-pandemic levels in all regions. Quoting activity increased throughout the quarter as many of our key end markets continue to recover. Incoming order rates remain elevated as the pace of business accelerates worldwide. Process segment sales grew 29% for the quarter and 17% for the year. Similar to Industrial, sales volumes were also either near or exceeding pre-pandemic levels in all regions. End market growth remains broad-based with key product categories up for the quarter. The strong recovery in both our lubrication and process pump businesses drove sales and earnings growth for the quarter in the segment. Moving on to our outlook. We have reinitiated our revenue guidance for the full year 2021 and are projecting mid- to high-teens revenue growth on an organic constant currency basis. Incoming orders continue to be robust in all regions with the Industrial and Process segments now on a solid footing and should finish the year strong. Favorable operating conditions remain in Contractor. However, second half comparisons are challenging.

quarterly earnings per common share $ 0.63. quarterly earnings per common share, adjusted $ 0.62.

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.

These factors are detailed in the company's financial reports. You should also note that we'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business. In the second quarter, GAAP net income was $449 million. However, GAAP earnings per share was a loss of $0.42 due to the GAAP accounting treatment required for the transaction entered into with Samsung Display. Let me take you through why this was the case. As a reminder, on April 5, 2021, Corning entered into a share repurchase agreement with Samsung Display. As part of the agreement, Samsung converted preferred stock into common stock, and Corning immediately repurchased 35 million shares of that common stock from Samsung. The common shares were traded on the open exchange, so GAAP requires a special accounting treatment of the repurchase as an extinguishment of the original preferred shares. The accounting treatment for an extinguishment of preferred shares is to record the difference between the repurchase price and the original book value in retained earnings. This adjustment to retained earnings is also removed from net income available to common shareholders when calculating GAAP earnings per share. Excluding this, U.S. GAAP earnings per share would have been $0.52. Differences between our GAAP and core results can also stem from non-cash mark-to-market gains or losses associated with hedging contracts. They were de minimus this quarter. A reconciliation of core results to the comparable GAAP values can be found in the Investor Relations section of our website at Corning.com. You may also access core results on our website with downloadable financials in the interactive analysts center. We encourage you to follow along and they're also available on our website for downloading. Today we reported outstanding second-quarter results and we're on track for a strong year. Versus second-quarter 2020, sales grew 35% to $3.5 billion. EPS grew 112% to $0.53 on the higher sales and expanding margins. Free cash grew 65% to $471 million with first-half cash generation of $843 million. No question, we're in great shape and we see a clear growth story playing out across our businesses. Each of our five segments grew sales by a double-digit percentage year over year, ranging from 16% for specialty materials to 80% for environmental technologies. Now, of course, 2020 was an easy compare so I think it's worth noting that even versus second quarter of 2019, we grew total company sales and earnings per share 17% and 18%, respectively. Since the second quarter of 2019, we've added more than half a billion dollars in quarterly sales. About $200 million is from Hemlock and more than $300 million is organic growth with about 70% of that coming from success of our more Corning content strategy and outperforming the competition. The other 30% of organic growth is from rising with the market. In each of our market access platforms, we're addressing significant and transformational trends. We seek to drive content and expand our total addressable market by combining capabilities from our focused portfolio and prioritizing opportunities for more Corning. Our long-term strategy is built on a complementary set of three core technologies for proprietary, manufacturing, and engineering platforms, and five market access platforms. And the synergies among them allow us to create distinctive benefits for our customers, improve the return on our investments in R&D and reduce our capital intensity. We create breakthrough products and processes by leveraging the synergies among our core capabilities, capitalizing on insights we gain through close collaboration with our customers and taking advantage of our existing plants and pilot facilities for early stage production. For example, over the past few years, we have created new-to-the-world products including ceramic shield, tougher Gorilla Glasses, auto-grade glass, Valor drug packaging, Gen 10.5 display glass, innovative passive optical solutions that are dramatically increasing the ease and cost efficiency of network deployments. But we're not just creators, we're also builders. We do the manufacturing ourselves using processes that we invent and proprietary equipment that we design and build. When growth opportunities arise and demand exceeds our existing capacity, we build state-of-the art plants to manufacture products at scale. And we locate these plants in close proximity to our customers, a strategy that is likely to continue to pay off in a post-pandemic world. We derisk these investments by requiring meaningful commitments from customers often including funding before beginning construction. We last detailed our build investments with you in 2019 when we described our focus, create, build, extend value creation cycle. We pointed out how our build projects were directly responding to customer needs and commitments. We knew that carriers like AT&T and Verizon would need more fiber to densify their networks for 5G. We knew that BOE would need glass for its Gen 10.5 panels, that car companies would need gasoline particulate filters to meet new regulations, that bio tech companies would need high density cell culture to support gene therapy, and that smartphone OEMs would need increasingly durable, scratch-resistant cover glass as they design thinner phones and bigger cameras. We told you these build projects would increase our capacity to meet committed demand, and that as we delivered on that demand, they would increase our revenue and generate excellent returns. Today the build projects we undertook from 2016 to 2019 are collectively delivering return on invested capital above 20%. They've helped us increase our sales run rate from $10 billion in 2015 and 2016 to our current run rate of $14 billion, and they've help us improve total company ROIC by three percentage points. Importantly each time we build, we increase our scale and we enhance the opportunity to extend our leadership and create new innovations. And because we're constantly improving our productivity and capabilities, we can often manufacture these innovations and drive revenue growth without building new facilities. Now we actually spend most of our time in this extend part of the cycle. It's where we are today. In this phase, we keep creating and extending until we're so successful that demand exceeds our capacity. As we reapply our insights and repurpose our assets, our best-in-the world capabilities just keep getting better. Every time we pursue an adjacent opportunity, we explore new combinations of capabilities. We push the boundaries in areas where we already lead and we cross-train our people in deep and important ways. In other words, we've created a positive feedback loop that expands our knowledge, increases the relevance of our capabilities, and enhances our value to customers. And this directly fuels our content strategy. We aren't exclusively relying on people buying more stuff. We're putting more Corning into the products that people are already buying. With that in mind, let's look at some of the initiatives we're advancing across our market access platforms. In mobile consumer electronics, we continue to help transform the way people interact with and use their devices. We capture growth, increasing the value we offer on each of those devices. In the quarter, consistent with our strategy to a customer commitments and support of build initiatives, Apple awarded Corning an additional $45 million from its advanced manufacturing fund to help expand our manufacturing capacity in the United States and to support our R&D. To date, we've received $495 million dollars in total from Apple's fund. We've also launched another chapter in our more Corning strategy with an important application of our capabilities to enhance the optics of smartphone cameras, which is a new category for us. The social media experience is centered around photos. Device designers are adding cameras and increased lens size. They're also integrating more advanced capabilities such as telephoto, wide-angle lenses, and infrared sensors. These features naturally increase the prominence of the lens surface area, which in turn increases the likelihood of scratches and damage, and to Corning. Just last week, we announced Gorilla Glass with DX and DX plus for mobile phone cameras. Our DX family increases image quality and camera durability by providing a composite glass material that combines low reflection with scratch resistance approaching sapphire. Samsung is the first adopter. OEMs are designing cleaner and safer vehicles with technology that enhances the driving experience. We're uniquely suited to address these trends and we're pursuing $100 per car content opportunity across emissions, precision glass products, and auto glass solutions. And we recently entered a new product category in automotive, curved mirror solutions. Our solutions are enabling the augmented reality head-up display in Hyundai's new electric crossover, the IONIQ 5. The system essentially turns the windshield into a display screen, letting drivers keep their eyes on the road while assessing navigation and speed information directly in their line of sight. Additionally a new generation of gasoline particulate filters is helping us on our way to surpassing $500 million in annual GPF sales, well ahead of our original timeframe. Turning to life sciences. We're delivering growth on multiple fronts. We're seeing ongoing demand in support of the global pandemic response while inventions are helping advance the transition to cell and gene therapies. And we're making significant strides toward building a Valor Glass franchise, addressing a multi-billion dollar content opportunity in the pharmaceutical packaging market. In the second quarter, we further increased Valor production capacity and secured additional customer wins. We worked with Thermo Fisher and OPTIMA Pharma to create solutions that increase [Inaudible] filling speed by nearly 70%, thereby alleviating a critical bottleneck in the medical supply chain. Our collaboration features a combination of Corning's Valor vials and OPTIMA's ultra high-speed fill and finish solutions. Thermo Fisher called the results "a game changer in their ability to serve patients". Turning to display, we've experienced the most favorable pricing environment in more than a decade and we announced a second moderate increase to our display glass substrate prices. Stepping back, we're the lowest cost producer of display glass, which makes us significantly more profitable than our competitors. Our superior products, [Inaudible] capabilities, and deep customer relationships enable us to enhance our leadership position. Meanwhile the emergence of Gen 10.5 has given us a unique opportunity although the market for large size keys is expected and projected to grow at a double-digit CAGR through 2024. And Gen 10.5 provides the most economical approach for larger sets. We recently hosted the official opening ceremony for our Gen 10.5 facility in the city of Wuhan. This site is co-located with a large BOE plant, allowing Corning to deliver Gen 10.5 glass substrates more efficiently to our customer for its production of large-sized display panels. Gen 10.5 provides strong economics for our shareholders while creating options to use earlier generation fusion tanks for new applications such as automotive and cover glass. To illustrate, remember that we launched our Gorilla Glass business back in 2007 by repurposing some of our existing fusion assets. Over time, repurposing has resulted in us avoiding more than a billion dollars in capital spending. Finally, let's look at optical communications. We're energized by the momentum that is building in this business. We see that momentum confirmed by multiple sources. First is network need. Demand on the network has only been increasing. Broadband usage for June was up 33% versus pre-pandemic levels, and up 10% versus June 2020, which was a peak quarantine period. Global 5G subscriptions have grown to almost $300 million, and they're on track to double that by the end of 2021 according to industry projections. The second confirmation is customer commitments. And many of our customers are actually being quite public about their plans. We believe we're in the early innings of a large capital deployment cycle across 5G, fiber to the home, and hyperscale data centers. On AT&T's earnings call last week, their CEO said that by year end, they expect to have expanded their fiber footprint by 3 million locations, including both business and consumer customers. Deutsche Telekom's managing director recently shared that by 2024, they're planning to have about 10 million homes passed and 97% 5G coverage. He said, "The expansion of high performance networks is our top priority whether with 5G in mobile communications or fiber optic broadband expansion. To achieve this we are massively increasing the investments in our network end