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I consider this to be my most important learning for my 10 years in the restaurant industry. Today, we reported, on a consolidated basis, first-quarter revenues of $111 million which represented a 55% decrease from the prior year. We estimate that we lost roughly $44 million of revenue in the first quarter due to the reduced traffic in-store closures associated with COVID-19. As of today, approximately 95% of our solon systemwide are open, and management is evaluating the future of unopened corporate salons which may include keeping some salons permanently closed. We reported an operating loss of $31 million during the quarter. First-quarter consolidated adjusted EBITDA loss of $19 million was $48 million unfavorable to the same period last year. And was driven primarily by the decrease in the gain associated with the sale of company-owned salon of $27 million and the planned elimination of the EBITDA that had been generated in the prior period from the net 1,056 company-owned salons that has since been sold and converted to the franchise portfolio over the past 12 months. Looking at the segment-specific performance and starting with our franchise segment, first-quarter franchise royalties and fees of $18 million decreased $10 million or 36% versus the same quarter last year. A substantial part of the year-over-year decline was due to a $6 million reduction in cooperative advertising funds which we would have typically charged to and collected from franchisees, but which the company temporarily reduced as part of the COVID-19 pandemic relief effort to help ease the financial burden, the pandemic placed on our franchisees. Royalties also declined approximately $7 million primarily due to COVID-19, certain state mandatory salon closures, state-mandated operating restrictions and pandemic-related customer behavior changes which we believe to be temporary. Offsetting these declines with the growth in our franchise fees which now represents 80% of our portfolio. Product sales to franchisees increased $1 million year over year to $14 million driven by the increase in the franchise fees. First-quarter franchise adjusted EBITDA of $7 million declined approximately $5 million year over year driven primarily by reduced royalties as a result of the COVID-19 pandemic and the associated activities, as previously noted partially offset by a decline in G&A. First-quarter revenue was $47 million, a decrease of $127 million or 73% versus the prior year. The multifaceted reach and the impact of COVID-19 including increased governmental regulations, along with the year-over-year decrease of 1,243 company-owned salons over the past 12 months were the drivers of the decline. The decrease in the company-owned salons can be bucketed into three main categories: First, the successful conversion of 1,067 company-owned salons to our asset-light franchise platform over the course of the past 12 months, of which 137 were sold during the first quarter; second, the holder of approximately 400 company-owned salons over the course of the last 12 months, most of which were underperforming salons at lease expiration and not essential to our future strategy nor did we believe would be well suited within the current franchisee portfolio; and third, these net company-owned salon reductions were partially offset by 218 salons that were taken back from franchisees over the last year and six new company-owned organic salon openings during the last 12 months which we expect to transition to our franchise portfolio in the months ahead. First-quarter company-owned salon segment adjusted EBITDA decreased $22 million year-over-year to a loss of $11 million. Consistent with the total company consolidated results, the unfavorable year-over-year variance was driven primarily by the elimination of the adjusted EBITDA that had been generated in the prior-year period from the company-owned salons that were sold and converted into the franchise platform over the past 12 months. As it relates to corporate overhead, first-quarter adjusted EBITDA decreased $21 million to a loss of $15 million and is driven primarily by the $27 million decline in net gains excluding noncash goodwill derecognition in the prior year from the sale and conversion of company-owned salon partially offset by the net impact of management initiatives to eliminate non-core, non-essential G&A expense. In addition, cash proceeds during the first quarter were $3.7 million or approximately $27,000 per salon. As of September 30, we have liquidity of $184 million. This includes $99 million of availability under our revolver and $85 million of cash. In the first quarter, we used $29 million of cash, operating the business. Additionally, we used $2.5 million in the first quarter to buy out of underperforming salons early at a discount that will improve future cash flows. So I thought it would be worth mentioning that these lease liabilities on our balance sheet represent liabilities for both our corporate and franchise locations, of which approximately 80% of our liability is service and personally guaranteed by our franchisees. Excluding the option period, the lease liability would be approximately $460 million which is $300 million, less than the $760 million on our balance sheet. So to take that one step further, only 20% of the $460 million or $92 million is release exposure on the company-owned salon. The West Coast, specifically California, where we have over 500 locations was largely impacted by reclosures mandated in mid-July, lasting through most of August.

We estimate that we lost roughly $44 million of revenue in the first quarter due to the reduced traffic in-store closures associated with COVID-19.

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GAAP earnings were obviously very strong, but positively impacted by a $0.10 per share reserve release, and an $0.08 per share benefit from PPP fees, so about $0.79 for the quarter on a recurring basis. Our benefits business was up 12% in EBITDA over the last year. Wealth management business was up 35%, and the insurance business was up 28%. As Mark noted, the first quarter earnings results were solid with fully diluted GAAP and operating earnings per share of $0.97. The GAAP earnings results were $0.21 per share, or 27.6% higher than the first quarter 2020 GAAP earnings results, and $0.20 per share, or 26% better on an operating basis. Comparatively, the Company recorded GAAP earnings per share of $0.86 and operating earnings per share of $0.85 in the linked fourth quarter of 2020. The Company recorded total revenues of $152.5 million in the first quarter of 2021, a $3.8 million or 2.6% increase over the prior year's first quarter revenues of $148.7 million. Total revenues were also up $1.9 million or 1.2% from the linked fourth quarter, driven by increases in net interest income, banking noninterest revenues, and financial services business revenues. Although several factors contribute to the net -- improvement in net interest income, the results were aided by the recognition of net deferred PPP loan origination fees of $5.9 million in the quarter due largely to the forgiveness of $251.3 million of Paycheck Protection Program loans. The Company's tax equivalent net interest margin was 3.03% in the first quarter 2021 as compared to 3.65% in the first quarter of 2020, and 3.05% in the linked fourth quarter of 2020. Average cash equivalents increased $1.55 billion between the first quarter of 2020 and the first quarter of 2021, due to the net inflows of stimulus funds and PPP between the periods. The tax equivalent yield on earning assets was 3.15% in the first quarter of 2021 as compared to 3.93% in the first quarter of 2020, a 78 basis point decrease between the capital periods. The Company's total cost of deposits remained low, averaging 11 basis points during the first quarter of 2021. Noninterest revenues were down $0.1 million, or 0.2% between the first quarter of 2021 and the first quarter of 2020. The decrease in noninterest revenues was driven by a $2.4 million, or 13.4% decrease in banking-related noninterest revenues, which was largely offset by a $2.3 million or 5.7% increase in financial services business noninterest revenues. The decrease in banking-related noninterest revenues was driven by a $2.2 million decrease in deposit service fees, including customer overdraft occurrences, a $0.2 million decrease in mortgage banking income. Employee benefit services revenues were up $1.2 million, or 4.6% over the first quarter 2020 results, driven by increases in employee benefit trust and custodial fees. Wealth management revenues were also up $1.1 million, or 14.9% over the same periods due to higher investment management, advisory and trust services revenues. The Company recorded a $5.7 million net benefit in the provision for credit losses during the first quarter of 2021, due to a significant improvement in the economic outlook, and very low levels of net charge-offs. Conversely, the Company recorded a $5.6 million provision for credit losses during the first quarter of 2020 as the economic outlook worsened due to the pandemic. Net charge-offs for the first quarter of 2021 were $0.4 million or 2 basis points annualized, as compared to $1.6 million or 9 basis points annualized of net charge-offs reported during the first quarter of 2020. For comparative purposes, the Company recorded a $3.1 million net benefit in the provision for credit losses during the linked fourth quarter of 2020. The Company reported $93.3 million in total operating expenses in the first quarter of 2021 as compared to $93.7 million in the first quarter of 2020. The $0.4 million, or 0.4% decrease in operating expenses was attributable to a $0.6 million, or 1.1% decrease in salaries and employee benefits, a $1.7 million or 16.4% decrease in other expenses, a $0.3 million or 8.6% decrease in the amortization of intangible assets, a $0.3 million decrease in acquisition-related expenses, partially offset by a $2 million, or 19% increase in data processing and communication expenses, and $0.6 million or 5.2% increase in occupancy expenses. Comparatively, the Company recorded $95 million in total operating expenses in the linked fourth quarter of 2020. The Company closed the first quarter 2021 with total assets of $14.62 billion. This was up $689.1 million, or 4.9% from the end of the linked fourth quarter, and up $2.81 billion, or 23.8% from the year earlier. Similarly, average interest-earning assets for the first quarter of 2021 of $12.69 billion were up $377.6 million, or 3.1% from the linked fourth quarter of 2020, and up $2.65 billion or 26.4% from one year prior. The very large increase in total assets and average interest-earning assets over the 12 -- over the prior 12 months was driven by the second quarter 2020 acquisition of Steuben Trust, and large inflows of government stimulus-related deposit funding and PPP originations. As of March 31 2021, the Company's business lending portfolio included 874 first draw PPP loans with a total balance of $219.4 million and 1,819 second draw PPP loans with a total balance of $191.5 million. This compares to 3,417 first draw PPP loans with a total balance of $470.7 million at the end of the fourth quarter of 2020. The Company expects to recognize through interest income the majority of its remaining first draw net deferred PPP fees totaling $3.4 million during the second quarter of 2021, and the majority of its second draw net deferred PPP fees totaling $8.3 million in the third and fourth quarters of 2021. Ending loans at March 31, 2021 were $7.37 billion, $47.6 million or 0.6% lower than the linked fourth quarter ending loans of $7.42 billion, but up $502.2 million, or 7.3% from one year prior. The growth in ending loans year-over-year was driven by the acquisition of $339.7 million of Steuben loans in the second quarter of 2020 and the $399.2 million net increase in PPP loans between the periods. The decrease in loans outstanding on a linked quarter basis was driven by a $48.3 million decrease in business lending, due to a decline in PPP loans. Exclusive of PPP loans, net of deferred fees, the Company's ending loans increased $14.9 million or 0.2% during the first quarter. On a linked quarter basis, the average book value of the investment securities decreased $118.3 million or 3.1% due to the maturity of $666.1 million of investment securities during the fourth quarter, a significant portion of which occurred late in the quarter, offset in part by investment security purchases during the first quarter of 2021 totaling $546.8 million. Average cash equivalents increased $587.5 million or 54.4% due to the continued growth of deposits. The average tax equivalent yield on the investments during the first quarter of 2021 was 1.42%, including [Phonetic] 2.02% tax-equivalent yield on investment securities portfolio and 10 basis points yield on cash equivalents. At the end of the quarter, the Company's cash equivalents balances totaled $2 billion. During the first quarter, the Company redeemed $75 million of floating rate junior subordinated debt and $2.3 million of associated capital securities, which was initially issued by the Company in 2006. The Company's net tangible equity to net tangible assets ratio was 8.48% at March 31, 2021. This was down from 10.78% a year earlier and 9.92% at the end of 2020. Company's Tier 1 leverage ratio was 9.63% at March 31, 2021, which is nearly two times the well-capitalized regulatory standard of 5%. The combination of the Company's cash, cash equivalents, borrowing availability at the Federal Reserve Bank, borrowing capacity at the Federal Home Loan Bank and unpledged available-for-sale of investment securities portfolio provided the Company with over $5.67 billion of immediately available sources of liquidity. At March 31, 2021, the Company's allowance for credit losses totaled $55.1 million or 0.75% of total loans outstanding. This compares to $60.9 million or 0.82% of loans outstanding at the end of the linked fourth quarter of 2020 and $55.7 million, or 0.81% of loans outstanding at March 31, 2020. Nonperforming loans decreased in the first quarter to $75.5 million or 0 -- 1.02% of loans outstanding, down from $76.9 million, or 1.04% of loans outstanding at the end of the linked fourth quarter 2020, but up from $31.8 million or 0.46% of loans at the end of the first quarter of 2020, due primarily to the reclassified -- reclassification of certain hotel loans under extended forbearance from accrual to non-accrual status between the periods. The specifically identified reserves held against the Company's nonperforming loans were $3.6 million at March 31,2021. Loans 30 days to 89 days delinquent totaled $19.7 million or 0.27% of loans outstanding at March 31, 2021. This compares to loans 30 days to 90 days delinquent of $44.3 million or 0.64% one year prior, and $34.8 million or 0.47% at the end of the linked fourth quarter. As of March 31, 2021, the Company had 47 borrowers in forbearance due to the COVID-19-related financial hardship, representing $75.6 million in outstanding loan balances, a 1% of total loans outstanding. This compares to 74 borrowers and $66.5 million in loans outstanding in forbearance at December 31, 2020. Fortunately, the Company's diversified noninterest revenue streams, which represent approximately 38% of the Company's total revenues remain strong, and are anticipating to mitigate the continued pressure on the net interest margin.

As Mark noted, the first quarter earnings results were solid with fully diluted GAAP and operating earnings per share of $0.97. The Company recorded total revenues of $152.5 million in the first quarter of 2021, a $3.8 million or 2.6% increase over the prior year's first quarter revenues of $148.7 million.

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Within direct-to-consumer, we accelerated our shift to digital, step-changing profitability by over 1,000 basis points as we added new connected retail capabilities and drove quality of sales. We can't wait for 10 minutes for the recording. Hey, if there's one thing we've learned over the past 18 months, it's agility and the importance of agility. And our total social media followers continue to grow, exceeding 46 million globally led by Instagram. As part of this, in the first quarter, we opened 18 new stores and concessions in priority locations globally, mostly in Asia, and closed 11 locations. China continues to be a significant long-term growth opportunity, and our ecosystem approach delivered strong growth again this quarter with Mainland sales up more than 50%. Our global digital ecosystem, including our directly operated sites, department store dot-com, pure players and social commerce, accelerated to more than 80% growth in the first quarter in constant currency, up from about 60% in Q4. North America drove the biggest improvement this quarter, increasing more than 50% across both owned and wholesale digital channels. Meanwhile, Europe and Asia momentum continued with growth of more than 100% in each region in Q1, led by our wholesale digital and pure-play channels. We committed to comprising our global leadership team of at least 20% underrepresented race and ethnic groups by 2023. As part of our comprehensive circularity strategy, we set a target to use 100% recycled cotton in our products by 2025 and to launch additional resale and recycle opportunities for our consumers by 2022. We also announced a goal to achieve net-zero greenhouse gas emissions across our operations and supply chain by 2040 as we continue to work on reducing our carbon footprint throughout our value chain. Our teams are executing with passion and continue to embrace the agility they demonstrated throughout the challenging and unpredictable last 18 months. First quarter revenues increased 182% to last year on a reported basis and 176% in constant currency. Compared to first quarter fiscal '20 or LLY, revenues declined 4%. Total digital ecosystem sales accelerated to more than 80% growth in constant currency both to last year and LLY, including 50% growth in our own digital business. North America delivered the strongest sequential improvement with digital ecosystem sales increasing more than 50%, up from low double digits last year. Total company adjusted gross margin was 69.8% in the first quarter, down 200 basis points to last year on a reported basis and down 260 basis points in constant currency. Adjusted gross margins increased 30 basis points to LLY. First quarter AUR growth grew 17%, marking our 17th consecutive quarter of AUR gains as we continue on our brand elevation journey. This came on top of 25% growth last year while stores were closed. Adjusted operating expenses increased 39% driven by higher compensation and rent as we lapped last year's furloughs and store closures during COVID shutdowns. Adjusted expenses declined 2% compared to LLY. Compared to first quarter fiscal '20, marketing increased 39% as we focused on digital initiatives and reactivating key brand moments as markets reopened around the world. We expect to maintain an elevated level of marketing this year at around 6% of sales to support consumer engagement, acquisition and our long-term brand-building initiatives. Adjusted operating margin for the first quarter was 16.8% compared to a margin loss of negative 35.7% last year and 460 basis points ahead of LLY operating margin. This was well above our guidance of 7% to 7.5% due to stronger-than-expected replenishment in our wholesale and digital channels, which generate highly accretive margins versus our total company rate. First quarter revenue increased 300% to last year driven by strong Spring assortments, improving consumer sentiment and expanded store reopenings as we lapped the peak of store lockdowns last spring. Compared to LLY, North America revenues declined 8%, but included an 18% headwind from our strategic distribution resets and Chaps. In North America retail, revenues grew 189% to last year. Comps increased 176% on improved traffic and nearly 40% AUR growth, reflecting our continued elevation around product marketing and more targeted pricing and promotions. Brick-and-mortar comps increased 278% driven by stronger AUR, basket sizes and traffic as most stores reopened. Although foreign tourist sales improved significantly to last year, they were still nearly 70% below LLY due to continued softness in international traffic and travel. Comps in our own digital commerce business grew 51% this quarter, accelerating from 25% in Q4 as we continued to focus on new consumer acquisition, product elevation and enhancing the user experience. In North America wholesale, revenues increased to $250 million compared to $23 million last year as we carefully restocked into the channel and lapped last year's minimal shipment to customers during the shutdown. Wholesale AUR growth continues to accelerate, up more than 20% to LLY. And our focus on Wholesale Dot Com is working with digital sellout up more than 50% in Q1 and more than 75% to LLY. First quarter revenue increased 194% on a reported basis and 179% in constant currency, above our expectations. First quarter comps increased at 98% with a 154% increase in brick-and-mortar as stores reopened and a 23% increase in digital commerce. Approximately 20% of our stores were fully closed in Q1 with additional stores operating under partial closures or other restrictions. Digital commerce outperformed despite a challenging 44% comparison last year when COVID-related closures shifted more business online. Revenues increased 68% on a reported basis and 61% in constant currency. Our Asia retail comps increased 43% driven by similar performance across our brick-and-mortar stores and digital commerce. In Q1, this was supported by our successful 5/20 gift day campaign, 6/18 shopping event live streamed from our newly opened Sanlitun store and momentum in our newest digital flagships in China, Japan and Hong Kong. This was led by the Chinese Mainland, which was up more than 50% to last year and 70% to LLY in constant currency driven by a strong product assortment, localized marketing initiatives and new store openings. Korea was also up more than 30% to last year and 40% to LLY. We ended the year with $3 billion in cash and investments and $1.6 billion in total debt, which compares to $2.7 billion in cash and investments and $1.9 billion in total debt last year. Net inventory increased 4% to support increasing demand. This compared to a 22% decline last year when we limited shipments to brick-and-mortar channels at the height of COVID shutdowns last spring. For fiscal '22, we now expect constant currency revenues to increase approximately 25% to 30% to last year on a 53-week basis. Excluding approximately $700 million in annualized revenues, we deliberately reduced during the pandemic, including department store exits, off-price and daigou reductions, Chaps and Club Monaco, this implies revenues up slightly to fiscal '20. Foreign currency is expected to contribute about 30 basis points to full year revenue growth. We now expect gross margin to expand 50 to 70 basis points even as we lap meaningful geographic and channel mix benefits due to last year's COVID closures. This implies roughly 440 basis point increase to fiscal '20. Our outlook includes slightly higher freight headwinds of approximately 100 to 120 basis points versus our previous expectation of about 100 basis points. We now expect operating margin of 12% to 12.5%, up from our 11% outlook previously. This compares to a 4.8% operating margin last year and 10.3% in fiscal '20. We expect operating margin for the remaining three quarters to moderate from Q1 levels based on increased marketing investments as planned to get to our target of 6% of sales this year, increased freight pressure in the back half of the year and our assumption that the higher-margin wholesale replenishments that we saw in the first quarter does not continue as demand start to normalize. For the second quarter, which no longer includes Club Monaco, we expect constant currency revenues to increase approximately 20% to 22%. Foreign currency is expected to contribute about 50 basis points to revenue growth. We expect operating margin of about 13% to 14% in the second quarter. This includes gross margin of flat to up 20 basis points as we continue to drive AUR and product mix, largely offset by higher freight as we lap last year's COVID mix benefits. We expect full year tax rate to be about 24% with the second quarter tax rate about 24% to 25%.

China continues to be a significant long-term growth opportunity, and our ecosystem approach delivered strong growth again this quarter with Mainland sales up more than 50%. Our global digital ecosystem, including our directly operated sites, department store dot-com, pure players and social commerce, accelerated to more than 80% growth in the first quarter in constant currency, up from about 60% in Q4. North America drove the biggest improvement this quarter, increasing more than 50% across both owned and wholesale digital channels. We committed to comprising our global leadership team of at least 20% underrepresented race and ethnic groups by 2023. Compared to first quarter fiscal '20 or LLY, revenues declined 4%. Total digital ecosystem sales accelerated to more than 80% growth in constant currency both to last year and LLY, including 50% growth in our own digital business. North America delivered the strongest sequential improvement with digital ecosystem sales increasing more than 50%, up from low double digits last year. Wholesale AUR growth continues to accelerate, up more than 20% to LLY. And our focus on Wholesale Dot Com is working with digital sellout up more than 50% in Q1 and more than 75% to LLY. First quarter revenue increased 194% on a reported basis and 179% in constant currency, above our expectations. Approximately 20% of our stores were fully closed in Q1 with additional stores operating under partial closures or other restrictions. Revenues increased 68% on a reported basis and 61% in constant currency. This was led by the Chinese Mainland, which was up more than 50% to last year and 70% to LLY in constant currency driven by a strong product assortment, localized marketing initiatives and new store openings. For fiscal '22, we now expect constant currency revenues to increase approximately 25% to 30% to last year on a 53-week basis. We now expect gross margin to expand 50 to 70 basis points even as we lap meaningful geographic and channel mix benefits due to last year's COVID closures. We now expect operating margin of 12% to 12.5%, up from our 11% outlook previously. For the second quarter, which no longer includes Club Monaco, we expect constant currency revenues to increase approximately 20% to 22%. Foreign currency is expected to contribute about 50 basis points to revenue growth. This includes gross margin of flat to up 20 basis points as we continue to drive AUR and product mix, largely offset by higher freight as we lap last year's COVID mix benefits.

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Our sales increased by 3% to $9.2 billion. Adjusting for the effects of our first-quarter divestiture of the IT services business, organic sales increased 10%. Additionally, program execution across the portfolio was exceptional, which drove our segment operating margins to exceed 12%. This follows on strong Q1 performance resulting in a year-to-date segment operating margin of 12.1%, and we continue to expect solid performance for the remainder of the year. Earnings per share increased 7% this quarter and transaction-adjusted earnings per share has increased 16% year to date. Transaction-adjusted free cash flow is also trending favorably and has increased 26% year to date. As a result, we ended the quarter with just under $4 billion in cash on the balance sheet. We completed the $2-billion accelerated share repurchase in Q2 and continue to expect to repurchase over $3 billion for the year. Additionally, we increased our dividend by 8% in May. And while it's still relatively early in the budget process, we're pleased to see strong support for national security from the Congress, including a $25 billion increase to the president's budget request approved last week by the Senate Armed Services Committee. Both the House Appropriations Committee and SASC have voiced strong support for many of our programs, including B-21, GBSD, Triton and F-35, to name a few. NASA was also well-supported in the budget, with a 7% year-over-year increase in proposed funding. In partnership with the Air Force, the B-21 program remains on track, with two test aircraft in production today, and we continue to make solid progress toward first flight. The Air Force recently published an artist rendering and a B-21 fact sheet that provides additional insights into the program. The fact sheet highlights that the B-21 is being designed with open systems architecture to reduce integration risk and enable future modernization efforts to allow for the aircraft to evolve as the threat environment changes. And as a reminder, the Freedom Radios equip both the F-35 and F-22. This latest flight test integrated the widest variety of sensors to date, including a Marine Corps G/ATOR radar, which is our GaN-based expeditionary radar that entered full-rate production last year, as well as F-35 and other ground sensors and interceptors. Additionally, after two years of book to bill over 1.3, we expect our book to bill for the full year to be close to one this year, with key booking opportunities in the second half of the year that include HALO, SLS, F-35 and several restricted programs, laying the foundation for continued growth. Our year-to-date transaction-adjusted free cash flow increased 26%, and we continue to return cash to shareholders through our buyback program and our quarterly dividend, which we increased by 8% in Q2. Normalizing for the IT services divestiture, which was a $585 million headwind in the second quarter of 2021, our organic sales increased 10% compared to last year. Moving to Slide 5, which compares our earnings per share between Q2 of 2020 and Q2 2021, our earnings per share increased 7% to $6.42. Operational performance contributed $0.60 of growth and lower unallocated corporate costs driven by state tax changes added another $0.22. But compared to the even more favorable equity markets experienced in the same quarter last year, it represented a year-over-year headwind of $0.18. Aeronautics sales were roughly flat for the quarter and up 2% year to date. At defense systems, sales decreased by 24% in the quarter and 21% year to date, and on an organic basis, sales were down roughly 3% in both periods. Lower organic sales were driven by the completion of our Lake City activities, which represented a headwind of $120 million in the quarter and $260 million year to date. Mission systems sales were up 6% in the second quarter and 8% year to date. On an organic basis, MS delivered another double-digit sales increase in the quarter of almost 12%, and organic sales were higher in all four of its business units in both periods. Turning to space systems, sales continue to grow at a robust rate, rising 34% in the second quarter and 32% year to date. We had an outstanding operational quarter with segment margin rate at 12.2%. Aeronautics' Q2 operating income decreased 3% due to a benefit of $21 million recognized in the second quarter of 2020 from the resolution of a government accounting matter. Operating margin rate was consistent at 10.3% in Q2 and the year-to-date period. At defense systems, operating income decreased by 18% in the quarter and 15% year to date, primarily due to the impact of the IT services divestiture. Operating margin rate increased to 12.4% in the quarter and 11.8% year to date. Operating income in Mission Systems rose 18% in the quarter and 15% year to date due to higher sales volume and improved performance. Operating margin rate increased to 15.8% in the quarter and benefited from the favorable resolution of certain cost accounting matters, as well as changes in business mix, as a result of the IT services divestiture. Year to date, operating margin rate increased to 15.5%. Space systems operating income rose 44% in the quarter and 40% year to date, and operating margin rate was 11% in both periods. For sales, we're increasing the midpoint of our guide by $500 million to a range of $35.8 billion to $36.2 billion. This translates to full-year organic growth of over 4% and over 5% excluding the 2020 equipment sale at AS. We're also increasing both our segment operating margin rate and our overall operating margin rate ranges by 10 basis points to 11.6% to 11.8% and 15.5% to 15.7%, respectively. Keep in mind that the gain from the IT services divestiture contributed approximately 5 points of our overall operating margin benefit. For unallocated corporate expense, our updated guidance reflects a $30 million reduction associated with state tax changes. And we now foresee an effective federal tax rate in the high 17% range, excluding the effects of the divestiture, which is an increase from our prior guidance. We project a federal tax rate of approximately 22.5% on a GAAP basis. The increase in guidance is driven by $0.40 of segment operational improvement. Lower unallocated corporate costs almost fully offset the headwind from the higher federal tax rate, leading to an increase in our transaction-adjusted earnings per share guidance of $0.35 at the midpoint. Since our call in January, we've raised the midpoint of our sales guide by $700 million. But in light of our outstanding first-half cash flow performance, we project that we can absorb that additional working capital in our existing transaction-adjusted free cash flow guidance of $3 billion to $3.3 billion. While asset returns and actuarial assumptions will continue to influence the final number, our current estimate is approximately $185 million of CAS recoveries in 2022, down $55 million from our January guide and down about $300 million from our expected 2021 level. Regarding cash deployment, as Kathy mentioned, we completed our $2 billion accelerated share repurchase in the second quarter, retiring over six million shares at an average price of around $327 per share. And we continue to target over $3 billion of total buybacks in 2021. At the end of the second quarter, we had approximately $3.7 billion of remaining share repurchase authorization.

Our sales increased by 3% to $9.2 billion. Moving to Slide 5, which compares our earnings per share between Q2 of 2020 and Q2 2021, our earnings per share increased 7% to $6.42. Year to date, operating margin rate increased to 15.5%. Space systems operating income rose 44% in the quarter and 40% year to date, and operating margin rate was 11% in both periods. For sales, we're increasing the midpoint of our guide by $500 million to a range of $35.8 billion to $36.2 billion.

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On a U.S. GAAP basis, for the third quarter of 2021, NOV reported revenues of $1.34 billion and a net loss of $69 million. For the third quarter ended September 30, 2021, NOV once again posted strong orders with consolidated book-to-bill of over 150%, reflective of steadily strengthening commodity prices and oilfield activity. However, NOV's reported consolidated revenue declined 5% sequentially, and EBITDA fell to $56 million during the third quarter. I'll start by reminding everyone that our second quarter financials included credits related to a project cancellation settlement within Rig Technologies, which contributed $74 million in revenue and $57 million in EBITDA. We excluded those credits from our discussion on our last call and excluding these credits again from the sequential comparison today, points to consolidated third quarter revenues that were essentially flat, down only $2 million sequentially and EBITDA that was up with EBITDA margins on this basis, rising from 3.5% to 4.2%. We recognized a $12 million charge stemming from a combination of COVID disruptions and execution challenges on a large offshore project within our Completion & Production Solutions segment, which I'll describe more fully in a moment. In fact, given: one, stronger oil and natural gas prices lately; two, the emergence of many of our key offshore drilling customers from bankruptcy; three, the significant reduction in costs that NOV has achieved through the past two years; four, our third quarter in a row of sequential double-digit top line growth and solid flow-throughs for our Wellbore Technology segment; and five, book-to-bill is in excess of 100% for the second quarter in a row for both the Completion & Production Solutions and Rig Technologies segments. Lead times for forgings have extended out from six weeks to 18 weeks. And while prices for plate steel and coiled steel are now up more than 240% year-over-year, at least we appear to be seeing some stability in steel pricing as iron ore prices have declined. Spot container shipping rates from Asia to the U.S. are now five times what they were this time last year, 14 times what they were in 2019. Additionally, ocean freight reliability is down to 38% and about half of where it was historically, which has led to more use of expensive airfreight. Completion & Production Solutions identified another $50 million of annual cost reductions, including shuttering another half dozen facilities over the next few quarters. Despite the level of contracted offshore rigs declining sequentially and I'll add a low level of actual offshore equipment orders for us, outside of the 20,000-psi pressure control equipment order for Transocean, we are being quietly asked to quote on several stacked rigs that are looking at coming back to the market. We see them raising their prices materially over, say, the next 18 months as prosperity trickles down to this level in the food chain. Our offshore wind installation vessel business won two packages from Cadeler and remains on track to achieve revenue run rate of $400 million a year by Q4 of next year. NOV's consolidated revenue in the third quarter of 2021 was $1.34 billion, a 5% decrease compared to the second quarter. Adjusted EBITDA was $56 million or 4.2% of sales. During the third quarter, we generated $105 million from cash flow from operations and $66 million of free cash flow. We ended Q3 with net debt of $36 million, comprised of long-term debt of $1.70 billion and cash and cash equivalents of $1.67 billion. Our Wellbore Technologies segment generated $507 million in revenue during the third quarter, an increase of $44 million or 10% sequentially. Revenue improved 6% in North America and 13% in international markets as the momentum of the global recovery continued to build in all major geographical regions. EBITDA improved $14 million to $77 million or 15.2% of sales as inflationary pressures and a less favorable mix limited incremental margins to 32%. Our downhole tools business realized a 5% improvement in revenue during the third quarter. Our Agitator system was recently used to help a customer establish a new rate of penetration benchmark in Colombia, delivering a field record rate of penetration of 201 feet per hour. Our SelectShift Downhole Adjustable Motor was used by a large operator in the Northeast U.S. during a 12-well drilling campaign and drove a 30% reduction in average drill times due to the tool's ability to change bend settings downhole saving trips out of the hole. While the business unit saw improvements in all regions, the North Sea and Latin America were particularly strong and offshore job counts improved by 17% sequentially, despite the impact of hurricanes in the Gulf of Mexico during the quarter. Looking forward, we anticipate our legacy data acquisition offering will continue to benefit from rising activity levels and market share gains, and we expect our digital offerings will continue to gain greater market adoption by operators looking to extract additional operational efficiencies to offset inflationary pressures. U.S. operators are showing an increasing preference for 5.5-inch drill pipe, which unlike smaller diameter pipe sizes is in limited supply. For our Wellbore Technologies segment, improving global activity levels, partially offset by lingering supply chain challenges, should allow for sequential revenue growth between 3% to 6% in the fourth quarter. We expect improving absorption in our manufacturing facilities and better pricing to be partially offset by supply chain challenges and continued inflationary pressures, limiting incremental margins to around 20% in the fourth quarter. Our Completion & Production Solutions segment generated $478 million in revenue during the third quarter, a decrease of $19 million or 4% sequentially. EBITDA for the quarter was a loss of $5 million or 1% of sales. Orders during the third quarter were $384 million, yielding a book-to-bill of 144% with all but one business realizing a book-to-bill greater than 1. Backlog for the segment ended at approximately $100 million higher sequentially to end the quarter at $1.1 billion. Indicative of the improving outlook for offshore activity, orders improved sequentially, achieving their highest levels since 2019, resulting in a book-to-bill that exceeded 140% for the second straight quarter. For the fourth quarter of 2021, we anticipate our Completion & Production Solutions segment will continue to face COVID and supply chain challenges, but improved backlogs and growing aftermarket activity should allow for segment revenues to improve 10% to 15% with incremental margins in the mid-30% range. Our Rig Technologies segment generated revenues of $390 million in the third quarter, a decrease of $97 million or 20% sequentially. Excluding the $74 million in revenue recognized in the second quarter from the settlement of the offshore rig project cancellation, revenues declined $23 million sequentially, primarily due to the timing of certain projects nearing completion during the third quarter. Adjusting for the impact of the offshore rig project cancellation, EBITDA increased $7 million on an improved sales mix and cost savings. Orders for the segment increased to $300 million, yielding a book-to-bill of 190%. As Clay mentioned, we remain on track to achieve an annualized revenue run rate of $200 million by the end of this year and a run rate of approximately $400 million by the end of 2022. Rig capital equipment orders improved for the second straight quarter, highlighted by an award for our third 20,000-psi BOP project. One of our customers recently indicated that it expects to have the entirety of its fleet under contract by the end of 2021, a remarkable feat considering where the industry was just 12 months ago. We also saw a 30% sequential increase in the number of quotations by our field engineering group, predominantly driven by the customers I described earlier, who would like help from our engineers in determining the requirements to reactivate their stacked rigs. For the fourth quarter, we expect revenues for this segment to grow 8% to 12% with incremental margins in the mid-teens.

On a U.S. GAAP basis, for the third quarter of 2021, NOV reported revenues of $1.34 billion and a net loss of $69 million. NOV's consolidated revenue in the third quarter of 2021 was $1.34 billion, a 5% decrease compared to the second quarter. Looking forward, we anticipate our legacy data acquisition offering will continue to benefit from rising activity levels and market share gains, and we expect our digital offerings will continue to gain greater market adoption by operators looking to extract additional operational efficiencies to offset inflationary pressures. Our Completion & Production Solutions segment generated $478 million in revenue during the third quarter, a decrease of $19 million or 4% sequentially. Orders during the third quarter were $384 million, yielding a book-to-bill of 144% with all but one business realizing a book-to-bill greater than 1. Our Rig Technologies segment generated revenues of $390 million in the third quarter, a decrease of $97 million or 20% sequentially. Orders for the segment increased to $300 million, yielding a book-to-bill of 190%.

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To share highlights of the quarter, net sales were up 14% year-over-year and up 11% organically. Professional segment net sales were up 9%, a continuation of the growth trend for this segment. Residential segment net sales were up 31%, setting another record. From a segment earnings perspective, Professional segment grew 14% and Residential increased 49%. We generated strong free cash flow in the quarter, which allowed us to pay down $90 million in debt and resume share repurchases. We grew net sales by 13.7% to $873 million. Reported earnings per share was $1.02 and adjusted earnings per share was $0.85 per diluted share. This compares with reported earnings per share of $0.65 and adjusted earnings per share of $0.64 for the comparable quarter last year. Now to the segment results, Professional segment net sales for the quarter were up 9.3% to $650.2 million. Professional segment earnings for the quarter were up 14% to $116.8 million. When expressed as a percent of net sales, segment earnings increased 80 basis points to 18%. Residential segment net sales for the quarter were up 31.3% to $217.7 million. Residential segment earnings for the quarter were up 48.9% to a record $32.1 million. This reflects a 170 basis point year-over-year increase to 14.7% when expressed as a percent of net sales. We reported gross margin for the quarter of 36.1%, a decrease of 140 basis points from the prior year. Adjusted gross margin was also 36.1%, down to 150 basis points. SG&A expense as a percent of net sales decreased 570 basis points to 19.9% for the quarter. Operating earnings as a percent of net sales for the quarter increased 430 basis points to 16.2%. Adjusted operating earnings as a percent of net sales increased 210 basis points to 14.2%. Interest expense of $7.5 million was down approximately $600,000 compared with a year ago, driven by lower interest rates. The reported effective tax rate was 18.1% for the first quarter and adjusted effective tax rate was 21.5%. Turning to the balance sheet and cash flow, at the end of the quarter, our liquidity was just over $1 billion. This included cash and cash equivalents of $433 million and full availability under our $600 million revolving credit facility. Accounts receivable totaled $306.9 million, down 4.5% from a year ago due to channel mix and the timing of other and receivables. Inventory was down 8.6% from a year ago to $675.3 million. Accounts payable increased 4.7% to $364.4 million from a year ago. First quarter free cash flow was $84.5 million with a reported net earnings conversion ratio of 76%. During the first quarter we paid down $90 million in debt and returned $59.8 million to shareholders, $28.7 million in regular dividends and $31.4 million in share repurchases. For fiscal 2021 we continue to expect net sales growth in the range of 6% to 8%. We expect full year adjusted earnings per share in the range of $3.35 to $3.45 per diluted share. For increased productivity solutions, the Toro Dingo TXL 2000 and Ditch Witch SK 3000 stand on skid steers; Toro Exmark and Ventrac high-capacity mowers, a new line of Ditch Witch horizontal directional drills, the BOSS DRAG PRO rear-mounted truck plow and BOSS and Ventrac sidewalk snow and ice management equipment.

We grew net sales by 13.7% to $873 million. Reported earnings per share was $1.02 and adjusted earnings per share was $0.85 per diluted share. For fiscal 2021 we continue to expect net sales growth in the range of 6% to 8%. We expect full year adjusted earnings per share in the range of $3.35 to $3.45 per diluted share.

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And for purposes of the anchor year on long-term earnings per share growth guidance, the anchor is weather-adjusted 2020 earnings per share of $3.84. This agreement will add an equivalent customer connection total of more than 45,000. It was also executed under Act 12 of 2016, which allows municipalities to sell their water and wastewater systems for a price-based on the fair market value of the facilities. This municipally owned water and wastewater system serves approximately 3,000 customer connections. This municipally owned water system serves approximately 900 customer connections and is our first agreement signed under the new fair market value legislation in the Virginia commonwealth. To date this year, we've added approximately 4,500 customer connections through closed acquisitions and organic growth. We have under agreement more than 86,000 customer connections, including the City of York. In total, the acquisitions closed so far this year, and all those under agreement represent approximately $440 million in additional rate base and an estimated $115 million of follow-on additional capital expenditures over the next five years. And our growth pipeline remains strong with more than 1.2 million customer connection opportunities. Our first quarter 2021 earnings per share of $0.73 were up 7.4% compared to the first quarter of 2020. We invested capital of $342 million in the first quarter as we continue to balance that investment by focusing on operating and capital efficiencies, constructive regulatory outcomes and by leveraging the size and scale of our business. As a reminder, we've challenged ourselves with a new O&M efficiency target of 30.4% by 2025. With this strong start to 2021 and continued execution of our strategies, we're affirming today our 2021 earnings guidance range of $4.18 to $4.28 per share. We are also affirming our long-term earnings per share compound annual growth rate in the 7% to 10% range. The request was driven by $1.64 billion of investment from 2019 through 2022. Pennsylvania American Water was authorized additional annualized revenues of $90 million over a 2-year period, excluding an agreed to reduction in revenues for tax savings passed back to customers as a result of the Tax Cuts and Jobs Act of 2017. The rate order includes approximately $620 million in water and wastewater system improvements made since the end of 2017. Rates will be effective on May 28, 2021, and will result in additional annualized water and wastewater revenue of $22 million, excluding the reduction in revenue for tax savings passed back to customers, also a result of TCJA. If the global settlement is adopted by the commission without changes, revenues will increase by $33.5 million over three years, with agreed capital investments of $165 million in 2021 and 2022. As part of the application, California American Water requested an authorized cost of equity of 10.75%, cost of debt of 4.35% and overall rate of return of 8%, which is sufficient to provide California American Water with the opportunity to earn a reasonable return on its investments. And once staff deemed the application complete, by statute, the Coastal Commission would have 180 days to process it. The law also establishes a time line for a PSC decision on an acquisition, which is within 60 to 150 days of application approval. Act 1287 creates a mechanism that reduces the required upfront cost to new customers for water and wastewater utility to extend service to underserved areas. And Act 349 establishes a tax writer for water and wastewater utilities based upon any change in state or federal income tax law. For the 12-month period ending March 31, 2021, our O&M efficiency ratio was 34.1%, a decrease from 34.5% for the 12-month period ended March 31, 2020. Since then, we've added approximately 327,000 customer connections, while expenses only increased at a compound annual growth rate of 1.1%. Our commitment to 0 injuries and incidents will continue because no injury is ever acceptable to us. As Walter highlighted, first quarter 2021 earnings were $0.73 per share compared to $0.68 per share in the first quarter of 2020. Results for the regulated business segment were $0.74 per share, an increase of $0.06 per share, primarily driven by continued growth from infrastructure investment, acquisitions and organic growth. Results for the market-based business were $0.09 per share, a decrease of $0.03 per share as we saw an increase in claims in the homeowner services group due largely to weather-related events. Current company results improved $0.02 per share in the first quarter of 2021 as compared to the same period in 2020. Regulated results increased $0.06 per share, as I said. We saw a $0.19 per share increase in revenues from new rates in effect as well as earnings from acquisitions. O&M expense increased by $0.08 per share and somewhat offsetting with an increase in depreciation of $0.05 per share in support of growth in the business. As previously mentioned, the market-based business results increased -- or decreased $0.03 per share in the first quarter of 2021 as compared to the first quarter of '20. The parent results improved $0.02 per share in the first quarter of 2021 compared to the first quarter of last year. And as a reminder, the excess accumulated deferred income taxes resulted from the federal rate being lowered from 35% to 21% as part of the Tax Cuts and Jobs Act, as Walter mentioned. To date, the regulated businesses have received $123 million in annualized new revenues in 2021. This includes $92 million from the Pennsylvania and the Missouri rate cases discussed earlier, excluding the agreed reduction in revenues for tax savings passed back to customers and $31 million from infrastructure surcharges. In addition, the Pennsylvania rate case includes a second step increase of $20 million effective January 2022. We have also filed requests and are awaiting final orders on three rate cases, totaling an annualized revenue request of $61 million. On April 28, 2021, our Board of Directors increased the company's quarterly cash dividend payment from $0.55 to $0.6025 per share. We have grown our dividend at a compound annual growth rate of about 10% over the last five years, significantly outpacing our peers in the Dow Jones utility average and the Philadelphia Utility Index. We expect to continue our dividend growth at the high end of the 7% to 10% range, as we know that, that is very important to many of our shareholders. Also, we continue to target a dividend payout ratio of 50% to 60% of earnings.

As Walter highlighted, first quarter 2021 earnings were $0.73 per share compared to $0.68 per share in the first quarter of 2020.

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Net income for the fourth quarter of 2021 included the aftertax amortization of the cost of reinsurance of $15.5 million or $0.08 per diluted common share and a net aftertax investment loss on the company's investment portfolio of $6.8 million or $0.03 per diluted common share. Net income in the fourth quarter of 2020 included a net aftertax gain from the closed block individual disability reinsurance transaction of $32 million or $0.16 per diluted common share. A net aftertax reserve increase related to assumption updates of $133.5 million, which is $0.66 per diluted common share; and a net aftertax investment gain on the company's investment portfolio, excluding the net aftertax realized investment gain associated with the closed block individual disability reinsurance transaction of $1.6 million or $0.01 per diluted common share. So excluding these items, aftertax adjusted operating income in the fourth quarter of 2021 was $182 million or $0.89 per diluted common share compared to $235.3 million or $1.15 per diluted common share in the year ago quarter. As we turn to our financial results, our fourth quarter played out largely as we anticipated, with aftertax adjusted operating earnings per share at $0.89 for the fourth quarter. colonial life produced a solid level of income this quarter, with a strong adjusted operating return on equity of approximately 16%. Premium growth in the fourth quarter on a year-over-year basis was just under 3% for our core businesses in aggregate, with growth of 3% for Unum US, 7% for international businesses and 1% for colonial life. The age demographics are a key driver for our business and there was a slight decrease to 35% of national deaths in the fourth quarter from 40% in the prior quarter. And finally, our capital position remains in a very, in very healthy shape, even after paying more than $0.5 billion in life claims through the pandemic. The weighted average risk-based capital ratio for our traditional U.S.-based life insurance companies was approximately 395% to close the year and holding company cash totaled $1.5 billion. Both of these metrics are well ahead of our long-term targets and relative to year-end 2020, holding company cash remained stable and RBC improved by approximately 30 points. In addition, we added $400 million of pre-capitalized trust securities, which gives us contingent capital on top of our pre-existing credit lines. For the fourth quarter in the Unum US segment, adjusted operating income was $81.4 million compared to $88.5 million in the third quarter. Within the Unum US segment, the group disability line reported adjusted operating income of $34.1 million in the fourth quarter compared to $39.5 million in the third quarter. We saw promising trends in premium income, which increased 2.9% relative to the third quarter and 5% on a year-over-year basis, with increasing levels of natural growth as we benefit from improving employment levels along with rising wages. The expense ratio was elevated this quarter at 29.9% compared to 28.1% in the third quarter, which reflected higher people-related costs and technology spend to support our digital strategies. The ratio did improve slightly to 78.3% from 78.9% in the third quarter, primarily driven by a lower level of incidence in the short-term disability line. Adjusted operating income for Unum US group life and AD&D declined to a loss of $71.7 million for the fourth quarter from a loss of $67.1 million in the third quarter. This impacted the quarter by approximately $15 million. The benefit ratio improved to 98.3% for the fourth quarter compared to 100.6% in the third quarter. We were impacted by the continued high level of national COVID-related mortality, which was a reported 94,000 in the third quarter and increased to a reported 127,000 in the fourth quarter. For our group life block, we estimate that COVID-related excess mortality claims declined from over 1,900 claims in the third quarter to an estimated 1,725 claims in the fourth quarter. Accordingly, our results reflect an improvement to approximately 1.4% of the reported national figure in the fourth quarter compared to approximately 2% of the reported national figures in the third quarter. We also experienced a higher average benefit size, which increased to around $65,000 in the fourth quarter from just over $60,000 in the third quarter. Now, looking at the Unum US supplemental and voluntary lines, adjusted operating income totaled $119 million in the fourth quarter compared to $116.1 million in the third quarter, both of which are very strong quarters that generated adjusted operating returns on equity in the range of 17% to 18%. The voluntary benefits line reported a strong level of income as well, with a benefit ratio in the fourth quarter declining to 42.9% from 46.6% in the third quarter, primarily reflecting strong performance across the A&H products. And finally, utilization in the dental and vision line decreased relative to the third quarter leading to an improvement in the benefit ratio to 65.6% compared to 75% in the third quarter. Now, looking at premium trends and drivers, we were pleased to see an acceleration in premium income growth for Unum US in the fourth quarter, with a year-over-year growth of 3%. For full year 2021, premium income increased 1%. The group disability product line had a very positive quarter, with premium increasing 5% year over year, with strong growth in the STD line as well as the benefit of natural growth on the in-force block. We estimate the benefit we're seeing from natural growth across our businesses to be in the 3% to 3.5% range measured on a year-over-year basis, with different impacts to our various product lines. To date, we've seen more of a benefit from rising wages overall, with the benefit from higher employment levels being more pronounced in the less than 2,000 lives sector of our blocks than in our larger case business. For the group life and AD&D line, premium income increased 2.1% year over year, benefiting from higher persistency and favorable trends and natural growth. Compared to a year ago, fourth quarter sales were lower by 4.7%. Finally, in the supplemental voluntary lines, premium income increased 0.6% in the fourth quarter relative to last year, with strong sales growth in both the voluntary benefits and the individual disability recently issued lines, a year-over-year increase of 8.3% in dental and vision premium income, as well as strong improvement in persistency in the voluntary benefits line. We had a very good quarter, with adjusted operating income for the fourth quarter of $27.1 million compared to $27.4 million in the third quarter. The primary driver of our international segment results is our Unum UK business, which generated adjusted operating income of GBP 18.7 million in the fourth quarter compared to GBP 18.4 million in the third quarter. The reported benefit ratio for Unum U.K. was 81.4% in the fourth quarter compared to 79.2% in the third quarter. On a local currency basis to neutralize the impact from changes in exchange rates, Unum UK generated growth of 5.1% with strong persistency, good sales and the continued successful placement of rate increases on our in-force block. Additionally, sales in Unum UK were strong in the fourth quarter, increasing 28.1% over last year. Unum Poland generated sales growth of 43.6%, a continuation of the strong growth trend this business has been producing. They remain at healthy levels and in line with our expectations, with adjusted operating income of $80 million in the fourth quarter and $80.1 million in the third quarter. One of the primary drivers of results between the third and fourth quarters was an improvement in the benefit ratio in the fourth quarter to 52.5% compared to 55.9% in the third quarter. We were pleased to see a continuation in the improving trend in premium growth for colonial life, which did increase 1.1% on a year-over-year basis after being flat to negative over the past four quarters. For the fourth quarter, sales for colonial life increased 7.8% compared to a year ago and for the full year 2021, sales increased 16.1%. Persistency for colonial life ended the year in a strong position, increasing to 79.3% for the full year compared to 77.8% in 2020. In the closed block segment, adjusted operating income, excluding the amortization of cost of reinsurance related to the closed block individual disability reinsurance transaction and the items related to the reserve assumption update in the prior quarter, was $76.7 million in the fourth quarter compared to $109.8 million in the third quarter. For LTC, the move in the interest adjusted loss ratio to 82.2% in the fourth quarter from 74.8% in the third quarter was driven by less favorable terminations and recoveries, partially offset by lower submitted new claims. For the closed block individual disability line, the move in the interest adjusted loss ratio to 75.4% in the fourth quarter from 58.2% in the third quarter was driven by higher submitted claims. However, we did experience a reduction of approximately $10 million in total miscellaneous investment income from the third quarter to the fourth quarter, with the reduction driven by a lower level of bond calls. Looking ahead, I'll reiterate from our messaging in prior calls with you that we estimate quarterly adjusted operating income for this segment will, over time, run within a $45 million to $55 million range, assuming more normal trends for investment income and claim results in the LTC and closed disability lines. So then wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $45.1 million in the fourth quarter and $45.4 million in the third quarter, which are both generally in line with our expectations for this segment. I'd also mention that the tax rate for the fourth quarter of 2021 was lower than we historically reported at 17.3%, with the favorability as compared to the U.S. statutory tax rate, driven primarily by tax exempt income and various credits. The comparable full year tax rate of 20.2% is consistent with our expectations and in line with the past two years. For the fourth quarter, we saw a decline of approximately $16 million relative to the third quarter, driven by a significant reduction in bond call activity, which was unusually high in the third quarter, but was still elevated above average levels for us in the fourth quarter. Our alternative investment portfolio remained very strong, generating income of $39.4 million in the fourth quarter compared to $38.2 million in the third quarter. insurance companies improved to approximately 395% and holding company cash was $1.5 billion at the end of the year, both well above our targeted levels. In addition, leverage has again trended lower with equity growth and is now 25.3%. During the fourth quarter, we successfully added $400 million of contingent capital through pre-capitalized trust securities, with a 4.046% coupon and 20-year tenor, which we view as a cost-effective way to enhance our balance sheet strength and flexibility. In terms of capital deployment in the fourth quarter, we executed an accelerated share repurchase transaction to buy back $50 million of our shares. We continue to anticipate repurchasing approximately $200 million of our shares during 2022. Capital contributions in the Fairwind subsidiary were $165 million for the fourth quarter and totaled $285 million for the full year 2021, which was a decline from $424 million in 2020. The recognition of the premium deficiency reserve for LTC, which is included in the Fairwind capital contributions, totaled $346 million after tax for full year 2021. Moving to First Unum, given the better position of the LTC Block in that subsidiary, resulting from higher interest rates and the benefit of rate increase approvals for that block during 2021, we were in a position to release $75 million of the asset adequacy reserve after many years of additions to that reserve. With this reserve release, we were able to take a $30 million dividend out of First Unum in the quarter, the first in several years. And with the increase in interest rates and repositioning our investment portfolio, the premium deficiency reserve in that block was reduced by $66 million after tax. So in closing, I wanted to give you an update on our progress in adopting ASC 944 or long-duration targeted improvements. Specifically, we plan to provide an update on the impact at the transition date as well as our 2022 outlook with a conference call on February 25.

So excluding these items, aftertax adjusted operating income in the fourth quarter of 2021 was $182 million or $0.89 per diluted common share compared to $235.3 million or $1.15 per diluted common share in the year ago quarter. As we turn to our financial results, our fourth quarter played out largely as we anticipated, with aftertax adjusted operating earnings per share at $0.89 for the fourth quarter. Premium growth in the fourth quarter on a year-over-year basis was just under 3% for our core businesses in aggregate, with growth of 3% for Unum US, 7% for international businesses and 1% for colonial life. Specifically, we plan to provide an update on the impact at the transition date as well as our 2022 outlook with a conference call on February 25.

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Organic revenue was down 6% in the quarter and 12% [Technical Issues] as the impacts from the pandemic continue to affect our business. Third quarter adjusted earnings per diluted share was $0.81, down 14% from the prior year quarter and down 28% year-to-date. While our results were below our pre-pandemic fiscal 23rd [Phonetic] quarter, we did see a 14% sequential improvement in revenue driven by all three business units, and our adjusted earnings per diluted share was up 31% from second quarter. Plasma revenue declined 13% in the third quarter and 26% year-to-date as the pandemic continued to have a pronounced effect on the U.S. source plasma donor pool. Revenue declines were partially offset by a $6 million one-time safety stock order of plasma disposables. Sequentially, North America collection volume improved 29% excluding the effect of the safety stock order. To put this in perspective, we typically have a 3% to 5% seasonal increase in the third quarter. Heightened safety protocols and compelling financial incentives along with waning government stimulus contributed to 10 consecutive weeks of volume recovery. Persona's individualized donor-specific approach is expected to yield an incremental 9% to 12% of plasma per collection. Nonetheless, our customers are ramping up to support end-market growth, and although forecasting remains difficult in this environment, once the pandemic subsides, we expect to see 8% to 10% collections growth over the long-term and the potential to grow in excess of that, as customers replenish their inventories. Blood center revenue declined 1.4% in the third quarter and 2.6% year-to-date. Apheresis revenue was up 6% in the third quarter and 1.8% year-to-date. Continued plasma growth and favorable order timing among distributors in both periods was partially offset by the impact of a previously disclosed customer loss of about $4 million in the quarter and $12 million year-to-date. Whole blood revenue declined 19% in the quarter and 11% year-to-date, driven by lower-than-usual procedure volumes due to COVID-19, previously discontinued customer contracts, and overall declines in blood utilization rates. Hospital revenue increased 5% in the third quarter and 1% year-to-date. Hemostasis Management revenue was up 11% [11.3%] in the third quarter and 6% year-to-date, compared with the prior year, driven by strong sales of TEG disposables in the U.S. and capital sales in Europe. Transfusion management was up 7% in the third quarter and 9% year-to-date, primarily driven by strong growth in BloodTrack through new accounts in several key geographies. Cell salvage revenue declined 6% in the third quarter and 11% year-to-date, primarily driven by declines in disposable usage. Sequentially, cell salvage revenue was up 1% in the third quarter as additional recovery in procedure volumes plateaued toward the end of the quarter. So, I will start with adjusted gross margin, which was 51.4% in the third quarter, a decline of 70 basis points compared with the third quarter of the prior year. Adjusted gross margin year-to-date was 50.4%, a decline of 160 basis points compared with the first nine months of the prior year. Adjusted operating expenses in the third quarter were $71 million, a decrease of $2.4 million or 3% [3.3%] compared with the third quarter of the prior year. Adjusted operating expenses year-to-date were $201.1 million, a decrease of $19.1 million or 9% compared with the first nine months of the prior year. As a result of the performance and adjusted gross margin and adjusted operating expenses, the third quarter adjusted operating income was $52.6 million, a decrease of $9 million or 15% [14.6%], and adjusted operating income year-to-date was $124.1 million, a decrease of $46.7 million or 27% compared with the same period in fiscal ' 20. Adjusted operating margin was 21.9% in the third quarter and 19.2% year-to-date, down 190 basis points and 350 basis points respectively compared with the same periods in fiscal ' 20. The adjusted income tax rate was 16% in the third quarter and 15% in the first nine months of the fiscal year, compared with 17% in the third quarter and 14% in the first nine months of the prior year. Third quarter adjusted net income was $41.4 million, down $7.1 million or 15% [14.5%] and adjusted earnings per diluted share was $0.81, down 14% [13.8% ] when compared with the third quarter of fiscal ' 20. Adjusted net income year-to-date with $96.8 million, down $39.1 million or 29%, and adjusted earnings per diluted share was $1.89, down 28% when compared with the prior year. We remain committed to delivering $80 million to $90 million of savings by the end of fiscal '23 as part of this program, which is essential for our future growth. Free cash flow before restructuring and turnaround costs was $99 million in the first nine months of fiscal '21, compared with $95 [$95.2 ] million in the prior year. Cash on hand at the end of the third quarter was $189 million, an increase of $52 [$51.7] million since the beginning of the fiscal year. In addition to free cash flow, the third quarter ending cash balance increased $28 million from recent portfolio moves and decreased $73 million due to debt repayments, including a $60 million repayment of the revolving credit line that was outstanding at the end of fiscal ' 20. The borrowing of $150 million under the revolving credit facility in the first quarter of this fiscal year was repaid during the third quarter, and has no effect on the cash increase in this fiscal year. 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 third quarter, total debt outstanding under the facility included $311 million term loan. There were no borrowings outstanding under the existing $350 million revolving credit line at the end of the third quarter. Following our announcement to acquire Cardiva Medical, we will execute additional term loan of $150 million and we'll finance the remaining $325 million balance using a combination of our cash on hand and our existing revolving credit line. At the completion of this transaction, which is expected to occur during the fourth quarter, our EBITDA leverage ratio as calculated in accordance with the terms set forth in the company's existing credit agreement will increase from 1.3 at the end of our third quarter of fiscal '21 up to about 3.2. We have also bought back a total of $435 million or $4.5 million of the company's shares outstanding.

Third quarter adjusted earnings per diluted share was $0.81, down 14% from the prior year quarter and down 28% year-to-date. Third quarter adjusted net income was $41.4 million, down $7.1 million or 15% [14.5%] and adjusted earnings per diluted share was $0.81, down 14% [13.8% ] when compared with the third quarter of fiscal ' 20.

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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. 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. The campus also sits on approximately 77 acres that provides attractive development opportunities to capture large amounts of foot traffic. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Our third quarter regional margins of 38% were another all-time record growing 886 basis points over the third quarter of 2019. 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. 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. 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. 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. 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. 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. 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.

Our consolidated third quarter net revenues were $2.7 billion, a 19% sequential improvement over our second quarter results. 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.

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SoCalGas began flowing renewable natural gas at two additional biomethane projects in support of their goal to provide 20% RNG to core customers by 2030 to help the state reach its decarbonization goals. In Texas, Oncor has provided visibility to their 2022 to 2026 projected capital plan, which has increased to approximately $14 billion over the five-year period. At Sempra Infrastructure, we completed the exchange offer for IEnova's shares, resulting in a 96.4% ownership interest, and we plan to launch a cash tender offer for the remaining 3.6% interest. As a result, Oncor is announcing its 2022 to 2026 projected capital plan of approximately $14 billion, nearly a $2 billion increase over the 2021 to 2025 capital plan. Furthermore, Oncor is increasing its 2021 to 2022 capital plan by approximately $425 million, consistent with what Allen outlined at the Investor Day and is largely incorporated in the new $14 billion five-year capital plan. A good example of this robust growth can be seen in new relocations, expansions and electric service to Oncor's system, which are on pace to exceed 2020 values by 70% and to exceed 2019 values by 170%. This compares to second quarter 2020 GAAP earnings of $2,239,000,000 or $7.61 per share. On an adjusted basis, second quarter 2021 earnings were $504 million or $1.63 per share. This compares to our second quarter 2020 adjusted earnings of $501 million or $1.71 per share. On a year-to-date basis, 2021 GAAP earnings were $1,298,000,000 or $4.24 per share. This compares to year-to-date 2020 GAAP earnings of $2,999,000,000 or $9.91 per share. Adjusted year-to-date 2021 earnings were $1,404,000,000 or $4.58 per share. This compares to our year-to-date 2020 adjusted earnings of $1,242,000,000 or $4.20 per share. The variance in the second quarter 2021 adjusted earnings compared to the same period last year was affected by the following key items: $126 million from a CPUC decision that resulted in the release of a regulatory liability at the California utilities in 2020 related to prior year's forecasting differences that are not subject to tracking in the income tax expense memorandum account; and $22 million of lower earnings due to the sale of our Peruvian and Chilean businesses in April and June of 2020, respectively. This was more than offset by: $38 million higher equity earnings from the Cameron LNG JV, primarily due to Phase one achieving full commercial operations in August of 2020; $35 million of lower losses at Parent and Other, primarily due to lower preferred dividends and lower net interest expense; $34 million of higher income tax benefits from forecasted flow-through items at SDG&E and SoCalGas; and $22 million income tax benefit in 2021 from the remeasurement of certain deferred income taxes at Sempra LNG.

In Texas, Oncor has provided visibility to their 2022 to 2026 projected capital plan, which has increased to approximately $14 billion over the five-year period. As a result, Oncor is announcing its 2022 to 2026 projected capital plan of approximately $14 billion, nearly a $2 billion increase over the 2021 to 2025 capital plan. Furthermore, Oncor is increasing its 2021 to 2022 capital plan by approximately $425 million, consistent with what Allen outlined at the Investor Day and is largely incorporated in the new $14 billion five-year capital plan. This compares to second quarter 2020 GAAP earnings of $2,239,000,000 or $7.61 per share. On an adjusted basis, second quarter 2021 earnings were $504 million or $1.63 per share.

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In New York, apartment occupancy, which had dropped to as low as 70% during COVID, is now rapidly climbing back with record numbers of new leases being signed each week at higher and higher rents. Condo sales, which had stalled during COVID, are now active, albeit at discounted pricing, except I'm proud to say that our 220 Central Park South where resales are at a premium. At 220 Central Park South, where we are basically sold out, resale pricing is up, and that's an understatement. A recent spectacular example, which is now public, is a two-floor 12,000 square foot resale that traded at a record-breaking $13,000 per square foot, think about that. Here's an interesting fact, a Fortune 100 occupier household name who dropped out of the market during COVID has come back to market. They were originally looking for 300,000 square feet to house 2,800 employees. Post-COVID, after extensive study and space planning, they now need and are seeking 400,000 square feet, a 30% increase to house the same 2,800 employees. In both instances, their projected in-office occupancy is the same 60%. The fact that this occupier needs 30% more space post-COVID is contrary to all analyst expectations, but that is the fact. At Farley, we have delivered to Facebook all of their 730,000 square feet. The West Side of Seventh Avenue, along the three blocks stretching from 31st Street to 34th Street, is now a massive construction site, where we are transforming the 4.4 million square foot PENN one and PENN 2 into the nucleus of our cutting-edge connected campus. The 34th Street PENN 1 lobby just opened, and our unrivaled three-level amenity offering will be completed at year-end. Our full building PENN 2 transformation, including the bustle and reskinning, is 98% bought out on budget and off to a fair start. Our 14,000 square foot sales center the Seventh Floor of PENN 1 is now open to rate reviews from brokers and occupiers. We expect demolition and shutdown costs to be about $150 million, which you should look at as land cost. Our book basis in this property today is $203 million. While overall availability is 18%, assets newly built or repositioned since 2000 have a much lower direct vacancy rate of 11%. Last quarter, 88% of new leasing activity in Midtown was a Class A product. Residential neighborhoods are bustling, less so the commercial canyons where office utilization is now approximately 23%. Last week, we announced that Wegmans, the premier grocer in the Northeast region, is opening its first store in Manhattan at our 770 Broadway replacing Kmart. The fact that Wegmans is coming is creating excitement with it at last count, 43 print and broadcast press articles celebrating the announcement. Wegmans expects that as much as 50% of its volume will be from in-home delivery -- appropriately from to home delivery. We will be investing $13 million in TIs, leasing commissions and free rent in this long-term lease with a 65% GAAP mark-to-market increase over Kmart's rent. This quarter, we announced that we exercised a ROFO to acquire our partner's 45% interest in One Park Avenue in a transaction that values the building at $870 million. Based on the in-place floating rate loan, we project $18 million, $0.09 cents per share first-year accretion. Last summer, we brought 555 California Street to market for sale and are unable to achieve fair value, we withdrew, understandable at the height of COVID with travel restrictions and so forth. At that time, we said we will refinance and this past quarter, we did to the tune of $1.2 billion, netting us approximately $467 million at share. So one might say the $460 million is free money. For 2021, we guided cash NOI of $135 million. For 2022, we guided cash NOI of $160 million, which we affirm. For 2023, we announced new cash NOI guidance of not less than $175 million. You should know that, as expected, Swatch exercised the termination option for a portion of their space at St. Regis, which is effective March 2023 with a $9 million termination fee. Second-quarter comparable FFO as adjusted was $0.69 per share compared to $0.56 for last year's second quarter, an increase of $0.13. $0.09 from tenant-related activities, including commencement of certain lease expansions and nonrecurrent or straight-line rent write-offs impacting the prior period, primarily JCPenney and New York & Company. $0.02 from lower G&A resulting from our overhead reduction program and $0.02 from interest expense savings and the start of improvement in our variable businesses, primarily from BMS cleaning. Companywide same-store cash NOI for the second quarter increased by 0.5% over the prior-year second quarter. Our core New York office business was up 3.2%. Blending in Chicago and San Francisco, our office business overall was up 2%. Consistent with prior quarters, our core office business, representing over 85% of the company, continues to hold its own, protected by long-term leases with credit tenants. Our retail same-store cash NOI was down 6%, primarily due to JCPenney's lease rejection in July 2020. But excluding the impact of JCPenney's lease rejection, the same-store cash NOI for the remaining retail business was up 9.8%. Our office occupancy ended the quarter at 91.1%, down 2 percentage points from the first quarter. This was expected and driven by long expected move-out at 350 Park Avenue and 85 Tenth Avenue as well as 825 Seventh Avenue coming back into service. Retail occupancy was up slightly to 77.3%. And office tour activity has now exceeded pre-pandemic levels with more than 11 million square feet of active tenant requirements. With more than 100,000 jobs now recovered, we're at 92% of the pre-pandemic peak. During the second quarter, we signed 33 leases, totaling 322,000 square feet with two-thirds coming from new companies joining our high-quality portfolio across the city. The average starting rent of these transactions was a strong $85 per square foot. The leasing highlight for the quarter was 100,000 square feet at PENN 1, further validating the market's resounding reception to our redevelopment of this property. The largest transaction was a new lease with Empire Healthchoice for 72,000 square feet. Looking toward the second half of 2021, our leasing pipeline has grown significantly since last quarter with more than 1 million square feet of leases in active negotiation, including 180,000 square feet of new leasing at 85 Tenth Avenue, as well as an additional 1.6 million square feet in various stages of discussion. This includes discussions with several large users newly interested in PENN 2 after seeing our vision at the Experience Center. Our office expirations are very modest for the remainder of 2021 and 2022, with only 976,000 square feet expiring in total, representing 7% of the portfolio, and 150,000 of this square footage is in PENN 1 and PENN 2. As we look toward our 2023 expirations of 1.9 million square feet, of which 350,000 is in PENN 1 and PENN 2, we are, of course, already in dialogue and trading paper with many of these companies and anticipate announcing important transactions by year-end. While short-term renewal leasing dominated the market during 2020, activity has picked up with almost 1 million square feet of new leasing completed during the second quarter, though concessions are unusually high. At theMART, we completed a 91,000 square foot long-term office renewal with 1871. Chicago's premier technology incubator for entrepreneurs and have an additional 80,000 square feet of new deals in negotiation. Attendance was 10% higher than the same show produced pre-pandemic 2019, and feedback from exhibitors and attendees was very positive. In San Francisco at 555, we are finalizing a couple of small, strong leases in our fall other than the cube. It bears repeating that in May, we upsized our 555 California Street loan from $533 million to $1.2 billion with no additional interest costs. We also reentered the unsecured debt market for the two tranche $750 million green bond offering at a blended yield of 2.77%. Finally, our current liquidity is a strong $4.492 billion, including $2.317 billion of cash and restricted cash and $2.175 billion undrawn under our $2.75 billion revolving credit facilities.

Second-quarter comparable FFO as adjusted was $0.69 per share compared to $0.56 for last year's second quarter, an increase of $0.13.

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For the second quarter specifically, consolidated gross margin expanded 200 basis points despite slightly lower revenues as compared with the prior year period. Selling, general and administrative, or SG&A, expenses as a percentage of total revenues improved 10 basis points to 5.6%. Adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, increased 7.5% to $407 million. And fully diluted earnings per share was $3.49, a 16% improvement. Overall, quarterly aggregate shipments declined approximately 4% compared with near record prior year period volume. Aggregates pricing improved 3.3%. By region, the West Group posted a 5.5% increase, reflecting favorable product mix. Pricing for the Mid-America Group improved 2%. However, second quarter cement shipments decreased 3%, driven primarily by the decline in energy sector activity that has resulted from lower oil prices. West Texas oil well cement shipments were down over 75% from pre-COVID expectations, a trend expected to continue until oil prices stabilize at a level that fosters additional investment and drilling activity in the Permian Basin. Specifically, cement prices in Dallas and San Antonio, the markets most proximate to our Midlothian and Hunter facilities, were up 4%. Turning to our targeted downstream businesses, the ready mixed concrete shipments increased nearly 9%, excluding prior year shipments from our Southwest Ready Mix Division's Arkansas, Louisiana and Eastern Texas business, known generally as ArkLaTex, which we divested earlier this year. Shipments increased 35% to 1.1 million tons, benefiting from market strength and pent-up demand following a weather-challenged 2019. Asphalt pricing declined 1% as customer segmentation was weighted more heavily toward publicly bid municipal projects as opposed to negotiated private work. Domestic and international chemicals demand declined as customers confronted COVID-19 related disruptions. It is worth highlighting that the Enterprise achieved a second quarter adjusted EBITDA margin of 32%. The driving force behind this accomplishment was the Building Materials, which achieved record second quarter products and services revenues of $1.1 billion, a 1% increase from the prior year quarter, and gross profit of $359 million, a 9% increase. Solid pricing gains, production efficiencies and lower diesel fuel costs drove a 230 basis point improvement in aggregates product gross margin to 35.5%, also an all-time record. Product gross margin of 39.7% expanded 210 basis points despite a nearly 3% decline in cement revenues. Ready mixed concrete product gross margin improved 270 basis point to 10.6%, driven by increased shipments, pricing improvement and lower delivery costs. Product revenues for the Magnesia Specialties business decreased 31% to $49 million, reflecting lower demand for chemicals and lime products. Lower revenues resulted in a 420 basis point reduction of product gross margin to 37.3%. Consolidated SG&A expenses included $3 million for COVID-19 related expense, which included enhancements to cleaning and safety protocols across our over 100 sites. Full year capital expenditures are now expected in the range of $350 million to $375 million, a slight upward revision from the guidance provided last quarter, as US businesses were in the early stages of responding to the pandemic. In this regard, earlier this month, we entered into an agreement to sell a depleted sand and gravel location in Austin, Texas for nearly $100 million. Since our repurchase authorization was announced in February 2015, we have returned nearly $1.8 billion to shareholders through a combination of share repurchases and meaningful sustainable dividends. In May, we repaid $300 million of floating rate notes that matured using proceeds from our first quarter bond issuance. Net cash, combined with nearly $970 million available on our existing revolving facilities, provided total liquidity of $1 billion as of the end of the quarter. Additionally, at a net debt to EBITDA ratio of 2.2 times, we remain well within our target leverage range as of the end of the second quarter. While July product demand and pricing trends across our markets remain broadly consistent with the second quarter, we feel it's premature to reinstate full year 2020 earnings guidance, given the uncertainty regarding the pandemic, potential Phase 4 stimulus and infrastructure reauthorization. For aggregates specifically, we anticipate full year 2020 pricing will increase 3% to 4% from the prior year. For example, Texas DOT scheduled lettings for fiscal year 2021, which began September 1, are currently planned at $7 billion, comparable to fiscal year 2020 lettings. Earlier this month, Texas DOT also reiterated its $77 billion 10-year unified transportation planned [Phonetic]. To ease funding shortfalls to its DOT budget, Colorado will issue certificates of participation to advance planned projects, the majority of which are concentrated along the megaregion, following the I-25 corridor, which has been the strategic focus of our Rocky Mountain business. Of our Top 10 states, North Carolina DOT faces the toughest near-term funding challenges. In the near term, NCDOT will benefit from $700 million in Build NC Bond revenues to fund existing transportation programs. While it's unlikely a successor bill will be agreed upon and signed into law prior to the Fixing America's Surface Transportation Act's expiration on September 30, we feel confident new legislation will be enacted and provide the first sizable increase in federal transportation funding in more than 15 years. The Dodge Momentum Index, or DMI, a monthly measure of the first report for nonresidential building projects in planning, which has historically led construction spending for nonresidential building by a full year, is down 20% from its most recent peak in July 2018. However, to contextualize the June reading, the Great Recession's peak to trough DMI decline was 62%. Nationally, housing starts remain below the 50-year annual average of 1.5 million despite notable population gains. Freddie Mac estimates the 2.5 million housing units are needed to address the current nationwide housing shortage. This situation is particularly evident in states with significant under-supply, including Texas, Colorado, North Carolina and Florida, which are all in our Top 10 states.