quote". And Microsoft CEO recently shared his perspective on expanding data center capacity to meet cloud demand. He said, "Digital adoption curves aren't slowing down. In fact, they're accelerating and it's just the beginning". Of course, the third confirmation is our order book, which is perhaps the most important indicator of growth over the next few quarters. Here, we're seeing year-over-year growth in double-digit percentages in both carrier and enterprise networks. During the quarter, we extended our technology and market leadership in optical communications by introducing new solutions that speed network deployment. We launched Corning SM-28 contour fiber, which offers an industry first combination of superior bendability, compatibility with other fibers, and low signal loss. We also launched Edge rapid connect solutions that increase fiber density and reduce customer installation time by up to 70%. Across our markets, you can see that our value creation model is driving growth and that key trends are converging around our capabilities. We're helping our customers move toward a world with nearly infinite and ubiquitous bandwidth with large lifelike displays where cars are cleaner, autonomous, and connected; where medicines are individualized, effective, and safe; and where you can do more from your mobile device protected by cover materials that are more and more capable. Now I'll wrap up my remarks today with one final point. I've always said that how we do things is as important as what we accomplish. So I'd like to take a moment to emphasize that we're committed to making a difference wherever we can. We're building on more than a century of honest respectful and fair behavior. And such behavior must continuously characterize all our actions, including progress toward improving our environmental, social, and governance programs. To share insight into our approach, we recently issued our annual report on diversity, equity, and inclusion, and we published our first sustainability would play. On all dimensions, Corning is operating exceptionally well, focused on providing value for all our stakeholders. And I look forward to updating you on our progress as we build on our momentum in the second half of the year. As Wendell said, we are on track for a strong year. Second-quarter results were outstanding. We added almost $1 billion in sales year over year, a half a billion in sales over pre-pandemic levels, and we generated significant operating and free cash flow. We also improved margins both sequentially and year over year, which contributed to our strong EPS. Across the board, our progress has been very positive. In particular pre-pandemic comparisons highlight our strength. We are confident this momentum will continue. In our markets, Corning's unique capabilities put us at the center of a substantial growth trend while our content strategy drives our performance. And we have a highly effective value creation model in place to deliver profitable growth and create shareholder value. Now let me walk you through the key metrics and drivers of our second-quarter performance. Sales increased 35% year over year to $3.5 billion, a strong run rate. Net income was $459 million, up 111%, an earnings per share was $0.53, up 112% year over year. We saw continued strength across our business segments. Optical communications delivered its third consecutive quarter of year-over-year growth and we expect to see that trend continue. Display technologies was up sequentially and year over year, and continues to experience the most favorable pricing environment in more than a decade. Life sciences and environmental outperform their markets and grew significantly versus last year's pandemic lows. Sequentially gross margin improved 200 basis points to 37.8% and operating margin improved 120 basis points to 18.3%. On a year-over-year basis, gross margin expanded 450 basis points and operating margin expanded 710 basis points. Now during the quarter, we continued to face supply chain disruptions and inflationary headwinds. Planning and increased output allowed us to reduce costly airfreight but the sequential improvement was offset by increases in shipping rates and the cost of certain raw materials, such as resin, a key component in our optical and life sciences businesses. In total, we felt about the same 150 basis points drag on margins as in Q1. Now while we don't expect significant improvement on the supply chain costs in the short term, we do expect them to normalize over time and we're taking mitigating actions, including raising prices in selected product lines. Now as is usual in the second quarter, operating expenses in dollars increased sequentially. The increase was greater than in prior years because of a larger -- because of larger variable compensation accruals consistent with our rising outlook. Free cash flow was $471 million, up $186 million year over year. Cumulative free cash flow for the first half of 2021 was $843 million. We expect to generate significant free cash flow in the second half of the year and to suppress our 2020 total by a wide margin. Now let's take a closer look at the performance of each of our businesses. In display technology, second-quarter sales were $939 million, up 9% sequentially and 25% versus 2020. Net income was $248 million, up 16% sequentially and 63% year over year. And Q2 sequential prices increased moderately as we implemented a price increase during the quarter. For the third quarter, we are moderately increasing glass prices once again. We believe the pricing environment will remain favorable going forward. Three factors will continue to drive this. First, we expect glass supply to remain short to tight in the upcoming quarters. Second, our competitors continue to face profitability challenges at current pricing levels. And third, display glass manufacturing requires periodic investments in existing capacity to maintain operations. Now we receive a lot of questions on how pandemic has impacted the display industry. For example, will there be fewer TVs sold in 2021 or in 2022? And what's the impact on the glass market? So let me take a moment to explain our view. I'll focus on televisions since they represent about 70% of the glass market. Since LCD TV has emerged as mainstream technology in 2004, LCD's television units have only three times and never two years in a row an annual glass demand has never declined. Assess 2014 television set for units are typically range bound between 225 million and 235 million while average screen size grows about an inch and a half a year. In 2020, global TV units increased 4% above the trend line to about 242 million. Screen size growth was about 1.2 inches, about 20% below trend. A lot of smaller TVs sold, probably to accommodate more people living working and studying from home. In total, glass demand was up mid-single digits. Now entering the year, we expected and continue to expect the market to revert to trend, implying a decrease in TV units, especially smaller TVs, and for normal growth of one and a half inches in screen size to return. We now have retail data through the first half of 2021 and it is largely confirmatory. TV units declined by a mid-single digit percentage year over year while average size growth returned to the one and a half inches per year trend. Unit volume for TVs, 65 inches and larger increased over 20% and smaller televisions were down by a high single digit percentage. Now consistent with math and history, the glass market grew. So halfway through the year, our expectations for TV units being down year over year and seen -- screen size growing approximately one and a half inches are playing out. Looking ahead to 2022, we think TV units and screen size will continue to follow historical trends. That means TV units will be within the typical range and average screen size will grow about one and a half inches. Now we have yet to see how the current holiday retail season plays out so we don't have enough information to definitively comment too much on next year but it is worth noting that TV units, which are declining this year, have never declined two years in a row. And next year is a world cup year and TV units have never declined in a world cup year. And finally, the biggest driver of retail glass growth in most years is the increase in screen size. We would expect the average screen size to once again grow one and a half inches next year. Now where we find our views based on this year's holiday retail season, which is still in front of us, and we will keep you updated. Let's move to optical communications, which continues its growth in with sales surpassing a billion dollars, up 21% year over year and 15% sequentially. Sales increased by a double-digit percentage in both carrier and enterprise network sequentially and year over year. Net income was $148 million, up 83% year over year and 33% sequentially. Higher volume and better operational performance drove the improvement. The environment is extremely favorable. Demand on networks is at an all-time high. In response, operators are expanding network capacity, capabilities, and access. The pace of data centers builds is accelerating and capital spending by our customers is increasing. Governments around the world are announcing and initiating plans to extend the reach of broadband. All this points to the start of a strong sustained investment phase across the industry. We are the market leaders and we're well-positioned to capture significant growth as network investment increases our solutions improve the speed and capital efficiency [Inaudible]. Additionally, Corning is the only large-scale Indian manufacturer of optical solutions, which allows us to innovate on important dimensions not available to competitors. Our broad customer base unquestioned technology leadership puts us squarely at the center of customer investments for fiber-to-the-home, rural broadband, 5G, and hyperscale data centers. In environmental technology, second-quarter results for $407 million, up 81%year over year but down 8% sequentially. Net income improved year over year to $81 million and also grew sequentially, partly due to improved freight and logistics costs versus Q1. Car-related sales increased 68% year over year as vehicle production improved from pandemic lows and GPF adoption continues in Europe and China. Auto markets continue to be constrained by chip shortages, which impacted our automotive sales sequentially in the second quarter. We are monitoring in-market demand and supply chain activity as we go through the second half of the year. We remain on track to build a $500 million gasoline particular filter business ahead of our original timeframe. We continue to innovate to solve our customer's most challenging problems and have recently begun to ship next-generation GPFs to help OEMs achieve even lower levels of emissions. In diesel, sales grew 101% year over year driven by continued customer adoption of advanced after-treatment in China and continued strength in the North American heavy duty truck market. Specialty materials delivered another outstanding quarter. Following first-quarter year-over-year growth of 28%, the second quarter was up 16% year over year with sales of $483 million. Demand remains strong for our premium cover glass materials and I.T. products. During the quarter, our premium glasses and services supported multiple new phone and I.T. launches, including 16 smartphones along with six laptops and tablets featuring Gorilla Glass. Demand also remains strong for advanced optics content used in semiconductor manufacturing, which are essential for deep ultraviolet and extreme ultraviolet or EUV lithography. Now investments and innovations that are moving toward commercialization resulted in lower net income than in 2020. As we've noted before, newer innovations can face high costs as we develop and scale our manufacturing processes. We anticipate that profitability will improve as we come up the learning curve and improve utilization. Life sciences second-quarter sales were $312 million, up 28% year over year and 4% sequentially driven by ongoing recovery in academic and pharmaceutical research labs and continued strong demand for bio production vessels and diagnostic-related consumables. Net income with $52 million, up 68% year over year and 8% sequentially driven by the higher sales and solid operating performance. So our businesses performed very well and our markets are strong. That said let me take a moment to reiterate our commitment to financial stewardship and capital allocation. Our fund -- our fundamental approach remains the same. We will continue to focus our portfolio and utilize our financial strength. We generate very strong operating cash flow and we expect that to continue going forward. We will continue to use our cash to grow, extend our leadership, and reward shareholders. Our first priority for use of cash is to invest in our growth and extend our leadership. We did -- do this through R&D investments, capital spending, and strategic acquisitions. Our next priority is to return excess cash to shareholders in the form of dividends and opportunistic share repurchases. This year we increased our quarterly dividend by 9% and resumed share buybacks by repurchasing and retiring 4% of our outstanding common shares from Samsung Display. In closing, we had an excellent quarter. Our performance relative to both 2020 and 2019 adds to our confidence that we are on track for an outstanding year. For the third quarter, we expect core sales in the range of $3.5 billion to $3.7 billion and we expect earnings per share in the range of $0.54 to $0.59. Our value creation model is working. We are pursuing opportunities that utilize capabilities from our focused and cohesive portfolio to drive growth. By repurposing and reapplying capabilities, we're increasing our probability of success lower our cost of innovation and becoming more capital efficient. I look forward to sharing our progress with you as the year goes on. With that let's move the Q&A. And, Katherine, we're ready for our first question.