And fully diluted earnings per share was $3.49, a 16% improvement. Domestic and international chemicals demand declined as customers confronted COVID-19 related disruptions. Since our repurchase authorization was announced in February 2015, we have returned nearly $1.8 billion to shareholders through a combination of share repurchases and meaningful sustainable dividends.

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For the second quarter of 2021, Tennant reported net sales of $279.1 million, up 30.4% year-over-year, including a favorable foreign currency effect of 5.4% and a divestiture impact related to the sale of the company's coatings business of negative 2.5%. Organic sales, which exclude the impact of currency effects and divestitures, increased 27.5%. In the first quarter, sales in the Americas increased 22.7% year-over-year with organic growth of 25.4%, including a foreign exchange effect of 1.1% and a divestiture impact of negative 3.8%. Sales in EMEA increased 55.5% or 40.2% organically, including a foreign exchange effect of 15.3%, with growth across all countries and across all product categories as pandemic-related restrictions eased. Sales in the Asia-Pacific region rose 16.6% or 9.6% organically, including a foreign exchange effect of 7%. Reported and adjusted gross margin were both 41.2% compared with 41.8% in the year ago period, which included the impact of government credits received and cost-saving measures taken in response to the pandemic. As for expenses during the second quarter, our adjusted S&A expenses were 30.3% of net sales compared with 28% in the year ago period. Net income was $9.8 million or $0.51 per diluted share compared with $14.3 million or $0.77 per diluted share in the year ago period. Adjusted diluted EPS, excluding non-operational items and amortization expense was $1.18 per share compared with $0.96 per share in the year ago period, which was primarily driven by lower interest expense. Adjusted EBITDA in the second quarter of 2021 decreased slightly to $35.1 million or 12.6% of sales compared with $35.3 million or 16.5% of sales in the second quarter of 2020. As mentioned in our Q2 2020 earnings call, we estimated that $15 million of savings occurred within the second quarter of 2020 due to the cost-saving measures and actions taken in response to the pandemic. As for our tax rate in the second quarter, Tennant had an adjusted effective tax rate, excluding the amortization expense of 4% compared with 20.4% in the year ago period. Tennant generated $19.4 million in cash flow from operations in the second quarter of 2021, mainly due to strong business performance. As of June 30, 2021, the company had $135.1 million in cash and cash equivalents while managing our leverage within the stated guidance of 1.5 to 2.5 times times. This change allows for greater flexibility with minimal covenants and no pre-payment penalties, while also reducing future interest expense by approximately $1 million per month, which was already reflected in our prior guidance. As included in today's earnings announcement, Tennant affirms its guidance for the full year 2021 as follows: net sales of $1.09 billion to $1.11 billion, with organic sales rising at 9% to 11%; GAAP earnings of $3.45 per share to $3.85 per share, adjusted earnings per share of $4.10 per share to $4.50 per diluted share, which excludes certain non-operational items and amortization expense, adjusted EBITDA in the range of $140 million to $150 million, capital expenditures of approximately $20 million and an adjusted effective tax rate of approximately 20%, which excludes the amortization expense adjustment.

For the second quarter of 2021, Tennant reported net sales of $279.1 million, up 30.4% year-over-year, including a favorable foreign currency effect of 5.4% and a divestiture impact related to the sale of the company's coatings business of negative 2.5%. Net income was $9.8 million or $0.51 per diluted share compared with $14.3 million or $0.77 per diluted share in the year ago period. Adjusted diluted EPS, excluding non-operational items and amortization expense was $1.18 per share compared with $0.96 per share in the year ago period, which was primarily driven by lower interest expense. As included in today's earnings announcement, Tennant affirms its guidance for the full year 2021 as follows: net sales of $1.09 billion to $1.11 billion, with organic sales rising at 9% to 11%; GAAP earnings of $3.45 per share to $3.85 per share, adjusted earnings per share of $4.10 per share to $4.50 per diluted share, which excludes certain non-operational items and amortization expense, adjusted EBITDA in the range of $140 million to $150 million, capital expenditures of approximately $20 million and an adjusted effective tax rate of approximately 20%, which excludes the amortization expense adjustment.

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Since the onset of the pandemic, we have expanded capacity at 13 existing sites with 30 major facility modifications, dedicated over $300 million of capital, and added over 400 incremental pieces of equipment, all while keeping pace with a growing base demand and moving our operations to 24/7. Our financial results are summarized on Slide 9 and the reconciliation of non-U.S. GAAP measures are described on Slides 17 to 21. We recorded net sales of $706.5 million, representing organic sales growth of 27.9%. And COVID-related net revenues are estimated to have been approximately $115 million in the quarter. Proprietary Products sales grew organically by 35.7% in the quarter. High-value products, which made up approximately 73% of proprietary product sales in the quarter grew double digits and had solid momentum across all of our market units in Q3. We recorded $288.2 million in gross profit, 93.6 million or 48.1% above Q3 of last year. And our gross profit margin of 14.8% was a 530 basis point expansion from the same period last year. We saw improvement in adjusted operating profit with $182.8 million recorded this quarter, compared to 103.9 million in the same period last year for a 75.9% increase. Our adjusted operating profit margin, 25.9%, was a 690 basis point increase from the same period last year. Finally, adjusted diluted earnings per share grew 79% for Q3. Excluding stock-based compensation tax benefit of $0.11 in Q3, earnings per share grew by approximately 72%. Volume and mix contributed $142.9 million or 26.1 percentage points of growth, including approximately 83 million of incremental volume driven by COVID-19-related net demand. Sales price increases contributed 10.1 million or 1.8 percentage points of growth. Slide 19 shows our consolidated gross profit margin of 40.8% for Q3 2021, up 35.5% in Q3 2020. Proprietary products third quarter gross profit margin of 46.3% was 550 basis points above the margin achieved in the third quarter of 2020. Contract manufacturing third quarter gross profit margin of 16.1% was 180 basis points below the margin achieved in the quarter of 2020. Operating cash flow was $423.2 million for the third quarter of 2021, an increase of 99.4 million compared to the same period last year, a 30.7% increase. Our third quarter 2021 year-to-date capital spending was $176.9 million, $60.2 million higher than the same period last year. Working capital of approximately $1 billion at September 30th, 2021 increased by 169.4 million from December 31, 2020, primarily due to higher accounts receivable from our increased sales. Our cash balance at September 30th of $688 million was $72.5 million higher than our December 2020 balance. Full year 2021 net sales are expected to be in a range of 2.8 billion and $2.81 billion, compared to our prior guidance range of 2.76 billion to $2.785 billion. This guidance includes estimated net coal with incremental revenues of approximately $450 million. There is an estimated benefit of $55 million based on current foreign exchange rates, compared to a prior estimated benefit of $80 million. This $25 million reduction in FX tailwind has been absorbed into our guidance. We expect organic sales growth to be approximately 28%, compared to a prior range of 24 to 25%. We expect our full year 2021 reported diluted earnings per share guidance to be in a range of $8.40 to $8.50, compared to a prior range of $8.05 to $8.20. This revised guidance includes a $0.35 earnings per share positive impact of tax benefits from stock-based compensation from the first nine months 2021. Also, our capex guidance remains at 265 to $275 million for the year. Estimated FX benefit on earnings per share has an impact of approximately $0.19 based on current foreign currency exchange rates compared to a prior estimated benefit of $0.27.

We recorded net sales of $706.5 million, representing organic sales growth of 27.9%. Full year 2021 net sales are expected to be in a range of 2.8 billion and $2.81 billion, compared to our prior guidance range of 2.76 billion to $2.785 billion. We expect our full year 2021 reported diluted earnings per share guidance to be in a range of $8.40 to $8.50, compared to a prior range of $8.05 to $8.20.

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Before I do that, I want to take a moment to recognize the contributions of Walter Scott, Jr., who served on our Board for more than 40 years and passed away late last month. Record third quarter sales of $868.8 million increased more than 18% compared to last year. Sales of $276.5 million grew slightly compared to last year. Sales of $281.1 million increased 10% year-over-year, led by favorable pricing in all markets and sales growth of more than 25% in wireless communication products and components. Sales of $96.7 million grew 10% year-over-year, driven by higher pricing, improved general end market demand and sales from our greenfield facility in Pittsburgh. Global sales of $240.3 million grew more than 72% year-over-year, with sales growth in all regions and higher sales of technology solutions. In North America, sales grew nearly 55%, as strong market fundamentals and improved net farm income projections continue to positively impact farmer sentiment, generating very strong order flow. For example, we recently localized some of our electronics assembly in Dubai facility and are increasing the total capacity in our Brazil factory by 50%, positioning us for long-term international market growth, while we continue enhancing service to our dealers and customers. We are also very pleased that our Irrigation backlog at the end of the third quarter was $388 million, up 26% year-over-year. Agriculture is quickly becoming its primary economic driver, accounting for 40% of the nation's GDP and employing close to 80% of the local workforce. We're proud to have initiated this project powering pivots by solar energy, 100% independent from the grid. Operating income of $80.4 million or 9.3% of sales grew 20% year-over-year, driven by higher volumes in Irrigation and favorable pricing, notably in Engineered Support Structures. Diluted earnings per share of $2.57 grew 30% compared to last year, primarily driven by higher operating income and a more favorable tax rate of 23.5%, which was realized through the execution of certain tax planning strategies. On slide eight, in Utility Support Structures, operating income of $24.6 million or 8.9% of sales decreased 170 basis points compared to last year. In Engineered Support Structures, operating income increased to $34.4 million or 12.2% of sales, a third quarter record. In the Coatings segment, operating income of $12.5 million or 12.9% of sales decreased 270 basis points year-over-year. In the Irrigation segment, operating income of $32 million, more than doubled compared to last year, and operating margin of 13.3% of sales improved 270 basis points year-over-year. Year-to-date, we have delivered operating cash flows of $62 million, with the use of cash this quarter of $8.4 million that reflects higher working capital levels to support strong sales growth. Year-to-date capital spending of $81 million includes $33 million for strategic growth investments and $55 million of capital was returned to shareholders through dividends and share repurchases, ending the quarter with approximately $170 million of cash. Based on our recently amended revolving credit facility, our net debt-to-adjusted EBITDA of 1.85 times remains within our desired range of 1.5 to 2.5 times. We're increasing our earnings expectations for fiscal 2021 by narrowing the earnings per share guidance range to $10.60 to $11.10. Demand for wireless communication products and components remains very strong, and we are on track to grow sales 15% to 20%, in line with expected market growth. We now expect sales to grow 50% to 53% this year based on strength in global underlying ag fundamentals and a strong global backlog. Looking ahead to 2022, strong market demand across our businesses, the strength and flexibility of our global teams and our continued pricing strategies give us confidence in achieving sales growth of 7% to 12%, and earnings-per-share growth of 13% to 15% in line with the three- to five-year growth targets that we have communicated at our Investor Day in May. The long-term drivers of our businesses remain solid as evidenced by our record global backlog of more than $1.5 billion, up 35% from year-end 2020.

Record third quarter sales of $868.8 million increased more than 18% compared to last year. Diluted earnings per share of $2.57 grew 30% compared to last year, primarily driven by higher operating income and a more favorable tax rate of 23.5%, which was realized through the execution of certain tax planning strategies. We're increasing our earnings expectations for fiscal 2021 by narrowing the earnings per share guidance range to $10.60 to $11.10. Looking ahead to 2022, strong market demand across our businesses, the strength and flexibility of our global teams and our continued pricing strategies give us confidence in achieving sales growth of 7% to 12%, and earnings-per-share growth of 13% to 15% in line with the three- to five-year growth targets that we have communicated at our Investor Day in May.

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Revenue grew 18% for the year and is on pace to recover to pre-pandemic levels two years faster than the previous recession. Revenue was $622 million, an increase of 20%, compared to Q4 2020 and up 5% versus Q4 2019. These factors produced adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020 and an increase of $15 million compared to Q4 2019. PeopleReady is our largest segment, representing 59% of total trailing 12-month revenue and 63% of total segment profit. Year-over-year PeopleReady revenue was up 22% during the quarter. Compared to the fourth quarter of 2019, we recovered 99% of our revenue, which is an improvement of 15 points from the recovery rate in the third quarter of this year. Retail results were strong during the quarter, increasing 100% year-over-year led by a seasonal surge, combined with ongoing project work. PeopleManagement is our second largest segment, representing 29% of total trailing 12-month revenue and 10% of total segment profit. Even though PeopleManagement revenue exceeded the comparable 2019 period by 4%, revenue declined 1% in the fourth quarter. Turning to our third segment, PeopleScout represents 12% of total trailing 12-month revenue and 27% of total segment profit. Revenue momentum at PeopleScout continued during the fourth quarter, growing 96% year over year and surpassing the comparable 2019 period by 49%. PeopleScout's strong results were driven by growth in existing client volumes of 71% year over year due to surging client demand and new customer wins. Since rolling out the application to associates in 2017 and to our clients in 2018, associate adoption has grown to over 90%, and our JobStack client user count ended the quarter at 29,700, up 13% versus Q4 2020. As a reminder, a heavy user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker, or approving time. Overall, heavy client users account for 56% of PeopleReady US on-demand revenue compared to 35% in Q4 2020. We've also seen continued growth in our digital fill rates, which have increased 3x since rollout to nearly 60%, with 964,000 shifts filled via the app during the quarter. As a reminder, the service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch. Once the service center rollout is complete, we expect annual run-rate cost savings of $10 million to $15 million. PeopleManagement secured annualized new business wins of $95 million this year, up more than 40% versus the three prior year comparable average, helping to offset recent supply chain challenges. Our efforts are delivering results with annualized new wins of $39 million this year versus the three-year prior comparable average of $11 million. Total revenue for Q4 2021 was $622 million, representing growth of 20% compared to Q4 2020 and growth of 5% compared to Q4 2019. We posted net income of $20 million or $0.57 per share, an increase of $12 million compared to Q4 2020 and an increase of $11 million compared to Q4 2019. We delivered adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020 and an increase of $15 million compared to Q4 2019. Adjusted EBITDA margin was up 160 basis points compared to Q4 2020 and up 230 basis points compared to Q4 2019, with growth in 2021, again, driven by revenue growth and gross margin expansion. Gross margin for Q4 2021 of 26.8% was up 350 basis points. Our staffing segments contributed 310 basis points of margin expansion, comprised of 110 basis points from lower workers' compensation costs mainly due to favorable development of prior-period reserves; 70 basis points from favorable bill/pay spreads; 70 basis points from increasing PeopleReady sales mix, which carries a higher margin than PeopleManagement; and 60 basis points from PeopleReady customer mix. Higher PeopleScout sales mix contributed the remaining 40 basis points of expansion. SG&A expense increased 33%, which was higher than our revenue growth of 20% due to the magnitude of the cost actions taken in Q4 last year. As a reminder, in Q4 2020, our cost management actions produced a decline in SG&A of 22%, which outpaced the revenue decline of 12% for the quarter. SG&A as percentage of revenue in Q4 2021 improved by 30 basis points in comparison with Q4 2019. Our effective income tax rate was 21% in Q4, which was slightly higher than expected due to lower tax credits. Turning to our segments, PeopleReady revenue increased 22%, while segment profit increased 69%, and segment margin was up 210 basis points. Revenue in the retail sector increased 100% year over year, largely due to a seasonal surge from one client, which contributed about half of the retail sector growth, or 4 percentage points of growth for the PeopleReady business, which we do not expect will carry into the first quarter. PeopleManagement revenue decreased 1%, while segment profit decreased 20%, with 60 basis points of margin contraction. Same-site sales are being negatively impacted by supply chain disruptions, which created a drag of approximately 4 percentage points during the quarter. PeopleScout revenue increased 96%, with segment profit up $7 million and over 300 basis points of margin expansion. During the quarter, same customer demand surged 71% year over year. Of the increase, approximately 15 percentage points was related to clients catching up to pre-pandemic hiring levels. We finished the quarter with $50 million in cash and no outstanding debt. During the quarter, we repurchased $17 million of common stock and $13 million was purchased during the first quarter of this year. The board of directors also authorized an additional $100 million in share repurchases, which we intend to complete over the next three years. In the first quarter, we expect approximately $3 million in operating costs as we prepare to implement this system at the end of this year and roughly $10 million for the full year. We expect $2 million in accelerated depreciation for full year 2022.

Revenue was $622 million, an increase of 20%, compared to Q4 2020 and up 5% versus Q4 2019. Total revenue for Q4 2021 was $622 million, representing growth of 20% compared to Q4 2020 and growth of 5% compared to Q4 2019. We posted net income of $20 million or $0.57 per share, an increase of $12 million compared to Q4 2020 and an increase of $11 million compared to Q4 2019.

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The passcode for both numbers is 137-21413. Despite the increased working capital required by higher prices and volumes, we generated $1.9 billion of cash from operating activities. As of the end of June, our year-to-date total recordable incident rate of 0.22 for employees and contractors remained in the top 10% of our industry. Our aim is to learn from all incidents and achieve a goal 0 work environment that prevents such tragedies from occurring. As of July, only 14% of the global population is fully vaccinated. While the U.S. and roughly a dozen other countries have achieved vaccination rates approaching or exceeding 50%, health experts anticipate that vaccines will be rolling out to the rest of the world throughout 2022 and into 2023. The Bureau of Economic Analysis estimates that U.S. personal savings averaged $3.5 trillion during the first five months of 2021, nearly three times the level seen in 2019. One example is that the average age of an automobile in the U.S. reached an all-time high of 12 years in 2021. Despite higher prices and supply chain constraints, demand for our products serving automotive manufacturing are forecast to increase a total of 10% in 2021 and an additional 11% during 2022. In the second quarter, LyondellBasell generated $1.9 billion of cash from operating activities that contributed toward the more than $4 billion over the past 12 months. Our free operating cash flow yield has been 10.1% over the past four quarters and free operating cash flow for the second quarter improved by more than 80% relative to the second quarter of 2019. We expect continued improvement of our last 12 months cash flow performance as we move forward through each quarter of 2021. In the second quarter, we expressed our confidence in our outlook by increasing the quarterly dividend by 7.6% to $1.13 per share. We continue to invest in maintenance and growth projects during the quarter with approximately $430 million in capital expenditures. Strong cash flow supported debt repayments of $1.3 billion, bringing our year-to-date debt reduction to $1.8 billion. We closed the second quarter with cash and liquid investments of $1.5 billion. We expect that robust cash generation and an anticipated tax refund will enable continued progress on our goal to reduce our net debt by up to $4 billion during 2021 and further strengthen our investment-grade balance sheet. Our original full year net interest expense guidance of $430 million did not include extinguishment costs associated with our accelerated debt repayment program. In the second quarter of 2021, LyondellBasell's business portfolio delivered record EBITDA of $3 billion. This was an improvement of more than $1.4 billion relative to the first quarter. Persistent consumer and industrial demand has met tight markets, leading to seven consecutive months of North American polyethylene contract price increases totaling more than $900 per ton. Our previous quarterly EBITDA record set in the third quarter of 2015 was approximately $2.2 billion, with more than $140 million of EBITDA contributed by our Refining segment. Strong demand, improved margins and our growth investments drove second quarter EBITDA to a record of $1.6 billion, $709 million higher than the first quarter. Olefins results increased by approximately $310 million compared to the first quarter due to higher margins and volumes. LyondellBasell's cracker operating rates increased to 93% and following the first quarter Texas weather events, about five points above the second quarter industry average. Polyolefin results increased by about $400 million during the second quarter as robust demand in tight markets drove higher prices and margins for polyethylene and polypropylene. High demand, low downstream inventories and customer backlogs are expected to continue and provide ongoing support for strong polymer margins. Similar to the Americas, robust demand and improving margins in our EAI markets drove second quarter EBITDA to a record $708 million, $296 million higher than the first quarter. Olefins results improved by $100 million as margins increased driven by higher ethylene and coproduct prices. Demand was robust during the quarter, and we operated our crackers at a rate of 96%, more than 10% above industry benchmarks. Combined polyolefin results increased approximately $180 million compared to the prior quarter. Second quarter EBITDA was $596 million, more than three times higher than the prior quarter. Second quarter propylene oxide and derivative results increased by $170 million driven by record high margins. Intermediate Chemicals results increased by about $170 million, primarily due to higher product prices for most of the businesses. Oxyfuels and related products results increased by $70 million, driven by higher margins, benefiting from improved demand and higher gasoline prices. Total gasoline and distillate demand in June was within 5% of prepandemic levels. Since the beginning of this year, global demand for gasoline and gasoline blending components such as MTBE and ETBE has improved, increasing the margin to an average of $167 per ton during the second quarter. Second quarter EBITDA was $129 million, lower than the first quarter. Compounding & Solutions results decreased by about $25 million as volumes decline for polymers supplied to the automotive sector appliance manufacturing and other industries that were constrained by chip shortages. Advanced Polymer results increased by approximately $10 million due to improved polymer price spreads over propylene raw materials. This resulted in second quarter EBITDA of negative $81 million, an improvement of $29 million relative to the first quarter of 2021. In the second quarter, the Maya 2-1-1 benchmark increased by $6.14 per barrel to $21.46 per barrel. The average crude throughput at the refinery increased to 248,000 barrels per day, an operating rate of 93%. Increased licensing revenue was offset by a decline in Catalyst margin, resulting in a second EBITDA of $92 million, $2 million lower than the prior quarter. As logistics constraints subside, and U.S. PG exports to Asia resume, producers will need to refill a depleted supply chain of 500,000 tons or more that is not fully captured in industry statistics. In today's strong markets, our second quarter EBITDA results are 38% higher than our previous record. By 2023, we expect that our recent growth investments will provide an additional $1.5 billion of mid-cycle EBITDA earnings capability relative to 2017.

In the second quarter, we expressed our confidence in our outlook by increasing the quarterly dividend by 7.6% to $1.13 per share. High demand, low downstream inventories and customer backlogs are expected to continue and provide ongoing support for strong polymer margins.

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It has 60% of our revenue comes from customers who buy from four or more of these technologies. In addition to that, we continue to reduce recordable injuries and incidents by 31%. Organic decline was 13% year-over-year, but that showed nice improvement versus the prior quarter, which was a 21% decline. EBITDA margin was 19.5% as reported or 20.1% adjusted. That makes two quarters in a row that we've been greater than 20% EBITDA margins we're excited about, and it was 100 basis point improvement versus the prior year. We paid down debt in the quarter of $557 million. And our cash flow from operations was just an outstanding level at 22.8%. See, we came in at 19.9% for the quarter. That was 110 basis point improvement versus the prior year. On a legacy basis, so Parker without acquisitions, again on an adjusted basis, was a 14% decremental. You can see we paid down $2 billion worth of debt in the last 11 months. We've now paid off 37% of the LORD and Exotic transaction debt. That was $210 million year-over-year incremental. But if you go back and look at your Q4 notes, we were 90% discretionary, 10% permanent. This quarter, Q1, we are now 30% permanent and moving to a full year of 60% permanent. If you just go to that full year section of the page and looking at FY '21, see $175 million discretionary. Permanent actions stayed the same at $250 million, and we're right on track to deliver that. And you can see that the improvement now is even more pronounced, 1,100 basis points over this period of time. And it's going to be all around Win Strategy 3.0, which we just recently changed in our purpose statement, which is in that blue box then at the bottom. Slide 13, where I'm going to spend a little bit of time going through 3.0 to give you a little more context and color as to why we think our future performance is going to continue to accelerate. Simplification is going to expand into more 80/20 and Simple by Design. And of course, you're all familiar with 80/20. The Simple by Design is the realization that 70% of your cost is tied up in how you design the product. So we feel very excited to continuing the performance changes we've been making and the performance lift we're going to get with 3.0 that the transformation that you've seen is going to continue in the future. And she has 33 years with the company and 33 great years. Todd was Investor Relations and knows the company extremely well, 27 years with the company. Current year adjusted earnings per share of $3.07 compares to the $3.05 last year, an increase despite lower sales. Adjustments from the fiscal 2021 as reported results netted to $0.60, including business realignment expenses of $0.12; integration costs to achieve of $0.03; and acquisition-related amortization of $0.63, offset by the tax effect of these adjustments of $0.18. Prior year first quarter earnings per share were adjusted by a net $0.45, the details of which are included in the reconciliation tables for non-GAAP financial measures. On slide 18, you'll find the significant components of the walk from adjusted earnings per share of $3.05 for the first quarter of fiscal 2020 to $3.07 for the first quarter of this year. Despite organic sales declining 13% and total sales dropping 3%, adjusted segment operating income increased the equivalent of $0.09 per share or $16 million. In addition, we realized an $0.08 increase from lower corporate G&A as a result of salary reductions taken during the quarter and tight cost controls on discretionary spending. Other income was $0.14 lower in the current year because the prior year included higher investment income and gains on several small real estate sales. Organic sales decreased 13% year-over-year. This decline was partially offset by favorable acquisition impact of 9.1% and currency impact of 0.8%. Despite declining sales, total adjusted segment operating margin improved to 19.9% versus 18.8% last year. This 110 basis point improvement reflects positive impacts from our Win Strategy initiatives and the hard work and dedication to cost containment and productivity improvements by our teams. For the first quarter, North American organic sales were down 14.1%, and currency negatively impacted sales 0.3%. These were partially offset by an 8.5% benefit from acquisitions. Even with lower sales, operating margin for the first quarter on an adjusted basis was an impressive 21% of sales versus 19.4% last year. Organic sales for the first quarter in the Industrial International segment decreased by 7.3%. This was offset by contributions from acquisitions of 9.1% and currency of 2.9%. Operating margin for the first quarter on an adjusted basis increased to 19.2% of sales versus 17% in the prior year, an impressive incremental margin of 66.5%. Organic sales decreased 20.1% for the first quarter partially offset by acquisitions, contributing 10.8%. Operating margin for the first quarter was 18.1% of sales versus 20.4% in the prior year for a decremental margin of 43.5%. Cash flow from operating activities increased 64% to a first quarter record of $737 million and an impressive 22.8% of sales. Free cash flow for the current quarter was 21.5%. And with a drop in net income of just $17 million, the free cash flow conversion from net income jumped to 216%. This compares to a conversion rate of 118% last year. Total orders decreased by 12% as of the quarter ending September. This year-over-year decline is a consolidation of minus 11% within Diversified Industrial North America, minus 4% within Diversified Industrial International and minus 25% within Aerospace Systems orders. Based on our current indicators, we have revised our outlook for total sales for the year to a year-over-year decline of 3.5% at the midpoint. This includes an estimated organic decline of 7.3%, offset by increases from acquisitions of 2.8% and currency of 1%. At the midpoint, total Parker adjusted margins are now forecasted to increase 30 basis points from prior year. For guidance, we are estimating adjusted margins in a range of 19% to 19.4% for the full fiscal year. For the below-the-line items, please note a significant difference between the as-reported estimate of $400 million versus the adjusted estimate of $500 million. In October, as a subsequent event to the quarter, we reached a gain on the sale of real estate of $101 million pre-tax or $76 million after tax that will be recognized as other income. The full year effective tax rate is projected to be 23%. For the full year, the guidance range for earnings per share on an as-reported basis is now $9.93 to $10.53 or $10.23 at the midpoint. On an adjusted earnings per share basis, the guidance range is now $11.70 to $12.30 or $12 even at the midpoint. The adjustments to the as-reported forecast made in this guidance at a pre-tax level include business realignment expenses of approximately $60 million for the full year fiscal '21. Savings from current year and prior year business realignment actions are projected to result in $210 million in incremental savings in fiscal year '21. Also included in the adjustments to the as-reported forecasts are integration costs to achieve of $18 million. Synergy savings for LORD are projected to be an additional $40 million, getting to a run rate of $80 million by the end of the year. And for Exotic, we anticipate a run rate of $2 million savings by the end of the year. Acquisition-related intangible asset amortization expense is forecasted to be $322 million for the year. Some additional key assumptions for full year 2021 guidance at the midpoint are sales are now divided 48% first half, 52% second half. Adjusted segment operating income is split 46% first half and 54% second half. Adjusted earnings per share first half, second half is divided 45%-55%. Second quarter fiscal 2021 adjusted earnings per share is projected to be $2.38 at the midpoint. And this excludes $0.63 or $106 million of projected acquisition-related amortization expense, business realignment expenses and integration costs to achieve, offset in part by the gain on real estate of $0.59 or $101 million. On slide 26, you'll find a reconciliation of the major components of the revised fiscal year 2021 adjusted earnings per share guidance of $12 even at the midpoint compared to the prior guidance of $10.30. The teams outperformed our original estimates, beating the first quarter's guidance by $0.92. With this performance and our continuing efforts to control costs, we are raising our estimated margins, which will in turn generate $0.81 of additional segment operating income over the next three quarters. This calculates to an estimated decremental margin of 11.4% for the year. Other minor adjustments to below operating income line items reduces our estimate by a net $0.03. All in, this leaves $12 even adjusted earnings per share at the midpoint for our current guide for fiscal '21. We continue to transform it with the three acquisitions, and we really feel strongly with the Win Strategy 3.0 in our purpose statement that our best days are ahead of us.

Current year adjusted earnings per share of $3.07 compares to the $3.05 last year, an increase despite lower sales. On slide 18, you'll find the significant components of the walk from adjusted earnings per share of $3.05 for the first quarter of fiscal 2020 to $3.07 for the first quarter of this year. For the full year, the guidance range for earnings per share on an as-reported basis is now $9.93 to $10.53 or $10.23 at the midpoint. On an adjusted earnings per share basis, the guidance range is now $11.70 to $12.30 or $12 even at the midpoint.

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MDC generated net income of $146 million or $1.99 per diluted share in the third quarter of 2021, driven by a combination of strong revenue growth, continued price increases and improving overhead leverage. Our home sales gross margin of 23.5% represented a 300 basis points improvement over the prior year period as our new home pricing stayed ahead of cost inflation. We also made further improvements to our fixed cost leverage as our SG&A expense fell 80 basis points year-over-year to 9.6%. Order activity remained healthy during the quarter at 4.1 sales per community per month. This represents the second highest third quarter order pace for the company in the last 15 years. We ended the quarter with a debt-to-capital ratio of 39.7% and a net debt-to-capital ratio of 23.7%. During the quarter, we issued $350 million of senior notes due in 2061 [phonetic] 0:05:40 at an interest rate of 3.966 and made a tender offer for over $120 million of our senior notes due 2024, which carry an interest rate of 5.5%. And while the early retirement of debt resulted in a $12.2 million charge this quarter, we now have a lower cost of capital and a debt maturity schedule that extends out 40 years. Our total liquidity position at the end of the quarter stood at just over $2 billion, giving us plenty of capital to scale our operations in the coming years. It will also allow us to continue paying our industry leading dividend, which currently stands at $2 per share on an annualized basis. With the West region posting the best order pace during the quarter at 4.9 homes per community per month, followed by the East at 3.7 and our Mountain region at 3.0. Pricing remained firm within our communities, and we did not win this any widespread use of incentives or discounting in our markets as each of the segments posted home sales gross margins in excess of 20%. Our lots owned and controlled at the end of the third quarter increased by 37% year-over-year, giving us a great opportunity to capitalize on the positive housing fundamentals in our markets. During the third quarter, we generated net income of $146 million or $1.99 per diluted share, representing a 48% increase from the third quarter of 2020. Home sale revenues grew 26% year-over-year to $1.26 billion, while gross margin from home sales improved by 300 basis points. The growth in home sale revenues and margin expansion resulted in a 62% increase in pre-tax income from our homebuilding operations to $165.2 million. As Larry mentioned, we accelerated the retirement of $123.6 million of our unsecured notes due in January 2024 through a cash tender offer during the quarter. The retirement resulted in a loss of $12.2 million, which is included in homebuilding pre-tax income. Financial services pre-tax income increased 13% year-over-year to $27.5 million. Our mortgage company also benefited from a $3.5 million gain recognized on the sale of conventional mortgage servicing rights during the period. Our tax rate increased from 21.5% to 24.3% for the 2021 third quarter. For the remainder of the year, we currently estimate an effective tax rate of approximately 24.5%, excluding any discrete items and not accounting for any potential changes in tax rates or policy. Homes delivered increased 13% year-over-year to 2,419 during the third quarter, driven by an increase in the number of homes we had in backlog to start the quarter. The number of homes delivered during the quarter was below our previously estimated range of 2,500 to 2,700 units and was a direct result of the extended cycle times that we experienced. The average selling price of homes delivered during the quarter increased 12% to about $520,000. The increase was a result of price increases implemented across the majority of our communities over the past 12 months. For the fourth quarter, we are anticipating home deliveries to reach between 27,300 units, with an average selling price between $530,000 and $540,000. Gross margin from home sales improved by 300 basis points year-over-year to 23.5%. Gross margin from home sales for the 2021 of fourth quarter is expected to increase to between 23.5% and 24%, assuming no impairments or warranty adjustments. Our total dollar SG&A expense for the 2021 third quarter increased by $16.5 million from the 2020 third quarter, driven primarily by increased general and administrative expenses. Our SG&A expense as a percentage of home sale revenues decreased 80 basis points year-over-year to 9.6%. General and administrative expenses totaled $59.9 million during the third quarter due to increases in compensation related expenses, including increased bonus and stock-based compensation accruals. We currently estimate that our general and administrative expenses will grow to between $65 million and $70 million for the fourth quarter of 2021. Marketing expenses increased $900,000 as a result of increased master marketing fees relating to increased closings volume. However, marketing expenses as a percentage of home sale revenues were down 50 basis points year-over-year as we were able to continue limiting advertising expenses in this high demand environment. Our commission expense as a percentage of home sale revenues decreased 60 basis points year-over-year as we have taken steps to control these costs during this period of strong demand for new housing. The dollar value of our net orders decreased 21% year-over-year to $1.31 billion due to a 32% decrease in unit net orders. This decrease was driven by a 33% year-over-year reduction in our monthly sales absorption pace. Our sales absorption pace for the third quarter of 2021 was a healthy 4.1 orders per community per month. While this represented a year-over-year decrease from the third quarter of 2020, it was a 14% increase from the pre pandemic levels experienced in the third quarter of 2019. The average selling price of our net orders increased 16% year-over-year as we have raised prices across most of our communities over the past 12 months. The dollar value of homes in backlog increased 38% year-over-year despite the decrease in third quarter activity. While cycle times remain the biggest challenge to our backlog conversion efforts, we believe we are well positioned entering the fourth quarter with construction started on 84% of our backlog and 42% at frame stage of construction or beyond. We approved 5,892 lots for acquisition during the quarter, representing a 54% increase year-over-year. This brings the total number of lots approved for acquisition during the year to 15,978 lots and marks the third time in the last four quarters, our approval activity exceeded to 5,000 lots. We closed on 3,214 lots during the third quarter, which included about a 100 finished lots within our first subdivision in Austin, Texas. Total land acquisition and development spend for the quarter was $420 million. As a result of our land acquisition and approval activity, our total lot supply to end the quarter was nearly 37,000 lots, representing a 37% increase from the prior year quarter. In addition, 34% of our lot supply was controlled via option as of period end. Our active subdivision count was at 203 to end the quarter, up 5% from 194 a year ago. Active subdivisions in the Mountain segment were down 8% year-over-year. However, we do expect to see an increase from our 203 active communities at the end of the third quarter before we reached the end of the 2022 first quarter in time for the spring selling season. Our financial position remains strong with over $2 billion of total liquidity and a net debt-to-capital ratio of 23.7% as of quarter end, providing us with the ability to continue to grow our business and invest in our new markets. Without their efforts, we would not be in the position we are today, poised to deliver more than 10,000 new homes to our homebuyers for the 2021 full year.

MDC generated net income of $146 million or $1.99 per diluted share in the third quarter of 2021, driven by a combination of strong revenue growth, continued price increases and improving overhead leverage. During the third quarter, we generated net income of $146 million or $1.99 per diluted share, representing a 48% increase from the third quarter of 2020. Home sale revenues grew 26% year-over-year to $1.26 billion, while gross margin from home sales improved by 300 basis points. The number of homes delivered during the quarter was below our previously estimated range of 2,500 to 2,700 units and was a direct result of the extended cycle times that we experienced. The average selling price of homes delivered during the quarter increased 12% to about $520,000. For the fourth quarter, we are anticipating home deliveries to reach between 27,300 units, with an average selling price between $530,000 and $540,000. The dollar value of our net orders decreased 21% year-over-year to $1.31 billion due to a 32% decrease in unit net orders. The dollar value of homes in backlog increased 38% year-over-year despite the decrease in third quarter activity.