compname reports q2 loss per share of $0.42. q2 gaap loss per share $0.42. q2 core earnings per share $0.53. qtrly gaap and core sales were $3.5 billion. in display technologies, second-quarter sales were $939 million, up 9% sequentially and 25% year over year. sees q3 core earnings per share $0.54 to $0.59. sees q3 core sales $3.5 billion to $3.7 billion. in optical communications, second-quarter sales were $1.08 billion, up 21% year over year.

Those statements involve risks, uncertainties, and other factors that could cause the actual results to differ materially. These factors are detailed in the company's financial reports. You should also note that we'll be discussing our consolidated results using core performance measures, unless we specifically indicate our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business. For the third quarter, the largest differences between our GAAP and core results stemmed from noncash mark-to-market losses associated with the company's currency hedging contracts and noncash impairment charges. With respect to mark-to-market adjustments, GAAP accounting requires earnings translation hedge contracts and foreign debt settling in future periods to be mark-to-market and recorded at current value at the end of each quarter, even though these contracts will not be settled in the current quarter. For us, this decreased GAAP earnings in Q3 by $16 million. To be clear, this mark-to-market accounting has no impact on our cash flow. Our currency hedges protect us economically from foreign exchange rate fluctuations and provide higher certainty for our earnings and cash flow, our ability to invest for growth, and our future shareholder distributions. Our non-GAAP or core results provide additional transparency into operations by using a constant currency rate aligned with the economics of our underlying transactions. We're very pleased with our hedging program and the economic certainty it provides. We received more than $1.7 billion in cash under our hedge contracts since their inception more than five years ago. A reconciliation of core results to the comparable GAAP value can be found in the Investor Relations section of our website at corning.com. You may also access core results on our website with downloadable financials in the Interactive Analyst Center. We encourage you to follow along. They're also available on our website for downloading. Today, we reported strong third-quarter results that continue a year of outstanding sales growth, margin expansion, and significant cash generation. Sales grew 21% year over year to $3.6 billion, a new all-time high. Gross margin expanded 50 basis points sequentially and 70 basis points year over year to 38.3%. EPS grew 30% year over year to $0.56. And free cash flow of $0.5 billion brought cumulative free cash generation for the first nine months of 2021 to $1.3 billion. Our outstanding results in this period of global disruption are due to excellent execution at all levels of the company. And they're driven by a compelling set of long-term growth opportunities that we're capturing through our innovations and broad market access, as we strengthen our commercial relationships and scale operations to meet demand. Like everyone, we're dealing with numerous factors caused by the pandemic and the resulting inflation. In this quarter, the largest macro impact was constraints in the automotive industry, stemming from chip and component shortages. Auto production in the third quarter is estimated to be down nearly 20% year over year and 9% sequentially. As a result, we stepped down in light-duty sales. Across our businesses, we prioritized delivering for our customers in a complex inflationary environment, and we have delivered despite incurring extra costs. Now we're taking additional actions, including pricing, to address these costs and maintain our ability to invest and support our customers. And you'll hear more from Tony on this in just a few minutes. Against this backdrop, we feel really good about our performance. In the quarter, announcements with industry leaders illustrated the power of our portfolio, demonstrating not only our relevance across multiple markets but also our role as a key innovation partner. Our strong position stems from a complementary set of three core technologies for proprietary manufacturing and engineering platforms and five market access platforms. We're leaders in each. We generate growth opportunities by delivering combinations and new applications of these capabilities to help our customers to drive their industries forward. And in doing so, we drive more Corning content into the products people are already buying. Let me share some highlights from the quarter. In Optical Communications, the industry is in the early innings of large deployments in support of 5G, broadband, and the cloud. Momentum is building, and we see it confirm high multiple sources. First is network need. Demand on networks is significantly higher than pre-pandemic levels. Broadband usage for September was up 32% versus pre-pandemic levels and up 9% versus September 2020, when remote work and school were largely in play. Global 5G subscriptions have grown to almost $0.5 billion this year. More applications are moving to the cloud and global data creation is expected to grow at 23% compound annual growth rate from 2020 to 2025. Versus 2020, cloud revenue industrywide is up nearly 50%. The second confirmation of strong industry momentum can be seen in the announcements from leading companies. On AT&T's earnings call last week, their CEO said they're on a march to deploy fiber at scale. We are working toward passing 5 million homes per year. In the quarter, we announced a strategic investment to support their growth plans. Speaking about our expanded collaboration. AT&T said the expansion of fiber infrastructure is central to the growth of broadband reach for consumers as well as business customers. France recently shared that they plan to reach 10 million more homes with fiber by the end of 2025 with their CEO saying, "Our future is fiber". Cloud deployments are also expanding. Microsoft CEO said that over the past year, they've added new data center clusters in 15 countries across five continents in support of their cloud business. The third confirmation is our substantial increase in sales and continued order book momentum. This is perhaps the most important indicator of growth over the next few quarters. We are ramping capacity and we are energized. Across the business, we're driving strong year-over-year sales growth, and we're outperforming the optical market as we continue to commercialize innovations that extend our competitive advantage. And as we provide more solutions to more customers at both the regional and national levels. During the quarter, we introduced the newest additions to our Evolv portfolio, which includes solutions designed to support real deployments. We also introduced our Everon millimeter-wave indoor small cell systems, which deliver 5G-ready coverage in high-density environments, including office buildings, factories, hotels, hospitals, and classrooms. Let's turn to mobile consumer electronics. Here, we're helping transform the smartphone experience. As we help our customers deliver new value to their users, we drive more of our content into each device sold. I displayed out well during the quarter with the launch of Samsung's Galaxy Z Fold3 and Galaxy Z Flip3. Both devices feature Gorilla Glass Victus. Now they also utilize our new Gorilla Glass with DX on the lenses of the rear cameras. This is more Corning in action. We've expanded our capabilities into a new category, device cameras. Even though the lens is a fraction of the surface area we address with our cover materials. The value we add is high, and we're capturing a very attractive opportunity to increase our revenue per device. Samsung is also featuring Gorilla Glass with DX on the new Galaxy Watch4. OEMs are designing cleaner, safer vehicles and distinguishing themselves with technologies that enhance the driving experience. Corning is uniquely sued to address these trends. And we're pursuing $100 per car content opportunity across emissions and auto glass solutions. In the quarter, Jeep announced a product that brings our top technical glass into their iconic vehicles, the new Jeep performance parts windshield featuring Gorilla Glass is now a factory-installed option on the 2021 Wrangler and Gladiator. We're making the windshields lightweight, durable, and up to three times more impact resistant than regular windshields. Additionally, tighter emissions regulations continue to provide a strong content opportunity for our environmental solutions. OEMs need higher filtration performance, and we responded with a new generation of gasoline particulate filters. The importance of our GPF business drives home my ongoing point. It's not about more cars, it's about more Corning in those cars. Since 2017, our auto sales are up more than 40%, while global car sales are down 20%. We're in a position of strength for two reasons. First, we are significantly more profitable than our competitors. Second, the market for large-sized TVs is projected to grow at a double-digit compound annual growth rate through 2024. And we're the leader in Gen 10.5, which is the most economical approach for larger sets. We've all seen the declines in panel pricing, and we're beginning to see panel maker utilization adjustments. Now longer demand provides us an opportunity to minimize expedited freight and to rebuild tanks that have operated beyond end of life. Taking these actions will allow us to keep our supply balance to demand. We expect the overall glass supply to remain tight, and the glass pricing environment to remain attractive. Tony will give you more details on our industry position and our outlook. Finally, in Life Sciences, we're delivering growth on multiple fronts. We're seeing ongoing demand in support of the global pandemic response. And our inventions are helping advance the transition to cell and gene-based therapies. Additionally, we're making progress on our multibillion-dollar content opportunity in pharmaceutical packaging. We're expanding our comprehensive portfolio, advancing key partnerships, and building our customer base. Corning continues to support the pandemic response and its portfolio of advanced vials and pharmaceutical glass tubing has enabled the delivery of more than 3 billion doses of COVID-19 vaccines. Our high-volume manufacturing facility in North Carolina is now operational, which will help us scale with demand. In total, we believe our efforts to address the pandemic are enabling permanent industry shifts. That means a future pharmaceutical packaging landscape defined by enhanced patient safety, lower cost, minimal regulatory hurdles, and increased capacity for life-saving drugs. Other efforts that have gained increased attention during pandemic are finding broader long-term applications. We introduced Corning Guardiant, a paint additive that uses a glass matrix to trapped copper ions, a powerful and long-used antimicrobial material. Paint with Guardiant has been proven to kill 99.9% of bacteria and viruses, including the 1 that causes COVID-19. This month, PPG announced that their copper armor paint, powered by Guardiant received EPA registration and will be available in major US retail and home improvement stores. PPG noted that it's the first virus-killing paint in the United States. And our collaboration builds on an EPA statement to ascertain that public health would benefit from surfaces with built-in antimicrobial capabilities. I am proud of the many ways our people unleased the power of our portfolio in the quarter and what our performance says about Corning's strong position today. Key trends are converging around our capabilities as we become more and more vital to industry transformations driving the world forward. This provides a compelling set of long-term growth opportunities. And we're executing well to bring those opportunities to life and make a difference wherever we can. Now I'll close by briefly looking back at 2019, when we outlined our priorities for growth and shareholder returns for the next several years. We provided attractive targets as we laid out our plans to build an even bigger, stronger company that delivers sustainable results. Today, the growth drivers we laid out remain intact and we're delivering on our goals. We are a bigger, stronger company than we were in 2019, and we are continuing to grow. Tony will get into more specifics. But I feel really good about our position and the progress that we've made. I look forward to updating you when we close out a strong year and as we grow again in 2022. Strong execution resulted in another outstanding quarter. We are on track to reach $14 billion in sales and over $2 in EPS. We're making significant progress extending our market leadership while scaling operations to meet demand, and we expect to grow again in 2022. During the third quarter, sales increased 21% year over year to $3.6 billion, led by the strength in Optical Communications and the strong performance in our other businesses. EPS grew 30% year over year to $0.56. Sales and earnings reflect lower production levels in the automotive industry due to the semiconductor chip shortage. The impact to Corning's results was approximately $40 million in sales and $0.02 of EPS. Gross margin percent expanded 50 basis points sequentially and 70 basis points year over year to 38.3% despite a net impact of 150 basis points from supply chain challenges and inflationary headwinds. Free cash flow grew to $497 million with cash generation of $1.3 billion for the first nine months of the year. Now these achievements are particularly noteworthy because we are operating in the face of unprecedented logistical challenges and component shortages. Delivering for customers in this complex environment requires both decisive action and agility. Our ability to sense disruption and act quickly has been key to running our plants well and meeting our customers' needs. And we're leveraging our diversified global supply chain to continue to meet customer demand. In fact, I'd be remiss if I didn't recognize the efforts of our global supply management and operations teams that have allowed us to maintain a steady supply of raw materials while finding creative shipping strategies. Their actions have enabled us to effectively deliver for our customers, and they're providing actionable insight into the current dynamic environment. At the same time, we continue to incur additional costs as we work to meet strong customer demand. And while we've been taking actions to mitigate them, certain costs continue to elevate in the third quarter. For example, we were able to offset a significant portion of elevated freight costs, but resin prices increased again. Therefore, our margin is temporarily muted. Given this ongoing inflationary environment, we have price increases underway across all of our businesses. We saw some benefit from these actions in the third quarter and their impact should accelerate in the fourth quarter and into 2022. Now we don't expect the environment to improve in the short term, but our digital supply chain capabilities enable real-time visibility into emerging situations, allowing us to proactively address the issues. We remain focused on meeting demand, expanding our margins, and protecting our ability to invest for customers. Now let's take a closer look at the performance in each of our businesses during the third quarter. In Display Technologies, sales were $956 million, up 2% sequentially and 16% year over year. Corning's glass volume grew slightly and glass prices increased moderately sequentially as expected. Glass supply continues to be tight, and we continue to do everything we can to meet customer demand. We expect fourth-quarter glass prices to be consistent with the third quarter. Now I know there's a lot of discussion about the display industry. Briefly, we expect the pricing environment to remain favorable as glass supply remains tight to balanced throughout 2022. Now as we've discussed previously, we based our perspective on what will happen in the display market on three main factors: retail demand, panel makers production, and glass makers' ability to supply the panel makers. With those factors in line, I'll start with what I said about retail demand on our last earnings call in July. Since LCD televisions emerged as a mainstream technology in 2004, LCD TV units have only been down three times and never two years in a row. Since 2014, TV sell-through units are typically range-bound between 225 million and 235 million, which average screen size grows about 1.5 inches a year. In 2020, global television units increased 4% above the trend line to about $242 million. Screen size growth was about 1.2 inches, about 20% below trend. A lot of smaller TVs sold probably to accommodate more people living, working and studying from home. Entering this year, we expected and continue to expect the market to revert the trend, implying a decrease in TV units, especially smaller televisions, and for normal screen size growth of 1.5 inches to return. With that, we now have nine months of retail data under our belts, and it is confirmatory. Television units declined by about 10% year over year while average screen size growth is in line with the 1.5 inches per year trend. Unit volume for TVs 65 inches and larger increased by a mid-teen percentage, and smaller TVs were down by a mid-teen percentage. So three quarters through the year, our expectation for TV units being down year over year and screen size growing approximately 1.5 inches are playing out. Now looking ahead to 2022, we think TV units and screen size will continue to follow historical trends and retail glass demand will be up. That means television units will be within the typical range of 225 million to 235 million units and average screen size will grow about 1.5 inches. Now remember, television units, which are declining this year have never declined two years in a row. And next year is a World Cup year, and TV units have never declined in a World Cup year. Finally, the biggest driver of retail glass growth in most years is the increase in screen size. We would expect the average screen size to once again grow 1.5 inches next year. In summary, we expect glass demand at retail to be up by a high single-digit percentage in 2022 as measured in square feet. Now let's move from retail to panel makers. After a period of high production in 2020 and 2021 to meet strong demand, we are now seeing panel makers temporarily reducing their utilization given the lower 2021 retail demand that we told you about all year. And that is happening just as we would expect. Now finally, let's move to the glass industry, which struggled to meet demand in 2020 and 2021 as glass has remained tight. Like other glassmakers, we've depleted our inventories, expedited shipping and operated tanks beyond their targeted in the life. We will use this period of temporarily lower panel maker utilizations to shut down end-of-life tanks and rebuild them with our latest technology. We will also take the opportunity to work our way out of expedited shipping. These actions keep our supply balanced to demand and will improve our operating cost going forward. But rest assured, we will still have capacity to supply all of our customers' anticipated glass demand. When panel maker production ramps to meet the expected high single-digit retail demand growth in 2022, we will be fully prepared with our revitalized fleet of tanks. Overall, we believe glass supply will be tightly balanced throughout 2022. And since glass pricing is primarily driven by glass supply demand balance, we expect the pricing environment to remain favorable in Q4 and also throughout 2022. Moving to Optical Communications. We saw strong growth across the business with sales exceeding $1.1 billion, up 24% year over year and 5% sequentially. Net income was $139 million, up 21% year over year. Net income declined 6% sequentially as increased raw material and shipping costs significantly impacted profitability. During the quarter, carriers spent more on 5G and broadband projects. This, along with the continued strong pace of enterprise cloud data center builds drove our strong performance. Demand on networks is at an all-time high, setting the stage for significant investments in fiber infrastructure as operators expand network capacity, capabilities, and access. During the quarter, we announced a collaboration with AT&T. Our capacity expansion will allow AT&T to expand investments in fiber infrastructure, expand US broadband networks and accelerate 5G deployment. We are well-positioned to capture significant ongoing growth and network and data center investment increases. Our solutions improve the speed and capital efficiency deployments. Additionally, Corning is the only large-scale end-to-end manufacturer of optical solutions, which allows us to innovate on important dimensions not available to competitors. In environmental technologies, our third-quarter sales were $385 million, up 2% year over year and down 5% sequentially. As everyone knows, chip shortages is having a big impact on the auto industry. At the start of 2021, global vehicle production was expected to be about 88 million. By July, the industry was projecting below 85 million. And given continued chip and component constraints, forecasts now anticipate auto production around 75 million for the year. This pullback in production began to impact us in the middle of third quarter, and we expect it to continue for the fourth quarter. We estimate an impact on earnings per share in the third quarter of about $0.02, and we expect additional impact in the fourth quarter. The good news is that when component shortages resolved, auto production will recover because the end market demand remains strong, and we will be prepared to meet the growing demand. Specialty materials delivered sales of $556 million, up 15% sequentially and in line with the strong third quarter in 2020 when we introduced Ceramic Shield. We've grown specialty sales every year from 2016 to today, despite smartphone unit sales being roughly flat. Over that five-year period, we've almost doubled our sales on a base of more than $1 billion. Clearly, we're successfully executing our objective of driving more content into each device sold. And strong demand continues for our premium cover materials. During the quarter, our glass innovations were featured in 30 new devices, including smartphones, wearables, and laptops. Demand also remains strong for our advanced optics content used in semiconductor manufacturing as the broader end market continues to experience robust growth. In the quarter, investments in innovations that are moving toward commercialization resulted in lower net income than in 2020. As we've noted before, newer innovations can face high cost as we develop and scale our manufacturing process. We anticipate that profitability will improve as we come up the learning curve and improve utilization. Looking into the fourth quarter, we're seeing typical volume declines in Gorilla Glass following the build supporting flagship customer product launches. Life Sciences third-quarter sales were $305 million, up 37% year over year, driven by ongoing demand to support the global pandemic response, continued recovery in the academic and pharmaceutical research labs and strong demand for bioproduction vessels and diagnostic-related consumables. Our Life Sciences segment is outpacing the overall industry as evidenced by a sales CAGR of 9% over the last three years. Stepping back, we have made strong progress across all of our businesses. We entered new product categories, announced collaborations with key industry leaders and contributed to significant industry advancements. We're building a strong foundation for future growth. This, combined with our consistent focus on innovation and deep commitment to RD&E is what continues to fuel and sustain Corning's leadership position across its markets. As we look ahead to Q4, we expect core sales to be in the range of $3.5 billion to $3.7 billion and core earnings per share in the range of $0.50 to $0.55. Profitability is expected to decline sequentially due to the further reduction on automotive-related sales, as I mentioned, and lower Gorilla Glass sales following strong customer launches. That said, we expect to close out 2021 with both top and bottom-line growth and another year of strong cash flow. And we expect our momentum to continue in 2022 with sales and earnings per share growth along with strong cash generation. Now I'd like to expand on Wendell's closing point. Back in 2019, we outlined our goals for growth and shareholder returns. We said we would leverage our focused and cohesive portfolio to extend our leadership and capture significant growth opportunities, and we said that key trends would continue to converge around our capabilities. What we said back in 2019 still rings true to date, despite the pandemic and the resulting global disruptions. Our key growth drivers are all intact. Some are even accelerating. And we're on track or even ahead of the goals we laid out in 2019 in all our market access platforms. Since 2019, sales have grown at a 10% CAGR and ahead of the 6% to 8% target. Now we have been growing earnings per share at a rate consistent with sales, which puts us ahead of our target which -- I mean, puts us behind our target because inflationary pressures are clearly impacting profitability. But we do expect that our cost and pricing actions will deliver significant improvement over time. As we said we would do, we're also growing our return on invested capital. Today, our total company ROIC is in the double digits. Our most recent capacity expansions or as we like to call them, build investments are fully ramped, have enabled the $2.5 billion of sales we've added since 2019, and are delivering more than 20% ROIC. Our aggregate free cash flow generation for 2020 and 2021 is expected to be more than $2.5 billion. Finally, we remain steadfast in our commitment to investing in growth and extending our leadership while returning excess cash to shareholders through share repurchases and a 10% annual increase in our dividend. As you might remember, we decided early in the pandemic to ensure the stability and flexibility of our financial position by building up our cash reserve. In April, we resumed share buybacks with the Samsung transaction where we repurchased 4% of our fully diluted shares. Consistent with our strategy to opportunistically buy back shares, we plan to do more repurchases in Q4. In summary, we've built a strong foundation over the last several years. Our capabilities are relevant to major growth trends across our markets. Our More Corning strategy is working, and we're executing through some very volatile end markets, expanding relationships and commitments with our customers extending our leadership position and generating outstanding sales, profits, and free cash flow. With that, let's move to Q&A. Michelle, we're ready for our first question.

corning sees q4 core earnings per share $0.50 to $0.55. sees q4 core earnings per share $0.50 to $0.55. corning - lower production levels in automotive industry due to chip shortage reduced sales by about $40 million and earnings per share by $0.02 in quarter. for q4, corning expects core sales to be in range of $3.5 billion to $3.7 billion. q4 profitability is expected to decline slightly on a sequential basis. for full year, on pace to reach $14 billion in sales and over $2 in eps. incurred additional costs that were elevated by inflation. have price increases underway in all of our businesses. in display technologies, third-quarter sales were $956 million, up 2% sequentially and 16% year over year. in optical communications, third-quarter sales were $1.13 billion, up 5% sequentially and 24% year over year. qtrly core earnings per share $ 0.56. market for large-sized tvs is projected to grow at a double-digit compound annual growth rate through 2024. expects glass pricing environment to remain favorable in q4 and in 2022.