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In Asia Pacific, China saw continued momentum across categories driven by both volume and improved mix with Trademark Coca-Cola. Great Britain and Russia, where mobility was at the highest, show notable volume outperformance relative to 2019 and sparkling soft drinks gained or maintained share in most of the top 10 markets in Europe. BIG also made great progress against its growth and productivity agenda, increasing year-to-date comparable operating margin, approximately 300 basis points from the 2019 levels. For a few examples. The Coke trademark portfolio is experiencing robust growth, led by brand Coke and driven in part by Coca-Cola Zero Sugar, which has contributed double-digit growth in value and volume year to date. The new Coca-Cola Zero Sugar recipe has already launched in nearly 50 markets across six of our operating units, including last week's announcement in the U.S. with more to come this year. Topo Chico Hard Seltzer is now in 17 markets worldwide, and we've authorized Molson Coors the right to produce and sell Topo Chico Hard Seltzer in the United States. Highlights include the continued rollout of a 100% recycled PET with 30 markets representing approximately 30% of our total sales offering at least one brand in a 100% rPET packaging. We've continued the expansion of refillables and dispense packaging and ultra-lightweighting technologies, and we delivered a 60% global collection rate for packaging in 2020. Recently, we announced that we've become a global implementation partner for The Ocean Cleanup's river project, supporting the deployment of cleanup systems across 15 rivers across the world. Our Q2 organic revenue was up 37%, comprised of concentrate shipments up 26% and price mix improvement of 11% as we lapped the biggest pandemic impacts of 2020. Unit case growth was 18%. As a result, second quarter comparable earnings per share of $0.68 was an increase of 61% year over year. We also delivered strong year-to-date free cash flow of approximately $5 billion, double last year's results. We now expect to deliver year-over-year organic revenue growth of 12% to 14% and comparable earnings per share growth of 13% to 15% in 2021. Our steady focus on cash generation continues to yield progress, and our updated guidance for free cash flow of at least $9 billion implies a dividend payout ratio significantly improved from where we began the year and is edging closer to our targeted level of 75% over the long term. Our currency outlook continues to contemplate a tailwind of 1% to 2% to the top line and approximately 2% to 3% to comparable earnings per share in 2021 based on current spot rates and our hedge positions. We will also have some additional timing considerations with the leveling out of our concentrate shipments that are running a bit ahead year to date as well as six fewer days in the fourth quarter.

In Asia Pacific, China saw continued momentum across categories driven by both volume and improved mix with Trademark Coca-Cola. For a few examples. The Coke trademark portfolio is experiencing robust growth, led by brand Coke and driven in part by Coca-Cola Zero Sugar, which has contributed double-digit growth in value and volume year to date. Our Q2 organic revenue was up 37%, comprised of concentrate shipments up 26% and price mix improvement of 11% as we lapped the biggest pandemic impacts of 2020. Unit case growth was 18%. As a result, second quarter comparable earnings per share of $0.68 was an increase of 61% year over year. We now expect to deliver year-over-year organic revenue growth of 12% to 14% and comparable earnings per share growth of 13% to 15% in 2021. Our currency outlook continues to contemplate a tailwind of 1% to 2% to the top line and approximately 2% to 3% to comparable earnings per share in 2021 based on current spot rates and our hedge positions. We will also have some additional timing considerations with the leveling out of our concentrate shipments that are running a bit ahead year to date as well as six fewer days in the fourth quarter.

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Revenue for the quarter grew 6% to $536.3 million compared to $506 million for the same quarter in 2019. Net income rose to 5 -- to $62.6 million or $0.13 per diluted share compared to $50.8 million or $0.10 per diluted share for the fourth quarter last year. Revenue for the full year totaled $2.161 billion, an increase of 7.2% compared to $2.015 billion for 2019. Net income for the full year increased to $260.8 million or $0.53 per diluted share compared to $203.3 million or $0.41 per diluted share for the same period last year. We experienced strong growth in residential pest control during the fourth quarter, increasing 11%, while termite and ancillary services grew 8.7%. However, we have continued to narrow the revenue shortfall gap each month since April with fourth quarter commercial growth only 0.6% below last year. As background, both Susan Bell and Patrick Gunning have recently retired from distinguished careers in public accounting, 36 and 39 years respectively. We added 10 strategic acquisitions within the United States, Canada, Australia, United Kingdom and Singapore. This continues to be an excellent add-on service for many customers and has increased greater than 30% over the prior year. Looking at the numbers, the fourth quarter revenues of $536.3 million was an increase of 6% over the prior year's fourth quarter revenue of $506 million. Our income before income taxes was $86.9 million or 28.7% above 2019. Net income was $62.6 million, up 23.4% compared to 2019. Our earnings per share were $0.13 per diluted share. Looking at the full year, revenue of $2.161 billion was an increase of 7.2% over the prior year's revenue of $2.015 billion. Our GAAP income before taxes was $354.7 million or 35.8% above 2019. Our net income was $260.8 million, up 28.3% compared to 2019. Our GAAP earnings per share were $0.53 per diluted share. For the full year, looking at our non-GAAP financials, taking into account the accelerated stock vesting that occurred in the third quarter of this year and the pension plan moving off of our books in 2019, income before taxes was $361.4 million and was up 16.2% and net income was $267.5 million this year compared to $229.9 million in 2019, a 16.3% increase, and our non-GAAP earnings per share were $0.54 compared to $0.47, which is a 14.9% improvement. Our total revenue increase of 6% included 1.5% from acquisitions and the remaining 4.5% was from pricing and new customer growth. In total, residential pest control, which made up 45% of our revenue, was up 11%, commercial, excluding fumigation, commercial pest control, which made up 34% of our revenue was down five-tenth of a percent and termite and ancillary services, which made up approximately 19% of our revenue, was up 8.7%. Again, total revenue less acquisition was up 4.5%, and from that residential was up 9.3%, commercial ex-fumigation decreased 2.4%, and termite and ancillary grew by 8.4%. In total, gross margin increased to 50.3% from 49.7% in the prior year's quarter. Depreciation and amortization expenses for the quarter decreased $203,000 to $22.4 million, a decrease of nine-tenth of a percent. Depreciation decreased $57,000 and amortization of intangible assets decreased $148,000 as intangibles from previous acquisitions such as HomeTeam and Western became fully amortized. Sales, general and administrative expenses for the fourth quarter increased $4.3 million or 2.8% to $159.1 million or 29.7% of revenue. This was down 2.9% compared to 2019 and the quarter produced savings in salaries and benefits and lower bad debt through better collection efforts. As for our cash position for the period-ended December 31, 2020, we spent $147.4 million on acquisitions compared to $430.6 million the same period last year, which included our initial Clark Pest Control acquisition. We paid $160.5 million on dividend and had $23.2 million of capital expenditures, which was slightly lower compared to 2019. We ended the period with $98.5 million in cash, of which $71.3 million is held by our foreign subsidiaries. These numbers all include our reduction in debt of $88.5 million for the year. Yesterday, the Board of Directors approved a regular cash dividend of $0.08 per share, which was a 50% increase in the pre-split numbers from last year that will be paid on March 10, 2021 to stockholders of record at the close of business February 10, 2021.

Net income rose to 5 -- to $62.6 million or $0.13 per diluted share compared to $50.8 million or $0.10 per diluted share for the fourth quarter last year. Looking at the numbers, the fourth quarter revenues of $536.3 million was an increase of 6% over the prior year's fourth quarter revenue of $506 million. Our earnings per share were $0.13 per diluted share.

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During the second quarter, we delivered adjusted earnings per share of $1.09, which represents a 36% increase over the prior year, expanded EBITDA margin of 110 basis points to 30.6%, and generated $1 billion of adjusted free cash flow on a year-to-date basis. Year-to-date, we invested $567 million in acquisitions to further enhance our market position and increase free cash flow. We expect to invest well over $600 million in acquisitions for the full year. Year-to-date, we returned $363 million to our shareholders through dividends and share repurchases, and our Board recently approved an 8% increase in the quarterly dividend. Retention in our small and large container business remains at historically high levels at 94%. If you further consider all permanent units of service, retention is even higher at 95%. Total core price was 5.2%, and average yield was 2.6%. Second quarter volume increased 8.1% compared to the prior year, which exceeded our expectations. Through the second quarter, we implemented tablets in approximately 40% -- 47% of our large and small container fleet. For example, we are proud to report a 5% reduction in operational greenhouse gas emissions in 2020 compared to the prior year. This year, we expanded and converted a landfill gas energy plant to high BTU and have 15 additional projects in the pipeline. So far this year, we've supported more than 25 charitable efforts and neighborhood revitalization projects through financial contributions and volunteer efforts. In recognition of our ESG performance and transparency, we were named to 3BL Media's 100 Best Corporate Citizens list for the second consecutive year. Accordingly, we are updating full year financial guidance as follows. Adjusted earnings per share is now expected to be in a range of $4 to $4.05, and adjusted free cash flow is now expected to be in a range of $1.45 billion to $1.475 billion. This represents an increase of over 6% from the midpoint of the prior guidance. Second quarter core price was 5.2%, which included open market pricing of 6.5% and restricted pricing of 3%. The components of core price included small container of 7.9%, large container of 5.3% and residential of 5%. Average yield was 2.6%, which increased 30 basis points from the first quarter. Second quarter volume increased 8.1%. While we expected second quarter to be the highest reported volume for the year, the 8.1% growth exceeded our expectations. The components of volume included an increase in small container of 8.6%, an increase in large container of 13.7% and an increase in landfill of 12.6%. For reference, second quarter volumes in our small and large container businesses were down less than 1% from a 2019 pre-pandemic baseline, and MSW and C&D landfill volumes were both above the pre-pandemic baseline. Commodity prices increased to $170 per ton in the second quarter. This compared to $101 per ton in the prior year. Recycling processing and commodity sales contributed 100 basis points to internal growth during the second quarter. Approximately 30% of our Environmental Solutions business is in the upstream oil and gas sector, and 70% is in the downstream petrochemical and broader industrial manufacturing sectors. The downstream petrochemical and industrial manufacturing portion of this business grew 8% compared to the prior year. Adjusted EBITDA margin for the second quarter was 30.6% and increased 110 basis points over the prior year. This included 130 basis points, a 50 basis point increase from recycled commodity prices and a 70 basis point headwind from net fuel. SG&A was 10.7% of revenue, which was flat with the prior year. SG&A would have been approximately 10%, excluding the additional incentive compensation expenses. Year-to-date, adjusted free cash flow was $1 billion and increased $276 million or 38% compared to the prior year. The drivers of growth included EBITDA growth in the business, a positive contribution from a 1.5-day improvement in DSO and the timing of capital expenditures. We received approximately 40% of our projected full year capex during the first half of the year. During the quarter, total debt was $9 billion, and total liquidity was $2.9 billion. Interest expense decreased $13 million due to refinancing activities completed last year, and our leverage ratio was 2.9 times. With respect to taxes, our second quarter adjusted effective tax rate was 21.6%. We had an equivalent tax impact of 23.7% if you include noncash charges from solar investments. We'll expect a full year equivalent tax impact of 26%, which includes the effective tax rate and noncash solar charges.

During the second quarter, we delivered adjusted earnings per share of $1.09, which represents a 36% increase over the prior year, expanded EBITDA margin of 110 basis points to 30.6%, and generated $1 billion of adjusted free cash flow on a year-to-date basis. Year-to-date, we returned $363 million to our shareholders through dividends and share repurchases, and our Board recently approved an 8% increase in the quarterly dividend. Accordingly, we are updating full year financial guidance as follows. Adjusted earnings per share is now expected to be in a range of $4 to $4.05, and adjusted free cash flow is now expected to be in a range of $1.45 billion to $1.475 billion. The downstream petrochemical and industrial manufacturing portion of this business grew 8% compared to the prior year.

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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. 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. By the end of the first quarter of '21, 23 of the company's 27 hotels were open. The average daily room rate of our owned and JV hotels that are open increased by 25% to $234. Loews Hotels has an ownership interest in nearly 15,000 rooms, approximately 11,000 of which are located in resort destinations. 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. 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. 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. CNA contributed net income of $279 million, up dramatically from a $55 million net loss in Q1 2020. 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. 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. 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. 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. 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. 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. 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. 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. The parent company's investment portfolio generated net pre-tax income of $46 million as compared to a loss of $166 million last year. The remainder of the corporate sector generated a $75 million pre-tax and $106 million after-tax loss in the quarter. 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. 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. 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.

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.

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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%. 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. The accomplishments of our founders back in 1914 reflects what happens every day in MSA's product development labs around the world. This electric lamp helped reduce mining fatalities by 75% over the next 25 years. 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. 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. Our fire service business increased 10% in the fourth quarter of 2020, even in the face of the pandemic. 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. 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. 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. Shifting gears to the employment-based industrial PPE products, which were down 4% year-over-year after declining by 25% in 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. Revenues from air purifying respirator lines increased 32% from a year ago. If you recall, our Q1 results a year ago included approximately $10 million of incremental revenue from APR at the onset of the pandemic. 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. 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. 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. 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. 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 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. 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. 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.

Quarterly revenue was a record high of $388 million, growing over 3% from a year ago or 2% in constant currency.

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We've captured the announced $1 billion of synergies and savings from actions the company took in connection with the transaction, all ahead of schedule. Underlying margins are expanding, and our trailing 12-month return on capital employed is headed toward an estimated 14% by year-end, reflecting the benefit of more than just stronger commodity prices. In June, we provided an outlook based on a roughly $50 per barrel price that included a modest ramp in the Lower 48 to reactivate our optimized plateau plans, some incremental base Alaska investment and some longer-cycle low cost of supply investments in Canada, the Montney and in Norway. Since June, we see some inflation pressures, especially in the Lower 48. To begin, adjusted earnings were $1.77 per share for the quarter. You saw in today's release that we lowered full year 2021 DD&A guidance from $7.4 billion to $7.1 billion. Excluding Libya, production for the quarter was 1,507,000 barrels of oil equivalent per day, which represents about 2% underlying growth. Lower 48 production averaged 790,000 barrels a day, including about 445,000 from the Permian, 217,000 from the Eagle Ford, and 95,000 from the Bakken. At the end of the quarter, we had 15 operated drilling rigs and seven frac crews working in the Lower 48. This reflects the impact of a decision we're making to convert Concho two stream contracted volumes to a three-stream reporting basis as part of our ongoing efforts to create marketing optionality across the Lower 48. Reported production is expected to increase by approximately 40,000 barrels a day, and both revenue and operating costs will increase by roughly $70 million. Cash from operations was $4.1 billion, which was reduced by about $200 million for nonrecurring items, so a bit higher than the average of external estimates on an underlying basis. Free cash flow was almost $3 billion this quarter, and on a year-to-date basis, this is about $6.5 billion. Through the first nine months of the year, we've returned $4 billion to shareholders, and we're on track to meet our target of returning nearly $6 billion by the end of 2021.

To begin, adjusted earnings were $1.77 per share for the quarter.

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This is reminiscent of the late 1990s Internet bubble, when Michael Lewis' 1999 book, The New New Thing, described it all you needed to know. We examined recessions in the U.S. over the last 100 years and in Japan over the last 45 years, and the evidence is compelling. The U.S. experienced 14 recessions during the past century. I'm looking at the five year returns, measuring from the beginning of the recession, the value outperformed the broad market by an average of 5% per year. Interest rates have been in structural decline for the past 40 years. The trend has led us to a world where you can buy value stocks at PEs of 10 just like at any time in the past 70 years, while average growth stock multiples have doubled from 30 times to 60 times earnings. Microsoft's stock price is up ten-fold during the past 10 years. That's 25% per year, helped by strong growth in cloud technology replacing on-premises hardware demand. This has led to 8% annual growth in operating income. To get an 8% annual stock price appreciation going forward given Microsoft's high multiple would now require 20 years of 10% operating income growth. But considering that, market analysts estimate that public cloud penetration of data needs has reached 30% to 35%, and that the possible maximum penetration for the public cloud would be approximately 70%. So where will 20 years of growth come from? Turning to the business front, we finished the quarter with approximately $1.1 billion in net inflows. For the previous 12 months, we had net positive flows of approximately $2.1 billion. We reported diluted earnings of $0.16 per share for the third quarter compared to $0.13 last quarter and $0.19 per share for the third quarter of last year. Revenues were $33.9 million for the quarter and operating income of $15 million. Our operating margin was 44.1% this quarter, increasing from 36.4% last quarter and decreasing from 46.3% in the third quarter of last year. Taking a closer look at our assets under management, we ended the quarter at $33.3 billion, up 5.7% from last quarter, which ended at $31.5 billion and down 7% from the third quarter of last year, which ended at $35.8 billion. The increase in assets under management from last quarter was driven by net inflows of $1.1 billion, as I've just mentioned, and market appreciation including the impact of foreign exchange of $0.7 billion. A decrease from the third quarter of last year reflects $4.8 billion in market depreciation, including the impact of foreign exchange, partially offset by net inflows of $2.1 billion. September 30, 2020, our assets under management consisted of $13.3 billion and separately managed accounts, $18 billion in sub-advised accounts and $2 billion in our Pzena funds. Compared to last quarter, separately managed account assets increased, reflecting $0.4 billion in market appreciation and foreign exchange impact, partially offset by $0.1 billion in net outflows. Sub-advised account assets increased, reflecting $1.3 billion in net inflows and $0.3 billion in market appreciation and foreign exchange impact, and assets in Pzena funds decreased slightly to $0.1 billion in net outflows. Average assets under management for the third quarter of 2020 were $33.1 billion, an increase of 11.1% from last quarter and a decrease of 8.1% from the third quarter of last year. Revenues increased 12.7% from the last quarter and decreased 8.4% from the third quarter of last year. During the quarter we did not recognize any performance fees similar to last quarter when compared to $0.3 million recognized in the third quarter of last year. During the third and second quarters of 2020, we recognized $1 million reductions in base fees related to these accounts compared to $0.5 million reduction in base fees during the third quarter of 2019. Our weighted average fee rate was 41 basis points for the quarter compared to 40.4 basis points last quarter and 41.2 basis points for the third quarter of last year. Looking at operating expenses, our compensation and benefits expense was $15.8 million for the quarter compared to $15.6 million last quarter and $16 million for the third quarter of last year. G&A expenses were $3.2 million for the third quarter of 2020 compared to $3.6 million last quarter and $3.9 million for the third quarter of last year. Other income was $0.5 million for the quarter, driven primarily by the performance of our investments. Looking at taxes, the effective tax rate for our unincorporated and other business taxes was negative 6.8% this quarter compared to a positive 4.1% last quarter and negative 5.1% in the third quarter of last year. We expect the effective rate associated with the unincorporated and other business taxes of our operating company to be between 3% and 5% on an ongoing basis. Our effective tax rate for our corporate income taxes, ex-UBT and other business taxes, was 26.5% this quarter compared to our effective tax rate of 26.6% last quarter and 24.4% for the third quarter of last year. We expect this rate excluding these items to be between 23% and 25% on an ongoing basis. The allocation to the non-public members of our operating company was approximately 78% of the operating company's net income for the third quarter of 2020 compared to 77.7% in the last quarter and 74.5% in the third quarter of last year. During the quarter through our stock buyback program, we repurchased and retired approximately 102,000 shares of Class A common stock for $0.5 million. At September 30, there was approximately $10.7 million remaining in the repurchase program. At quarter end, our financial position remained strong with $49.2 million in cash and cash equivalents as well as $70.3 million in short-term investments. We declared a $0.03 per share quarterly dividend last night.

We reported diluted earnings of $0.16 per share for the third quarter compared to $0.13 last quarter and $0.19 per share for the third quarter of last year. Revenues were $33.9 million for the quarter and operating income of $15 million.

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I'm incredibly proud of our team at Box and our strong start to FY 2022, delivering a 200 basis point improvement in our revenue growth rate versus the previous quarter, 24% billings growth and 20% growth in RPO year-over-year. In a recent Gartner study, more than 80% of company leaders surveyed said they plan to allow employees to continue working remotely at least some of the time. This is illustrated in Q1 by the 48% year-over-year growth in enterprise deals over $100,000. As proof of this, we have experienced a record 49% attach rate of our suites this quarter in $100,000 plus deals, and we anticipate the growth of our multi-product plans continuing in the future. Over 100,000 customers rely on Box to Power Secure collaboration and its critical business processes across their organizations in Q1. We are committed to our FY 2024 targets of delivering a growth rate of 12% to 16% in operating margin in the range of 23% to 27%. We are going after one of the largest markets in software attacking a total addressable market of over $55 billion in spend on content management, collaboration, storage and data security annually. With over 100,000 customers on our platform, and exciting roadmap and a strategy that is already yielding results. We delivered revenue of $202 million up 10% year-over-year, a 200 basis points improvement from the 8% growth we delivered in the previous quarter. As our customers are increasingly adopting products with more advanced capabilities, 60% of our revenue is now attributable to customers who have purchased at least one additional product up from 54% a year ago. In Q1, we closed 59 deals worth more than $100,000 up 48% year-over-year. Importantly, 49% of these six-figure deals included one of our multi product suite offerings, a new record for us and up significantly from 28% a year ago. We ended Q1 with remaining performance obligations or RPO of $865 million, up 20% year-over-year, exceeding our revenue growth by 1000 basis points and an acceleration from the prior quarters RPO growth rate. Q1s RPO growth is comprised of 15% deferred revenue growth, and 23% backlog growth, demonstrating Box's stickiness as we continue to sign longer term agreements to support our customers content strategies. We expect to recognize more than 60% of our RPO over the next 12 months. Q1 billings of $159 million were up 24% year-over-year, and a significant improvement from Q4's growth rate. This result reflects the impact of a few early renewals from customers who had been set to renew in Q2, shifting roughly $5 million in billings from Q2 to Q1. Our net retention rate at the end of Q1 was 103%, up from 102% in Q4. This result was driven by strength in customer expansion and a stable annualized full churn rate of 5%. Turning to margins, our non-GAAP gross margin came in at 73% in line with the same period a year ago. Q1 gross profit of $148 million was up 10% year-over-year consistent with our revenue growth. We expect gross margin to increase over the course of this year and for it to come in at roughly 74% for the full year as we continue to deliver infrastructure efficiencies. Q1 operating income doubled year-over-year to $34 million, which in turn drove a 760 basis points improvement in Q1 operating margin to 17%. As a result, in Q1, we delivered $0.18 of non-GAAP earnings per share above the high end of our guidance and a strong 80% improvement from $0.10 a year ago. In Q1, we delivered record cash flow from operations of $95 million, up 53% from the year ago period. We also generated record free cash flow of $76 million a year-over-year improvement of 91%. Capital lease payments, which we include in our free cash flow calculation, were $13 million versus $17 million in Q1 of last year. For the full year of FY 2022, we continue to expect CapEx and capital lease payments combined to be roughly 7% of revenue. Cash from investing in Q1 reflects $57 million in M&A related payments, primarily driven by the acquisition of SignRequest. As a result, we ended the quarter with $612 million in cash, cash equivalents and short-term investments. First on a quarterly basis, until conversion of the preferred stock and the common stock are roughly $0.025 reduction due to the non-cash accounting impact related to the preferred stock dividend, which we anticipate settling and shares of common stock. Second for Q2 and FY 2022 a $0.02 reduction due to a temporarily elevated share count during the period between our recent preferred stock issuance and the completion of our anticipated share repurchase. Combined, these items will result in a $0.04 reduction to earnings per share in Q2 and a $0.09 reduction to earnings per share for the full year. For the second quarter of fiscal 2022, we anticipate revenue of $211 million to $212 million representing 10% year-over-year growth. We expect non-GAAP operating margin to be in the range of 18% to 18.5%, representing a 150 basis points sequential improvement at the high end of this range. Including the $0.04 impact I just discussed. We expect our non-GAAP earnings per share to be in the range of $0.17 to $0.18 and GAAP earnings per share to be in the range of negative $0.13 to negative $0.12, on approximately 167 million and 160 million shares respectively. We expect our billings growth rate to be in the mid single-digit range, which includes the $5 million impact from early renewals that I mentioned earlier. Combined with our strong Q1 billings results, this would result in year-over-year billings growth of roughly 13% for the first half of FY 2022 ahead of revenue growth and an acceleration from our billings growth in the first half of last year. We are raising our full year revenue guidance and we now expect our FY 2022 revenue to be in the range of $845 million to $853 million, representing approximately 11% year-over-year growth at the high end of this range. We expect non-GAAP operating margin to be in the range of 18% to 18.5% above our initial FY 2022 expectations. The high end of this range represents a 320 basis point improvement from last year's results of 15.3%. Our stronger business performance drives a $0.04 improvement in our earnings per share expectations for FY 2022 versus our initial guidance. At the same time, our full year earnings per share guidance incorporates the $0.09 reduction for the preferred stock accounting charges that I mentioned previously. As a result of these various factors, we now expect our FY 2022 non-GAAP earnings per share to be in the range of $0.71 to $0.76 on approximately 161 million diluted shares. Our GAAP earnings per share is expected to be in the range of negative $0.50 to negative $0.45 on approximately 154 million shares. As we build on this leadership position, we're very confident in achieving our FY 2024 targets two years from now of a 12% to 16% growth rate and operating margin in the range of 23% to 27%.

Q1 billings of $159 million were up 24% year-over-year, and a significant improvement from Q4's growth rate. As a result, in Q1, we delivered $0.18 of non-GAAP earnings per share above the high end of our guidance and a strong 80% improvement from $0.10 a year ago. Combined, these items will result in a $0.04 reduction to earnings per share in Q2 and a $0.09 reduction to earnings per share for the full year. For the second quarter of fiscal 2022, we anticipate revenue of $211 million to $212 million representing 10% year-over-year growth. We expect our non-GAAP earnings per share to be in the range of $0.17 to $0.18 and GAAP earnings per share to be in the range of negative $0.13 to negative $0.12, on approximately 167 million and 160 million shares respectively. We are raising our full year revenue guidance and we now expect our FY 2022 revenue to be in the range of $845 million to $853 million, representing approximately 11% year-over-year growth at the high end of this range. At the same time, our full year earnings per share guidance incorporates the $0.09 reduction for the preferred stock accounting charges that I mentioned previously. As a result of these various factors, we now expect our FY 2022 non-GAAP earnings per share to be in the range of $0.71 to $0.76 on approximately 161 million diluted shares. Our GAAP earnings per share is expected to be in the range of negative $0.50 to negative $0.45 on approximately 154 million shares.

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In the second quarter, Capital One earned $3.5 billion or $7.62 per diluted common share. Included in the results for the quarter was a $55 million legal reserve build. Net of this adjusting item, earnings per share in the quarter was $7.71. On a GAAP basis, pre-provision earnings increased slightly in the sequential quarter to $3.4 billion. We recorded a provision benefit of $1.2 billion in the quarter as $541 million of charge-offs was offset by a $1.7 billion allowance release. Revenue grew 4% in the linked quarter, largely driven by the impact of strong Domestic Card purchase volume on noninterest income and the absence of the mark on our Snowflake investment a quarter ago. Period-end loans held for investment grew $6.5 billion or 3%, inclusive of the effect of moving $4.1 billion of loans to held-for-sale during the quarter. The loans moved to held-for-sale consisted of $2.6 billion of an International Card partnership portfolio and $1.5 billion in commercial loans. We released $1.7 billion of allowance, primarily driven by observed strong credit performance and an improved economic outlook. Our Domestic Card coverage is now 8.9%, down from 10.5% last quarter. Our branded card coverage is 10.1%. Coverage in our consumer business declined about 60 basis points to 3%. Coverage in our Commercial Banking business declined about 25 basis points to 1.7%, with the single largest driver being the improvement in our energy portfolio. Turning to Page 6. You can see our preliminary average liquidity coverage ratio during the first -- during the quarter was 141%. The LCR continues to be well above the 100% regulatory requirement. Our liquidity reserves from cash, securities and Federal Home Loan Bank capacity ended the quarter at approximately $137 billion. The $14 billion decline in total liquidity was driven by lower ending cash balances. Moving to Page 7. You can see that our second quarter net interest margin was 5.89%, 10 basis points lower than the prior quarter. Our common equity Tier 1 capital ratio was 14.5% at the end of the second quarter, down 10 basis points from the first quarter. Our stress capital buffer requirement, which will be effective on October 1 of this year, is 2.5%, resulting in a total capital requirement by the Fed of 7%. Based on our internal modeling, we continue to estimate that our CET1 capital need is around 11%. We repurchased $1.7 billion of common stock in the second quarter, the full amount allowed under the Fed's capital preservation measures. We have approximately $5.3 billion remaining of our current board authorization of $7.5 billion. In the third quarter of 2020, we reduced our dividend to $0.10 due to the Fed's capital preservation measures. The difference between our historical $0.40 dividend and the reduced level for those two quarters was $0.60 per common share. Therefore, we expect to make up for the reduced level of dividends from the second half of 2020 by paying a $0.60 special dividend in the third quarter of 2021. In addition to the special dividend, we expect to increase our quarterly common stock dividend from $0.40 per share to $0.60 per share in the third quarter. Both the $0.60 special dividend and the increase of our quarterly common stock dividend to $0.60 will be subject to board approval. Domestic Card purchase volume for the second quarter was up 48% from the second quarter of 2020. Purchase volume was up 25% from the second quarter of 2019, which is an acceleration from the first quarter when we saw growth of 17% versus 2019. In June, T&E purchase volume was up 3% compared to June of 2019. At the end of the quarter, Domestic Card loan balances were down $4.1 billion or about 4% year over year. Excluding the impact of a partnership portfolio moved to held-for-sale last year, second quarter ending loans declined about 2% year over year. Compared to the sequential quarter, ending loans were up about 5%, ahead of typical seasonal growth of 2%. The Domestic Card charge-off rate for the quarter was 2.28%, a 225-basis-point improvement year over year. The 30-plus delinquency rate at quarter end was 1.68%, 106 basis points better than the prior year. Provision for credit losses improved by about $3.5 billion year over year. Purchase volume growth outpacing loan growth and strong credit were the key drivers of Domestic Card revenue margin, which was up 226 basis points year over year to 17.7%. Revenue margin increased over 50 basis points quarter over quarter, higher than our typical seasonal pattern. Total company marketing expense was $620 million in the quarter, up $347 million compared to the second quarter of 2020. Driven by auto, second quarter ending loans increased 12% year over year in the Consumer Banking business. Average loans also grew 12%. Auto originations were up 56% year over year and up 47% from the linked quarter. Second quarter ending deposits in the consumer bank were up $4.4 billion or 2% year over year. Average deposits were up 9% year over year. Consumer Banking revenue increased 27% from the prior-year quarter, driven by growth in auto loans and retail deposits. Second-quarter provision for credit losses improved by $1.2 billion year over year, driven by an allowance release and lower charge-offs in our auto business. Year over year, the second quarter charge-off rate improved 120 basis points to negative 0.12%, and the delinquency rate was essentially flat at 3.26%. Second quarter ending loan balances were down 5% year over year. Average loans were down 7%. Commercial line utilization continues to be down year over year, and we moved $1.5 billion of commercial real estate loans to held-for-sale. Quarterly average deposits increased 22% from the second quarter of 2020 and 5% from the linked quarter as middle market and government customers continue to hold elevated levels of liquidity. Second-quarter revenue was up 3% from the prior-year quarter and down 6% from the linked quarter. Excluding this effect, Commercial Banking revenue would have increased about 13% year over year and 4% from the linked quarter. In the second quarter, the Commercial Banking annualized charge-off rate was negative 11 basis points. The criticized performing loan rate was 7.6%, and the criticized nonperforming loan rate was 1%.

In the second quarter, Capital One earned $3.5 billion or $7.62 per diluted common share. Net of this adjusting item, earnings per share in the quarter was $7.71. We recorded a provision benefit of $1.2 billion in the quarter as $541 million of charge-offs was offset by a $1.7 billion allowance release. You can see that our second quarter net interest margin was 5.89%, 10 basis points lower than the prior quarter. Our common equity Tier 1 capital ratio was 14.5% at the end of the second quarter, down 10 basis points from the first quarter.

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Similar to the early results in the broader U.S. population, in the first few weeks of the vaccine rollout, we saw the vaccination rate for Black and Hispanic were approximately 40% below that of White and Asian American. Our Hispanic patients have now been vaccinated at nearly the same rate as white patients and the gap for our black patients has been reduced to 10%. On to our first quarter financial results. We delivered solid performance in Q1 as our operating margins returned to 15.7% in the quarter, while we continue to lead through the continued challenges presented by the pandemic. Our treatments per day hit a low point in mid-February, including the impact of approximately 25,000 missed treatments from the winter storm. As of last Friday, the number of active cases among our patients across the country decreased approximately 85% from peak prevalence on January 6, 2021, and the last seven-day incidence rate for new cases decreased approximately 91% from the week ending January 9, 2021. We've previously shared that the unfortunate incremental mortality associated with COVID was approximately 7,000 in 2020. In the first quarter, incremental mortality associated with COVID was approximately 3,300 lives, with more than half of that number occurring in January, decreasing to approximately 600 in March. However, now that the likelihood of some downside scenarios have decreased due to the trends I've previously mentioned, we are increasing our adjusted earnings per share guidance range to $8.20 to $9 per share and our adjusted operating income guidance range to $1.75 billion to $1.875 billion. At the midpoint of our revised adjusted operating income guidance, this would represent approximately a 4% growth year-over-year. It starts with the Board of Directors, currently made up of nine leaders, of whom 67% are diverse, including four women and three people of color. The diversity of our team extends to the leaders who run the core operations in our clinics of whom 52% are female and 27% are people of color. These reports disclose the progress we made in 2020 and lay out our ambitious ESG goals for 2025, including goals to reduce carbon emissions by 50% and to have vendors representing 70% of emissions set by climate change goals and to achieve engagement scores of 84% or higher among our teammate population. For the quarter, we recorded revenue of approximately $2.8 billion, operating income of $443 million and earnings per share of $2.09. As Javier referenced, treatment volume was a large headwind and our nonacquired growth was negative 2.2% compared to negative 0.3% in Q4. While COVID presented the main challenge to NAG in Q1, winter storms, particularly Uri, were responsible for about 30 basis points of the NAG decline. U.S. dialysis revenue per treatment grew sequentially by almost $3 this quarter as a result of the Medicare rate increase, higher enrollment in MA plans, a slight improvement in commercial mix and higher volume from our hospital services business, partially offset by the seasonal impact of coinsurance and deductible. U.S. dialysis patient care costs declined sequentially by approximately $6 per treatment. Although we continue to experience elevated costs due to the pandemic, such as higher PPE and certain clinical level expenses from continued infection control protocols, our Q1 patient care costs included a nearly $2 per treatment benefit from our power purchase agreement, a benefit that we do not expect to persist through the rest of the year. For the quarter, the net headwind related to COVID was approximately $35 million, consisting primarily of higher PPE costs and the compounding effect of patient mortality associated with COVID, partially offset by the benefit from the sequestration suspension with a number of other items that largely offset each other. For fiscal year 2021, we now estimate the net negative impact from COVID to be approximately $50 million lower than our guidance last quarter. At the middle of our guidance range, this would equate to $150 million negative impact from COVID in 2021. This quarter, we had more of these holes and the single largest driver was related to winter storm Uri, which impacted more than 600 of our centers until right in the middle of the quarter. In the first quarter, we repurchased 2.9 million shares of our common stock. Debt expense was $67 million for the quarter. We expect quarterly debt expenses to increase to approximately $75 million beginning next quarter as a result of the $1 billion of notes issued in late February.

On to our first quarter financial results. However, now that the likelihood of some downside scenarios have decreased due to the trends I've previously mentioned, we are increasing our adjusted earnings per share guidance range to $8.20 to $9 per share and our adjusted operating income guidance range to $1.75 billion to $1.875 billion. For the quarter, we recorded revenue of approximately $2.8 billion, operating income of $443 million and earnings per share of $2.09.