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.

American Vanguard will file our Form 10-Q with the SEC tomorrow. Before beginning, we should take our moment for a usual cautionary reminder. Such factors can include weather conditions, changes in regulatory policy, competitive pressures and various other risks that are detailed in the company's SEC reports and filings. We appreciate your continued support of American Vanguard. In our last call, we gave you our first impression of the coronavirus pandemic, which had begun to spread into the United States partway through the first quarter. As part of the critical infrastructure, we were permitted, indeed, expected to continue operating in the midst of a global pandemic, the likes of which we had not seen in over a century. In order to operate without disruption during the first quarter, we had to adapt. Where we could do so, we shifted from in-person to remote work. Where we had to maintain physical operations as in our factories, we implemented COVID protocols to keep the workplace safe and healthy. At the same time, we learned to do business remotely while constantly checking on supply chain stability, logistics and customer demand. Fast forward to the second quarter, the pandemic has become the norm. We, and our suppliers, peers and customers, have become more accustomed to doing business through Zoom meetings, webinars and email. We continue our efforts to ensure that internal communication was frequent and continuous. In fact, I continue to hold weekly 2-hour state of the company calls with over 40 of my key managers during which I solicit input on operational challenges, sales opportunities and regional developments to ensure that we are all moving in the same direction. In addition, on a daily basis, our pandemic working group advises the workplace regarding COVID-related news, government orders, research and company protocols. During the second quarter, the pandemic shifted from Asia and Europe into the Americas, where we do most of our business. In spite of that shift, I am pleased to report that we have had a low very low incident of coronavirus infection within our workforce. That nearly all of the cases were community transmissions outside of our facilities and that our operations have not been adversely affected by the pandemic to date. At this point, I want to pause to note that given the circumstances where so many businesses are struggling for survival, cutting workforces, taking federal loans or filing free organization, we are generating stronger returns than what we did while operating in the normal course of last year at this time. Specifically, even while quarterly net sales declined by 8%, net income increased by 25% over the period. At the same time, and I hate to steal David's thunder here, as of June 30, we have strengthened our balance sheet by reducing inventory even with expanded product offerings, reducing debt and improving cash from operations by $38 million so far this year. Before turning the call over to David, let me take a moment to focus on the future. We are still constrained from making specific forecast because we do not yet know how long the pandemic will last nor how it may affect our business or markets. Nevertheless, we have adapted to the coronavirus with increasing success. As we look forward to the balance of the year, we continue to believe that we are poised to perform in line with our peers. This is so for a number of reasons, including favorable conditions for our mosquito control products, larger supply of Krovar and Hyvar herbicides for use on citrus, pineapple and McCabe and expansion of our Vapam fumigant business in Mexico, Central America and Australia. I will then return to give you an update on some exciting initiatives to grow our business through new products and technology innovation. As Bill mentioned, we will be filing our Form 10-Q for the three and six months ended June 30, 2020, tomorrow. Everything I'm covering here is included in more detail in that document. As Eric indicated, the company is fortunate to participate in industries that are considered part of critical infrastructure in all countries in which we operate. As a result, our customers and suppliers have all operated more or less without disruption during the pandemic. Having said that, the pandemic has impacted us in a few ways, including our ability to present new sales and marketing ideas, such as new products, face-to-face with customers in the field. On the other hand, you will see in our financial statements the same restrictions have caused us to spend less on operating expenses. Furthermore, the company has been able to operate normally throughout the first half of 2020 without the need to apply for any COVID-related federal stimulus package loans. Looking forward to the balance of 2020, we do not expect to need to seek such loans resistance. With regard to our financial performance for the three months ended June 30, 2020, the company's net sales decreased by 8% to $105 million as compared to sales of $113 million this time last year. Within that overall decline, our U.S. sales were down about $6 million and our international sales were down about $2 million. International sales accounted for 44% of net sales as compared to 43% of net sales this time last year. Eric has already discussed the main factors that have affected our second quarter sales performance. In addition, the sales and expenses of our businesses in Mexico and Brazil were affected by the devaluation of the related currency exchange rates with the dollar, as compared to this time last year. We believe these exchange rate devaluations were caused at least in part by the COVID pandemic. Without the adverse currency translation effect on our Brazilian and Mexican sales, our second quarter consolidated sales would have been $3 million higher. For the quarter, our manufacturing performance was strong, with factory operating costs well controlled and activity improved as compared to 2019. As a result of these various dynamics, we improved our gross margin performance when expressed as a percentage of sales to 39% of sales in the second quarter of 2020 as compared to 37% in the same period of 2019. For the three months ended June 30, 2020, our operating expenses decreased by $1.9 million or 5% as compared to the expenses incurred in the same period of the prior year. In the prior year, however, we had a benefit of approximately $1.8 million, primarily associated with adjustments to deferred liabilities on a past acquisition. That did not repeat in the current year. Making adjustments for that item, our underlying reduction in recurring operating expenses is greater and amounted to approximately $3.7 million or about 10%. During the second quarter, we recorded reduced interest expense. Our average debt was a little higher because of all the acquisition activity during the last year, but we got a benefit from reduced borrowing rates in the United States. Finally, our effective tax rate remained approximately flat compared to the same period of 2019. In summary, for the second quarter, though our sales were down, selling prices and overall mix of sales remain good, factory performance was improved compared to 2019 and gross margins as a percentage of sales increased from 37% to 39%. Our operating expenses and interest expenses were lower. And as a result, net income increased by 25% in comparison to 2019. Now let us turn to the six-month period ended June 30, 2020. Sales were down about $12 million or 6% as compared to the prior year. Within that performance, net sales of both our domestic and international businesses were down about $6 million each. The devaluation in key currencies resulted in about $4 million lower sales when sales originally recorded in the Brazilian real and the Mexican peso were translated to dollars for inclusion in our consolidated financial statements. Our factory performance for the six-month period was excellent, with costs up only 0.006% and factory output up about 13%. This resulted in a much improved rate of recovery factory costs. Overall, gross margin when expressed as a percentage of net sales was flat period-over-period at 39% of sales. Our operating expenses remained almost flat in the first six months of 2020 as compared to the prior year. In the prior year, however, we had a benefit of approximately $3.3 million, primarily associated with adjustments to deferred liabilities on a past acquisition. That did not repeat in the current year. Making adjustments for that item, our underlying reduction in recurring operating expenses amount to about $3.3 million or about 5%. Our net income for the first six months of 2020 ended at $4.4 million or $0.15. This compared with $7 million or $0.24 in the same period of 2019. From my perspective, the operating and financial focus for the company remains as follows. We continue to follow a disciplined approach to planning our factory activity, balancing overhead recovery with demand forecasts and inventory levels. At the end of June 2020, our inventories were at $180 million. This includes about $5 million of inventory related to acquisitions completed since June 30, 2019. An adjusted or underlying inventory of $175 million represents an $18 million reduction as compared to $193 million this time last year. We are highly focused on our balance sheet as we navigate through this pandemic period and having lower inventories at this point in the year is pleasing to report. Looking forward, we expect inventories to reduce during the balance of the year. Our present forecasts indicate that we will be below prior year numbers for both the remaining reporting periods of 2020. The estimate of $145 million that we previously indicated remains a good estimate, excluding any acquisitions. With regard to accounts receivable, as I noted earlier, our customers have continued to operate without significant disruption. They are placing orders for our products and making payments when expected. As a result, we have not seen any material change in the assessment of our credit risk exposure at the end of the second quarter of 2020 in comparison to prior quarters. The variation between accounts receivable this year and prior comparative periods relate entirely to mix of products, specific markets, individual customers and contractual terms. Our business has a distinct annual cycle, and we routinely experienced expansion in working capital in the first half of the year and a reversal in the second half of the year. Year-to-date, in 2020, working capital has increased by only $8 million as compared to $45 million in the same period of 2019. This careful management of working capital is driving the improved cash generation from our operating performance. In the first six months of 2020, we have generated $6 million from operations as compared to using $32 million in the first half of 2019. Comparatively, that amounts to a positive change of $38 million period-over-period. With regard to liquidity, at the end of the second quarter, availability under our credit line was $49 million, which compares to $31 million at the same point in 2019. As we progress through 2020, we intend to continue to focus on both working capital and debt levels. Indebtedness ended at $159 million at June 30, 2020, as compared to $165 million this time last year. During the last year, in addition to paying down $6 million in debt, we have funded more than $35 million in investments, including fixed assets, product acquisitions and technology investments from the cash generated from operations. These investments are focused on developing our businesses for the future. During the first six months of 2020, we have continued our normal business cycle of expanding working capital in support of our globally situated businesses. However, we are focusing very carefully on every dollar of working capital, and our usual annual cycle expansion has been much more muted than in previous comparable periods. In summary, though our sales are down in comparison to prior year, our product mix has remained strong, our factories have performed well and gross margins have remained solid. We have performed well at controlling underlying operating expenses which are down. Finally, our interest expense is down. From a balance sheet and cash perspective, we are doing very well managing working capital, and our debt is lower than this time last year, notwithstanding our investments in long-term growth of our businesses. Finally, availability under the credit line has improved. With that, I will hand back to Eric. I would now like to focus on the key strategic initiatives that will define and enrich our enterprise. First, we continue to expand our product portfolio through core growth. That is taking existing products and developing new formulations and mixtures tailored for use on new crops for providing greater views of application. As we've reported in the past, at any given time, we are launching some of these solutions while several are in the pipeline. We expect that these core growth products will generate over $100 million in high-margin revenues per annum within the next five years. Beyond core growth, Envance technologies continues to broaden market opportunities with their insect receptor targeting technology. As we've reported Envance technology and products are being commercialized by Procter & Gamble for their emerging, safe and effective Zevo brand consumer pest control products. We are pleased that the Chief Executive Officer of P&G, David Taylor, mentioned Zevo in his recent earnings conference call last Thursday. We see this as another positive sign for Envance's innovation partnership with P&G. In addition to Envance's superior technology for households, we believe that this patented nontoxic alternative to traditional pesticides will be successfully leveraged into numerous consumer, commercial and agricultural markets to meet the increasing demand for low-impact solutions. The Envance R&D team has also developed a new technology a new application for their technology to kill weed pests. The company's new herbicide platform delivers broad spectrum efficacy that is safe for people and pets. We intend to pursue all potential market applications to fully exploit the superior safety, functional performance and environmental sustainability of these herbicide solutions. Of course, the Capstone of our technology innovation is SIMPAS, and I'm pleased to announce that the launch of this game-changing prescription application technology has arrived. As we've previously discussed, SIMPAS enables growers to precisely target multiple crop inputs solely to the locations where they are needed in order to realize higher yields, significant cost savings and sustainable environmental benefits. Having successfully completed multiple field trials this past spring, we'll be ready to commercialize the SIMPAS system in the fourth quarter of this year. This launch represents a milestone for American Vanguard, and this is how we see it playing out. Our market campaign will proceed on several fronts. First, a group of the industry's largest distributors and retailers, including Nutrien, Helena, Simplot, Harvest Land Co-Op and Asmus Farm supply, all of whom participated in our 2020 spring trial, will use their positive experiences to promote the benefits of SIMPAS to some of their most valued customers. Second, the AMVAC sales and marketing team, in conjunction with BEC Ag marketing consultants will identify progressive growers in each region who have analyzed their soil health and crop protection needs and can significantly benefit from the multiple capabilities of SIMPAS. Third, SIMPAS will enable us to provide economically beneficial product solutions to a much broader segment of the corn market than we've reached with our SmartBox corn worm products. For over 20 years, our current SmartBox users have recognized the benefit of using our granular insecticide products, primarily to address corn rootworm pressures which tends to be greatest in the I-70, I-80 corridor, where most farmers also grow soybeans. As we expand our SIMPAS product portfolio to include soybean inputs, we'll be able to offer these same growers both corn and soybean solutions through SIMPAS. In addition, unlike corn rootworm, nematodes are present and economically damaging numbers throughout the entire corn build. By offering counter through SIMPAS for Nematode control, farmers throughout the entire region can significantly improve the return on investment as compared to the current practice of having to apply counter at a uniform rate across the entire form. Add in Southern soybeans and cotton akers and SIMPAS becomes a vehicle to help us increase product sales in all three of these major row crops throughout the United States. As a bridge for SmartBox users who aren't yet ready to make the jump to simultaneous prescriptive application of multiple products, we'll be offering a lower cost system called SmartBox Plus by SIMPAS in Q4 of this year, featuring SIMPAS components such as meters, harnesses and an ISO-based prescriptive controller. The SmartBox plus by SIMPAS will enable farmers to gain the benefits of prescriptively applying a single product like counter for a smaller capital investment. Like SIMPAS, SmartBox Plus by SIMPAS supplies only what's prescribed precisely where it's needed. That's good for the environment and for the farmers' bottom line. Fourth, this year, we plan to introduce SIMPAS into the largest crop protection market in the world, Brazil, where we'll be conducting field development trials in the fourth quarter. Having just completed a comprehensive study with our consulting firm, context of the Brazilian market, we believe there is robust opportunity for our technology in that region, particularly given the extremely large row crop farming operations in such states as and Mapitoba. Our market approach in Brazil will vary from that of the U.S. as we will generate sales both through distribution and from direct sales to large growers. We also expect that regional crop input manufacturers will market their own products through smart cartridges, thereby increasing demand for the SIMPAS platform. Further, having Trimble as our global partner, will give us ready access for both sales and support in that country. As an additional entree into Brazil, in 2021, we plan to introduce SmartBox Plus by SIMPAS as a way to prescriptively apply counter to control nematodes in soybeans, the largest row crop in Brazil. This market access was one of the key reasons for our acquisition of Defense Agrovant earlier this year or early last year. In preparing for our domestic Q4 SIMPAS launch, we are manufacturing smart cartridge containers to meet demand for all the SIMPAS applied solutions that will be sold in 2021. The initial filling of these product cartridges will occur in our access Alabama manufacturing plant, and they will be refilled in Q3 and Q4 of 2021 and using Smartfill refilling equipment that we've positioned with select SIMPAS applied solution retailers. We are also adding staff to provide sales, installation and support training to Trimble dealers who will begin SIMPAS sales activities in October of this year. In addition, we are working under NDAs with multiple peer crop protection chemical manufacturers as they conduct application trials of their own products using SIMPAS equipment. It is gratifying that industry leaders are recognizing SIMPAS as a technologically advanced application system. From the outset, we have aspired to have other manufacturers package and sell their own proprietary products for use as SIMPAS applied solutions. Access to products from multiple companies greatly increases the utility of SIMPAS equipment for farmers. We'll be announcing some of these collaborations in the coming months. On a related note, we have seen strong enthusiasm for our SIMPAS at plant seed treatment process. Since seed treatments are generally liquid products, we are focused on expanding our liquid product portfolio offering. Finally, we recently received a U.S. patent for our ultimate supply chain tracking software. As crop inputs are applied via SIMPAS, Ultimas enables complete traceability of individual product containers through every step of the supply chain, from the factory to the farmer and to the geotag field location where the product is applied. Ultimas makes it possible to know precisely when, where and how much product was applied to any given location in the field and to identify the product containers associated with the application. With consumers and food marketers demanding greater transparency as to how food is produced, Ultimas answers those demands through automated and verifiable traceability of applied crop inputs. So on closing, I'm encouraged by what we have accomplished over the course of the second quarter and the year. There is in part to managing a business in the best of times, but the true test is delivering results in the hardest of times. In response to the turmoil brought on by the pandemic, our team has shown discipline from top line to bottom line, selling higher-margin products, launching newer acquired product lines, improving factory use, driving down inventory and debt and generating cash. All the while, we have continued investing in our future through self-funded technology innovation. And from SmartBox insecticide applications to SIMPAS multiproduct prescriptive applications to automated and verifiable product application traceability through Ultimas, we are on the leading edge of precision ag. And with that, we'll field any questions you may have.