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Revenue and adjusted EBITDA in Q2 increased 17.5% and 23%, respectively, over the prior year period, primarily as a result of continued improvement in solid waste pricing volume growth and strength in recovered commodity values. These trends drove year-to-date adjusted EBITDA margin expansion of 110 basis points and adjusted free cash flow of over $585 million, up 18.5% year-over-year, and given expected continuing momentum and margin expansion from these trends position us to raise our full year outlook for revenue, adjusted EBITDA, adjusted EBITDA margin and adjusted free cash flow. Year-to-date, we have signed or closed 14 acquisitions with total annualized revenue of approximately $115 million, including $75 million of franchise operations in California, Nevada and Oregon expected to close later this year. In the second quarter, solid waste price plus volume growth of 11.4% exceeded our expectations by almost 150 basis points, primarily as a result of higher-than-expected volumes as the recovery trends that began in Q1 continued throughout the quarter, with landfill tons and roll-off pulls returning to levels about in line with or above prepandemic levels. Total price of 4.9%, up 70 basis points sequentially, was above our outlook on higher core pricing of 4.7%, once again reflecting the strength of pricing retention we noted in Q1, plus about 20 basis points in fuel and material surcharges. Our Q2 pricing ranged from 2.6% in our mostly exclusive Western region to a range of about 4.5% to 7% in our more competitive regions. Reported volume growth of 6.5% in Q2 reflected sequential improvement of approximately 1,000 basis points from Q1 and was led by those regions where markets were hardest hit during the pandemic including the Northeast U.S. and Canada. Volumes range from about 4% in our Central region, where comparisons to the prior year were tougher as many markets were relatively less impacted by the COVID-19 pandemic, to almost 10.5% in Canada, one of our most impacted regions where the volume recovery have been remarkably strong, arguably outpacing the reopening activity particularly when considering that many restrictions in Canada extended through Q2 of this year. Also noteworthy is our Western region, where volumes led our other regions going into the pandemic and continue to be the strongest in the U.S. at about 8.5% in Q2. Looking at year-over-year results in the second quarter on a same-store basis, all lines of business increased by double digits Commercial collection revenue was up 16% year-over-year. Roll-off pulls increased by over 11% year-over-year, led by Canada, up almost 20% and back to above pre-COVID-19 levels. In the U.S., pulls were up about 10%, and all regions showed year-over-year improvement, most notably in our more impacted markets, including in the Northeast. Landfill tons were up 17% year-over-year on MSW tons up 11%, C&D tons up 20% and special waste tons up 33%. However, the outsized amount of special waste activity was particularly noteworthy as Q2 activity propelled tons back to 13% above pre-pandemic levels with all regions up year-over-year, perhaps due to a little pull forward from Q3. Excluding acquisitions, collectively, they were up about 95% year-over-year resulting in a combined margin tailwind of about 130 basis points, 90 basis points of which was from recycling and 40 basis points from landfill gas and RINs. Recycling revenue increases were driven by both higher commodity values, including old corrugated containers or OCC, up 25%; and plastics and metals, both up over 100%. Prices for OCC averaged about $135 per ton in Q2 and our RIN pricing averaged about $2.72. We reported $31.2 million of E&P waste revenue in the second quarter, up 26% sequentially from Q1, reflecting increased activity across multiple basins. As noted earlier, we've already signed or closed 14 acquisitions with annualized revenue of approximately $115 million, approaching what we would consider an average amount of activity for the full year. In the second quarter, revenue was $1.534 billion, about $44 million above our outlook due primarily to higher-than-expected solid waste growth and recovered commodity values. Revenue on a reported basis was up $228 million or 17.5% year-over-year, including acquisitions completed since the year ago period which contributed about $47.6 million of revenue in the quarter or about $44.1 million net of divestitures. Commodity-driven impacts account for about 100 basis points of margin expansion, net of a 30 basis point impact from higher fuel on diesel rates up almost 20% year-over-year. Ex fuel solid waste collection transfer and disposal margins expanded by 50 basis points as we more than offset a 60 basis points increase in incentive compensation costs, 50 basis points from higher medical and 50 basis points from increased discretionary expenses. And finally, acquisitions completed since the year ago period accounted for about 10 basis points of margin dilution. As noted earlier, we've already implemented incremental price increases to address these higher costs, resulting in full year 2021 price of approximately 5%, up from 4% in our original outlook. We delivered adjusted free cash flow up 18.5% year-over-year through Q2 at $585 million or 20% of revenue, putting us on track to achieve our revised adjusted free cash flow outlook of approximately $1 billion. Revenue in Q3 is estimated to be approximately $1.56 billion. We expect solid waste price plus volume growth of about 7% in Q3 with pricing of about 5%. Adjusted EBITDA in Q3 is estimated to be approximately $495 million or 31.7% of revenue, up 60 basis points year-over-year and up sequentially from Q2. Depreciation and amortization expense for the third quarter is estimated to be about 13.3% of revenue, including amortization of intangibles of about $33.8 million or a rounded $0.10 per diluted share net of taxes. Interest expense, net of interest income, is estimated at approximately $40 million. And finally, our effective tax rate in Q3 is estimated to be about 21.5%, subject to some variability. Revenue for 2021 is now estimated to be approximately $5.975 billion or $175 million above our initial outlook, with the primary drivers being an additional 150 basis points of solid waste price plus volume growth and higher recovered commodity values as compared to our initial outlook, plus $25 million from acquisitions completed year-to-date. Adjusted EBITDA for the full year is now estimated to be approximately $1.875 billion or about 31.4% of revenue and up about $75 million over our initial outlook. Moreover, full year adjusted EBITDA margin guidance is 40 basis points above our initial outlook, up 90 basis points year-over-year. At 31.4%, our adjusted EBITDA margin outlook reflects continued year-over-year margin expansion in the second half of 2021 in spite of wage and inflationary pressures and tougher year-over-year comparisons. Adjusted free cash flow in 2021 is now expected to be approximately $1 billion or over 53% of EBITDA and up $15 million from our initial outlook despite capex up $50 million from our original outlook. Last week, we closed our new $2.5 billion credit facility, which increased borrowing capacity by almost $300 million, reduced borrowing spreads and enhanced flexibility for continued growth. We have already returned over $400 million to shareholders in 2021 through share repurchases and dividends. And we are in the process of renewing our normal course issuer bid, authorizing the repurchase of up to 5% of our outstanding shares per annum. We are on track for adjusted free cash flow of approximately $1 billion and adjusted EBITDA margins back above pre-COVID-19 levels.

Revenue on a reported basis was up $228 million or 17.5% year-over-year, including acquisitions completed since the year ago period which contributed about $47.6 million of revenue in the quarter or about $44.1 million net of divestitures. Revenue in Q3 is estimated to be approximately $1.56 billion. We expect solid waste price plus volume growth of about 7% in Q3 with pricing of about 5%. Revenue for 2021 is now estimated to be approximately $5.975 billion or $175 million above our initial outlook, with the primary drivers being an additional 150 basis points of solid waste price plus volume growth and higher recovered commodity values as compared to our initial outlook, plus $25 million from acquisitions completed year-to-date.

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Yesterday, we reported record earnings of $0.76 per share compared with $0.74 in the prior year's quarter and $0.67 sequentially. Revenue was a record $116.6 million for the quarter compared with $109.8 million in the prior year's quarter and $111.4 million sequentially. Our implied effective fee rate was 57 basis points in the fourth quarter compared with 59 basis points in the third quarter. Excluding performance fees, our fourth quarter implied effective fee rate would have been 56.3 basis points, and our third quarter implied effective fee rate would have been five point -- 56 basis points. Operating income was a record $49.4 million in the quarter compared with $47.4 million in the prior year's quarter and $44.2 million sequentially. Our operating margin increased to 42.4% from 39.6% last quarter. And the compensation to revenue ratio for the fourth quarter was 35% lower than the guidance we provided on our last call. For the year, the compensation to revenue ratio was 36.1%. Our effective tax rate was 25.8% for the fourth quarter, which included an adjustment to bring the full year rate to 26.65%. Our firm liquidity totaled $143 million at quarter end compared with $201.9 million last quarter. Firm liquidity as of December 31 reflected the payment of approximately $60.2 million for costs associated with our new closed-end fund and a special cash dividend in December of approximately $47 million or $1 per share. Over the past 11 years, we have paid a total of $14 per share in special dividends. Assets under management totaled a record $79.9 billion at December 31, an increase of $9.4 billion or 13% from September 30. The increase was due to net inflows of $3.9 billion and market appreciation of $6.4 billion, partially offset by distributions of $859 million. With respect to compensation and benefits, we expect to balance anticipated revenue growth from year-end assets under management that exceeded our 2020 full year average assets under management by about 15%, with our focus on controlled investment in order to maintain our industry-leading performance, broaden our product offerings and expand our distribution efforts. As a result, we expect that our compensation to revenue ratio will decline to 35.5% from the 36.1% recorded in 2020. Continuing with the theme of investing in our business, we expect G&A to increase by about 6% from the $42.6 million we recorded in 2020. After finishing last year 8% below 2019, which was largely driven by lower travel and entertainment and a reduction in hosted and sponsored conference costs as a result of COVID conditions, we intend to make incremental investments this year in technology, including the implementation of new systems, cloud migration and upgrades to our infrastructure and security as well as in global marketing, focused on hosting virtual conferences and expanding our digital footprint. We expect that our effective tax rate will be 27.25% in 2021. The macro environment in 2020 was unprecedented with the Fed's balance sheet increasing by over 75%, the budget deficit reaching the highest level since World War II, money supply growing 25% and negative yielding debt reaching $18 trillion globally. For the last 12 months, six of nine core strategies outperformed. As measured by AUM, 84% of our portfolios are outperforming on a 1-year basis, an improvement from 70% last quarter, mostly due to our preferred portfolios. On a 1- and 3-year basis, 99% are outperforming, which was consistent with last quarter. Preferreds returned 4.6% in the fourth quarter. In the fourth quarter, infrastructure returned 8.4%, which lagged the global stock index return of 14.8%. Assessing the infrastructure universe's sensitivity to the economic situation and pandemic, we believe that 9% benefits from secular trends, 50% is relatively unaffected by the economy and pandemic, 20% is directly sensitive to the economic recovery, and 21% will be reliant on successful penetration of the vaccine. In the fourth quarter, U.S. real estate returned 8.1% compared with the S&P 500, which was up 12.1%, and global real estate returned 13.2%. Overall, on most metrics, REITs are very cheap, as cheap as they were in the depths of the global financial crisis in 2009. I also want to mention that our real assets multi-strategy portfolio had very good relative performance in 2020, outperforming by 200 basis -- 240 basis points for the year, which puts us in good position with investors who are looking for inflation protection. While most active managers continued to battle the dual challenges of declining fees and net outflows, the equity markets offered them a reprieve with the S&P 500 and NASDAQ up 16.3% and 43.6%, respectively, last year. As Joe noted, global and U.S. real estate securities indices actually declined by 9% and 5.1%, respectively, while global listed infrastructure indices also fell by 4.1%. We ended the quarter with record assets, as Matt said, of $79.9 billion. In the quarter, gross inflows were a record $7.3 billion and net inflows contributed $3.9 billion. Our confidence in the new generation of closed-end funds paid off in the quarter, and we added $2.1 billion of net new assets through the IPO of our Tax-Advantaged Preferred Securities and Income Fund. Although not a record, our open-end fund channel registered $1.7 billion of net inflows, driven mainly by preferred securities and U.S. real estate strategies. Our non-U.S. open-end fund showed modest improvement, albeit from low levels, with net inflows of $41 million in the quarter. Consistent with more recent trends, Japan subadvisory saw net inflows of $83 million before distributions and $293 million of net outflows after distributions. And it was a quiet quarter for subadvisory ex Japan with $10 million of net inflows. While the headline results for the advisory channel of $101 million of net outflows was disappointing, the underlying trends continue to be strong. five new mandates totaling $297 million, combined with $282 million of inflows from existing clients, contributed $579 million of gross inflows. Offsetting these inflows was an unexpected $301 million global real estate outflow, stemming from the termination of a relatively new institutional account, along with a global listed infrastructure termination totaling $299 million. We do expect the balance of the terminated global real estate account of approximately $960 million to be withdrawn in the next quarter or 2. Lastly, the quarter ended with a record-setting pipeline of $1 billion, but unfunded mandates of $1.7 billion. The quarter began with a $1.2 billion pipeline. $400 million was funded in the quarter, and another $280 million has been deferred due to funding uncertainties. New awards totaled $1.1 billion. For the full year, firmwide gross sales were $27.4 billion, which exceeded the prior record achieved in 2011 of $17 billion by 61%. Open-end fund gross sales of $17.6 billion were 41% above the prior record, and closed-end fund sales of $2.7 billion similarly blew by the prior record by more than double. Even in the transition year for us in the U.S. institutional market, our advisory channel recorded sales of $4.3 billion, which was more than 100% better than the prior -- the record set in 2018. Net inflows last year also set a record at $10.8 billion. In 2011, net inflows were $10.7 billion. However, subadvisory inflows from Daiwa Asset Management contributed 81% of that amount in one single strategy. In contrast, last year, six strategies across open-end funds, closed-end funds and advisory contributed $5.4 billion, $2.6 billion and $1.6 billion of net inflows, respectively, and each setting individual channel records and accounting for almost 90% of firmwide totals.

Yesterday, we reported record earnings of $0.76 per share compared with $0.74 in the prior year's quarter and $0.67 sequentially. Assets under management totaled a record $79.9 billion at December 31, an increase of $9.4 billion or 13% from September 30. The increase was due to net inflows of $3.9 billion and market appreciation of $6.4 billion, partially offset by distributions of $859 million. We ended the quarter with record assets, as Matt said, of $79.9 billion. In the quarter, gross inflows were a record $7.3 billion and net inflows contributed $3.9 billion.

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U.S. life reported adjusted operating income of $93 million for the quarter, up from $71 million in the prior quarter and $14 million in the prior year period. The results were primarily driven by LTC insurance, which reported adjusted operating income of $133 million, reflecting strong earnings from in-force rate actions, including higher benefit reductions as well as higher net investment income. We entered the fourth quarter with a strong cash position of approximately $638 million and exciting plans to further strengthen Genworth's balance sheet and advance our long-term growth agenda. Genworth received aggregate net proceeds of approximately $529 million from the IPO. We use those proceeds to retire in full our outstanding promissory note to AXA of approximately $296 million, nearly a year ahead of schedule. After the IPO, our ownership of Enact decreased from 100% to 81.6%. Inclusive of the $296 million AXA note repayment, we have reduced holding company debt by $1.5 billion year to date. We are proud of this progress, which brings us closer to our target debt of approximately $1 billion. We have achieved approximately $323 million in rate action approvals year to date, including $117 million in the third quarter, which brings our cumulative total to over $16.3 billion on a net present value basis since 2012. As of September 30, 2021, approximately 43% of Genworth's LTC policyholders have opted some form of reduced benefit option. We've achieved over $16.3 billion in rate increases on a net present value basis against the current estimated $22.5 million shortfall in our legacy LTC business. The legacy U.S. life insurance legal entity will continue to fund claims using their existing reserves, statutory capital of $2.5 billion as of the end of June, and the actuarially justified multi-year rate action plan. We plan to invest a modest initial amount approximately $5 million to $10 million to recapitalize and scale this CareScout business so that we can offer more fee-based services going forward. After we receive our -- after we achieve our debt target of approximately $1 billion. Ward's decision to retire comes after 24 years with Genworth, taking the company through its recovery from the financial crisis and its several strategic review processes throughout which he has built strong relationships within Genworth and the regulatory community. Net income this quarter was $314 million. And with this quarter's $239 million adjusted operating income of $0.46 a share, we've reported more than $600 million in adjusted operating income so far this year. During the quarter, we fully retire the remaining principal amount of the September 2021 debt maturity of $513 million. We also successfully executed Enact's IPO, generating $529 million in net proceeds that we use to pay off the remainder of our AXA promissory note of $296 million and further enhanced our liquidity position. Enact's NIW for the quarter was $24 billion and contributed its overall 10% year-over-year increase in insurance in-force. For the third quarter, Enact reported adjusted operating income of $134 million to Genworth and a strong loss ratio of 14%. I would note the Genworth's third quarter adjusted operating income excludes an 18.4% minority interest since the Enact IPO date of September 16th of $4 million and adjusted operating income for the third quarter. Enact finished the quarter with an estimated PMR sufficiency ratio of 181%, approximately $2.3 billion above published requirements. Assuming these conditions remain supportive, Enact intends to recommend to their board the approval of a $200 million dividend. Genworth would receive its pro rata share of that dividend based on its ownership interest or approximately $160 million. Life segment, overall result was solid in the quarter at $93 million, driven by the continued strength of the LTC in-force rate action plan and variable investment income. Long-term care had adjusted operating income of $133 million, compared to $98 million in the prior quarter and $59 million in the prior year. As of the third quarter, the pre-tax balance of this reserve was $1.1 billion, up from $625 million as of year end 2020. This reduced LTC earnings by $129 million after tax during the quarter. Earnings from in-force rate actions of $304 million prior to profits followed by losses increased versus the prior year. The Choice I legal settlement that we discussed last quarter favorably impacted our results by $48 million or $16 million after profits followed by losses. As of quarter end, 42% of the settlement class have reached the end of their selection period and we expect the remaining class members to make their elections by mid-2022. Shifting to in-force rate action approvals to LTC, during the quarter, we received approvals impacting approximately $394 million of premiums with a weighted average approval rate 30%. Year to date, we received approvals impacting $871 million of premiums, the weighted average approval rate of 37%, up from the comparable period last year when we received approvals impacting $595 million in premiums with the weighted average approval rate of 29%. While the expected change in the long-term utilization assumption would significantly increase the $22.5 billion legacy shortfall, as Tom stated, we plan to offset the increase to an expansion of our multi-year rate action plan. Our third quarter included an estimate of approximately $24 million after tax in COVID-19 claims based upon death certificates received to date. In our term Universal Life and Universal Life products, we recorded a $30 million after tax charge for DAC recoverability, up from $13 million in the prior quarter. In fixed annuities, adjusted operating earnings of $28 million for the quarter was higher sequentially driven by favorable mortality and the change in reserves related to the increase in interest rates during the quarter. In the runoff segment, our adjusted operating income was $11 million for the third quarter versus $15 million in the prior quarter and $19 million last year. We expect capital in Genworth Life Insurance Company, GLIC, as a percentage of company action level RBC to be approximately 290%, up from 272% at the end of the second quarter. Page 12 of the investor deck highlights recent trends on a quarter lag in statutory performance for the consolidated life companies. Rounding out the results, adjusted operating income in corporate and other was $1 million and was improved from last quarter in the prior year, driven by lower interest expense and a favorable tax adjustment. Turning to the holding company, we ended the quarter with a very strong cash position of $638 million with no debt due until our $400 million maturity in August 2023. As Tom mentioned, we've retired more than $1.5 billion of debt during 2021 while maintaining prudent cash buffers for forward debt service obligations. This is outstanding progress toward our priority of reducing holding company debt to approximately $1 billion. Most notably, the net proceeds from the Enact IPO were $529 million, which enabled the full retirement of the AXA promissory note of $296 million. Intercompany tax payments were $96 million during the quarter and reflected a strong underlying taxable income of Enact and U.S. Life. With our improved liquidity position, we intend to retire our 2023 debt maturity once Enact declares their dividend, moving us $400 million closer to our debt target. We then anticipate retiring the 2024 debt maturity, leaving an improved debt ladder with the next maturity not until 2034. In closing, once we've achieved our goal of reducing holding company debt to approximately $1 billion, we'll be positioned to return capital to shareholders.

And with this quarter's $239 million adjusted operating income of $0.46 a share, we've reported more than $600 million in adjusted operating income so far this year.

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Across our portfolio, physical occupancy has remained at approximately 15% since early June. We reported FFO of $0.66 a share. We collected 97% of total rents and 98% of office rents. We leased 303,000 square feet with a weighted average lease term of 7.6 years. Second generation cash rents grew by 20.6%. In fact, I recently asked the leadership of a Fortune 500 company with a growing Sun Belt footprint to share their perspective on the impact of COVID on their real estate strategy with the Board of Directors here at Cousins. After a deep dive into the real estate strategy, this growing Fortune 500 company concluded that while the layout of the office would likely change post COVID, their overall space needs would not. 100% of our portfolio is located in the best amenitized submarkets across the Sun Belt, 100% is Class A. Our portfolio is among the newest vintage in the office sector, with an average building age of 2002. Our average building size is just 347,000 square feet with the overwhelming majority having multiple elevator banks. 77% of the portfolio is near mass transit while also enjoying an average parking ratio of 2.9 per 1,000. Net debt to EBITDA of only 4.4 times and liquidity in excess of $1 billion. A $566 million development pipeline that's 82% committed and projected to add approximately $66 million of incremental NOI by year-end 2022. Given that I'm especially pleased to say that our team executed 303,000 square feet of leases in the second quarter with an average lease term of 7.6 years. Further, 32% of our leasing activity this quarter was new and expansion leasing. I'm also pleased to report that rent growth remained exceptionally strong with second generation net rents increasing 20.6% on a cash basis, a level not seen since 2015. Net effective rents for the quarter came in at $25.43 per square foot, even higher than in the first quarter. We also ended the second quarter at 92.5% leased with in-place gross rents posting another company record of $39.48 per square foot. Finally, our same property portfolio leased percentage came in at a solid 94.4%. You will recall that our second quarter leasing activity did include the previously announced 74,000 square foot new lease with DLA Piper at Colorado Tower in Austin. Our second quarter activity also included significant long-term renewals of a 112,000 square foot customer at The Domain in Austin and a 42,000 square foot customer at the Pointe in Tampa. On a similar note, we are also thrilled with Microsoft's recent decision to lease over 500,000 square feet in a new project in Midtown Atlanta, adding 1,500 new technology jobs in our hometown. 97% of our customers overall paid rent during the second quarter and the collection rate among our traditional office customers was 98%. Further 100% of our top 20 customers paid rent in the second quarter. As of today, 98% of our customers overall have paid July rent charges. The total cash rent deferred to date stands at $7.5 million or 1.1% of our annualized contractual gross rents. As a reminder, those two segments only represent 1.7% and 1.9% of our overall operating portfolio respectively. Despite being open, the physical occupancy of our properties is currently only at about 15% on average with usage of our parking facilities at similarly low levels. Looking specifically at our same-property performance, cash net operating income during the second quarter declined 1.6% compared to last year. This was driven by a 4% decline in revenues and a 7.8% decline in expenses. Adjusting for the impact of these deferrals, cash net operating income declined 0.1% during the second quarter. Fewer customers coming to the office mean fewer cars and as a result, same-property parking income was down 30% compared to last year's second quarter. This is comprised of a 12% decline in contractual parking and a 76% decline in transient parking. Adjusting for the impact of both rent deferrals and reduced parking income, same property cash NOI was up 3.7% during the second quarter. During the second quarter FFO was reduced by approximately $400,000 due to a combination of rent write-offs and an increase in our allowance for uncollectible rents. The comparable number for the first quarter was approximately $500,000. To put these numbers in perspective, charges related to collectability averaged approximately $170,000 per quarter during 2019. We closed one acquisition during the second quarter, the purchase of 1,550 space parking deck in Uptown Charlotte for $85 million. Not only did we extend the maturity of this loan, we also reduced the interest spread from 190 basis points to 125 basis points and eliminated our repayment guarantee. Not only do we have low leverage, our liquidity position of over $1 billion at the end of the quarter represented over 15% of our total market cap at quarter-end and is more than enough to fund the remaining $160 million necessary to complete our current development pipeline. First, we currently anticipate the parking deck that we purchased in early May to generate net operating income of between $1.5 million and $2 million during calendar year 2020. We anticipate the annual stabilized NOI on this parking deck to be between $4.5 million and $5 million going forward. Our current 2020 forecast assumes corporate G&A expenses net of capitalized salaries of between $27 million and $29 million. As we sit here at the end of July at 15% fiscal occupancy, we clearly need to adjust low end of our range in this metric. The total earnings impact of the amendment remains unchanged at $2.1 million. Specifically, instead of recognizing $2 million as a termination fee in 2020 and an additional termination fee of $100,000 in 2021, we will recognize $300,000 as property level NOI in 2020 and $1.8 million as property NOI over the course of the remaining lease term through mid-2025. The positive impact of the parking deck purchase of approximately $1.7 million, if you use the midpoint of our guidance, combined with a reduction in G&A of $1 million equals the negative earnings impact of accounting for the Parsley lease as a modification and the commensurate $1.7 million reduction and the adjusted range in parking revenue of $1 million, again at the midpoint.

We reported FFO of $0.66 a share. First, we currently anticipate the parking deck that we purchased in early May to generate net operating income of between $1.5 million and $2 million during calendar year 2020.

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Overall, Domino's team members and franchisees around the world generated impressive operating results, leading to a diluted earnings per share of $3 for the first quarter. Global retail sales grew 16.7% in Q1 as compared to Q1 2020. When excluding the positive impact of foreign currency, global retail sales grew 14%. Breaking down that global retail sales growth, our US retail sales grew 15.3% and our international retail sales grew 18%. When excluding the positive impact of foreign currency, international retail sales grew 12.8%. During Q1, we continued to lead the broader restaurant industry with 40 straight quarters of positive US comparable sales and 109 consecutive quarters of positive international comps. Same-store sales in the US grew 13.4% in the quarter, lapping a prior year increase of 1.6%. Same-store sales for our international business grew 11.8%, rolling over a prior year increase of 1.5%. Our franchise business was up 13.9% in the quarter, while our Company owned stores were up 6.3%. The 11.8% international comp was driven by ticket growth. We and our franchisees added 36 net stores in the [Technical Issues] US during the first quarter, consisting of 37 store openings and the closure of one of our corporate stores. Our international business added 139 net stores, comprised of 160 store openings and 21 closures. Total revenues for the first quarter were approximately $984 million and were up approximately $111 million or 12.7% over the prior year quarter. Changes in foreign currency exchange rates positively impacted our international royalty revenues by $2.1 million in Q1 2021 as compared to prior year. Our consolidated operating margin as a percent of revenue increased to 39.6% in Q1 2021 from 39% in the prior year, due primarily to higher revenues from our US franchise business. Company-owned store margin as a percent of revenues increased to 23.9% from 22.4%, primarily as a result of strong sales leverage. This was also up sequentially from 21.9% in Q4 2020, driven by lower labor cost as a percent of revenue in Q1 2021. Supply chain operating margin as a percent of revenues decreased to 10.5% from 11.5% in the prior year quarter. G&A expenses increased approximately $2.8 million in Q1 as compared to Q1 2020 resulting from a combination of higher advertising expenses and labor costs, partially offset by travel. Net interest expense increased approximately $0.9 million in the quarter, primarily the result of lower interest income. As previously disclosed, in Q1 2021, we invested an additional $40 million in Dash brands, our master franchisee in China, following their achievement of previously established performance conditions. Accordingly, we remeasured the original $40 million investment we made in Q2 of last year due to the observable change in price from the valuation of the additional investment. This $2.5 million gain was recorded in other income in the first quarter of 2021. Our effective tax rate was 21.3% for the quarter as compared to a negative 3.7% in Q1 2020. The effective tax rate in Q1 2021 includes a 0.6 percentage point positive impact from tax benefits on equity-based compensation as compared to a 26 percentage point positive impact in Q1 2020. Combining all of these elements, our first quarter net income was down $3.8 million or 3.2% versus Q1 2020. On a pre-tax basis, income before provision for income taxes was up $32.3 million or 27.6%. Our diluted earnings per share in Q1 was $3 versus $3.07 in the prior year, a decrease of 2.3%. Breaking down that $0.07 decrease, most notably, our improved operating results benefited us by $0.61. The gain on the Dash brands investment benefited us by $0.05. Net interest expense negatively impacted us by $0.02. A lower diluted share count driven by share repurchases over the trailing 12 months benefited us by $0.03. And finally, our higher effective tax rate resulting from lower tax benefits on equity-based compensation, as I mentioned previously, negatively impacted us by $0.74. During Q1, we generated net cash provided by operating activities of approximately $153 million. After deducting for capex, we generated free cash flow of approximately $136 million. Regarding our capital expenditures, we spent approximately $17 million on CapEx in Q1, primarily on our technology initiatives. As previously disclosed, during Q1, we also repurchased and retired approximately 66,000 shares for $25 million. As a reminder, in February, our Board approved a new $1 billion authorization for future share repurchases. We also paid a $0.94 quarterly dividend on March 30. Subsequent to the end of the quarter, our Board of Directors declared a quarterly dividend of $0.94 per share to be paid on June 30. We're very pleased with our gross issuance of $1.85 billion, which includes $850 million of seven-and-a-half-year to 2.662% fixed-rate notes and $1 billion of 10-year 3.151% fixed-rate notes. This recapitalization will reduce our weighted average borrowing rate from 3.9% as of the end of the first quarter to approximately 3.7%. And it will return our leverage to approximately 6 times EBITDA, consistent with our leverage model following previous recapitalizations. Our US business performed extremely well during the quarter, highlighted by 15.3% retail sales growth and a 13.4% comp. At 15% for the first quarter, we saw a slight sequential improvement of the two-year stack when compared to the fourth quarter of 2020. Now, beyond the comps, when you look at the absolute dollars, our first quarter same-store average weekly unit sales in the US exceeded $26,000. Our addition of 36 net stores was a nice improvement over Q1 of 2020 and we anticipate a strong pipeline of future openings. A single store closure in the quarter, on a base of over 6,000 units, demonstrates the elite economic proposition that we offer to our franchisees. And on that note, I'm thrilled to report yet another record-setting year of franchisee profitability, with our final 2020 estimated average EBITDA number for US franchise stores coming in at just over $177,000; the highest in our history. Our 12.8% retail sales growth was supported by a very strong 11.8% comp, continuing the momentum we saw toward the end of last year. Q1 represented a 13.3% two-year stack, which was a 430 basis point improvement versus the fourth quarter of 2020. Our 139 net stores in Q1 was a 100-store improvement versus the first quarter of 2020. We continue to have temporary store closures around the world, but those have come down dramatically over the last few quarters and were below 100 at the end of the first quarter. And we remain confident in our two-year to three-year outlook of 6% to 8% annual net store growth and 6% to 10% annual global retail sales growth.

Global retail sales grew 16.7% in Q1 as compared to Q1 2020. Same-store sales in the US grew 13.4% in the quarter, lapping a prior year increase of 1.6%. Same-store sales for our international business grew 11.8%, rolling over a prior year increase of 1.5%. The 11.8% international comp was driven by ticket growth. Total revenues for the first quarter were approximately $984 million and were up approximately $111 million or 12.7% over the prior year quarter. Our US business performed extremely well during the quarter, highlighted by 15.3% retail sales growth and a 13.4% comp. Our 12.8% retail sales growth was supported by a very strong 11.8% comp, continuing the momentum we saw toward the end of last year.

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We expect the call to last about 60 minutes. Revenue for the quarter was $1.963 billion. Adjusted EBITDA was $230 million, adjusted earnings per share was $1.30. And backlog at quarter end was $9.2 billion, a sequential increase of nearly $1.4 billion. Our team member count increased year-over-year from 18,000 to 26,500 team members at quarter end and was up sequentially by nearly 6,000 team members. Considering the challenges in the oil and gas industries, we led our path to achieving annual revenue target of $10 billion, with double-digit margins. Our full year guidance that we provided today reflects continued diversification, as we expect our non-Oil and Gas business to grow over 20% in revenue and over 30% in EBITDA in 2021, with significant acceleration in the second half of 2021. Our Communications revenue for the quarter was $630 million and margins improved 290 basis points sequentially. Comcast revenue was also very strong in the quarter, increasing over 30% from last year's second quarter. That growth was offset with expected declines in both our Verizon and AT&T business, which were both down over 25%. Over the last few quarters, we've talked about the opportunities related to the Rural Digital Opportunity Fund or RDOF, which will provide $20 billion of funding over the next 10 years to build and connect gigabit broadband speeds in underserved rural areas and the 5G Fund for Rural America, which will provide up to $9 billion in funding over the next decade to bring 5G wireless broadband connectivity to rural America. Communications segment backlog, increased sequentially by $489 million, and was driven by bookings across all segment end markets, including wireless, fiber deployments and fulfillment work. Revenue was $232 million versus $128 million in last year's second quarter. Revenue was $621 million and margins remained strong. As a reminder, last year, we forecasted a long-term recurring revenue target of $1.5 billion to $2 billion a year, assuming a continued depressed oil and gas market. Revenue was $482 million for the second quarter. Segment backlog at quarter end was at record levels, with a sequential increase of $320 million and a year-to-date increase of $680 million. In summary, we had strong second quarter results with revenue of approximately $1.96 billion, a 25% increase over last year; adjusted EBITDA of approximately $230 million; and adjusted EBITDA margin rate at 11.7% of revenue. This represented a 39% increase in adjusted EBITDA dollars and a 120 basis point increase in adjusted EBITDA margin rate over last year's second quarter. Second quarter backlog of $9.2 billion represented an all-time record high for MasTec. Importantly, our non-oil and gas segment backlog sequentially increased $1.6 billion with record second quarter backlog in Communications, Clean Energy and infrastructure, and Electrical Transmission. Our continued focus on working capital management during 2021 has allowed us to easily fund organic working capital needs, while investing approximately $600 million in strategic acquisitions. As of the end of our second quarter, we maintained a strong balance sheet and capital structure with liquidity approximating $1.2 billion and comfortable leverage metrics. Second quarter Communications segment operations performed generally in line with our expectations with revenue of $630 million inclusive of expected temporary lower levels of wireless project activity prior to the upcoming construction ramp-up for C-band spectrum awards. Second quarter Communications segment adjusted EBITDA margin rate was 11.5% of revenue a 290-basis-point improvement sequentially. Our annual 2021 Communications segment expectation is that revenue will approximate $2.6 billion to $2.7 billion with annual 2021 adjusted EBITDA margin rate improving 90 to 110 basis points over 2020 levels. Regarding some color on expectations during the second half of 2021, we expect third quarter year-over-year revenue growth in the mid to high single-digit range with fourth quarter year-over-year revenue growth accelerating in the mid to high 20% range. Second quarter Clean Energy and Infrastructure segment or Clean Energy, revenue was $482 million. Adjusted EBITDA was approximately $16 million or 3.2% of revenue. During the second quarter, we estimate the combination of start-up delays and project inefficiencies inclusive of weather, negatively impacted second quarter segment operating margins by 350 basis points to 400 basis points. As we look forward, we expect improved performance during the second half of 2021 with second half revenue approximating $1.2 billion, slightly over a 40% increase, compared to first half 2021 levels with adjusted EBITDA margins in the range of 7% to 8% of revenue. And the benefit of exiting two underperforming projects which are approximately 75% complete as of the end of the second quarter. We are very excited, that Clean Energy's second quarter backlog reached a new all-time record of $1.7 billion. Our annual 2021 Clean Energy segment expectation is that revenue range between $2 billion to $2.1 billion with annual 2021 adjusted EBITDA margin rate improvement in the 20 basis point to 70 basis point range over the prior year. Second quarter Oil and Gas segment revenue was $621 million and adjusted EBITDA was $138 million, generally in line with our expectation. We currently expect annual 2021 Oil and Gas segment revenue will range between $2.4 billion to $2.5 billion with the continued expectation, that annual 2021 adjusted EBITDA margin rate for this segment will be in the high-teens range. Second quarter Electrical Transmission segment revenue was $233 million and adjusted EBITDA margin rate was 4% of revenue. Second quarter backlog was $1.3 billion, an approximate $800 million sequential increase. We completed the acquisition of INTREN, which focuses primarily on electrical distribution mid-quarter and this added approximately $100 million of revenue to this segment during the quarter, as well as most of the segment's sequential backlog growth. In summary, INTREN's operations performed well, and as expected, during the partial quarter period, while our legacy Electrical Transmission operations were impacted by weather-related project inefficiencies and increased closeout costs on two projects which are over 90% complete, as of the end of the second quarter. These two projects negatively impacted second quarter Electrical Transmission segment operating results by approximately $8.5 million and 370 basis points. Looking forward to the balance of 2021, we expect annual 2021 revenue for the Electrical Transmission segment to approximate $950 million to $1 billion and annual 2021 adjusted EBITDA margin rate to approximate 6.5% of revenue. Relative to the remainder of 2021 expectations, inclusive of INTREN, we anticipate that second half 2021 revenue levels will range in the low $600 million range a year-over-year increase of approximately $350 million. Second half 2021 adjusted EBITDA margin rate for this segment is expected to approximate 8% of revenue, due to the combination of improved legacy operations as we exit two underperforming projects and the benefit of higher-margin INTREN MSA operations. Now I will discuss a summary of our top 10 largest customers for the second quarter period, as a percentage of revenue. Enbridge and AT&T were both 12% of revenue. AT&T revenue derived from wireless and wireline fiber services totaled approximately 9% and install-to-the-home services, was approximately 3%. On a combined basis these three separate service offerings, totaled approximately 12% of our total revenue. NextEra was 8% of revenue comprising services across multiple segments including Clean Energy, Communications and Electrical Transmission. Equitrans Midstream and Comcast were each 5% of revenue. T-Mobile, Duke Energy and Energy Transfer were each 3% of revenue and Midstream and Elite were each 2%. Individual construction projects comprised 68% of our second quarter revenue with master service agreements comprising 32%. At June 30, 2021, we had a record total backlog of approximately $9.2 billion, up about $1 billion from second quarter last year and up $1.3 billion sequentially from last quarter. During the second quarter, we easily funded working capital associated with over $120 million in organic revenue growth, as well as approximately $500 million in acquisition activity. We ended the quarter with $1.2 billion in liquidity and net debt defined as total debt less cash and cash equivalents at $1.3 billion, which equates to a very comfortable 1.4 times leverage metric. Our year-to-date 2021 cash provided by operating activities was $345 million, $118 million lower than in the first half of 2020. This performance is impressive as our first half 2021 cash flow includes working capital funding requirements associated with approximately $750 million in higher revenue levels when compared to last year and thus this performance was possible due to our strong working capital management. We ended the second quarter of 2021 with DSOs at 80 compared to 86 days at year-end 2020 and 90 days for the second quarter last year. Assuming no second half 2021 acquisition,activity net debt at year-end is expected to approximate $1.1 billion leaving us with ample liquidity and expected book leverage slightly over one time adjusted EBITDA. We project annual 2021 revenue of $8.1 billion with adjusted EBITDA of $930 million, or 11.5% of revenue and adjusted diluted earnings of $5.45 per share. Our current view represents a slight decrease in the annual 2021 revenue expectation, primarily due to some project activity slippage to 2022 in communications and clean energy, while reaffirming the annual adjusted EBITDA view of $930 million, and increasing our adjusted diluted earnings per share by $0.05 to $5.45 per share. We anticipate net cash capex spending in 2021 at approximately $120 million with an additional $160 million to $180 million to be incurred under finance leases. We expect annual 2021 interest expense levels to approximate $56 million with this level including approximately $600 million in acquisitions funding activity during the first half of 2021. For modeling purposes, our estimate for 2021 share count continues at 74 million shares. We expect annual 2021 depreciation expense to approximate 4.2% of revenue inclusive of first half 2021 acquisition activity. Given these trends, we anticipate that next year annual 2022 depreciation expense as a percentage of revenue will decrease when compared to 2021 levels and approximate 3.5% of revenue. We expect annual 2021 corporate segment adjusted EBITDA to be a net cost of approximately 1% of overall revenue. And lastly, we expect that annual 2021 adjusted income tax rate will range between 24% to 25% with the expectation that the third quarter tax rate may be slightly lower than the annual rate. Our third quarter revenue expectation is $2.3 billion with adjusted EBITDA of $267 million or 11.6% of revenue and earnings guidance at $1.71 per adjusted diluted share.