american vanguard corp qtrly net sales of $105 million, compared with $113 million.

I'm Rebecca Gardy, Vice President of Investor Relations. A transcript of this earnings conference call will be available within 24 hours at investor. Turning to slide 3. These statements rely on assumptions and estimates, which could be inaccurate and are subject to risk. On Slide 4, you will see our agenda. With us on the call today are Mark Clouse, Campbell's President and CEO; and our Chief Financial Officer, Mick Beekhuizen. Mark will share his thoughts on our overall first quarter performance and in-market performance by division. Mick will discuss the financial results of the quarter in more detail and review our guidance for the second quarter. We will close the call with an analyst Q&A. I know I am grateful this year for the entire Campbell organization, especially our colleagues in the manufacturing plants and our distribution teams who have been producing and shipping to meet the higher demand the pandemic has brought, while prioritizing the safety of our people and following our heightened in-plant protocols. Our strong top-line growth combined with gross margin expansion and value capture synergies, despite the impact of ongoing COVID-19 related costs, led to better than expected adjusted EBIT growth, up 18%, and a 31% increase in adjusted earnings per share to $1.02 per share. It also was a strong executional quarter where we were able to strengthen supply levels to allow our retailers to improve inventory going into the crucial soup and holiday season. In addition, we announced that our Board approved a 6% increase in our quarterly dividend, reflecting the Company's strong earnings performance, cash flows and increasing confidence in our long-term growth prospects as well as our continued commitment to shareholder returns. Organic sales in the first quarter increased 8%, led by 12% organic sales growth in Meals & Beverages reflecting our continued investment in our brands to attract and retain new households as retailers also rebuilt inventory levels. Turning to our Snacks Division, we drove solid growth, with organic sales up 4% reflecting sales increases across the majority of our nine power brands. Our portfolio of unique and differentiated snacks remained in high demand as in-home consumption rapidly expanded. We did make some selective strategic decisions to shift promotions from the first quarter to the balance of the year to help ease supply constraints, particularly in the Meals & Beverages division. While these decisions did generate mixed share results as expected, we exited the first quarter in a much better position on retailer inventories and are seeing accelerating in-market performance as programming is ramping up into our key holiday season. We expect that pressure of elevated demand on supply will continue in the near term, but we are building supply chain capacity and capabilities to help us better navigate this pressure and maximize availability while protecting and growing share. For the sixth consecutive quarter, our total Company in-market dollar performance grew in measured channels, increasing 7%, with growth across almost the entire portfolio. Continuing the momentum from the back half of fiscal 2020, October was the ninth consecutive month in which we grew household penetration versus prior year. In our first quarter, we attracted millions of new households with the most notable increase coming from younger consumers. We also continued to see elevated repeat rates with over 70% of households gained since the beginning of the pandemic purchasing our products again. As we have said on previous calls, we consider this to be an enduring change in behavior and given strengthening consumer trends like quick-scratch cooking and at-home eating and snacking, we remain confident that we will retain a meaningful number of these households beyond the pandemic. Within the Meals & Beverages division, soup net sales increased 21% with growth in all segments. This reflects retailer inventory recovery, in-market gains, and moderated promotional activity. We grew our household penetration in overall soup by 1.3 points. In addition to gaining new buyers, we are retaining these new buyers as reflected by higher repeat rates. And, among millennials, we grew share for total US soup by nearly 1 point, including significant growth of 2.7 points on condensed and over 1 point on ready-to-serve, demonstrating the sustained relevance of our core businesses with younger consumers. Our condensed soups were the highlight of the quarter with double-digit net sales growth, gains in share led by cooking SKUs, and 4 million new households purchasing this quarter versus prior year. We continued to bring new ideas and recipes to consumers who are cooking more frequently at home. As these first-time cooks gain more confidence, we believe they will likely continue to use these skills to prepare more meals at home, well beyond the pandemic. Our recipe solutions continue to resonate with consumers as we saw a 20% increase in overall recipe-related page views in the first quarter compared to the prior year. Within ready-to-serve, we saw solid consumption growth, but supply pressure and our decision to moderate promotions as previously mentioned, resulted in some short-term share loss. However, as supply has improved, we are seeing improved trends, supported by our Chunky NFL sponsorship activation, our Slow Kettle Crunch innovation, and our Well Yes! We expect all these factors to have a very positive impact in the second quarter. Our Pacific Foods growth engine performed well as we continued to build scale with nearly 22% dollar consumption growth in soup and broth in the quarter. Pacific soup and broth grew share for the fourth consecutive quarter, including strong gains with millennials. Pacific has also increased points of distribution and grew household penetration as we launched our first ever national advertising campaign. Overall, we continue to feel great about the progress we've made against our Win in Soup strategy, as evidenced by our success expanding into millions of new households, attracting younger consumers and growing all of our core brands. Turning now to the performance of our Snacks power brands, which grew dollar consumption by 6% in the quarter. The most notable being Late July, which grew consumption sales by 26% and share by nearly 2 points. We continued to run the brand's first national ad campaign throughout the quarter. Late July is a great example of how our power brands are helping consumers make the most of their snacking moments. We take a mainstream segment like tortilla chips and offer a product with higher quality including organic product credentials, highly relevant innovation and world-class marketing to better engage consumers, allowing them to trade up into a better snacking experience. We have successfully applied this model to other brands as well, such as Kettle Brand chips and Snack Factory Pretzel Crisps, which also had double-digit dollar consumption growth in the quarter. We also made significant progress on Goldfish in the quarter with both supply and service levels improving. We have also redirected marketing aimed toward snacking options at home and restored promotional spending toward the end of the quarter. This is resulting in improved consumption and share in the most recent periods. We feel very good about our Snacks performance and the steady growth it delivers supported by a very healthy base business. In addition, we continue to remain on-plan to deliver the value capture synergies that we initially outlined as part of our acquisition of Snyder's-Lance. Our investment in capacity expansion in both Goldfish and our chips, demonstrates our conviction in the long-term growth potential of our brands. We are still working through some supply constraints, including a challenge in cookies where the combination of demand and labor impacted by COVID-19 has had some negative impact on supply. Despite these isolated challenges, we feel very confident in our ability to meet the long-term demand driven by the expected sustained growth of consumer snacking behavior. Given the rapid growth of the e-commerce channel across foods, I want to touch on our enterprise performance in the quarter. Our e-commerce in-market dollar consumption results were once again impressive, growing 85% over prior year. Consumers' use of e-commerce, and particularly click-and-collect for groceries, has increased by a considerable amount these past several months and we believe this trend will continue. Accordingly, we are investing to strengthen our capabilities and in our support of key partnerships to serve the millions of consumers who are shopping online. Given our overall financial results and the actions we have taken to start the year, we are well-positioned across our entire portfolio heading into Q2 and the key soup and holiday season. As Mark just shared, we had a strong start to fiscal 2021 with another quarter of strong sales growth, driven by elevated consumer demand, gross margin expansion, despite the COVID-19 cost headwinds, and robust adjusted EBIT and adjusted earnings per share growth ahead of expectations. I'll now review our first quarter results in more detail and provide guidance for the second quarter. For the first quarter, reported net sales increased 7% to $2.3 billion. Organic net sales increased 8% in the quarter, which excludes the impact of the sale of the European chips business. Adjusted EBIT increased 18% to $463 million, as higher sales volumes, improved adjusted gross margin performance and lower selling expenses were partially offset by increased marketing and slightly higher adjusted administrative expenses. Adjusted earnings per share from continuing operations increased by 31%, or $0.24, to $1.02 per share, reflecting an increase in adjusted EBIT as well as a lower net interest expense. Breaking down our net sales performance for the quarter, organic net sales increased 8% from the prior year. This performance was driven by a 6 point gain in volume across the majority of our retail brands, offset partially by declines in foodservice. Lower levels of promotional spending in both segments drove a 2 point gain. The divestiture of the European chips business negatively impacted net sales in the quarter by a point, and the impact from currency translation in the quarter was neutral. All-in, our reported net sales were up 7% from the prior year. Our adjusted gross margin increased by 100 basis points in the quarter to 34.8%. Favorable product mix, which drove a 30 basis point improvement in our adjusted gross margin, was largely driven by the increased contribution from our soup products within our Meals & Beverages segment. Separately, we are estimating a 60 basis point gross margin improvement from better operating leverage within our supply chain network as we significantly increased our overall production, primarily within Meals & Beverages. Net pricing drove a 120 basis point improvement, due to lower levels of promotional spending in the quarter. Inflation and other factors had a negative impact of 270 basis points driven by cost inflation, as overall input prices on a rate basis increased approximately 2%, as well as other operational costs and continued COVID-19 related costs. This was partially offset by our ongoing supply chain productivity program, which contributed a 150 basis point improvement, and includes, among others, initiatives within procurement and logistics optimization. Our cost savings program, which is incremental to our ongoing supply chain productivity program, added 10 basis points to our gross margin expansion. Moving on to other operating items. Marketing and selling expenses increased 1% in the quarter to $208 million. This increase was driven primarily by our planned increased investment in advertising and consumer promotion expenses, which is up 17% versus a year ago. These investments primarily reflect higher levels of support behind soup, to continue to drive usage, inspire meal solutions, build brand awareness among younger households, and support innovation. These investments were partially offset by the benefits of our cost savings initiatives, lower marketing overhead, and lower selling expenses. Adjusted administrative expenses increased $11 million or 9% to $137 million, driven by higher benefit costs and general administrative costs, including incremental consulting charges related to supply chain optimization, as well as inflation, partially offset by the benefits from our cost savings initiatives. Moving to the next slide, we have continued to successfully deliver against our multi-year enterprise cost savings initiatives. This quarter, we achieved $15 million in incremental year-over-year savings, inclusive of Snyder's-Lance synergies. To-date, that brings our savings for the overall program to $740 million. We expect an additional $60 million to $70million in the balance of fiscal 2021 and we remain on-track to deliver our cumulative savings target of $850 million by the end of fiscal 2022. To help tie this all together, we are providing an adjusted EBIT bridge to highlight the key drivers of performance this quarter. As discussed, adjusted EBIT grew by 18%. This was largely driven by the increase in demand for our products with sales gains contributing $53 million of EBIT growth. The overall adjusted gross margin expansion of 100 basis points contributed $23 million of EBIT growth, which more than offset higher marketing and selling expenses of $2 million reflecting our investments in A&C, partially offset by lower selling expenses. The remaining impact of all other items, consisting of adjusted administrative expenses, R&D and adjusted other income in aggregate was nominal. Our adjusted EBIT margin increased year-over-year by 180 basis points to 19.8%. The following chart breaks down our adjusted earnings per share growth between our operating performance and below the line items. Adjusted earnings per share increased $0.24 from $0.78 in the prior-year quarter to $1.02 per share. Adjusted EBIT had a positive $0.18 impact on adjusted EPS. Net interest expense declined year-over-year by $25 million, delivering a $0.06 positive impact to adjusted EPS, as we have used proceeds from completed divestitures and our strong cash flow to reduce debt. The impact from the adjusted tax rate was nominal, completing the bridge to $1.02 per share. In Meals & Beverages, organic net sales increased 12% to $1.3 billion, reflecting double-digit increases across most of our US retail products, including gains in US soups, inclusive of Pacific Foods soups and broth, Prego pasta sauces, V8 beverages, Campbell's pasta, and Pace Mexican sauces, as well as gains in Canada, partially offset by declines in foodservice. Volume was favorable in US retail and Canada, driven by increased demand of food purchases for at-home consumption, offset partially by the negative impact on foodservice as a result of shifts in consumer behavior and continued COVID-19 related restrictions. Net sales of US soup, including Pacific, increased 21% compared to the prior year due to retailers rebuilding inventory for the upcoming soup season, in-market gains in condensed soups and broth and moderating promotional spending. Operating earnings for Meals & Beverages increased 18% to $333 million. The increase was primarily driven by sales volume growth and improved gross margin, offset partially by increased marketing investment. The gross margin performance was impacted by the lower levels of promotional spending and favorable mix, as productivity improvements and improved operating leverage were offset by other operational costs, cost inflation and COVID-19 related costs. Within Snacks, organic sales increased 4% driven primarily by lower levels of promotional spending as well as healthy velocity on the majority of the base business. We saw volume gains in fresh bakery products, Late July snacks, Pop Secret popcorn, Pepperidge Farm cookies, Snack Factory Pretzel Crisps, as well as Kettle Brand potato chips, which partially offset declines in Lance sandwich crackers. Sales of Goldfish crackers were relatively flat in the quarter, as increased demand for family size products were offset by reduced away-from-home consumption. Operating earnings for Snacks increased 11% driven by lower selling expenses, lower marketing overhead, and sales volume gains, partly offset by higher administrative expenses. Gross margin performance was consistent with prior year as lower levels of promotional spending were offset by higher net supply chain costs as productivity improvements, cost savings initiatives and improved operating leverage were more than offset by cost inflation and COVID-19 related costs. I'll now turn to our cash flow and liquidity. Cash flow from operations was $180 million, comparable to the prior year as changes in working capital were basically offset by higher cash earnings and lower other cash payments. Cash from investing activities decreased by $341 million, driven by lapping the net proceeds from our divested businesses in the prior year. The cash outlay for capital expenditures was $74 million, $24 million lower than the prior year driven by discontinued operations, and in line with our previously communicated full-year expectation. Cash outflows for financing activities were $245 million compared to $453 million a year ago. The reduced cash outflow reflects lower debt repayments. Dividends paid in the amount of $108 million were comparable to the prior year, reflecting our current quarterly dividend of $0.35 per share. We ended the quarter with cash and cash equivalents of $722 million. I'll now turn to guidance. As I've reviewed, the Company's strong first quarter fiscal 2021 results were impacted by increased demand stemming from the COVID-19 pandemic. The impact of the continuing pandemic on the Company's fiscal 2021 results is uncertain and makes it difficult to provide a full year outlook at this time. Based on our expectation of a continued elevated demand landscape and increased investment in our brands, we are providing the following guidance for the second quarter of fiscal 21. We expect year-over-year growth in net sales of 5% to 7% as growth more closely aligns with consumption reflecting better inventory, strong programming and improving share positions. We expect adjusted EBIT growth to be in line with year-over-year sales growth for the quarter as we invest to win the season and keep fueling the retention of new households behind key consumer trends. We expect the combination of healthy EBIT growth and the benefit of significantly reduced interest expense year-over-year to result in adjusted earnings per share growth of 12% to 15%, or $0.81 to $0.83 per share. While it remains very difficult to provide anymore direction for the balance of the year, as time has progressed our outlook does continue to strengthen. In closing, our first-quarter results were a strong start to the year. I am proud of the continued strong execution by our teams throughout the organization.