We project annual 2021 revenue of $8.1 billion with adjusted EBITDA of $930 million, or 11.5% of revenue and adjusted diluted earnings of $5.45 per share. Our current view represents a slight decrease in the annual 2021 revenue expectation, primarily due to some project activity slippage to 2022 in communications and clean energy, while reaffirming the annual adjusted EBITDA view of $930 million, and increasing our adjusted diluted earnings per share by $0.05 to $5.45 per share. Our third quarter revenue expectation is $2.3 billion with adjusted EBITDA of $267 million or 11.6% of revenue and earnings guidance at $1.71 per adjusted diluted share.

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The collective efforts of our folks generated consolidated sales of $227 million for the third quarter, split almost equally between our Metal Coatings and Infrastructure Solutions segments. We had sequential improvement in operating performance, and we have returned over $44 million of capital to shareholders in the form of cash dividends and share repurchases through the third quarter of this year. While sales were down 22% from Q3 of last year, our realignment activities and operational performance generated net income of $19.7 million, down about 10% from the same period of the prior year. This resulted in earnings per share of $0.76 per diluted share, or $0.80 on an adjusted basis. Hot-dip galvanizing sales were down 8.8% from the same quarter last year, while Surface Technologies was down more due to the nature of their customer base being more impacted by COVID. Our actions during the quarter included recording a loss on the sale of SMS of $1.9 million and initiating a comprehensive Board-led review of our businesses with the assistance of leading independent financial, legal and tax advisors. Finally, given the share repurchases currently and attractive use of our capital, we repurchased over 652,000 shares in the quarter, which brings our total for the year to over 850,000 shares. While our Metal Coatings segment had lower sales in the third quarter of the prior year, they were able to generate higher operating income and improved operating margins to 24.8%. Our Infrastructure Solutions segment's third quarter fiscal 2021 sales decreased by 31.5% to $111 million. This resulted in operating income of $8.7 million as compared to $17.4 million in Q3 a year ago. For the third quarter of fiscal year 2021, we reported sales, as Tom had noted, of $226.6 million, a $64.5 million decrease or 22.2% lower than the third quarter of the prior year. Net income for the third quarter of fiscal '21 was $19.7 million, a decrease of $2.3 million or 10.6% below the prior year third quarter. Diluted earnings per share of $0.76 per share declined 9.5% compared to the $0.84 per share in the prior year third quarter. Despite the lower sales, third quarter fiscal 2021 gross margin improved 100 basis points to 24.1% on a year-over-year basis and was driven by continued strong margin performance within the Metal Coatings segment. Operating margins of 12.3% of sales increased 80 basis points compared to 11.5% of sales in the prior year. Operating income for the third quarter of fiscal 2021 decreased 16.6% to $27.9 million from $33.4 million in the prior year third quarter. Third quarter EBITDA of $39.6 million decreased 15.4%, compared to $46.8 million in EBITDA in last year's third quarter. As for the year-to-date results, through the third quarter of fiscal '21, we reported year-to-date sales of $643.3 million, 21.2% below the $816.5 million in sales in the same period last year. Year-to-date net income for the third quarter was $23.5 million, a decrease of $35.4 million or 60.2% from the same period last year. Year-to-date net income, as adjusted for the restructuring and impairment charges primarily incurred earlier in the year was $39 million, which was $19.9 million or 33.8% lower than the comparable prior year results. Year-to-date reported diluted earnings per share declined 59.8% to $0.90 a share as compared to $2.24 per share for the same period last year, primarily driven by restructuring and impairment charges, as well as softer markets and travel restrictions resulting from the pandemic, mostly in our Infrastructure Solutions segment. On an adjusted basis, year-to-date 2021 diluted earnings per share was $1.49 per share, a reduction of 33.5% from the prior year. Our fiscal year 2021 year-to-date gross margin of 22.2% declined 60 basis points from a gross margin of 22.8% from the prior year. Year-to-date reported operating profit of $42.8 million was $43.8 million or 50.5% lower than the $86.6 million reported for the same period last year. Year-to-date reported operating margin of 6.7% decreased 390 basis points compared to 10.6% last year. On a year-to-date basis, excluding the impact of the $20.3 million of restructuring and impairment charges, operating margins were 9.8% or 80 basis points below prior year. On a year-to-date basis, our net cash provided by operating activities of $59.4 million declined $12.7 million or 17.6% from the comparable period in the prior year, primarily the impact of lower year-to-date net income. During the third quarter of fiscal 2021, as Tom had noted, we repurchased 652,000 shares of our common stock at an average price of $37.66. On a year-to-date basis, we have repurchased 852,000 million [phonetic] shares at an average price of $36.31 per share. Investments in capital equipment to support our business were $8.6 million for the third quarter and $27.9 million on a year-to-date basis, which are in line with our expectations of spending roughly $35 million for the year. As of the end of our third quarter of fiscal '21, our existing debt of $182 million is down $20.9 million from the end of the year, as we continue to effectively manage our balance sheet. The Acme Galvanizing team is being quickly integrated into our existing operating network, bringing our total hot-dip galvanizing locations to a market-leading 40 sites in North America, in spite of recently closing two Gulf Coast locations. Post-COVID crisis, we remain committed to our growth strategy around Metal Coatings and achieving 21% to 23% operating margins, including an increased contribution from Surface Technologies. We believe galvanizing would tend to run to the high end, if not above the 23%, while Surface Technologies is going to have to rebuild this margin profile as customer demand grows.

This resulted in earnings per share of $0.76 per diluted share, or $0.80 on an adjusted basis. For the third quarter of fiscal year 2021, we reported sales, as Tom had noted, of $226.6 million, a $64.5 million decrease or 22.2% lower than the third quarter of the prior year. Diluted earnings per share of $0.76 per share declined 9.5% compared to the $0.84 per share in the prior year third quarter. Despite the lower sales, third quarter fiscal 2021 gross margin improved 100 basis points to 24.1% on a year-over-year basis and was driven by continued strong margin performance within the Metal Coatings segment.

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On the earnings front, the team delivered $0.69 per share in FFO. We leased over 484,000 square feet with a 12.9% increase in second-generation cash rents. Same property NOI on a cash basis increased 7.1%. And our net debt-to-EBITDA at quarter end was 4.55 times. And G&A expenses as a percentage of total assets were at just 0.36%. Importantly, we are seeing activity in our higher profile vacancies, including 1200 Peachtree and 3350 Peachtree as well as in our development projects like Domain 9, 10000 Avalon and 100 Mill. Through our relationships, we sourced an off-market transaction that includes the recapitalization of Neuhoff, an exciting development project in Nashville and the acquisition of 725 Ponce in Atlanta. Construction has already commenced on Phase one of the project which will consist of approximately 388,000 square feet of office space, 542 multifamily units and 60,000 square feet of experiential retail. Cousins investment of $275 million represents a 50% ownership interest and includes a Phase II office site that can accommodate 275,000 square feet of additional space as well as rights to future adjacent land parcels. We also acquired 725 Ponce, a 372,000 square foot office asset in East Midtown Atlanta for $300.2 million. 725 Ponce is currently 100% leased to customers, including BlackRock, McKinsey & Company and Chipotle. Cousins also acquired a 50% ownership interest in adjacent land site for an additional $4 million that can accommodate 150,000 to 200,000 square feet of additional development. We also announced that we sold One South at the Plaza, a 891,000 square foot, 58% leased office property in Charlotte for a gross sale price of $271.5 million. In summary, through these creative transactions, we have entered Nashville, an exciting new market for Cousins; acquired 725 Ponce, one of the best buildings in Atlanta with an additional pad for future development; and funded these transactions, in part through the sale of an older vintage property. For now, physical customer utilization in our portfolio sits around 30%. Our total office portfolio lease percentage and weighted average occupancy both came in at 89.4% this quarter. Our leased percentage declined 80 basis points this quarter which was mainly attributable to the previously known move-out of Anthem at 3350 Peachtree in Atlanta. As a reminder, Norfolk Southern will vacate 370,000 square feet at 1200 Peachtree at the end of December, representing a fantastic value-creation opportunity going forward. And looking forward to 2022, I would note that we have only 6.5% of our annual contractual rent expiring with no expirations greater than 100,000 square feet. As for leasing activity, we executed a solid 39 leases, totaling 484,000 square feet this quarter, surpassing our level of reported activity in the first quarter of 2020. Leasing mix was much improved with new and expansion leases accounting for 74% of total activity. Recall that new and expansion leasing combined hit a pandemic low of just 14% of activity two quarters ago. Net effective rents were $23.77 this quarter, an improvement over the first quarter and only $0.05 lower than our reported net effective rents for the full year of 2019. Rent growth remained remarkably strong as well, with second-generation net rents increasing 12.9% on a cash basis. And finally, our average lease term bounced back to 6.7 years on average. In our Austin portfolio, second quarter tour activity was up 53% versus the first quarter. While not specific to our portfolio, CBRE also recently noted that in Phoenix, June 2021 tour volume was 240% greater than the average monthly volume in 2019. Of CBRE's 2021 development opportunity watchlist, eight out of the 10 biggest development opportunities are located in the Sun Belt region. Among the metropolitan areas with populations larger than 750,000 people, large Sun Belt cities led the way in terms of nominal population growth last year. Austin's population increased by more than 67,000 new residents over the past year, second to Atlanta. For JLL, overall leasing activity in Austin has increased every quarter since the pandemic began with this quarter's activity reaching 80% of pre-pandemic levels. Further, according to Morgan Stanley, Austin was the only market to have a consecutive quarter improvement in sublease listings posting a decrease of 18%. JLL estimated the quarterly decline was even greater at 29%. In fact, JLL's second quarter office submarket reports for Buckhead stated that overall leasing activity was up 200% year-over-year. Cousins bucket portfolio opportunity -- excuse me, Cousins Buckhead portfolio participated in this demand, signing 65,000 square feet of expansions with high-quality, publicly traded technology companies this past quarter alone. For example, per CBRE 74% of new leasing activity in Phoenix this year has been in Class A projects. By comparison, over the past five years, this percentage hovered under 50%. At $0.69 per share, FFO was up almost 5% compared to last year, and the important operating metrics that we all focus on were very strong. And same property NOI on a cash basis increased 7.1% over last year. Numbers were driven by improving revenue, which increased 6.6% on a cash basis. After bottoming during the fourth quarter of 2020, same-property parking revenues are up 14%, but they still remain 23% below pre-COVID levels. One asset, 120 West Trinity, a mixed-use property in the Takeda submarket of Atlanta that we developed in a 20/80 joint venture was moved off our development pipeline schedule and into our portfolio statistics, while another asset, Domain 9, an office property in the Domain submarket of Austin, commenced development during the second quarter and was added to our schedule. The current development pipeline represents a total Cousins investment of $492 million across 1.3 million square feet in four assets. Our remaining funding commitment for this pipeline is approximately $210 million, which is more than covered by our existing liquidity and future retained earnings. Domain nine represent over $1.1 billion in transaction activity year-to-date. In addition, our joint venture partner at Dimensional Place in Charlotte has exercised their option to purchase our 50% interest in the property with the closing expected at the end of the third quarter. As this series of transactions unfold, we intend to maintain our net debt to EBITDA around 4.5 -- excuse me, 4.5 times as we have done with very few exceptions since 2014. In addition, it's a small transaction, but we do want to call your attention to the sale of the land parcel adjacent to our 100 Mill development in Tempe, subsequent to quarter end. The site was sold for $6.4 million earlier in July and will be developed into a Hyatt branded hotel. This new hotel will be an important amenity for our 100 Mill customers as well as the customers and the other five buildings we own within two blocks of that site. On the capital markets front, we closed on a $350 million unsecured term loan during the second quarter, replacing a $250 million term loan that was scheduled to mature later this year. The new loan matures in 2024 and the applicable LIBOR spread was reduced by 15 basis points. We currently anticipate full year 2021 FFO between $2.70 and $2.78 per share. This is up $0.01 at the midpoint from our previous guidance.

On the earnings front, the team delivered $0.69 per share in FFO. At $0.69 per share, FFO was up almost 5% compared to last year, and the important operating metrics that we all focus on were very strong. We currently anticipate full year 2021 FFO between $2.70 and $2.78 per share.

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In Q3, we reported earnings of $1.27 per share versus $0.27 in the prior year quarter. We incurred pre-tax restructuring and impairment charges of $28 million or $0.16 per share in Q3 primarily related to the exit of our unprofitable oil and gas business, which we divested at the end of January. This compares to charges of $0.48 per share in the prior year quarter. We recognized a net pre-tax benefit of $4 million or $0.07 per share on our investment in Nikola Corporation during the quarter. This benefit was primarily due to a selling our remaining shares of Nikola for $147 million. In total, we realized cumulative pre-tax cash proceeds of $634 million from our investment in Nikola and contributed $20 million in shares to the Worthington Industries Foundation establishing a charitable endowments supporting worthwhile community costs. The prior year quarter included $0.11 per share benefit related to a gain on the consolidation of our Worthington Samuel Coil Processing JV combined with the lowering of the reserve associated with a tank replacement program within Pressure Cylinders. Excluding these items, we generated a record $1.36 per share in earnings in Q3 compared to $0.64 in Q3 a year ago. Consolidated net sales in the quarter of $759 million were relatively flat compared to $764 million in the prior year quarter. Our reported gross profit for the quarter increased by $49 million from Q3 last year to $164 million and our gross margin increased to 21.6% from 15.1% as we had inventory holding gains this quarter and losses in the prior year quarter. Adjusted EBITDA was $126 million up from $79 million in the prior year quarter and our trailing 12 month adjusted EBITDA is now $364 million. Our adjusted EBITDA through the nine months ended February is $297 million. In Steel Processing, net sales of $504 million were up 3% from Q3 of 2020 due to higher average selling prices, which were partially offset by lower total volumes. Our total ship tons were down 11% from last year's third quarter driven by a decrease in total tons caused by furnace and mill outages. Direct tons made up 48% mix compared to 44% in the prior year quarter. Steel generated record operating income of $63 million in the quarter, which is up $44 million from $19 million in Q3 last year. Operating margins increased significantly from 3.9% to 12.5%. The large year-over-year increase was primarily driven by increased direct spreads, which benefited from inventory holding gains estimated at $31 million or $0.44 per share in the quarter compared to losses of $6 million or $0.08 per share in Q3 of last year. In our Pressure Cylinders business, net sales were $255 million down 6% from the prior year quarter, primarily due to lower sales in our recently divested oil and gas business, where sales declined year-over-year by $24 million. Cylinders operating income excluding impairment and restructuring charges and the benefit we had last year from the reserve adjustment I mentioned earlier was $13 million up $1million from the prior year quarter, while operating margins increased to 5% from 4.4%. Collectively, these headwinds totaled roughly $4 million. These investments include the expansion of our composite cylinder facility in Poland and the construction of a new Type 3 and Type 4 hydrogen cylinder production facility in Austria. With respect to our JVs, equity income during the current quarter was $32 million compared to $25 million last year. During the quarter, we received $18 million in dividends from our unconsolidated JVs. Cash flow from operations was $9 million in the quarter and $234 million for the first nine months of our fiscal year with free cash flow totaling $169 million in the same period. Free cash flow for the quarter was actually negative by $7 million due primarily to increase in steel prices that caused our working capital levels to increase by $71 million. During the quarter, we generated $147 million in pre-tax proceeds from the sale of Nikola stock. We completed two acquisitions totaling $130 million, invested $16 million on capital projects, paid $13 million in dividends and spent $52 million to repurchase $1 million of our common stock on the shares of our common stock at an average price of $52.37. On the debt at quarter end of $709 million was relatively flat sequentially and interest expense of $8 million was in line with the prior year quarter. And in Q3, with $650 million in cash and are well positioned to continue our balanced approach to capital allocation that focused on growth and rewarding shareholders. Earlier today, the Board increased the authorization on our stock repurchase program to an aggregate of $10 million shares and declared a dividend of $0.28 per share for the quarter, a 12% increase over last quarter, which is payable in June of 2021. That approach led us to raise our quarterly dividend by 12% today, a reflection of our strong financial position and performance, further rewarding our shareholders.

In Q3, we reported earnings of $1.27 per share versus $0.27 in the prior year quarter. We completed two acquisitions totaling $130 million, invested $16 million on capital projects, paid $13 million in dividends and spent $52 million to repurchase $1 million of our common stock on the shares of our common stock at an average price of $52.37.

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In the fourth quarter, we closed on the transformative acquisitions of Larry H. Miller and Total Care Auto, powered by Landcar, Kahlo Chrysler Jeep Dodge, Arapahoe Hyundai-Genesis and the Stevinson Automotive Group, representing approximately $6.6 billion in annualized revenue. For the full year, we grew adjusted EBITDA by 94% and adjusted earnings per share by 112%. We delivered an operating margin adjusted at 8.1%. Our adjusted operating cash flow for 2021 was $632 million, an increase of $189 million over 2020. Our net leverage ended this quarter at 2.7 times. Our same-store adjusted revenue grew almost 12% last year, exceeding expectations. Clicklane continues to deliver impressive metrics, generating over $570 million in additional revenue for three quarters in 2021. Despite lower new vehicle levels, inventory levels, Clicklane contributed an incremental 7% to our same-store growth. We delivered strong results, enabling us to deliver an impressive gross margin of 20.4%, an all-time record and an expansion of 370 basis points versus the fourth quarter last year. Our teams continue to maximize productivity per employee, resulting in adjusted SG&A as a percentage of gross profit of 54.3%, a 710 basis point improvement versus prior year. Our total revenue for the quarter was up 19% year over year and total gross profit was up 46%. We improved our adjusted operating margins for the quarter from 6% in 2020 to 8.9% in 2021, and we'll continue to optimize our portfolio in the future. Our new average gross profit per vehicle was $6,335, up $3,441 or 119% from the prior-year period. At the end of December, our total new vehicle inventory was $207 million and our day supply was at eight days, down 32 days from the prior year. Our used retail volume increased 15%, while gross margin was 8.2%, representing an average gross profit per vehicle of $2,623. As a result of our performance, our retail gross profit was up 64%. Our total used vehicle inventory ended the quarter at $402 million, which represents a 34-day supply, up three days from the prior year. Our used to new ratio for the quarter was 109%. Our strong, consistent and sustainable growth in F&I delivered an increase of $213 to $1,961 per vehicle retailed from the prior-year quarter. In the fourth quarter, our front-end yield per vehicle increased $2,169 per vehicle to an all-time record of $6,362. Our parts and service revenue increased 13% in the quarter. The warranty revenue dropped 19%. Our customer pay revenue continues its healthy recovery, posting a 17% growth. We achieved over 149,000 online service appointments, an all-time record and a 16% increase over the prior-year quarter. We sold over 5,000 vehicles through Clicklane in Q4, of which 47% of them were new vehicles and 53% used. 91% of our transactions this quarter were with customers that were new to Asbury's dealership network. Average transaction time continues to be consistent with previous quarter, eight minutes for cash deals and 14 minutes for finance deals. Total variable front-end yield of $4,298 and F&I front-end yield of $1,846. 80% of consumers seeking financing received instant approval, while an additional 10% require some off-line assistance. 90% of those that applied were approved for financing. 43% of Clicklane sales had trade-ins with 78% of such trades reconditioned in retail to consumers with a total front-end yield of $4,490. And 92% of our Clicklane deliveries are within a 50-mile radius of our stores, thus allowing us the opportunity to retain our new customers in our parts and service departments. During our first few months after launching Clicklane, approximately 60% of our sales were new vehicles. Overall, compared to the fourth quarter of last year, our actions to manage gross profit and control expenses resulted in a fourth quarter adjusted operating margin of 8.9%, an increase of 290 basis points above the same period last year and an all-time record. Adjusted net income increased 89% to $163 million, and adjusted earnings per share increased 68% to $7.46. Net income for the fourth quarter of 2021 was adjusted for acquisition expenses and acquisition-related financing expenses of $289 million or $1.02 per diluted share. Net income for the fourth quarter of 2020 was adjusted for a gain on dealership divestiture of $3.9 million or $0.15 per diluted share. If the financing had closed simultaneously with the Larry H. Miller acquisition, our adjusted earnings per share for the fourth quarter would have been positively impacted by $0.87 as a result of lower interest expense and fewer outstanding shares. Adjusted operating margin was 8.1%, an increase of 240 basis points at an all-time record. Adjusted net income increased 120% to $549 million and adjusted earnings per share increased 112% to $27.29. Our effective tax rate was 23.7% for 2021 compared to 24.8% in 2020. This quarter, we acquired $6.6 billion in annualized revenue. In order to finance the acquisitions, we completed debt and equity offerings totaling approximately $2.1 billion, a syndicated mortgage facility of approximately $700 million and borrowed under our upsized syndicated credit facility. In addition, we spent approximately $34 million of capital expenditures in the quarter. We generated $632 million of adjusted operating cash flow for the year. Our balance sheet remains healthy as we ended the quarter with approximately $437 million of liquidity, comprised of cash, excluding cash to Total Care Auto, floorplan offset accounts and availability on both our used line and revolving credit facility. Also at the end of the quarter, our net leverage ratio stood at 2.7 times, below our targeted net leverage of three times. As David stated earlier, today, we announced that our board has approved an increase to our share repurchase authorization by $100 million to $200 million. For 2022, we are planning for a tax rate of approximately 25% to 26% and capex of approximately $150 million. As a result, we are planning our business for a SAAR of 15.5 million to 16 million units and vehicle margins consistent with 2021.

Our total revenue for the quarter was up 19% year over year and total gross profit was up 46%. We sold over 5,000 vehicles through Clicklane in Q4, of which 47% of them were new vehicles and 53% used. Adjusted net income increased 89% to $163 million, and adjusted earnings per share increased 68% to $7.46. As David stated earlier, today, we announced that our board has approved an increase to our share repurchase authorization by $100 million to $200 million.

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Since the inception of MSC over 80 years ago and through our last 25 years as a public company, our mission has stayed the same: to be the best industrial distributor in the world as measured by our four stakeholders. And as a reminder, those goals are reaching 400 basis points of market share capture by the end of fiscal 2023 and returning return on invested capital into the high teens by improving our operating expense-to-sales ratio, inclusive of a $90 million to $100 million gross cost takeout target. We eliminated 110 positions, and we're adding 135 positions that are customer-facing and that will drive growth. Second, while we all face supply chain disruptions and shortages, MSC's broad and deep product assortment, our multiple brand choices including exclusive brands, and our next-day delivery capabilities position us very well against the 70% of the market, made up of local and regional distributors. We also expect a continued stream of structural cost work that is moving us toward the higher end of our $90 million to $100 million cost takeout range. Before getting into the details, I'll start by addressing the obvious issue in our second quarter that impacted results, which is the inventory writedown on PPE of roughly $30 million. Overall sales were down 1.5% for the quarter. Recall that a 200 basis point spread was our target for our fiscal fourth quarter. Safety and janitorial, on the other hand, were down roughly 20% against last year's PPE surge. Due to the PPE writedown, our GAAP gross margin was 38.1%. But excluding that writedown, adjusted gross margin was 42%, down just 10 basis points versus the prior year and up 10 basis points sequentially from the first quarter. Our second-quarter sales were $774 million, or $12.7 million, on an average daily sales basis, both a decline of 1.5% versus the same quarter last year. Our second-quarter gross margin was 38.1%, a decline of 400 basis points compared to the second quarter of last year. As Erik mentioned, this was primarily the direct result of the roughly $30 million PPE writedown we recorded during the quarter, which was primarily related to masks. Excluding this writedown, our second-quarter gross margin was 42%, a 10 basis point decline from the prior year and a 10 basis point increase sequentially from our first quarter. Operating expenses in the second quarter were $245.1 million, or 31.7% of sales, versus $251.4 million, or 32% of sales in the prior year. This includes about $700,000 of legal costs associated with the nitrile glove prepayments we impaired in the first quarter. Excluding these costs, operating expenses as a percent of sales was 31.6%, a 40 basis point improvement from the prior year in which there were no operating expense adjustments. We incurred approximately $21.6 million of restructuring costs, primarily related to the move to virtual customer care hubs and a review of our operating model, both related to Mission Critical. In Q2 of last year, we incurred $1.9 million of restructuring charges, and that was primarily related to consulting costs. All of that led to operating margin on a GAAP basis of 3.6%, but that was significantly influenced by the PPE writedown and the restructuring charges related to the virtual customer care hubs. Excluding this writedown, as well as the restructuring and other related costs, our adjusted operating margin was 10.4%, up 30 basis points from the prior year due to our progress on Mission Critical and despite lower sales. GAAP earnings per share were $0.32. Adjusted for the inventory writedown, as well as restructuring, and other charges, adjusted earnings per share were $1.03. Our free cash flow was $4 million for the second quarter as compared to $58 million in the prior year. As of the end of fiscal Q2, we were carrying $533 million of inventory, up $12 million from last quarter. This is net of the $30 million inventory writedown during the quarter. We now expect capex for the fiscal year of approximately $50 million to $60 million. We still expect our cash flow conversion or operating cash flow divided by net income to be above 100% for fiscal '21. As we mentioned on our last call, we increased our debt to fund the $195 million special dividend paid in December. Our total debt as of the end of the second quarter was $684 million, comprised primarily of a $115 million balance on our revolving credit facility, about $200 million on our uncommitted facilities, $20 million of short-term fixed rate borrowings, and $345 million of long-term fixed rate borrowings. Cash and cash equivalents were $20 million, resulting in net debt of $664 million at the end of the quarter. On Slide 8, you can see our original program goals of $90 million to $100 million of cost takeout through fiscal '23, and that's versus fiscal '19. On our last call, we shared that we had taken out $8 million of gross savings and invested roughly $2 million to $3 million in the first quarter. During our fiscal second quarter, we achieved additional gross savings of $9 million, bringing our cumulative savings for fiscal '21 to $17 million against our goal of $25 million by the end of this year. We also invested roughly $5 million in Q2, bringing our total investments to $7 million to $8 million, which compares to our full-year target of $15 million. The most significant initiative during the quarter was, of course, our move to virtual customer care hubs, including the closure of 73 sales branches. The gross savings related to that move are expected to be between $7 million and $9 million in fiscal 2021 and reach an annualized level of approximately $15 million to $18 million starting in fiscal 2022.

Our second-quarter sales were $774 million, or $12.7 million, on an average daily sales basis, both a decline of 1.5% versus the same quarter last year. GAAP earnings per share were $0.32. Adjusted for the inventory writedown, as well as restructuring, and other charges, adjusted earnings per share were $1.03.

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Vishay reported revenues for Q3 of $814 million. EPS was $0.67 for the quarter. Adjusted earnings per share was $0.63 for the quarter. Revenues in the quarter were $814 million, down by 0.7% from previous quarter and up by 27.1% compared to prior year. Gross margin was 27.7%. Operating margin was 15.2%. EPS was $0.67, adjusted earnings per share was $0.63. EBITDA was $162 million or 19.9%. Reconciling versus prior quarter, operating income quarter three 2021 compared to operating income for prior quarter based on $5 million lower sales or flat sales, excluding exchange rate impacts, operating income decreased by $2 million to $124 million in Q3 2021 from $125 million in Q2 2021. The main elements were: Average selling prices had a positive impact of $10 million, representing a 1.3% ASP increase; volume decreased with a negative impact of $4 million, equivalent to a 1.3% decrease in volume. Variable costs increased with a negative impact of $12 million, primarily due to increases in metal prices as well as materials and services and not completely offset by cost reductions. Fixed costs decreased with a positive impact of $4 million, in line with our guidance. Reconciling versus prior year, operating income quarter three 2021 compared to adjusted operating income in quarter three 2020, based on $174 million higher sales, or $172 million excluding exchange rate impacts, adjusted operating income increased by $62 million to $124 million in Q3 2021, from $61 million in Q3 2020. The main elements were: Average selling prices had a positive impact of $18 million, representing a 2.2% ASP increase; volume increased with a positive impact of $70 million, representing a 23.2% increase. Variable costs increased with a negative impact of $8 million. Fixed cost increased with a negative impact of $17 million, primarily due to annual wage increases and higher incentive compensation costs, only partially offset by our restructuring programs. Inventory impacts had a positive impact of $9 million. Exchange rates had a negative effect of $9 million. Selling, general and administrative expenses for the quarter were $102 million, in line with our guidance, excluding exchange rate impacts. For quarter four 2021, our expectations are approximately $104 million of SG&A expenses at current exchange rates. We had total liquidity of $1.7 billion at quarter end. Cash and short-term investments comprised $916 million, and there are no amounts outstanding on our $750 million credit facility. Total shares outstanding at quarter end were 145 million. The expected share count for earnings per share purposes for the fourth quarter 2021 is approximately 145.6 million. Our U.S. GAAP tax rate year-to-date was approximately 18%, which mathematically yields a rate of 17% for quarter three. In quarter three, we recorded a tax benefit of $5.7 million due to the reversal of deferred tax valuation allowances in certain jurisdictions. We also recorded benefits of $8.3 million year-to-date due to changes in tax regulations. Our normalized effective tax rate, which excludes the unusual tax items, was approximately 22% for the quarter, and 23% for the year-to-date period. We expect our normalized effective tax rate for full year 2021 to be between 22% and 24%. Cash from operations for the quarter was $136 million. Capital expenditures for the quarter were $57 million. Free cash for the quarter was $79 million. For the trailing 12 months, cash from operations was $436 million, capital expenditures were $171 million, split approximately for expansion, $113 million; for cost reduction, $9 million; for maintenance of business, $49 million. Free cash generation for the trailing 12-month period was $267 million. The trailing 12-month period includes $15 million cash taxes paid for the 2021 installment of the U.S. tax reform transition tax. Vishay has consistently generated in excess of $100 million cash flows from operations in each of the past 26 years and greater than $200 million for the past 19 years. Backlog at the end of quarter three was at $2.244 billion or 8.3 months of sales. Inventories increased quarter-over-quarter by $30 million excluding exchange rate impacts. Days of inventory outstanding were 81 days. Days of sales outstanding for the quarter were 43 days. Days of payables outstanding for the quarter were 35 days, resulting in a cash conversion cycle of 89 days. We had a gross margin of 27.7% of sales and operating margin of 15.2% of sales. Earnings per share were $0.67 and adjusted earnings per share, $0.63. Vishay in the third quarter generated $79 million of free cash, and we do expect another good year of cash generation. POS in the third quarter continued on a record level of the second quarter, running 34% over prior year. POS increased versus Q2 by 5% in the Americas and by 3% in Europe. Asia was slightly down by 2%. Inventory turns of global distribution in quarter three turns was at 4.2 turns, started to normalize from quite extreme 4.4 turns in the second quarter. In the Americas, 2.2 turns after 2.1 turns in the second quarter and 1.5 turns in prior year. In Asia, 6.1 turns after 7.4 turns in Q2 and 4.3 turns in prior year. And in Europe, 4.5 turns in the quarter after 4.6 turns in the second quarter and 3.2 turns in prior year. We achieved sales of $814 million versus $819 million in prior quarter and versus $640 million in prior year. Excluding exchange rate effects, sales in Q3 were flat versus prior quarter and up by $172 million or by 27% versus prior year. Book-to-bill in the quarter has remained on an extraordinarily high level of 1.26 after 1.38 in prior quarter. 1.29 book-to-bill for distribution after 1.41 in quarter two; 1.23 for OEMs after 1.34 in the second quarter; 1.27 for semis after 1.41 in Q2; 1.26 for passives after 1.35; 1.30 for the Americas after 1.33 in Q2; 1.14 for Asia after 1.29; 1.41 for Europe after 1.54, I think we can speak of a broad continuation of an excellent economical environment. Our backlog in the third quarter has climbed to another record high of 8.3 months after 7.5 in the second quarter, 8.9 months in semis after 8.4 months in Q2 and 7.6 months in passives after 6.7 months in Q2. We have seen 1.3% prices up versus prior quarter and 2.2% versus prior year. For the semiconductors, it was 2.2% up versus prior quarter and 3.8% up versus prior year. For the passives, 0.3% up versus prior quarter and 0.5% up versus prior year. SG&A costs in Q3 came in at $102 million according to expectations when excluding exchange rate impacts. And manufacturing fixed costs in the quarter came in at $137 million, below our expectations when excluding exchange rate impacts. Total employment at the end of the third quarter was 22,730, 1% up from prior quarter. By $30 million, $13 million in raw materials and $17 million in WIP and finished goods. Inventory turns in the third quarter remained at a very high level of 4.5 after 4.8 in Q2. Capital spending in the quarter was $57 million versus $22 million in prior year, $41 million for expansion, $2 million for cost reduction and $14 million for the maintenance of business. We continue to expect for the year 2021 capex of approximately $250 million for the most part, of course, for expansion projects. We, in the third quarter generated cash from operations of $436 million on a trailing 12-month basis. And also, on a 12-month basis, we generated $267 million free cash. Sales in the quarter were $181 million, down by $12 million or 6% from previous quarter, but up by $35 million or 24% versus prior year, all excluding exchange rate impacts. The book-to-bill ratio in the quarter continued strong, 1.26 after 1.39 in the second quarter. The backlog increased further to 7.8 months from 6.6 months in the prior quarter. Gross margin in the quarter decreased to 27% of sales, down from a peak of 30% in Q2. Inventory turns in the quarter remained on a very high level of 4.7 after 5.1 in the second quarter. Selling prices continued to increase, plus 0.5% versus prior quarter and plus 0.7% versus prior year. Sales of inductors in the third quarter were $85 million, flat versus prior quarter and up by $5 million or by 7% versus prior year, excluding exchange rate effects. The book-to-bill ratio in the third quarter was 1.11 after 1.21 in prior quarter. The backlog for inductors grew further to 5.4 months from 5.1 in the second quarter. Gross margin continued to run at an excellent level of 32% of sales, slightly down from a peak of 34% in prior quarter. Inventory turns were at 4.6, practically flat versus prior quarter. There is a substantially reduced price decline at inductors, a slight price increase of 0.2% versus prior quarter and minus 1% versus prior year. Sales in the third quarter were $116 million, 3% below prior quarter but 25% above prior year, which excludes exchange rate impacts. Book-to-bill in the third quarter for capacitors remained at very strong 1.7 on the level of the prior quarter. Backlog increased to an absolute record of 8.9 months, up from 7.7 months in the second quarter. Gross margin in the third quarter reduced to 21% of sales from 24% in the second quarter. Inventory turns in the quarter remained on a healthy level of 3.5 after 3.9 in prior quarter. We are steadily increasing selling prices, 0.1%-plus versus prior quarter and 1.3%-plus versus prior year. Sales in the quarter were $71 million, 6% below prior quarter, but 9% above prior year, which excludes exchange rate impacts. Book-to-bill in the third quarter continued strong at 1.36 after extreme 1.69 in the second quarter. Backlog continued to grow to another record high of 10.9 months after 9.3 months in prior quarter. Gross margin in the third quarter improved further to 34% of sales after 32% in prior quarter. We have seen now more normal inventory turns of 5.0 in the quarter after 5.8 in the second quarter. The selling prices are going up, plus 1.9% versus prior quarter and plus 5% versus prior year. Sales in the quarter were $185 million, up by $12 million or by 7% versus prior quarter, and up by $61 million or 49% versus prior year without exchange rate effects. We see a continued strong book-to-bill ratio of 1.31 in the quarter after 1.45 in Q2. Backlog climbed to an extreme high of 8.9 months from 8.5 months in prior quarter. With growing volume, gross margin continued to improve to 25% of sales as compared to 24% in Q2. Inventory turns were at 4.5 after 4.7 in prior quarter. Selling prices keep increasing by 2.9% versus prior quarter and by 5.1% versus prior year. Sales in the quarter were $176 million, 5% above prior quarter and 31% above prior year, excluding exchange rate impacts. Book-to-bill ratio in Q3 was 1.19 after 1.26 in the second quarter. Backlog has grown further to an extreme level of 8.1 months as compared to 7.9 in the second quarter. Higher volume, better selling prices and good efficiencies allowed gross margin to increase further to 31% of sales, up from 28% in the second quarter. Inventory turns in the quarter were at 5.1, virtually flat versus prior quarter. We are implementing price increases plus 1.5% versus prior quarter and plus 2.2% versus prior year. And this in mind, we decided to build a 12-inch wafer fab in Itzehoe in Germany, adjacent to our existing eight-inch fab, which will increase our in-house wafer capacity by 70%, 7-0 percent, within three to four years. We guide to a sales range between $805 million and $845 million at a gross margin of 27.7%.