q1 adjusted earnings per share $1.02 from continuing operations. increases quarterly dividend by 6% to $0.37 per share. qtrly organic net sales increased 8%. sees q2 2021 net sales up 5% to up 7%. sees q2 2021 adjusted earnings per share $0.81 to $0.83. remains on track to deliver annualized savings of $850 million by end of fiscal 2022.

On the call today, we will discuss non-GAAP financial measures, including adjusted EBITDA and free cash flow. I'm proud of the performance we delivered in 2020, particularly in the light of the unprecedented challenges we face due to COVID-19. Under the leadership of our newly expanded management team, which had been in place just 75 days before the pandemic took hold, we made significant progress on our historic transformation executing on our strategy, and operating in four new segments. We further optimized our portfolio completing targeted divestitures, and exit during the past year. We also ended 2020 with a lowest net debt in 2.5 years and paid our regular quarterly dividend demonstrating our disciplined stewardship and financial strength. Although I'm proud of how well our team has executed, the impact of COVID-19 on our financial performance was clear. We reported revenue of $1.79 billion for the full year 2020, a decline of 11% compared to 2019. You will note, at our Q1 earnings call we had forecasted 20% adjusted EBITDA margins for the full year 2020; fast-forward nine months later, I'm very pleased to report that we achieved this goal delivering adjusted EBITDA margin of 20.4% for the full year, despite the macroeconomic impact from COVID. Importantly, COVID did not change our focus strategy and one thing has become increasingly clear; our company's diverse portfolio and business model are highly durable, we have the right strategy, right segments, and right team to whether any major macroeconomic storm. We're a sales driven company now, we continue to invest the strong cash flows contracts and promotional solutions to grow payments and cloud solutions, each of which is well positioned in secular growth markets. Now, I would like to take a moment to review the 4 core pillars of our strategy. First, sales; continue to unify our go-to-market sales approach in order to drive growth, selling more of what we have to new and existing customers, breaking our previous dependence on acquisition-only growth, that also resulted in escalating debt. Second, payments and clouds; we focus on these secular growth businesses, sell what we have, build new products, and migrate to a recurring revenue model. Third, promotional solutions profitability; adjust revenue mix and distribution channels moving to a recurring revenue model. Fourth, our Checks business; gain market share, capture the share while holding margins flat by making smart investments, giving a strong set cash flow to invest in payments and cloud. The strength of this strategy and our significant progress on our transformation is compelling, and is undeniable despite COVID-19 impacts. In 2019 we promised to become a sales-driven company, and that's exactly what we did. We estimate Deluxe delivered full year sales driven growth in 2020 for the first time in more than a decade, excluding COVID impacts of course. We achieved this result by building an employee ownership and sales culture, fundamentally changing our go-to-market approach. Instead of having dozens of separate sales organization, calling on a customer selling one product at a time, we built a unified sales team with a complete review of our customers relationship with us. Complementing [Phonetic] these efforts, we have product experts ready to help close the sale. This integrated go-to-market strategy is a key part of our One Deluxe strategy, and this strategy is working. In 2020 we signed more than 3,900 deals. We added many new logos and expanded many of our existing relationships. In fact, since we began One Deluxe, we sold 6 of the Top 10 deals of the last decade, including the largest sale in the company's history. Here's just a flavor of our wins in 2020; [indecipherable] they signed a multi-year deal in our Check business, SunTrust had been a longtime customer of Deluxe, so with the merger of SunTrust and BB&T, we're pleased to have been selected as the trusted partner for the new combined entity; this deal is the single largest total contract value in the company's history. We further grew Check market share with additional strategic takeaways winning two national or super-regional banks and more. Our Checks retention rate is the highest in five years. Synovus expanded it's relationship with us to include our entire receivables as a service platform. Being selected by Synovus treasury management to be their digital transformation partner, it's clear evidence our integrated receivables as a service platform is what the market demands. Payments further added or expanded relationships with P&C and Sirius XM Radio. We also expanded our relationship with Alliance Data and Citibank. Alliance Data joined our receivables management solutions, and Citibank joined our Deluxe Payment Exchange. Promotional solutions also built on a key relationship. As you know for previous calls, we're customer of Salesforce, but importantly, now Salesforce is a customer of the Deluxe. Salesforce can now utilize our digital Deluxe brand center platform to manage their digital assets promotional products, marketing collateral, and other essential supplies. With our growing relationship with Salesforce and other opportunities in our pipeline, we're well positioned to expand our sales efforts in the technology industry in 2021 and beyond. In our telesales centers, we delivered record average order value growing 7.5% over last year, and our sales team find more than 200 cross sell deals totaling $35 million in total contract value. Cross-sell has been an allusive goal for this company for more than a decade, and we delivered in 2020. Of course, all of these wins are scheduled to onboard in 2021, timing of which will be dictated by COVID lockdowns and restrictions. But here is the bottom line; our One Deluxe approach is working, enabling us to set new sales records in the middle of a pandemic. Now, let's talk division specifics. Our top growth segment payments, which did not even exist in it's current form until January 2020, had a successful year. In addition to Synovus, SiriusXM Radio, Alliance Data and all the other newly signed clients and distribution partners; integrated receivables continues to benefit from positive secular outsourcing trends as new and long-standing customers focus on speed and efficiency. COVID has put a spotlight on an additional Deluxe competitive advantage; the strength of our balance sheet and our leadership. During the pandemic we've benefited as a number of institutions shifted volume away from our competitors to the safety of Deluxe. In cloud solutions, our other target growth area; we made important progress in adding a number of new clients. You can see we did experience significant directly related COVID impact, the financial institutions deferred marketing campaign spend impacting our data driven marketing business. Additionally, our website services also experienced weakened demand during the year. We did see encouraging signs for recovery at our corporation services, as we've previously announced. We're particularly optimistic about data driven marketing as the recovery unfolds. We're already deeply engaged in planning multiple large-scale marketing campaigns for our financial institution customers adding to our confidence for 2021 and beyond. Next, we're going to talk about promotional solutions business, and I'm going to talk about two areas. First is business essentials, where we've delivered custom forms and more that businesses consume in their routine operations. Second is branded merchandise used to promote a business. Encouragingly, we saw volume in our business essentials as the year progresses. We expect to see a rebounded branded merchandise as events and physical promotion return as COVID fades. Further, I'm extremely proud of the speed with which the promotional services team adapted to the new reality adjusting our product mix. We saw $31 million of personal protective equipment in 2020, a business we had not been in previously, where we had no source of supply, no way to book an order, and no sales training at the beginning of the pandemic; it's a great example of innovative thinking, and speed this organization can now deliver. We also find many new customers focused on our turnkey-managed brand services program giving us more confidence in our future profitable growth. Salesforce is just one of these examples. Fourth is our Check business. Consistent with previous economic slowdown, the secular decline in Checks was higher due to the impacts of COVID. We expect the business to rebound in line with historical secular trends as the economy recovers. Encouragingly, we witnessed a sequential increase in new check customers resulting from new business start-ups at 2020 unfolded; this is an important evidence of the ongoing necessity of checks. We were also encouraged to see acceleration of self-service and digital order volume acceleration throughout the year proving our digital strategy works. Our multiple check wins at expanding market share bring important new revenue providing a partial offset the secular declines. Clearly, in 2020, we have made significant and measurable progress in all four pillars of our strategy to become a sales-driven growth, trusted business technology company, which we achieved all of this in the middle of a pandemic with a new team. Next, I want to briefly outline our progress in three areas that are helping to accelerate our transformation. These three critical areas are talent, technology infrastructure, and efficient operating footprint. In 2020 we further built on our team expanding products, business development and innovation. An example of how talent is helping us succeed is our development of the Medical Payment Exchanger, MPX. MPX is the only healthcare option that digitally attaches a check payment to the explanation of payments, delivery them together electronically; this is important because it doesn't require any workflow changes for anyone. To accelerate our MPX progress, we announced our joint venture with Eco-Health in April of 2020. We also continue to foster a culture of empowerment, inclusion, diversity and equity enabling our employee-owner [Phonetic] spring their full authentic cells to work. In doing so, we're more directly reflected the diverse communities and customers we serve; all of this helped us achieve status as a 2020 Great Place To Work. Our company had never before been so recognized. We continue to execute on our previously discussed upgrade advancing optimization and efficiencies. Third, is an efficient operating footprint. We took full advantage of the work from home reality to drive efficieny and productivity. We closed an additional 24 sites during the year, reducing our location count by 60% in the last two years. We're particularly encouraged by the future operating savings and significant capital avoidance we will achieve by relocating both, our Minnesota headquarters, and Atlanta Technology facilities to more efficient spaces. I do want to discuss M&A for a moment. As you know, since I joined DLX, we have paused on acquisitions to reduce debt, strengthen the balance sheet, optimize the portfolio, get our talent and technology infrastructure in place, and importantly, expand our sales capabilities. As I've outlined today, we've now delivered on all of these fronts and are once again ready to look at opportunistic ways to augment our business through acquisition, particularly in our higher growth engines of payments and cloud solutions. In summary, we are very encouraged by our success on all four of our strategic pillars, and in our transformative talent, technology infrastructure, and operating footprint initiatives. Our solid performance in the midst of the pandemic gives us confidence in our future post-pandemic. For 2021, we look forward to closing the year as a sales-driven mid-single-digit-revenue growth company, with margins in the low-to-mid 20s, continuing to drive enhanced value for all shareholders. Now, I'll pass it to Keith for more financial details. As Barry mentioned, DLX delivered in 2020; we delivered EBITDA margin in line with our plan and guidance. We took swift action to address covert at the onset, and we sustain this focus through the year. The result, we delivered EBITDA margin in line with our commitments, reduced net debt to it's lowest level in 2.5 years, and we continue to invest for growth. Before I get into the details, I want to express my gratitude to all my fellow employee owners who worked tirelessly and overcame many challenges this year. The foundational work we began in 2019 made 2020 a successful year of transformation and continued innovation that produce measurable progress positioning us to deliver full year sales driven growth. That said, we felt the continuing effects of the COVID-19 in our financial results. Our total revenue in the quarter was $454.5 million, a decline of 12.9% as compared to the same period last year; however, an increase of 3% from the third quarter. For the full year, total revenue declined 10.8% to $1.791 billion. We reported GAAP net income of $24.7 million in the quarter, and $8.8 million for the full year. A comparison of reported 2019 and 2020 full year results is difficult given each year was impacted by asset impairment charges. Our measures of adjusted earnings and adjusted EBITDA excludes these non-cash charges along with restructuring, integration and other costs. These adjustments are detailed in the reconciliations provided in our release. Our adjusted EBITDA for the quarter was $94.9 million resulting in $364.5 million for the full year. Adjusted EBITDA margins for the quarter was 20.9% bringing full year performance 20.4%. As previously committed, our cost containment initiatives improved our adjusted EBITDA margin performance from the first quarter low by more than 300 basis points, this brought both Q4 and full year adjusted EBITDA margin into the low end of our pre-pandemic long-term adjusted EBITDA margin guidance range. A closer discussion of Q4 segment performance helps demonstrate the resiliency of our new portfolio approach. As payments continues to experience year-on-year revenue growth, cloud continue to expand EBITDA margins versus prior year. Promotional expanded revenue went to 15%, sequentially versus Q3 and Check maintained a strong EBITDA margin despite significant COVID-related headwinds to the business. Consistent with our expectations and as we had shared at the third quarter call, payments grew Q4 revenue 3% to $78 million as compared to prior year, achieving 12% growth for the year and ending at $301.9 million. We did see less one-time hardware revenue in the quarter against a tough Q4 2019 compare. Treasury management led the growth with encouraging demand for our integrated receivables. As Barry mentioned, the team expanded the number of FI partners that have moved to our full suite of capabilities. We will continue to work with these partners to onboard these services and work to expand the number of full-service clients in 2021. Adjusted EBITDA decreased in the quarter and for the full year by $4.5 million and $6.3 million respectively. For the year, adjusted EBITDA margin was 22.6%, well within the range of our pre-pandemic guide on slightly lower revenue performance. We expect to achieve double-digit revenue growth for the year with Q1 growth in low single-digits as expected while we continue to work on implementing the many new clients we signed in 2020. We continue to invest to drive growth and as such we're assuming adjusted EBITDA margins in the low 20% area through the year. Cloud solutions revenue declined 27.1% to $59.2 million in the quarter and ended the year at $252.8 million, resulting in a decline of 20.6% compared to 2019. Q4 data driven marketing solutions revenue remained flat sequentially versus Q3 but experienced a decline versus prior year consistent with pandemic induced financial industry slowdowns in marketing spend. But you can't see in the revenue performance as a number of new data driven marketing clients that signed during the quarter and will benefit us in future periods. Web and hosted solutions saw declines to loss of customers discussed last year, the economic impact of the macroeconomic environment and expected attrition from our decisions to exit certain non-strategic product lines. In Q4, cloud achieved a 160 basis point improvement in adjusted EBITDA margin versus prior year, and expanded 20 basis points to 24.4% for the full year reflecting solid performance against pre-pandemic guide on significantly less revenue. We expect the loss of revenue associated with Q4 2020 product exits will continue to impact the business into 2021, but we anticipate cloud margins to remain healthy in the low-to-mid 20% range. Promotional Solutions fourth quarter 2020 sequential revenue grew by 15.3% from Q3 to $144 million, the year-over-year rate of decline moderated to down 16.6%, reflecting the continued impact of market conditions. Adjusted EBITDA margin for the fourth quarter was 14%, down from the prior quarter peak. Full year revenue declined 17.4% to $529.6 million with an adjusted EBITDA margin of 12.6%, and was greatly impacted by macroeconomic conditions in 2020. In promotional solutions, we are seeing a modest rebound in business essentials, but continue to feel COVID-related impacts most acutely in marketing promotional products where revenues are tied to events and branded merchandise. We believe the business will continue to improve but we are not expecting a rapid recovery in 2021. We are anticipating improved adjusted EBITDA margins throughout 2021 in the low to mid-teens as a result of cost actions taken in 2020, including changes in key distribution relationships throughout 2020 and continuing in 2021. Checks fourth quarter revenue declined 10% from last year to $173.3 million due to the secular trend combined with the impact of the pandemic. Q4 adjusted EBITDA margin levels of 48.1% held largely steady versus Q3 declining only 10 basis points sequentially despite lower revenue levels, but remained lower than 2019 levels as a result of increased selling costs, new wins, and technology investments in support of our One Deluxe strategy. Full year Check revenue declined 9.4% to $706.5 million as compared to last year, and adjusted EBITDA margin decreased to 48.4%. Based on the high renewal rates and new businesses won in 2020, we do anticipate Check recovery rates in 2021 to return to mid-single digit declines, consistent with the recovery from previous economic slowdowns. Free cash flow defined as cash provided by operating activities less capital expenditures was $155 million for 2020, a decline of $65.1 million as compared to last year. The decline was primarily the result of lower earnings, partially offset by lower interest, taxes, integration and lower CapEx. We did not repurchase common stock in Q4, and we will continue to evaluate future repurchases in 2021. We ended the quarter with strong liquidity of $425 million, including $123 million in cash. During the quarter we reduced the amount drawn under the credit facility by $200 million, ending the year with $840 million drawn, a reduction of $44 million in the year resulting net debt continue to decrease through the year ending at $717 million, the lowest level in 2.5 years. Our Board approved a regular quarterly dividend of $0.30 per share on all outstanding shares. The dividend will be payable on March 1, 2021 to all shareholders of record on February 16, 2021. Our strong execution and solid financial position, give us confidence to established guidance for the full year of 2021, the specific timing for economic recovery remains uncertain. Our expectation is though for first quarter of 2021 will feel much like a continuation of the fourth quarter of 2020 as a result of the ongoing pandemic. We are poised for recovery to begin in the second quarter enabling us to exit the year a sales-driven mid-single-digit revenue growth company. All of this means, we expect to achieve full-year 2021 revenue growth of 0% to 2% with full year 2021 adjusted EBITDA margin of 20% to 21%. We expect to invest approximately $90 million in CapEx to continue with important transformation work, innovation investments in building future scale across all our product categories. Before I pass it back to Barry, I want to summarize for you; our very strong financial stewardship combined with our new leadership team, winning sales strategy, and ownership culture allowed us to not only protect but improve the company's financial strength, while simultaneously positioning us well for 2021 and beyond. COVID certainly took it's toll but our strong team delivered in the worst of times, and we proved our cash generating business model is highly durable and our transformation is real; all of this gives us much confidence in our future. Now, back to Barry. In early 2020, we could not have anticipated the year that was in front of us. But Deluxe-ers [Phonetic] have always had the grit to succeed. Our team just put our heads out and went to work. We're proud of our progress on our strategy and transformation to become a trusted business technology company. We're proud of our strengthened balance sheet and improved portfolio. We're proud to be a sales-driven revenue growth company, our cross-sell results, all-time record sales success. But what's more impressive to me, we did all of this in the middle of a global pandemic. I now have great confidence we'll be a sales-driven company growing low-to-mid single digit with margins in the low-to-mid 20s over the long-term, and expect to be that company exiting this year. We've done the work, we've completed the preparations and laid the groundwork, and now our company is well positioned for the future. I can't close without recognizing the extraordinary contribution of my follow Deluxe-ers [Phonetic]. Our team went to work and got the job done. We're team living our purpose of values and ownership culture because we are all shareholders too. Now, we'll take questions.

sees fy 2021 revenue up 0 to 2 percent. qtrly revenue $454.5 million versus $522.1 million. positioned for recovery to begin in the second quarter, enabling us to exit 2021 with revenue growth in mid-single digits. expect q1 financial performance to be a continuation of q4 2020.