Vishay reported revenues for Q3 of $814 million. EPS was $0.67 for the quarter. Adjusted earnings per share was $0.63 for the quarter. Revenues in the quarter were $814 million, down by 0.7% from previous quarter and up by 27.1% compared to prior year. EPS was $0.67, adjusted earnings per share was $0.63. Earnings per share were $0.67 and adjusted earnings per share, $0.63. We achieved sales of $814 million versus $819 million in prior quarter and versus $640 million in prior year. We guide to a sales range between $805 million and $845 million at a gross margin of 27.7%.

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Our third quarter net sales of $396.7 million were once again very strong and increased 8.9% over the prior-year period. This includes but is not limited to ensuring availability of our trusted product solutions typically within 48 hours or less. Looking at our sales results in greater detail, although third quarter net sales benefited primarily from a full quarter of the first two price increases, our top line moderately declined by 3.3% compared to the second quarter of 2021, predominantly due to decreases in sales volumes from our home center channel, which I'll discuss in more detail shortly. These price increases were primary contributors to another quarter of strong gross margins, which increased to 49.9% from 47.9% in the prior quarter and 47.6% in the year-ago period. As a result, our income from operations improved to $100.6 million and led to strong earnings per diluted share of $1.70. With that said, U.S. housing starts continue to show promise, improving by 19.5% during the first nine months of 2021 versus comparable period last year. As Karen highlighted, our consolidated net sales increased 8.9% to $396.7 million. Within the North America segment, net sales increased 6.8% to $338.6 million, primarily due to product price increases that took effect through the third quarter of 2021 in an effort to address rising material costs and were partially offset by a decline in sales volumes, primarily in our home center channel. In Europe, net sales increased 22.5% to $54.8 million, primarily due to higher sales volumes compared to last year's COVID-19-related slowdown. Europe sales also benefited by approximately $900,000 of positive foreign currency translations, resulting from some Europe currencies strengthening against the United States dollar. Wood construction products remained consistent at 85% of total sales and concrete construction products also remained consistent at 15% of total sales. Consolidated gross profit increased by 14.3% to $198 million, which resulted in another strong gross margin quarter at 49.9%. Gross margin increased by 230 basis points, primarily due to the aforementioned price increases, which were partially offset by higher material costs. On a segment basis, our gross margin in North America increased to 52.1% compared to 48.9%, while in Europe our gross margin declined slightly to 37.7% compared to 37.9%. From a product perspective, our third quarter gross margin on wood products was 50.2% compared to 48% in the prior-year quarter, and was 44.6% for concrete products compared to 42.1% in the prior-year quarter. As a result, total operating expenses were $97.4 million, an increase of $15.4 million or approximately 18.8%. As a percentage of net sales, total operating expenses were 24.6% compared to 22.5. Research and development and engineering expenses increased 18.5% to $14.6 million, primarily due to increased salaries and expenses on patents. Selling expenses increased 19.3% to $35.1 million due to increased salaries, commissions and travel expenses. On a segment basis, selling expenses in North America were up 18.9% and in Europe they were up 22.4%. General and administrative expenses increased 18.6% to $47.8 million, primarily due to increased salaries, a variable compensation and travel expenses. Our solid top-line performance, combined with our stronger Q3 gross margin, helped drive a 10.2% increase in consolidated income from operations to $100.6 million compared to $91.3 million. In North America, income from operations increased 11% to $97 million, primarily due to the increase in gross profit, partly offset by higher operating expenses. In Europe, income from operations increased 23.8% to $7.5 million, primarily due to the increase in sales volumes and gross profit. On a consolidated basis, our operating income margin of 25.4% increased by approximately 30 basis points from 25.1%. Our effective tax rate decreased slightly to 26.1% from 26.2%. Accordingly, net income totaled $73.8 million or $1.70 per fully diluted share, compared to $67.1 million or $1.54 per fully diluted share. At September 30th, cash and cash equivalents totaled $294.2 million, a decrease of $17.3 million compared to September 30, 2020. And as of September 30, 2021, the full $300 million on our primary credit line was available for borrowing and we remained debt free. Our inventory position of $385.5 million at September 30th increased by $75.3 million from our balance at June 30th, primarily due to the increases we saw in steel prices over the first nine months of the year. As a result of our improved profitability and effective working capital management, we generated strong cash flow from operations of $40.5 million for the third quarter of 2021. Our strong cash generation enabled us to invest $12 million for capital expenditures during the quarter as well as pay $10.9 million in dividends and repurchase 222,060 shares of our common stock at an average price of $108.64 per share for a total of $24.1 million. On October 19, 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share. And as of September 30, 2021, we had $75.9 million of our share repurchase authorization available, which remains in effect through the end of 2021. We are updating our operating margin outlook to be in the range of 20% to 22% from our previous estimate of 19.5% to 21%. We continue to expect our effective tax rate to be in the range of 25% to 26%, including both federal and state income tax rates. And our capital expenditures outlook remains in the range of $55 million to $60 million, including approximately $15 million to $20 million that will be used for safety and maintenance capex. As a result and based on our updated fiscal 2021 operating margin outlook, we currently expect our operating margin for the full year of 2022 will decline by approximately 400 basis points to 500 basis points year-over-year.

Our third quarter net sales of $396.7 million were once again very strong and increased 8.9% over the prior-year period. As a result, our income from operations improved to $100.6 million and led to strong earnings per diluted share of $1.70. As Karen highlighted, our consolidated net sales increased 8.9% to $396.7 million. Accordingly, net income totaled $73.8 million or $1.70 per fully diluted share, compared to $67.1 million or $1.54 per fully diluted share. And our capital expenditures outlook remains in the range of $55 million to $60 million, including approximately $15 million to $20 million that will be used for safety and maintenance capex.

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Let me also remind you that CVR Partners completed a 1-for-10 reverse split of its common units on November 23, 2020. For this reason, we've began exploring utilizing excess hydrogen capacity at our refineries for renewable diesel production nearly two years ago and have invested nearly $150 million since on those initiatives. We have made progress on several fronts since our last call and are accelerating our efforts with the Board's recent approval of the feed pretreater at Wynnewood at an estimated cost of $60 million. Yesterday, we reported third quarter consolidated net income of $106 million and earnings per share of $0.83. EBITDA for the quarter was $243 million. For our Petroleum segment, the combined total throughput for the third quarter of '21 was approximately 211,000 barrels per day as compared to 201,000 barrels per day in the third quarter of 2020, which was impacted by some weather-related power outages. The Group 3 2-1-1 crack averaged $20.50 per barrel in the third quarter as compared to $8.34 in the third quarter of '20. Based on the 2020 RVO levels, RIN prices averaged approximately $7.31 per barrel in the third quarter, an increase of 177% from the third quarter of 2020. The Brent-TI differential averaged $2.71 per barrel in the third quarter compared to $2.42 in the prior year period. Light product yield for the quarter was 100% on crude oil processed. In total, we gathered approximately 112,000 barrels per day of crude oil during the third quarter of '21 compared to 124,000 barrels per day in the same period last year. In the Fertilizer segment, both plants ran well during the quarter with a consolidated ammonia utilization of 94%. For the third quarter of 2021, our consolidated net income was $106 million, earnings per share was $0.83 and EBITDA was $243 million. Our third quarter results include a positive mark-to-market impact on our estimated outstanding RIN obligation of $115 million, unrealized derivative gains of $22 million and favorable inventory valuation impacts of $8 million. Excluding the above mentioned items, adjusted EBITDA for the quarter was $99 million. The Petroleum segment's adjusted EBITDA for the third quarter of 2021 was $43 million compared to breakeven adjusted EBITDA for the third quarter of 2020. In the third quarter of 2021, our Petroleum segment's reported refining margin was $15.03 per barrel. Excluding favorable inventory impacts of $0.41 per barrel, unrealized derivative gains of $1.17 per barrel, and the mark-to-market impact of our estimated outstanding RIN obligation of $5.94 per barrel, our refining margin would have been approximately $7.51 per barrel. On this basis, capture rate for the third quarter of 2021 was 37% compared to 55% in the third quarter of 2020. RINs expense excluding mark-to -market impacts reduced our third quarter capture rate by approximately 26% compared to a 22% reduction in the prior period. In total, RINs expense in the third quarter of 2021 was a benefit of $16 million or $0.81 per barrel of total throughput, compared to $36 million, or $1.96 per barrel of expense for the same period last year. Our third quarter RINs expense was reduced by $115 million from the mark-to-market impact on our estimated RFS obligation, which was mark-to-market at an average RIN price of $1.31 at quarter end compared to $1.67 at the end of the second quarter. Third quarter RINs expense excluding mark-to-market impacts was $99 million compared to $35 million in the prior year period. For the full year of 2021, we forecast an obligation based on 2020 RVO levels of approximately 270 million RINs, which does not include the impact of any waivers or exemptions. Derivative losses for the third quarter of 2021 totaled $12 million, which includes unrealized gains of $22 million, primarily associated with crack spread derivatives. In the third quarter of 2020, we had total derivative gains of $5 million, which included unrealized gains of $1 million. The Petroleum segment's direct operating expenses were $4.52 per barrel in the third quarter of 2021 as compared to $4.17 per barrel in the prior year period. For the third quarter of 2021, the Fertilizer segment reported operating income of $46 million, net income of $35 million or $3.28 per common unit and EBITDA of $64 million. This is compared to third quarter of 2020 operating losses of $3 million and net loss of $19 million or $1.70 per common unit and EBITDA of $15 million. The partnership declared a distribution of $2.93 per common unit for the third quarter of 2021. As CVR Energy owns approximately 36% of CVR Partners' common units, we will receive a proportionate cash distribution of approximately $11 million. Total capital spending for the third quarter of 2021 was $38 million, which included $12 million from the Petroleum segment, $7 million from the Fertilizer segment and $19 million on the renewable diesel unit. Environmental and maintenance capital spending comprised $15 million, including $12 million in the Petroleum segment and $3 million in the Fertilizer segment. We estimate total consolidated capital spending for 2021 to be approximately $208 million to $223 million, of which approximately $66 million to $73 million is expected to be environmental and maintenance capital. Our consolidated capital spending plan excludes planned turnaround spending, which we estimate will be approximately $4 million for the year and preparation for the planned turnarounds at Wynnewood in 2022 and Coffeyville in 2023. Cash provided by operations for the third quarter of 2021 was $139 million and free cash flow was $76 million. During the quarter, we paid cash taxes of $67 million, which was partially offset by the receipt of a $32 million income tax refund related to the NOL carryback provisions of the CARES Act. Other material cash uses in the quarter included $31 million for interest, $15 million for the partial redemption of CVR Partners' 2023 senior notes and $11 million for the non-controlling interest portion of the CVR Partners' second quarter distribution. At September 30th, we ended the quarter with approximately $566 million of cash. Our consolidated cash balance includes $101 million in the Fertilizer segment. As a September 30th, excluding CVR Partners, we had approximately $680 million of look liquidity, which was primarily comprised of approximately $469 million of cash and availability under the ABL of approximately $370 million, less cash included in the borrowing base of $160 million. Looking ahead to the fourth of 2021 for a Petroleum segment, we estimate total throughput to be approximately 210,000 to 230,000 barrels per day. We expect total direct operating expenses to range between $90 million and $100 million and total capital spending to be between $26 million and $30 million. For the Fertilizer segment, we estimate our fourth quarter 2021 ammonia utilization rate to be between 90% and 95%. Direct operating expenses to be approximately $45 million to $50 million, excluding inventory in turn around impacts and total capital spending to be between $9 million and $12 million. Starting with crude oil, OPEC is clearly in the driver seat from a crude price standpoint, inventories have dropped in the US and across the world and backwardation is firmly in place around $12 a barrel over the next year. While we expect to see shale oil production improving at $80 crude, additional Canadian production has been slow to develop despite additional takeaway capacity. The outlook for the nitrogen fertilizer market is very positive through the next year and we are happy to have our 36% ownership in CVR Partners common units. The Board has approved the project and we are currently estimating completion late in the fourth quarter of 2022 at a capital investment of approximately $60 million. Third, on the Coffeyville project, Schedule A engineering is in process for the renewable diesel conversion with an expected annual capacity of approximately 150 million gallons of renewable fuel per year with an option of up to 25 million gallons of that amount to be sustainable aviation fuels should regulations support it. Looking at the fourth quarter of 2021, quarter-to-date metrics are as follows: Group 3 2-1-1 cracks have averaged $19.24 with RINs averaging $6.77 on a 2020 RVO basis. The Brent-TI spread has averaged $2.52 with the Midland Cushing differential at $0.31 over WTI and the WTI differential at $0.19 per barrel over Cushing WTI, and the WCS differential of $13.56 per barrel under WTI. Forward ammonia prices have increased to over a $1,000 per ton, while UAN prices are over $500 a ton. As of yesterday, Group 3 2-1-1 cracks were $15.65 per barrel, the Brent-TI was $0.66 per barrel and the WCS was $15.10 under WTI. On the 2020 RVO basis, RINs were approximately $6.26 per barrel.

Yesterday, we reported third quarter consolidated net income of $106 million and earnings per share of $0.83. For the third quarter of 2021, our consolidated net income was $106 million, earnings per share was $0.83 and EBITDA was $243 million.

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Revenue was $1.2 billion and in line with expectations, while EBITDA, EBITDA margin and earnings per share exceeded our expectations. Adjusted EBITDA was $272 million, and adjusted EBITDA margin was on par with Q1 2021 and Q4 2020 at 22.8% despite the addition of costs to prepare for the second half ramp-up in commercial aerospace production. Earnings per share, excluding special items, was $0.22 and ahead of our expectations. The increased operating performance focus of Howmet has led to improved margins, enhanced working capital control and capital discipline, which generated $160 million of cash in the first half of the year. Year-to-date, we have reduced debt by approximately $835 million by completing the early redemption of the 2021 notes in Q1 and the 2022 notes in Q2 with cash on hand. These transactions reduced 2021 interest expense by approximately $28 million and approximately $47 million on an annual run rate basis. In the second quarter, we continue to return money to shareholders with the completion of a $200 million share buyback program. The weighted average acquisition price was $34.02 per share for approximately 5.9 million shares. The second quarter end cash balance was $716 million. Year-to-date, we have reduced our pension and OPEB liabilities by approximately $160 million. Moreover, full year pension and OpEx expense is expected to improve approximately 50% compared to last year. Q2 revenue was 5% less year-over-year and in line with our expectations. On a year-over-year basis, commercial aerospace was 31% less, driven by lower aircraft builds, spares and the lingering effects of customer inventory corrections. Commercial aerospace continues to represent approximately 40% of total revenue compared to pre-COVID levels of 60%. The industrial gas turbine business continues to grow and was up 13% year-over-year, driven by new builds and spares. The commercial transportation business was up 89% year-over-year as it rebounds from customer shutdowns in Q2 of 2020. Structural cost reductions are also in line with expectations with a $37 million year-over-year benefit which reflects the decisive actions we started in the second quarter of 2020 at the onset of the pandemic and continued through last year. Year-to-date structural cost reductions are $98 million, which have essentially achieved already our target of approximately $100 million. The aerospace decremental operating margins continue to be very good at only 19%, while the Wheels segment had an incremental margin of 47%. EBITDA margin expanded by 310 basis points year-on-year, driven by price, variable cost flexing and fixed cost reductions. Capital expenditure was $36 million for the quarter and continues to be less than depreciation and amortization, resulting in a net source of cash. Lastly, free cash flow was $164 million for the quarter, resulting in a record first half. Adjusted EBITDA margin for the quarter was 22.8% and consistent with the last couple of quarters on approximately $43 million of less revenue. Q2 revenue at $1.2 billion was in line with expectations. You can see the benefit of our actions since the start of the pandemic in Q2 with a solid 310 basis points EBITDA margin expansion, while revenue was approximately $58 million less in the same period. Second quarter revenue was 5% less, driven by commercial aerospace, which continues to represent approximately 40% of total revenue in the quarter. Commercial aerospace was 31% less year-over-year, in line with our projections as expected inventory corrections continued. Defense aerospace was essentially flat in the second quarter as we are on a diverse set of programs with the Joint Strike Fighter being approximately 40% of the total defense business. Commercial transportation, which impacts both the Forged Wheels and the Fastening Systems segments, was up 89% year-over-year as second quarter of last year was significantly impacted by customer shutdowns. Finally, the industrial and other markets, which is composed of IGT, oil and gas and general industrial, was up 13%. IGT, which makes up approximately 45% of this market, continues to be strong and was up a healthy 13% year-over-year. As expected, Engine Products year-over-year revenue was 7% less in the second quarter. Commercial aerospace was 17% less, driven by customer inventory corrections and reduced demand for spares. Commercial aerospace was partially offset by a year-over-year increase of 13% in IGT. Decremental margins for engines were 12% for the quarter as we hired back approximately 300 workers to prepare for the anticipated growth in the second half of this year. Also was expected, Fastening Systems year-over-year revenue was 20% less in the second quarter. Commercial aerospace was 42% less. The industrial and commercial transportation markets within the Fastening Systems segment were both up approximately 45% year-over-year. Decremental margins for Fastening Systems were 31% for the second quarter, and segment operating profit margin was approximately 19%. Engineered Structures year-over-year revenue was 30% less in the second quarter. Commercial aerospace was 45% less, driven by customer inventory corrections and production declines for the Boeing 787. Decremental margins for Engineered Structures were 12% for the quarter. On a sequential basis, volumes were down approximately 7% due to customer supply chain issues. Reported revenue was essentially flat sequentially, driven by a 20% increase in aluminum prices. Segment operating profit margin was approximately 27%, and year-over-year incremental margin was 47%. Gross debt stands at approximately $4.2 billion. Finally, our $1 billion 5-year revolving credit facility remains undrawn. Special items for the second quarter were a net charge of approximately $22 million, mainly driven by the costs associated with the early redemption of the 2022 bonds completed in early May. For 2020, we had a 20% year-over-year improvement in rate to 0.71. Additionally, 84% of our locations worldwide were without a lost workday incident. Recently, we were recognized by the 50/50 Women on Boards organization for our commitment to board diversity. For commercial aerospace, next-generation jet engine technology reduces fuel consumption by approximately 15%. Moreover, Howmet's increased content on composite aircraft of 2 times contributes to lightweighting solutions and reduces fuel use as composite aircraft are approximately 20% more fuel efficient than comparable metallic aircraft. For Forged Wheels, Howmet's aluminum wheels are 5 times stronger than steel while being 47% lighter. Customers can realize up to 1,400 pounds of weight savings from retrofitting an 18-wheeler Class eight truck of steel to aluminum wheels. For IGT, Howmet's products continue to enable higher operating temperatures in the turbine and also pressures, which increase the load efficiency toward approximately 64% and reduce nitrogen oxide emissions by approximately 40%. Lastly, for renewables, Howmet's Fastening Systems used with solar panels improve strength and clamping by 5 times to 10 times and reduce installation time by up to 80%. The expectation that Howmet will transition into revenue growth in the third quarter continues with growth of approximately 15% in commercial aerospace and total revenue growth of approximately 9%. In terms of specific numbers, we expect the following: for the third quarter, revenue of $1.3 billion, plus or minus $20 million; EBITDA of $295 million, plus or minus $10 million; EBITDA margin of 22.7%, plus or minus 40 basis points; and earnings per share of $0.25, plus or minus $0.02. And for the year, we expect revenue to be $5.1 billion, plus or minus $50 million; EBITDA baseline to increase to $1.17 billion, plus or minus -- plus $15 million, minus $25 million; EBITDA margin to increase to 22.9%, plus 10 basis points and minus 20 basis points; earnings per share increase to $0.99, plus or minus $0.03; cash flow baseline increase to $450 million, plus or minus $35 million. Moving to the right-hand side of the slide, we expect the following: second half revenue to be up approximately 12% versus the first half, driven by commercial aerospace, defense and IGT; second half year-over-year incremental margins of over 50% compared to the prior year. The cost reduction carryover of $100 million is already achieved with some potential modest upside. Pension and OPEB contributions of approximately $120 million. We are reducing cash pension contributions by approximately $40 million based upon the American Rescue Plan Act. capex should be in the range of $200 million to $220 million compared to depreciation of approximately $270 million. Adjusted free cash flow conversion continues to be in excess of net income at approximately 100%. Lastly, as announced last month, we have reinstated the quarterly dividend of $0.02 per common stock, starting in the third quarter. The net recruitment of production operators in the second quarter was approximately 300 people, principally in our Engine business. In the second half, we plan to recruit another net 500 people. The third quarter outlook is for revenue to be approximately $100 million higher than the second quarter with margins somewhere between 22.3% and 23.1%. However, year-over-year incremental margins are expected to be over 50%. Consolidated EBITDA margins for the second half are expected to be 22.6% to 23.2%, setting a platform for a healthy 2022 And overcoming the drag of the increased labor costs from the recruitment I talked about and the cost of net -- the net effect of the metal recoveries.

Revenue was $1.2 billion and in line with expectations, while EBITDA, EBITDA margin and earnings per share exceeded our expectations. Earnings per share, excluding special items, was $0.22 and ahead of our expectations. In terms of specific numbers, we expect the following: for the third quarter, revenue of $1.3 billion, plus or minus $20 million; EBITDA of $295 million, plus or minus $10 million; EBITDA margin of 22.7%, plus or minus 40 basis points; and earnings per share of $0.25, plus or minus $0.02. And for the year, we expect revenue to be $5.1 billion, plus or minus $50 million; EBITDA baseline to increase to $1.17 billion, plus or minus -- plus $15 million, minus $25 million; EBITDA margin to increase to 22.9%, plus 10 basis points and minus 20 basis points; earnings per share increase to $0.99, plus or minus $0.03; cash flow baseline increase to $450 million, plus or minus $35 million.

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In the first quarter adjusted earnings per diluted share increased 26.4%. Looking at the operations in Japan in the first quarter, Aflac Japan generated solid overall financial results with a profit margin of 23.1%, which was above the outlook range that we provided at the Financial Analyst briefing. Aflac Japan also reported strong premium persistency of 95%. Turning to the US, we saw a strong profit margin of 27.3%, Aflac US also reported very strong premium persistency of 80%. As expected, we saw modest sequential sales improvement in the quarter with an overall decrease of 22.1%. Japan has experienced approximately 575,000 COVID cases and 10,000 confirmed deaths since inception of the virus. Through the first quarter of 2021 and since the inception of the virus, Aflac Japan's COVID impact has totaled approximately 10,500 claimants with incurred claims of JPY1.9 billion. Sales of medical insurance are up 34% over the first quarter of 2020 and up 8% over the 2019 quarter. The new product called EVER Prime has enhanced benefits that on average result in 5% to 10% more premium per policy versus our old medical product. We introduced this capability in October of 2020 and for the month of November, we processed 1,600 applications utilizing this digital experience. In the month of March that number doubled to approximately 3,200 applications. On March, 26, we launched a national advertising campaign promoting the capability and expect to see increased utilization. It's important to remember that the Japan Post sales force has been inactive for 18 months. Turning to the US, there is approximately 32 million COVID-19 cases and 575,000 deaths as reported by the CDC. As of the end of the first quarter, COVID claimants since inception of the virus has totaled approximately 38,000, with incurred claims of $130 million. It's important to note that roughly 390,000 of our 420,000 US business clients have less than 100 employees, critical areas of investment include recruiting, training, technology advancement and product development, key indicators of recovery include agent and broker recruiting, a built in average weekly producers and traction in the rollout of our dental and vision products. For the first quarter, we are running at approximately 70% of the average with the producers during the same period in pre-pandemic 2019. Our dental product is approved in 43 states, and vision in 41 states with more states coming online throughout the year. We have started to see our quoted pipeline build in the last 45 days. We offer critical illness, accident and cancer and are approved in approximately 30 states with more states and product coming online throughout the year. With a modest amount of committed marketing dollars, we are attracting about 500,000 visitors per month to aflac.com, which has resulted in 120,000 leads for call center conversion this year. We are currently experiencing a 15% conversion rate once in the call center. In terms of the contribution of these businesses to overall sales in 2021, we expect these three growth initiatives will make up roughly 10% of sales in 2021 after having contributed less than 5% to 2020 sales. We expect these initiatives to drive incremental revenue in excess of $1 billion over the next five to seven years. As Dan noted, we issued our inaugural sustainability bond, raising $400 million to be invested toward our path to net zero emissions by 2050 and investments that support climate, as well as diversity and inclusion efforts. As part of that alliance, we have made an initial $1.5 billion general account allocation to the newly created Sound Point Commercial Real Estate Finance, LLC, with $500 million of that amount dedicated to providing transitional and other debt financing to support economically distressed communities, designated as qualified opportunity zones. Aflac will hold a 9.9% minority interest in this newly created investment LLC, with the ability to grow our stake over time in line with future growth of the new venture. For the first quarter, adjusted earnings per share increased 26.4% to $1.53, with a $0.02 positive impact from FX in the quarter. Variable investment income went $24.5 million above our long-term return expectations. Adjusted book value per share, including foreign currency translation gains and losses, grew 20.6%, and the adjusted ROE, excluding the foreign currency impact, was a strong 16.7%, a significant spread to our cost of capital. Total earned premium for the quarter declined 3.6%, reflecting first sector policies paid up impact, while the earned premium for our third sector product was down 2.2%, as sales were under pressure in 2020. Japan's total benefit ratio came in at 68.4% for the quarter, down 100 basis points year-over-year, and the third sector benefit ratio was down -- was 58%, also down 100 basis points year-over-year. Persistency remains strong, with a rate of 95%, up 50 basis points year-over-year. Our expense ratio in Japan was 21.3%, up 130 basis points year-over-year. Adjusted net investment income increased 6.9% in yen terms, primarily driven by favorable returns on our growing private equity portfolio and lower hedge costs, partially offset by lower reinvestment yield on our fixed and floating rate portfolio. The pre-tax margin for Japan in the quarter was 23.1%, up 60 basis points year-over-year, a very good start to the year. Turning to the US, net earned premium was down 4.1% due to weaker sales results. Persistency improved 240 basis points to 80%, as our efforts to retain accounts and reduce lapsation show early positive results. Breaking down the 240 basis points persistency rate improvement further, 70 basis points can be explained by the emergency orders in place, 90 basis points by lower sales as first year lapse rates are roughly twice total in-force lapse rates. And the residual of 80 basis points includes conservation efforts executed on last year. At 39.1%, a full 900 basis points lower than Q1 2020. We estimated new COVID claims at approximately $42 million, and this was offset by an IBNR release of $41 million. For the full year, we now expect our benefit ratio to be toward the lower end or slightly below our guided range of 48% to 51%. Our expense ratio in the US was 38.5%, up 10 basis points year-over-year, but with a lot of moving parts. Higher advertising spend increased the expense ratio by 70 basis points along with our continued build-out of growth initiatives, group life and disability, network and innovation and direct-to-consumer. These contributed to a 110 basis point increase to the ratio. In the quarter, we also incurred $6 million of integration expenses not included in adjusted earnings associated with recent acquisitions. Adjusted net investment income in the US was down 0.6% due to a 22 basis points contraction in the portfolio yield year-over-year, partially offset by favorable variable investment income. Profitability in the US segment was very strong, with a pre-tax margin of 27.3%, with a low benefit ratio as the core driver. Initial expectations were for us to be toward the low end of 16% to 19%. In our Corporate segment, we recorded a pre-tax loss of $26 million as adjusted net investment income was $20 million lower than last year, due to lower interest rates at the short end of the yield curve. Other adjusted expenses were $7 million lower as our cost reduction activities are coming through. Our capital position remains strong, and we ended the quarter with an SMR north of 900% in Japan and an RBC of approximately 563% in Aflac Columbus. Unencumbered holding company liquidity stood at $3.9 billion, $1.5 billion above our minimum balance, excluding the $400 million proceeds from the sustainability bond that we issued in March that reinforced our ESG initiatives and believe that sustainable investments are also good long-term investments. Leverage, which includes the sustainability bond, increased but remains at a comfortable 23% in the middle of our leverage corridor of 20% to 25%. In the quarter, we repurchased $650 million of our own stock and paid dividends of $227 million, offering good relative IRR on these capital deployments.

For the first quarter, adjusted earnings per share increased 26.4% to $1.53, with a $0.02 positive impact from FX in the quarter.

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In the second quarter, Cullen/Frost earned $116.4 million or $1.80 a share compared with earnings of $93.1 million or $1.47 a share reported in the same quarter last year and compared with $113.9 million or $1.77 a share in the first quarter. Overall, average loans in the second quarter were $17.2 billion, a decrease of 1.7% compared to $17.5 billion in the second quarter of last year. Excluding PPP loans, second quarter average loans of $14.6 billion represented a decline of 3% compared to second quarter of 2020. Average deposits in the second quarter were $38.3 billion, an increase of more than 22% compared with $31.3 billion in the second quarter of last year. Our return on average assets and average common equity in the second quarter were 1.02% and 11.18%, respectively. Net charge-offs for the second quarter totaled $11.6 million compared with $1.9 million in the first quarter. Nonaccrual loans were $57.3 million at the end of the second quarter, a slight increase from $51 million at the end of the first quarter and primarily represented the addition of three smaller energy loans, which had previously been identified as problems. A year ago, nonaccrual loans stood at $79.5 million. Overall delinquencies for accruing loans at the end of the second quarter were $97.3 million or 59 basis points of period-end loans and were at manageable pre-pandemic levels. We've discussed in the past $2.2 billion in 90-day deferrals granted to borrowers earlier in the pandemic. Total problem loans, which we define as risk grade 10 and higher were $666 million at the end of the second quarter compared with $774 million at the end of the first quarter. I'll point out that energy loans declined as a percentage of our portfolio, falling to 6.98% of our non-PPP portfolio at the end of the second quarter as we continue to make progress toward a mid-single-digit concentration level of this portfolio over time. Those of these portfolio segments, the total, excluding PPP loans, represented $675.1 billion at the end of the second quarter, and our loan loss reserve for these segments was 8.6%. Through the midpoint of this year, we added 7% more new commercial relationships than we did in 2020, which included the outsized second quarter of 2020 when PPP activity was so strong. Looking at recent trends, our new commercial relationships were 511 in the fourth quarter of 2020, 554 in the first quarter of this year and 643 in our most recent quarter. Were up about 6% in both of those in terms of new customers. And also, as many others, we're seeing good growth in wealth management from assets under management with these good markets, but have also seen an increase of around 3% in new customers. In the time since we began our PPP efforts, just under 1,000 new commercial relationships identified our assistance in the PPP process as a significant reason for moving to Frost. New loan commitments booked during the second quarter, excluding PPP loans, were up by 9% compared to the second quarter last year and up by 45% on a linked quarter basis. Our current weighted pipeline is 12% higher than one year ago, 17% higher than last quarter and 38% higher than the same time in 2019. In total, the percentage of deals lost to structure of 56% was down from the 75% we saw this time last year, but that's really more a factor of the increase in price competition rather than more market discipline around structure. We were extremely proud to have completed our 25 branch Houston expansion initiative in the second quarter, and we continue to be very pleased with the results. Our numbers of new households were 141% of target and represents almost 11,000 new individuals and businesses. Our loan volumes were 215% of target and represented $300 million -- $310 million in outstandings and about 80% represented commercial credits with about 20% consumer. Regarding deposits, at $433 million, they represent 116% of target, and they represent about 2/3 commercial and 1/3 consumer. This represents about 13,500 net new checking customers. Our previous high was 12,700 for full year 2019 and it's all organic growth. Houston accounts for about 1/3 of this relationship growth. Their annual growth rate for consumer customers is up over 13%. That compares to 4% in 2018 before we started the expansion. This makes a difference in the lives of people who live paycheck to paycheck, and that was on top of our $100 overdraft grace feature that we rolled out in April. Also, earlier this month, we reached an ATM branding partnership with Cardtronics that will result in us having more than 1,725 ATMs in our network across Texas. I mentioned PPP earlier and how our efforts helped thousands of small businesses, and we closed out the second round of PPP with more than 13,000 loans for $1.4 billion. And combined with the first round, that gives us a PPP program total of more than 32,000 loans and $4.7 billion in deposits -- $4.7 billion in outstandings. We've already submitted 21,000 forgiveness applications and received approval on nearly 19,100 of them for $3 billion. Our net interest margin percentage for the second quarter was 2.65%, down seven basis points from the 2.72% reported last quarter. Interest-bearing deposits at the Fed averaged $13.3 billion or 31% of our earning assets in the second quarter, up from $9.9 billion or 25% of earning assets in the prior quarter. Excluding the impact of PPP loans, our net interest margin percentage would have been 2.37% in the second quarter, down from an adjusted 2.59% for the first quarter with all of the decrease resulting from the higher level of balances at the Fed in the second quarter. The taxable equivalent loan yield for the second quarter was 4.28%, up 41 basis points from the previous quarter and was impacted by an acceleration of PPP forgiveness during the quarter which accelerated the recognition of the associated deferred fees. Excluding the impact of PPP loans, the taxable equivalent loan yield would have been 3.80%, up three basis points from the prior quarter. To add some additional color on our PPP loans, forgiveness payments received accelerated during the quarter, totaling $1.3 billion compared to the $580 million received in the prior quarter. As a result of the accelerated forgiveness, interest income, including fees on PPP loans totaled about $45 million in the second quarter, up significantly from the approximately $30 million recorded in the first quarter. Given our current projections on the speed of forgiveness of the remainder of our PPP loans, we currently expect that the interest income on PPP loans recognized in the third quarter would be less than 1/2 of the $45 million recorded in the second quarter. Total forgiveness payments through the second quarter were approximately $2.7 billion. And total PPP loans at the end of June were $1.9 billion, down from the $3.1 billion at the end of March. At the end of the second quarter, we had approximately $38 million in net deferred fees remaining to be recognized, and we currently expect a little over 70% of that to be recognized this year. The total investment portfolio averaged $12.3 billion during the second quarter, up about $46 million from the first quarter. The taxable equivalent yield on the investment portfolio was 3.36% in the second quarter, down five basis points from the first quarter. The yield on the taxable portfolio, which averaged $4.2 billion was 2.01%, down five basis points from the first quarter as a result of higher premium amortization associated with our agency MBS securities, given faster prepayments. Our municipal portfolio averaged about $8.1 billion during the second quarter, down $104 million from the first quarter, with a taxable equivalent yield of 4.09%, flat with the prior quarter. At the end of the second quarter, 78% of the municipal portfolio was pre-refunded or PSF-insured. The duration of the investment portfolio at the end of the second quarter was 4.4 years, in line with the first quarter. Investment purchases during the quarter were approximately $680 million and consisted of about $400 million in municipal securities with a TE yield of about 2.30% and about $190 million in 20-year treasuries with the remainder in MBS securities. Regarding noninterest expense, looking at the full year 2021, we currently expect an annual expense growth rate of around 3% from our 2020 total reported noninterest expenses. And regarding income tax expense, the effective tax rate for the quarter was 11.3%, up from the 6.4% reported in the first quarter as a result of higher earnings, but also impacted by lower tax benefits realized from employee stock option activity in the second quarter as compared to the first. We currently are projecting a full year 2021 effective tax rate in the range of 9% to 9.5%. Given our second quarter results and recognition of lower PPP fee accretion for the remainder of the year, we currently believe the current mean of analyst estimates of $6.33 is reasonable.

In the second quarter, Cullen/Frost earned $116.4 million or $1.80 a share compared with earnings of $93.1 million or $1.47 a share reported in the same quarter last year and compared with $113.9 million or $1.77 a share in the first quarter.