In evaluating Farmer Mac, you should consider these risks and uncertainties, as well as those described in our 2019 annual report on Form 10-K filed with the SEC in February as updated to discuss risks related to COVID-19 pandemic and our quarterly report on Form 10-Q filed with the SEC yesterday. In analyzing its financial information, Farmer Mac sometimes uses measures of financial performance that are not presented in accordance with Generally Accepted Accounting Principles in the United States, also known as non-GAAP measures. I'd like to start by recognizing that this is really an extremely challenging time for all of us. And our thoughts are especially with those most affected by COVID-19, particularly those on the front line of this crisis. At Farmer Mac, our immediate priorities are to support American agriculture and rural communities and to provide a safe, secure work environment for employees. I believe that if we focus on these priorities such as the financing of producers and processors of food on the front line, we can and will be a positive force in helping the nation get through this terrible pandemic. I'm happy to report that Farmer Mac has been successfully operating uninterrupted with 100% of our employees working remotely, and we've been doing that since March 12. Like all businesses, our leadership team has challenged ourselves to communicate and collaborate in new ways, and we've been successful, I think. Our business continuity plan has been functioning as designed in support of all functions of the organization. And recent investments in technology have allowed us to stay in communication within our organization and with our customers and our suppliers. Our Board has also remained very active in its oversight role. They've done that through weekly teleconference meetings. And we have been working effectively and cooperatively with our regulators and our debt capital market investors to help ensure the continued safety, liquidity and soundness of Farmer Mac. Let me now turn to results. Our strong underlying fundamentals and resilient business model has really enabled us to successfully continue operations and execute on our mission. We provided $1.3 billion of new credit to rural America that ultimately is to people in the first quarter of 2020. The challenges presented beginning in March 2020 required Farmer Mac to respond dynamically. We pivoted our customer outreach approach and fine-tuned some of our products in order to continue fulfilling our mission. In a few minutes, Zack Carpenter is going to go into more details on how we've done that. Our access to capital markets has remained strong despite the ongoing market volatility. We have continued to issue debt on a daily basis and to maintain our disciplined asset liability management policies and practices that have long been in place. We have remained well capitalized with a strong liquidity position that has been at or above $1 billion for most of the last couple of months. This strong liquidity position enables us to meet any unexpected cash flow need with minimal operational disruption. As we have previously noted, we indefinitely suspended our $10 million share repurchase program in early March to preserve capital and liquidity and as additional precautionary measure. Turning to credit, despite the normal seasonal uptick in delinquencies in the first quarter, our credit quality has remained healthy. We have maintained the same consistent underwriting guidelines for credit approvals and are closely monitoring the impact of COVID-19 on new applications. While we are not subject to any regulatory requirements that would require forbearance of loan payments, we are working closely with those borrowers that have been impacted by COVID-19 and we've been providing flexibility on payment terms to them as needed. More specifically, we have approved 71 payment deferment requests related to COVID-19 through May 1 with a total principal balance of $78.9 million. That's less than 0.5% of outstanding credit. We do expect to see an increase in these deferment requests over the next quarter, and we're continuing to work closely with our servicers to provide appropriate relief to impacted borrowers. We remain focused on serving the needs of our rural customers and are challenging ourselves to find more efficient and effective ways to provide our customers with the flexibility and assistance their borrowers need as they adapt to this new norm. And with that introduction, I'd like to now turn to Zack, our Chief Business Officer, to give you an update on customer and market developments. In the wake of this unprecedented global pandemic, we know that companies around the world are enacting new measures to ensure that they continue to offer their services, but even more importantly, to protect the wellbeing of their customers and employees. While we have transitioned to alternative operation, our team continues to work diligently to remain flexible and adaptable to meet our customers' financing needs and help mitigate any challenges their borrowers may face. To that end, we have taken specific steps to support our customers during this time. These initiatives include: loan closing flexibility and extended rate lock optionality for approved loans to provide customers the ability to navigate challenges due to office closures and social distancing requirements; continuing to offer competitive prices for all available Farmer Mac products and risk management solutions, given our ability to maintain [Phonetic] continued and uninterrupted access to the capital markets during this volatile environment; as well as providing rural borrowers impacted by the pandemic [Technical Issues] for principal and interest payments, as well as supporting customer deferral requests for loans backing guaranteed securities and long-term standby purchase commitment products. We will continue to assess and incorporate initiatives that allow Farmer Mac to serve our customers, rural borrowers and rural America as a stable source of capital during this unprecedented environment. Now, turning to business volume, 2020 is off to a good start for Farmer Mac, as all four lines of business contributed to net outstanding business volume growth of $421.4 million this quarter. This reflects loan purchase net volume growth in Farm & Ranch, USDA and Rural Utilities of a combined $303.3 million, which was partially offset by a sequential decrease in net growth in long-term standby purchase commitments and guaranteed securities of $137.8 million. We also saw increases in institutional credits, which grew $255.9 million, largely driven by our ability to provide short-term liquidity for two of our largest counterparties during the most volatile capital markets environment during the month of March. This growth is a testament to Farmer Mac's ability to be competitive in price, while also being effective in execution to meet the needs of these customers. In our Rural Utilities lines of business, loan purchase net volume grew $118.4 million in the first quarter of 2020 compared to $490.3 million in the same period last year. It is important to note that loan purchase net volume growth in the first quarter of 2019 included one large unique transaction, the purchase of a $546.2 million portfolio of participations in seasoned Rural Utilities loans from CoBank. Excluding the impact from the unique CoBank transaction, Farmer Mac's loan purchase net volume decreased in the first quarter of 2019. The strength of growth during the first quarter of 2020 reflects steady loan purchase demand from CoBank and their other primary counterparty in the rural utilities line of business, National Rural Utilities Cooperatives Finance Corporation. Loan purchase net volume growth in our foundational Farm & Ranch and USDA lines of business was $184.9 million for the first quarter of 2020 versus a net volume decline of $64.7 million for the same quarter in 2019. The strong first quarter of 2020 primarily reflects the results of Farmer Mac's customer acquisition and retention initiatives, competitive interest rates across our product set, and efficient and effective loan approval and onboarding execution by our underwriting and closing teams. Farm & Ranch loan purchases had net volume growth of $142.1 million during the quarter, overcoming one of our largest prepayment quarters of over $260 million, primarily related to the January 1 payment date, as well as increased scheduled principal amortization levels, given our larger portfolio. Looking ahead, our pipeline remains robust as we continue to build upon a more dynamic and responsive business model that has transformed the way we deliver upon our mission and improved customer satisfaction, volume retention and penetration in existing and new markets. As I've mentioned on prior calls, enhancing our infrastructure is crucial in order for us to continue to provide consistent and reliable capital to both existing and new markets. I'm excited to announce that we successfully launched our new customer portal platform yesterday. This portal provides an enhanced interface with elevated security features for our Farm & Ranch and USDA customers and will serve as the foundational platform to launch future innovative products and initiatives as we continue to drive incremental capital of the core sectors we serve. Later this fall, we will launch through this customer portal a new streamlined origination platform for Ag Express score card loan product. This origination platform will provide increased efficiency, enhanced technology and faster loan approval and funding for Ag Express score card loans. Our continued investment in our infrastructure does not stop with these two enhancements. We have several initiatives slated for 2021 and beyond and that continuing to elevate our infrastructure. We look forward to providing more details on future calls. Lastly, I would like to take a moment to recognize the Farmer Mac team for all their hard work and dedication to help meet the credit and liquidity needs of our customers and rural communities nationwide. Even during these times of uncertainty, it is imperative that we continue to execute upon our strategic priorities and remain dynamic and flexible in supporting our customers in rural America. And I just like to note that to be able to execute and deliver this kind of loan growth as well as to launch a major new technology initiative while working under our business continuity plan, basically working from home, I think is a real testament to both the commitment as well as effectiveness to the Farmer Mac team. I'd now like to turn to Jackson to give you an update on the current agriculture environment. You've heard a lot, read a lot of headlines in the press. Now, Jackson will fill in some of the detail and provide the Farmer Mac perspective. The COVID-19 pandemic has disrupted nearly all aspects of the global economy. Energy consumption has fallen precipitously in the last few months as drivers abandoned the roads and travelers shelved their passports. This demand decline caused dramatically lower oil and fuel prices. Increased market volatility and uncertainty also resulted in a significantly stronger US dollar in March, as well as elevated credit spreads for most borrowers, both corporate and retail. The agricultural sector has not been immune to the wide reaching effects of COVID-19. Schools, hotels and restaurants are all significant buyers of wholesale dairy products, animal protein products and fresh produce. Without this important demand pool for our food supply system, many farmers have abandoned milk and fresh produce due to the excess supply and perishable nature of these commodities. Animal protein processors have been challenged by the indirect economics of hospitality business closures, but also more directly confronted by COVID-19 outbreaks at individual plants. Approximately 40 animal protein processing plants have temporarily closed for parts of March and April and over 40% of hog and 30% of cattle processing was offline in early May. This drop in gasoline demand translated to reduced ethanol usage as well, prompting ethanol producers to take nearly half of all capacity offline. Ethanol typically consumes between 30% and 40% of annual US corn production. So lower corn demand is pressuring grain prices. Finally, a stronger US dollar and lower global economic growth creates headwinds for agricultural exports. Agricultural exports through March were down from 2019 levels, driven by a 15% drop in corn and soybean sales. Farmers and ranchers are pivoting production as a result of rapidly evolving information. Food processors and agribusinesses are enhancing already strong food and worker safety protocols to stay open or reopen during this challenging time. In April, USDA announced $16 billion in direct emergency aid, targeting cattle, dairy, hog, specialty crop and grain producers, and an additional $3 billion in food purchases for donation and distribution. Additionally, the CARES Act signed in March authorized a $14 billion replenishment of the Commodity Credit Corporation for possible direct farm and ranch aid later this year. The CARES Act also created several small business administration programs that could cover payroll, mortgage interest and other general expenses. According to data released by the SBA, the first round of Paycheck Protection Program payments delivered nearly $3 billion to small businesses involved in agriculture, forestry, fishing and hunting. Finally, lower fuel, feed, fertilizer and interest expenses provide a needed offset to those lower commodity prices. While Farmer Mac's credit portfolio contains exposure to affected industries, initial indicators of credit performance show only minor signs of degradation. The Farm & Ranch portfolio has no direct credit exposure to hog or cattle processing facilities, and only $40 million or 0.5% in hog production and only $21 million or 0.3% in dairy processing as of March 31. We do have exposure to several indirectly affected commodities like corn and soybeans at $2.4 billion or 30% of the Farm & Ranch portfolio, ranch cattle and calves at $672 million or 9% of the portfolio and dairy at $538 million or 7% of the portfolio as of March 31. However these exposures are extremely well diversified by both borrower and geography. For example, the corn and soybean portfolio is spread across more than 5,000 loans in 601 counties in 41 states. Loans past due by 90 days or more increased in the first quarter of 2020 to 1.02% of the outstanding Farm & Ranch portfolio or 0.37% across all four lines of business. This increase was driven by a handful of larger exposures, but the percentage of loan count is also increasing. There were no delinquencies in any of the other portfolios, including rural infrastructure, institutional credit or USDA guarantees. Individual loan risk ratings held steady in the first quarter of 2020, with substandard loans totaling $317 million across all loans and guarantees. This volume is spread across 56 commodities in 212 counties in 36 states. These metrics are near historical averages as a percentage of Farm & Ranch, as well as total loans and guarantees. But there still exists considerable uncertainty around the full impacts of COVID-19 on agriculture and rural communities. The disruption could significantly alter the trajectory of the related economic cycles. Fortunately, there exist strong support mechanisms to help augment any financial disruption and give rural communities time to heal. Farmer Mac had a very good start to the year, with our results for the quarter divided into two distinct macroeconomic periods. January and February were characterized by rising markets and a stable and positive economic outlook. March, however, proved to be unprecedented for everyone. As the COVID-19 virus spread globally and shelter-in-place orders became common, we saw significant volatility and market dysfunction in the latter half of March, and this coincided with national and global lockdowns. We continue to have, though, strong access to capital markets and were able to issue across various price point and tenors remaining well within GSE spread issuances. While there was initial strain and widening at the longer end of the curve in the latter half of March, we worked with our existing investor and dealer base and issued bonds in a flexible way that was tailor-made to meet end investor needs. During the period through which COVID-19 has been declared a national emergency, we issued long SOFR bonds. In fact, one of them was the longest GSE SOFR issuance and $285 million in structures, 10 years of greater, with total medium-term note issuances of approximately $2.5 billion to date. Our strong liquidity position, as Brad mentioned, and market access also enabled Farmer Mac to call higher-cost issuances, provide funding to business lines for new assets and add over $160 million in high-quality liquid assets to our investment portfolio. Let me now provide an overview of our financial results. Core earnings were $20.1 million for first quarter 2020 compared to $22.2 million in first quarter 2019. Net effective spread was $44.2 million in first quarter 2020 compared to $38.8 million in the same period last year. Net effective spread in percentage terms remained stable at 89 basis points for both periods. The $2.1 million year-over-year decrease, though, in core earnings was primarily due to a $3.3 million after-tax increase in the total provision for losses and a $2.7 million after-tax increase in operating expenses. These were partially offset by the higher net effective spread. The increase in the total provision for losses reflects the adoption and implementation of the new standard Current Expected Credit Losses, or CECL, and the immediate impact of updated economic factor forecast, particularly higher credit spreads and expected higher unemployment as a result of the COVID-19 pandemic and the resulting economic volatility that I mentioned that had an impact on CECL model results. Of the $3.8 million loss provision during the first quarter, approximately $3.5 million was attributable to factors related to COVID-19. Operating expenses increased by 26% in first quarter 2020 compared to first quarter 2019. This primarily was due to increased compensation and benefit expenses, including higher cash bonus payments to employees under our short-term annual bonus plan, as well as onetime payments to an executive who resigned during the quarter. It's important to note that these additional compensation expenses are seasonal and they do not reflect a recurring trend for the rest of the year. General and administrative expenses also increased compared to the prior year due to Farmer Mac's ongoing investment in various growth and strategic initiatives that were highlighted by both Zack and Brad. These ongoing investments in infrastructure will enable Farmer Mac to more efficiently meet its customer needs and will ultimately enable greater revenue retention over time. As of March 31, 2020, total allowance for losses were $19.1 million, an increase of $6.5 million from December 31, 2019. The total allowance for losses represents 9 basis points of Farmer Mac's $21.5 billion portfolio, and we continue to compare very favorably to industry peers. As I previously mentioned, the adoption and implementation of CECL on January 1, 2020, as well as the corresponding increase in reserves under these macroeconomic conditions were the primary drivers of this increase. Before moving on to capital, I did want to note one item regarding the adoption of CECL, which is the impact that it's had on our Rural Utilities line of business. Under the previous accounting standard, which estimated incurred losses based on historical loss rates, Farmer Mac's Rural Utilities line of business did not require an allowance as Farmer Mac had never experienced a loss in its Rural Utilities line of business. However, under the CECL accounting standard, the highly specialized nature of power generation and transmission utilities results in significant losses, given default estimates that drive our model assumptions, even though the actual probability of default remains very low. It is therefore important to note that as of March 31, 2020, Farmer Mac's $2.4 billion in outstanding Rural Utilities loan purchases and long-term standby purchase commitments have no historic or current delinquencies. Turning to capital, we continue to remain very well capitalized, which puts us in a position of strength as we entered this challenging time and will serve us well as we move forward. Farmer Mac's $815.1 million of core capital as of March 31, 2020 exceeded our statutory requirement by $165.8 million or 25%. This compares to $815.4 million of core capital as of December 31, 2019, which exceeded our statutory requirement by $196.7 million or 32%. The slight decrease in excess capital from the prior quarter is primarily due to net growth in Farmer Mac's outstanding business volume and the coinciding decrease in retained earnings related to various factors. However, from an overall liquidity standpoint, we are comfortable with our current cash position, which is hovering around $1 billion and which was at $1.2 billion on March 31, 2020. This level resulted in 202 days of liquidity and it's far exceeded our regulatory requirements by approximately 112 days. April, likewise, continued to be strong with a daily average cash position also around $1 billion, accompanied by strong levels of liquidity, which have continued through today. As Brad noted, the higher-than-mandated levels of cash and liquidity allow us to weather any unexpected cash flows, adequately fund deferments to meet our customer needs, while retaining the flexibility to maintain low but still ample levels as market conditions change. So in conclusion, Farmer Mac's underlying financial fundamentals, reflecting a well-capitalized balance sheet, stable core earnings, disciplined asset liability management and strong capital markets access, positions us to continue to successfully deliver upon a critical mission and navigate these uncertain times effectively. More complete information about Farmer Mac's first quarter 2020 performance is in the 10-Q we filed yesterday with the SEC. Farmer Mac was created in response to crises back in the 1980s and is intended to be a resource for financial institutions serving rural America. This is especially true during times of economic pressure and uncertainty. We are proud to play a vital role as a source of credit and liquidity for America's farmers, ranchers and rural utilities that comprise one of the most resilient sectors of this economy. Our ongoing commitment to invest in technology and business infrastructure has played a critical role in our ability to reach our customers, and we will continue to work diligently to ensure that remains the case as we look ahead. We're encouraged by the fact that we've been operating the Company remotely over the last two months. In closing, I'd like to express how proud I am of our team's efforts during this very difficult time to identify new and creative ways to connect with those who we serve. This includes the hardworking farm and ranch families who continue to be the most efficient, innovative producers of food in the world even in the face of challenges of trade, weather, labor and transport. It includes the people who process, transport and distribute our food, who are facing new safety challenges and who are adjusting to new distribution channels. It includes the people who produce and distribute electricity and provide rural infrastructure, who are having to adjust to fluctuating demand and safety and other issues. It certainly includes the network of financial institutions who are Farmer Mac's partners in serving all of these people. Our team, our employees at Farmer Mac have shown remarkable resilience, in large part because of the character and their belief in the purpose and the mission of Farmer Mac. And now, operator, I'd like to see if we have any questions from anyone on the line today.

provided $1.3 billion in liquidity and lending capacity in q1 2020.