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Companywide revenues were $1.1 billion, down 27% from last year's second quarter on a reported basis and down 26% on an as adjusted basis. Net income per share in the second quarter was $0.41 compared to $0.98 in the second quarter, one year ago. As announced in our last earnings call, we've implemented actions to reduce our overall cost structure by approximately 30% as compared to Q1 2020. The timing of those actions which occurred over the course of the quarter as well as certain employee compensation-related items, such as severance and salary continuation, reduced the savings actually reported in the second quarter to 24%. Cash flow from operations during the quarter was $301 million and capital expenditures were $8 million. In June, we distributed a $0.34 per share cash dividend to our shareholders of record for a total cash outlay of $38 million. As Keith noted global revenues were $1.108 billion in the second quarter. This is a decrease of 27% from the second quarter one year ago on a reported basis and a decrease of 26% on an as adjusted basis. On an as adjusted basis, second quarter staffing revenues were down 33% year-over-year. U.S. staffing revenues were $640 million, down 34% from the prior year. Non-U.S. staffing revenues were $184 million, down 31% year-over-year on an as adjusted basis. We have 326 staffing locations worldwide, including 88 locations in 17 countries outside the United States. In the second quarter, there were 63.4 billing days, unchanged from the same quarter one year ago. The current third quarter has 64.3 billing days compared to 64.1 billing days in the third quarter one year ago. Currency exchange rate movements during the second quarter had the effect of decreasing reported year-over-year staffing revenues by $8 million. This decreased our year-over-year reported staffing revenue growth rates by 0.6 percentage points. Global revenues in the second quarter were $284 million, $225 million of that is from business within the United States and $59 million is from operations outside the United States. On an as adjusted basis, global second quarter Protiviti revenues were up 4% versus the year ago period, with U.S. Protiviti revenues up 6%. Non-U.S. revenues were down 2% on an as adjusted basis. Exchange rates had the effect of decreasing year-over-year Protiviti revenue by $1 million and decreasing its year-over-year reported growth rate by 0.5 percentage points. Protiviti and its independently owned Member Firms serve clients through a network of 86 locations in 28 countries. In our temporary and consulting staffing operations, second quarter gross margin was 37.1% of applicable revenues compared to 38.2% of applicable revenues in the second quarter one year ago. Our permanent placement revenues in the second quarter were 8.6% of consolidated staffing revenues versus 11.3% of consolidated staffing revenues in the same quarter one year ago. When combined with temporary and consulting gross margin, overall staffing gross margin decreased 260 basis points compared to the year-ago second quarter to 42.5%. For Protiviti, gross margin was $73 million in the second quarter or 25.7% of Protiviti revenues. One year ago, gross margin for Protiviti was $76 million or 27.9% of Protiviti revenues. Companywide selling, general and administrative costs were 32.9% of global revenues in the second quarter compared to 31.5% in the second quarter one year ago. Staffing SG&A costs were 39.1% of staffing revenues in the second quarter versus 34.6% in the second quarter of 2019. Second quarter SG&A costs for Protiviti were 15% of Protiviti revenues compared to 17.3% of revenues in the year ago period. Companywide operating income was $58 million in the second quarter, operating margin was 5.3%, second quarter operating income from our staffing divisions was $28 million, and -- with an operating margin of 3.4%. Operating income for Protiviti in the second quarter was $30 million, with an operating margin of 10.6%. Our second quarter tax rate was 20% compared to 28% a year ago. Our six month year-to-date rate of 28% is in line with what we expect for the full year. Accounts receivable at the end of the second quarter, accounts receivable was $665 million and implied day sales outstanding or DSO was 54 days. Our temporary and consultant staffing divisions exited the quarter with June revenues down 33.7% versus the prior year compared to a 31.2% decrease for the full quarter. Revenues for the first two weeks of July were down 33% compared to the same period one year ago. Permanent placement revenues in June were 46.1% versus June of 2019. This compares to a 49.1% decrease for the full quarter. For the first three weeks of July, permanent placement revenues were down 35% compared to the same period in 2019. Revenue $1.09 billion to $1.20 billion, income per share $0.49 to $0.68. The midpoint of our guidance implies a year-over-year revenue decline of 26% on an as adjusted basis, inclusive of Protiviti.

Net income per share in the second quarter was $0.41 compared to $0.98 in the second quarter, one year ago. As Keith noted global revenues were $1.108 billion in the second quarter.

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As you can see on Slide 4, total sales for the second quarter were $122.9 million compared to the coronavirus impacted trough of $91.1 million in the same period last year, an increase of 35%. Overall utility water sales increased 38%. Excluding the approximately $12 million of sales from s::can and ATi acquisitions, core utility water revenues increased 22% year-over-year. Comparing back to the pre-COVID impacted second quarter of 2019, core utility water sales increased 11%. As anticipated, the flow instrumentation product line sales rate of change returned to growth with a 22% year-over-year improvement, stabilizing demand trends across the majority of global end markets and applications as well as an easier comp influenced the increase. The quarter's operating margin was 15.2%, an increase of 130 basis points year-over-year. Gross margin for the quarter was 40.8%, an increase of 150 basis points year-over-year. Taking a closer look at copper, prices have settled back down into the $4.30 range after escalating to about $4.80 earlier in the quarter. This is generally in line with our most recent year-over-year headwind estimate, which was approximately $7 million to $8 million on a full year basis unmitigated. The second quarter spend of $31.4 million was sequentially in line with the $31.6 million from Q1 2021 and represents an increase of $8.2 million from the prior year. The SEA run rate includes both the s::can and ATi along with the higher level of acquired intangible asset amortization, and is in line with our ongoing expectations of normalized SEA leverage in 25% to 26% range over time. The income tax provision in the second quarter of 2021 was 25%, slightly higher than the prior year's 24.3% rate. In summary, earnings per share was $0.48 in the second quarter of 2021, an increase of 45% from the prior year's earnings per share of $0.33. Working capital as a percent of sales was 24.3% on par with the prior quarter-end. Free cash flow of $11.9 million was lower than the prior year, the result of higher cash tax payments and the increase in inventory. On a year-to-date basis, free cash flow conversion of net earnings is sitting at 147%. We took the opportunity to upsize the facility to $150 million and to add additional flexibility in the form of leverage covenants and an accordion feature among others. We are very pleased with the results from the last two water quality acquisitions this quarter contributing just over $12 million of revenue in the quarter, a pro forma growth rate in the double-digits. One is an outline of how Badger Meter works to align our ESG efforts with the United Nations Sustainable Development Goals, notably Goal 6, 3 and 11 that focus on water, health and safety and sustainable cities.

As you can see on Slide 4, total sales for the second quarter were $122.9 million compared to the coronavirus impacted trough of $91.1 million in the same period last year, an increase of 35%. In summary, earnings per share was $0.48 in the second quarter of 2021, an increase of 45% from the prior year's earnings per share of $0.33.

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As you all know, our organic portfolio had strong momentum heading into this crisis, delivering 9% revenue and 19% earnings growth through the first nine months of fiscal '20. The Project Enable will help us accelerate our business model transformation and reduce our global cost structure by about $125 million over three years. Despite unprecedented challenges from rolling virus surges and lockdowns globally, we were able to deliver global revenues of $9.2 billion and adjusted earnings per share of $1.31, in line with our outlook shared in January. Our D2C digital business delivered 55% organic growth. And when combined with pure play digital wholesale, our total Digital business grew over 40% and accounted for nearly 30% of total revenue. These new offerings further simplify the shopping experience for our consumers and enabled us to utilize retail inventory through our digital channels when stores were closed, all of which helped to generate around $50 million of incremental revenue this year. Our China business also remained consistently strong throughout fiscal '21 growing 20% and surpassing $1 billion in revenue and exceeding our long-term plan targets. We have generated approximately $1 billion in free cash flow in fiscal '21, a testament to the resiliency of our portfolio and strong execution from our global teams. While many of our peers were forced to pause their dividend commitments, our strong balance sheet and command over free cash flow supported our ability to modestly raise our dividend this year, returning $760 million to shareholders. I'm pleased to say that we ended this year with owned inventories down 18% and our disciplined brand and marketplace management approach globally has resulted in clean inventory positions across channels. We started Q4 with about 15% of our doors closed in the region, mostly in California. Each of our largest brands returned to double-digit growth in the Americas, and our total D2C business increased 16% led by 57% growth from digital. We started the quarter with about half of our doors closed and finished the quarter with about 60% of doors closed. Despite this choppier brick-and-mortar recovery, our teams have continued to leverage digital, driving 99% growth in that channel during the period, with broad based strength across the portfolio. Vans digital increased 92%; The North Face, 118%; and Timberland, 122%. Our Greater China business surpassed the $1 billion milestone in fiscal '21 growing 20%, capped off by 70% growth in Q4. This represents nearly 25% growth over our fiscal 2019 Q4 revenue, the prior peak before the impact of COVID. All VF brands achieved growth in the region, led by 93% growth at The North Face and 107% growth at Dickies. VF delivered 19% growth in Q4 or 12% organic growth despite headwinds from supply chain disruptions and more extended lockdowns throughout Europe. The strength of our business was broad based with 16% growth from the Big Four brands, an acceleration for many of our emerging brands, highlighted by a 53% growth from Altra. In its first quarter with VF, the Supreme brand contributed over $140 million of revenue, exceeding our expectations. As expected, Vans inflected positively, delivering 10% global growth as strength in the Americas and APAC regions more than offset larger than expected headwinds from store closures in Europe. During Q4, skate high, authentic and old-school heritage styles each grew double digit, while the proskate and MTE progression lines each grew more than 30%. Van's digital growth accelerated to 52% including a growing contribution from omnichannel sales which represented over 10% of digital revenue in the Americas. The Vans family loyalty program added 1.2 million members in the U.S. in the last four months and now has nearly 15 million enrolled globally. The North Face delivered 23% growth led by 56% growth in digital. Momentum at The North Face also extent to the brand's off mountain product portfolio, with strength from logowear and Iconic franchises such as the Nuptse, which increased more than 75%. The brand also wrapped up the Gucci collab, with the largest earned media campaign in The North Face's history with more than 17 billion impressions, yielding worldwide 100% sell-through of all collaboration outerwear. And lastly, due partially to an exceptionally strong first responder program throughout fiscal 2021, The North Face's digital business increased 63% including 49% growth in new paid customers via adding 1.6 million in new loyalty members in the Americas. Timberland increased 19% with continued momentum behind outdoor footwear, apparel, Timberland PRO, and an accelerating classics business. Digital increased 96% with additional strength from key digital retail partners. Timberland delivered 54% global digital growth in fiscal 2021 and is entering this year with broad-based momentum across the product portfolio. Finally, Dickies increased 19% with continued strength across regions channels and categories. The brand continued its strong performance in APAC, highlighted by more than 120% growth in Greater China. Work inspired lifestyle product increased at a double-digit rate across all regions and represented 40% of total revenue. Despite headwinds from the pandemic, the brand delivered 7% growth in fiscal 2021 through strong execution against the strategic pillars of digital, China and work-inspired product categories. Fourth quarter adjusted earnings per share was $0.27, including a $0.06 contribution from Supreme, representing 89% organic growth and a strong start to our earnings recovery. Our liquidity remained strong as we ended the year with approximately $1.45 billion in cash and short-term investments and approximately $2.2 billion remaining undrawn on our revolver. We expect total VF revenue to approximate $11.8 billion, representing about 28% growth from fiscal '21 and a low double-digit increase relative to our prior peak revenue in fiscal 2020. This includes approximately $600 million of Supreme revenue. Excluding the Supreme business, our fiscal 2022 outlook implies growth of about 23%, representing high-single-digit growth relative to fiscal 2020. By brand, we expect Vans to generate between 26% and 28% growth, representing a 7% to 9% increase relative to prior peak revenue. The North Face is expected to increase between 25% and 27%, representing 14% to 16% growth relative to fiscal 2020 and surpassing $3 billion in global brand revenue. We expect Timberland to increase between 16% and 18%, which implies revenue in line with prior peak levels. Lastly, we expect continued strength from Dickies with growth accelerating to between 10% and 12% which implies revenue up about 20% from fiscal 2020. By region, excluding Supreme, we expect Europe to increase about 30%, representing about 15% growth relative to prior peak revenue. We expect continued momentum in APAC with close to 20% organic growth led by ongoing strength in China, where we expect growth to exceed 20%. In the Americas, we expect organic revenue growth of greater than 20%. By channel, again excluding Supreme, we expect our D2C business to increase between 28% and 30%, including about 15% growth in digital. And including pure play digital wholesale, we expect our total digital penetration in fiscal 2022 to exceed 30%. Moving down the P&L, we expect gross margin in excess of 56%, representing organic margins above prior peak levels. We expect an operating margin of about 12.8%, which implies high single-digit organic growth in our SG&A spend relative to fiscal 2020 levels. Relative to fiscal '20, our fiscal '22 plan assumes over $150 million of incremental investments in demand creation and our business model transformation to be more consumer-minded, retail-centric and hyper-digital, which supports the strong growth commitments cover today. Foreign currency translation represents about 20% of the expected dollar growth in SG&A. To wrap up our fiscal 2022 P&L outlook, we expect our tax rate to approximate 15%, which brings us to earnings per share of about $3.05, including an expected $0.25 per share contribution from the Supreme brand. Finally, we expect to generate over $1 billion in operating cash flow. Capital expenditures are planned to approximate $350 million. Our strong balance sheet will continue to be a focus and we expect to end fiscal 2022 with net leverage between 2.5 times and 3 times.

The North Face delivered 23% growth led by 56% growth in digital. Fourth quarter adjusted earnings per share was $0.27, including a $0.06 contribution from Supreme, representing 89% organic growth and a strong start to our earnings recovery. We expect total VF revenue to approximate $11.8 billion, representing about 28% growth from fiscal '21 and a low double-digit increase relative to our prior peak revenue in fiscal 2020. To wrap up our fiscal 2022 P&L outlook, we expect our tax rate to approximate 15%, which brings us to earnings per share of about $3.05, including an expected $0.25 per share contribution from the Supreme brand.

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There were some signs of reprieve as CONEXPO-CON/AGG took place in early March with less than 3% of the floor space affected by exhibitor cancellations and attendee registrations of more than 100,000. In response, we took swift and effective steps to bolster our company's liquidity and financial position. We drew on our revolving line of credit to increase our cash position, and we've obtained a waiver of our financial covenants for the second quarter. We implemented aggressive cost-reduction actions, including furloughs, mandatory unpaid time off, and salary reductions for all employees across the company. Our executive management team voluntarily reduced its base salaries by 20% to 50%, and each of our nonemployee members of our Board of Directors has agreed to reduce his or her cash retainer by 50% for payments typically made to them in second quarter of 2020. We have limited all nonessential capital expenditures and discretionary spending. We have suspended future dividend payments and share repurchases. In the past 61 days, we've supported our communities through the donation of PP&E to regional health authorities, and we fed literally thousands of team and community members through a volunteer-driven meal program. So fast forward 60 days, looking to our iconic locations and FlyOver experiences, we're seeing the world begin to open back up. FlyOver Iceland reopened last week in Reykjavik, and we expect to benefit from the over 30,000 units of presold product already in the hands of our Icelandic guests in that market. Canadian government has been very industry-focused, has enacted several programs that have been super helpful, including wage subsidies of up to 75% for team members, and that's called the CEWS program. Our properties and attractions will open in Alaska on a staggered basis beginning mid-June, because we expect business levels to be impacted by the partial cancellation of many cruise departures from the lower 48. Over 90% of guests to this area are self-driving Americans, and so with record low gas prices and the overall safety allure of a family road trip, we anticipate attendance in Glacier will be less impacted than other locations. We were looking forward to a tremendous year with strong momentum on the corporate side and an incremental $100 million of revenue from three nonannual events all set to take place this year. We essentially entered a hibernation mode until events return, reducing our semi-variable cost by approximately 70%, and we stand ready to quickly turn the faucet back on as events return. At March 31, our cash balance was $130.5 million, and in early April, we drew the remaining $33 million down on our revolver, bringing our total cash at the beginning of the second quarter to approximately $163 million. Given the swift and deep cost savings actions we've taken, we have significantly reduced our operating costs and expect our cash outflow during the second quarter will approximate $40 million. Preliminary revenue was $306 million, up 7.1% from the 2019 first quarter primarily due to positive share rotation of approximately $57 million at GES, partially offset by show postponements and cancellations due to the COVID-19 pandemic. GES revenue was $292.5 million, up $17.6 million or 6.4%. Pursuit revenue was $13.5 million, up $2.9 million or 26.8%. Preliminary net loss attributable to Viad was $10.6 million versus $17.8 million in the 2019 first quarter. And preliminary net loss before other items was $8.5 million versus a loss of $10.2 million in the 2019 first quarter. Preliminary adjusted segment operating loss was $8.4 million versus a loss of $11 million in the 2019 first quarter, and adjusted segment EBITDA was $6.9 million, up $4.7 million from the 2019 first quarter. GES adjusted segment EBITDA was $19.1 million, up from $10.9 million in the 2019 first quarter. And Pursuit adjusted segment EBITDA was negative $12.2 million versus negative $8.8 million in the 2019 first quarter.

In response, we took swift and effective steps to bolster our company's liquidity and financial position. We drew on our revolving line of credit to increase our cash position, and we've obtained a waiver of our financial covenants for the second quarter. We implemented aggressive cost-reduction actions, including furloughs, mandatory unpaid time off, and salary reductions for all employees across the company. Our executive management team voluntarily reduced its base salaries by 20% to 50%, and each of our nonemployee members of our Board of Directors has agreed to reduce his or her cash retainer by 50% for payments typically made to them in second quarter of 2020. We have limited all nonessential capital expenditures and discretionary spending. We have suspended future dividend payments and share repurchases. Preliminary revenue was $306 million, up 7.1% from the 2019 first quarter primarily due to positive share rotation of approximately $57 million at GES, partially offset by show postponements and cancellations due to the COVID-19 pandemic.

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A big shout-out to all 15,000 of our team members and our dedicated suppliers that have worked hard and stepped up during this difficult period to continue meeting our customers' needs. For the fourth quarter, we delivered sales of nearly $1.8 billion and adjusted earnings per share of $1.30. This is important as we were able to grow adjusted operating income in our defense, fire & emergency and commercial segments over the prior year while achieving consolidated adjusted decremental margins of 19%. In our largest segment, access equipment, we delivered 23% adjusted decremental margins during the quarter where revenues were down nearly 40%. Finally, we are announcing a 10% increase to our quarterly cash dividend to $0.33 per share. For example, our access equipment segment overcame a nearly $1.6 billion year-over-year sales decline to deliver an impressive 8.5% full year adjusted operating margin. Our commercial segment posted a decade-plus high full year adjusted operating income margin of 7.5%. Sales for the quarter were down nearly 40%, and we're therefore continuing to operate our facilities on reduced schedules. Through the first quarter, we'll keep production lower by operating our U.S. facilities for approximately 50% of the available production weeks. Despite these challenges, which we experienced more intensively late in the fourth quarter and continued to experience earlier this month, our operations teams have delivered solid results for our U.S. government customer and grew revenues in the year by more than 11%. Our team was happy to receive an expected order for 322 JLTVs from the Belgian Ministry of Defense in October. It used to be rare that the government required a CR to fund spending, but over the last 10 to 12 years, CRs have become the norm. Fire & emergency delivered an all-time record for quarterly adjusted operating income of 16.4% in the fourth quarter. We are exiting the year with a strong backlog, supported by a record order year of nearly $1.3 billion despite the negative impacts of COVID-19. Much of our recent success stems from simplification efforts and disciplined cost management as well as the ramp-up of our new S-Series 2.0 Front Discharge Concrete Mixer, which is driving a lot of excitement and helping us win new customers. Strong execution allowed us to deliver 19% adjusted decremental margins on a consolidated basis and 23% adjusted decremental margins at access equipment in the fourth quarter. Consolidated net sales for the quarter were $1.8 billion, down 18.7% from the prior year quarter. A 39% decrease in access equipment segment sales was the primary driver of the decrease. Consolidated adjusted operating income for the fourth quarter was $124.1 million or 7% of sales compared to $203.1 million or 9.2% of sales in the prior year quarter. Adjusted earnings per share for the quarter was $1.30 compared to earnings per share of $2.17 in the fourth quarter of 2019. Fourth quarter results benefited by $0.02 per share from share repurchases completed in the prior 12 months. Finally, we generated strong free cash flow during the quarter to drive full year free cash flow of $238 million. Taking these factors into account, including the ongoing uncertainty of the pandemic, we're not in a position to provide quantitative expectations for 2021 at this time. In the second quarter of 2020, we implemented decisive actions which reduced our 2020 pre-tax cost by approximately $120 million. Additionally, we discussed permanent cost reduction actions during our last earnings call in the access equipment and commercial segments totaling $30 million to $35 million once complete. We expect these actions will benefit 2021 by approximately $20 million. Recently, we implemented additional permanent cost reductions totaling $15 million for 2021, which reduced corporate and segment operating expenses. So we expect to benefit from a total of $35 million of permanent cost reductions in 2021, growing to $45 million to $50 million by 2022. Our balance sheet remains strong with available liquidity of approximately $1.4 billion, consisting of cash of approximately $600 million and availability under our revolving line of credit of approximately $800 million. We expect a modest increase in capital expenditures to approximately $120 million in 2021. We just completed the year in which we delivered nearly $5 of adjusted earnings per share in the midst of a global pandemic, and we believe we are in a great position moving into 2021 with our strong balance sheet and cash position.

For the fourth quarter, we delivered sales of nearly $1.8 billion and adjusted earnings per share of $1.30. Finally, we are announcing a 10% increase to our quarterly cash dividend to $0.33 per share. Consolidated net sales for the quarter were $1.8 billion, down 18.7% from the prior year quarter. Adjusted earnings per share for the quarter was $1.30 compared to earnings per share of $2.17 in the fourth quarter of 2019. Taking these factors into account, including the ongoing uncertainty of the pandemic, we're not in a position to provide quantitative expectations for 2021 at this time.

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We finished the year with total company revenue of $15.3 billion and operating income of $1.8 billion. Our completion and production division finished the year with 15% operating margin, driven by activity improvement despite inflationary pressures. 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. 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. 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. 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. First, our board of directors increased our quarterly dividend to $0.12 per share in the first quarter of 2022. 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. 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. 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. We will optimize the working capital required to grow our business and maintain our capex in the range of 5% to 6% of revenue. 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. 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. Given a strong commodity price environment, we anticipate North America customer spending to grow more than 25% year on year. 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. We recruit nationally and hire, train, and manage a commuter workforce that makes up to 80% of our personnel in some areas. 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. 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. 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. In North America, revenue increased 10%. Revenue increased 7% sequentially. In Europe, Africa, CIS, revenue increased 8% sequentially. 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. 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. 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. Our normalized effective tax rate for the fourth quarter came in at approximately 23%. 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. 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. 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.

Total company revenue for the quarter was $4.3 billion, an increase of 11%.

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Total revenues were up 6%, with each of our business segments, research, conferences, and consulting, exceeding our expectations. For Q1, GTS contract value grew 5%. First quarter new business was up 21% as a result of new logos and upsell with existing clients. Client engagement continue to be strong, with content and analyst interaction volumes up to 26% compared to Q 2020. GBS achieved contract value growth of 12%, its first quarter of double-digit growth. New business growth was a very strong 87% in the quarter. Our Consulting segment also exceeded our expectations, with bookings up 26% during Q1. Free cash flow for the quarter was $145 million, up significantly versus the prior year. In addition, we used that cash flow plus cash balances to purchase more than $600 million in stock through April of this year. With these repurchases, our Board increased our share repurchase authorization by another $500 million. First quarter revenue was $1.1 billion, up 8% year-over-year as reported and 6% FX-neutral. In addition, total contribution margin was 70%, up more than 320 basis points versus the prior year. EBITDA was $320 million, up 50% year-over-year and up 44% FX-neutral. Adjusted earnings per share was $2, and free cash flow in the quarter was $145 million. Research revenue in the first quarter grew 8% year-over-year as reported and 6% on an FX-neutral basis, and we saw strong retention and new business throughout the quarter. First quarter research contribution margin was 74%, up about 200 basis points versus 2020. Total contract value grew 6% FX-neutral to $3.7 billion at March 31. Quarterly net contract value increase, or NCVI, was $59 million, significantly better than the pandemic affected first quarter last year. Global Technology Sales contract value at the end of the first quarter was $3 billion, up 5% versus the prior year. GTS CV increased $34 million from the fourth quarter. By industry, CV growth was led by technology, healthcare and services, while retention for GTS was 98% for the quarter, down about 560 basis points year-over-year. GTS new business was up 21% versus last year with strength in new logos and an improvement in upsell with existing clients. Global Business Sales contract value was $731 million at the end of the first quarter, up 12% year-over-year. GBS CV increased $25 million from the fourth quarter. While retention for GBS was 104% for the quarter, up more than 330 basis points year-over-year, GBS new business was up 87% over last year, led by very strong growth across the full portfolio. Conferences revenue for the quarter was $25 million. We had about $10 million of onetime revenue in the quarter. Contribution margin in the quarter was 56%. First quarter consulting revenues increased by 4% year-over-year to $100 million. Consulting contribution margin was 39% in the first quarter, up 860 basis points versus the prior year quarter. Labor-based revenues were $84 million, up 4% versus Q1 of last year and down 1% on an FX-neutral basis. Labor-based billable headcount of 744 was down 8% due to headcount actions taken in Q2 and Q3 of last year. Utilization was 68%, up about 550 basis points year-over-year. Backlog at March 31 was $116 million, up 3% year-over-year on an FX-neutral basis after a strong bookings quarter. Our Contract Optimization business was up 6% on a reported basis versus the prior year quarter and 3% FX-neutral. Consolidated cost of services decreased 2% year-over-year and 4% FX-neutral in the first quarter. SG&A decreased 2% year-over-year and 4% FX-neutral in the first quarter as well. EBITDA for the first quarter was $320 million, up 50% year-over-year on a reported basis and up 44% FX-neutral. Depreciation in the quarter was up about $3 million versus 2020, including real estate and software, which went into service since the first quarter of last year. Net interest expense, excluding deferred financing costs in the quarter, was $25 million, flat versus the first quarter of 2020. The Q1 adjusted tax rate, which we used for the calculation of adjusted net income, was 23.5% for the quarter. The tax rate for the items used to adjust net income was 22.4% in the quarter. Adjusted earnings per share in Q1 was $2. Recall that about $6 million of equity compensation expense, which we normally would have incurred in the fourth quarter of 2020, shifted into the first quarter of 2021. The weighted average fully diluted share count for the first quarter was 89.1 million shares. The ending fully diluted share count at March 31st was 87.7 million shares. Operating cash flow for the quarter was $157 million compared to $56 million last year. capex for the quarter was $13 million, down 49% year-over-year. Free cash flow for the quarter was $145 million, which was up about 360% versus the prior year. Free cash flow as a percent of revenue or free cash flow margin was 22% on a rolling 4-quarter basis, continuing the improvement we've been making over the past few years. At the end of the first quarter, we had $446 million of cash. Our March 31st debt balance was $2 billion. At the end of the first quarter, we had about $1 billion of revolver capacity. Our reported gross debt to trailing 12-month EBITDA was about 2.2 times. During the first quarter, we repurchased $398 million in stock at an average price of about $180 per share. In the month of April, we repurchased more than $200 million of our stock. At the end of April, the Board increased our share repurchase authorization for the second time this year, adding another $500 million. As of April 30, we have around $790 million available for open market repurchases. As you know, travel expenses were close to 0 from April 2020 through March 2021. For our revenue guidance, we now expect Research revenue of at least $3.935 billion, which is growth of at least 9.2%. We expect Conferences revenue of at least $170 million which is growth of at least 42%. We now expect consulting revenue of at least $400 million, which is growth of at least 6.4%. The result is an outlook for consolidated revenue of at least $4.5 billion, which is growth of 9.9%. Based on current foreign exchange rates and business mix, the consolidated growth includes an FX benefit of about 200 basis points. We now expect full year adjusted EBITDA of at least $1 billion, which is an increase of about 22.3% versus 2020 and reported margins of at least 22%. The 18% to 19% expected margins in the back half of the year should provide a reasonable run rate for thinking about the margins going forward as we will have more fully restored costs and resumed growth hiring. We expect our full year 2021 adjusted net interest expense to be $102 million. We expect an adjusted tax rate of around 22% for 2021. We now expect 2021 adjusted earnings per share of at least $6.25. For 2021, we now expect free cash flow of at least $850 million. Finally, we expect to deliver at least $270 million of EBITDA in Q2 of 2021. With 12% to 16% research CV growth, we will deliver double-digit revenue growth. With gross margin expansion, sales cost growing in line with CV growth over time and G&A leverage, we can modestly expand margins from a normalized 2021 level of around 18% to 19%. We repurchased more than $600 million worth of stock this year through the end of April and remain committed to returning excess capital to our shareholders.

With these repurchases, our Board increased our share repurchase authorization by another $500 million. First quarter revenue was $1.1 billion, up 8% year-over-year as reported and 6% FX-neutral. At the end of April, the Board increased our share repurchase authorization for the second time this year, adding another $500 million.

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2020 was a challenging year for all of us as the virus started reshaping our lives, our economy, and our business we established 3 priorities to guide us throughout the year. Number 1, keep our employees safe; 2, meet the needs of our customers; and 3, position Masco to outperform the recovery. Turning to slide 4, our top line increased 12% excluding the impact of currency in the 4th quarter. Operating profit increased 20% and our operating margin expanded 90 basis points to 16.6% in the quarter as we leveraged our strong volume growth. Our earnings per share for the quarter increased an outstanding 36%. Turning to our segments, Plumbing grew 12% excluding currency, with 14% growth in North American plumbing and 8% growth in International plumbing. North American plumbing was led by Delta faucet company with 18% growth. In regards to capital allocation, we resumed our share repurchase program by repurchasing 2.3 million shares for $125 million during the quarter. And we executed 3 bolt-on acquisitions, which we expect to contribute approximately 3% top line growth in 2021. Also in our plumbing segment, Hansgrohe in January acquired a 70% interest in easy sanitary solutions or ESS, a Netherlands based developer and manufacturer of high-style linear drain solutions. For the full year, sales grew 7%, led by double-digit growth from Delta faucet, Behr paint and Liberty Hardware. This resulted in full-year growth of over 20% in DIY paint. While total company sales grew 7%, operating profit increased 18% as we leveraged the strong volume growth and enacted significant cost reduction across the organization including hiring and wage freeze for part of the year, significantly lower brand and marketing spend, a freeze on certain growth investments for part of the year, and obviously drastically reduced travel and entertainment expense. These actions coupled with our strong volume leverage resulted in significant operating margin expansion of 170 basis points in 2020. Our strong cash generation allowed us to deploy nearly $1.1 billion in capital during the year. We repurchased $727 million of our stock at an average price of approximately $39 per share. We returned approximately $145 million in dividends to shareholders. We completed 4 bolt-on acquisitions for $227 million and we finished the year with over $1.3 billion in cash on hand and net leverage of one-time. This strong operating profit growth combined with our significant capital deployment resulted in exceptional financial results, 37% earnings-per-share growth to $3.12 per share exceeding our 2019 Investor Day guidance for 2021, a full year earlier than planned. Free cash flow of over $1 billion with a conversion rate of 118% and a return on invested capital of approximately 42%. Home price appreciation was up nearly 30% in December and existing home sales were up over 22% compared to prior year. Based on these assumptions and our expectation that we will continue to gain share and outperform the market, we anticipate Masco's growth to be in the range of 5% to 9% excluding currency for 2021, and 7% to 11% including currency. This is based on expected organic growth of 2% to 6% excluding currency, growth from our completed acquisitions of approximately 3%, and growth from foreign currency translation of approximately 2%. We expect margins to be approximately 17% and earnings per share to be in the range of $3.25 to $3.45 for 2021. Our Board announced its intention to increase our annual dividend to $0.94 per share beginning in the second quarter of 2021, a 68% increase. As we have raised our targeted dividend payout ratio from 20% to 30% based on the strength of our business model and cash generation capabilities. In addition to announcing its intention to increase our annual dividend, our Board also approved a new $2 billion share repurchase authorization. Our strategy remains unchanged to deploy our free cash flow after dividends to share repurchase or acquisitions and based on our strong liquidity position of over $1.3 billion in cash at year-end and then our projected free cash flow, we expect to deploy approximately $800 million to share repurchases or acquisitions in 2021. Fourth quarter sales increased a robust 12% excluding currency. In local currency, North American sales increased 13%. In local currency, international sales increased 8%. Gross margin was 35.6% in the quarter, up 100 basis points as we leveraged increased volume, partially offset by higher rebates and program costs. Our SG&A as a percentage of sales was 19% in the quarter. We delivered a strong 4th quarter operating profit of $309 million, up $52 million or 20% from last year with operating margins expanding 90 basis points to 16.6%. Our 4th quarter earnings per share increased 36% to $0.75. Please note that this performance is based on a normalized tax rate of 25% versus the previously guided 26% tax rate. Changes to IRS guidance in late 2020 and how certain foreign income is taxed in the US lowered our normalized tax rate to 25%. As this change was retroactive, restated adjusted earnings per share numbers for 2019 and the first 3 quarters of 2020 can be found in the appendix on slide 28. Turning to the full year 2020, sales increased 7% excluding currency. Foreign currency translation favorably impacted the full-year by $13 million. In local currency, North American sales increased 9% and international sales decreased 1% as many European markets were slower to recover from the impacts of COVID-19. Our SG&A as a percentage of sales decreased 100 basis points to 17.9% for the full year as a result of our rapid pandemic related cost containment. For the full year, operating profit increased $196 million or 18% with operating margins expanding 170 basis points to 18.2%. Lastly, our earnings per share increased 37% to $3.12 for the full year. Turning to slide 8, Plumbing grew 12% in the quarter, excluding the impact of currency. North American sales increased 14% in local currency led by Delta's 18% growth in the quarter. They have a record backlog despite operating at less than 100% capacity due to ongoing government mandated employee limitations in our Mexican facilities. International plumbing sales in the 4th quarter increased 8% in local currency. Operating profit was $224 million in the quarter, up $44 million or 24% with margins expanding 160 basis points 19.1%. Turning to the full year 2020, sales increased 3% excluding currency. Foreign currency translation favorably impacted full year sales by approximately $15 million. In local currency, North American plumbing sales grew 6% and international plumbing sales decreased 1%. Full-year operating profit was $813 million, up $92 million or 13% with margins expanding an outstanding 160 basis points to 19.7%. Turning to 2021, we expect plumbing segment sales growth to be in the range of 11% to 14% with 47% organic growth, another 4% growth from the recent acquisitions and given current exchange rates foreign currency to favorably benefit plumbing revenue by approximately 3% or $112 million. We anticipate full year margins will be approximately 18% given that in 2020 we delayed approximately $40 million in costs and investments due to COVID. We will also have increased amortization expense of approximately $11 million due to purchase accounting. Segment operating margins will decline by approximately 60 basis points due to this incremental amortization in the 2 recent acquisitions. Decorative Architectural grew 12% in the 4th quarter driven by mid-teens growth in our paint business. Operating profit in the quarter increased 9% driven by incremental volume, partially offset by an unfavorable price-cost relationship as well as higher variable compensation and legal accruals of approximately $10 million. Turning to full year 2020, sales increased 12% driven by the resurgence in DIY paint in the year. Full-year operating income increased $98 million or 20% percent with operating margins expanding 120 basis points to 19.2%. In 2021, we expect Decorative Architectural segment sales to grow in the range of 2% to 7% with 0% to 5% organic growth and another 1.5% from the acquisition. We also expect segment operating margins of approximately 19%. In addition, the acquisition completed at the end of 2020 will add approximately $3 million of incremental amortization expense due to purchase accounting. Turning to slide 10, our year-end balance sheet was strong with net debt to EBITDA at 1 times and we ended the year with approximately $2.3 billion of balance sheet liquidity, which includes full availability of our $1 billion revolver. Working capital as a percentage of sales finished the year at 15.2% excluding acquisitions and an improvement of 50 basis points over prior year. With our strong operating and working capital performance, and lower than normal capex, adjusted free cash flow was extremely strong at $1 billion representing 118% of adjusted net income from continuing operations. During 2020, we repurchased 18.8 million outstanding shares for approximately $727 million and we increased our annual dividend by 4% to $0.56 per share. We expect overall sales growth of 7% to 11% with operating margins in the range of approximately 17%. As a result, we will incur a non-cash settlement charge of approximately $450 million when we terminate the plans. Additionally, we will make a final one-time cash pension contribution of approximately $140 million to settle these plans. This amount will reduce our cash from operations, similar to the approximate $50 million of defined benefit contributions made to these plans in the past several years. This also means that beginning in 2022 cash from operations will increase by approximately $15 million as compared to prior years improving our already strong free cash flow conversion. Lastly, as Keith mentioned earlier, our 2021 earnings per share estimate of $3.25 to $3.45 cents represents 7% earnings per share growth at the midpoint of the range. This assumes a 255 million average diluted share count for the year. Growth on average is approximately GDP plus 1% to 2%, and is less cyclical than the new home construction market. Older homes require more repair and remodel spending and the average age of housing has increased due to significant under-building of homes since the downturn of 2008 and the COVID-19 pandemic has clearly increased the desire for more enjoyable living space, which has led to increased home demand and remodeling expenditures. With our market leading brands, history of innovation, strong management teams, and focus on serving our customers in this attractive industry combined with our strong free cash flow and capital deployment, our long-term expectation is to grow earnings per share on average by approximately 10% each year. This is comprised of above market organic growth in the range of 3% to 5% annually. Growth from acquisitions in the range of 1% to 3%, margin expansion each year through cost productivity and volume leverage and continued capital deployment in the form of share buybacks, which should contribute approximately 2% to 4% earnings per share growth and dividends, which should add approximately 1% to 2% return on top of the earnings per share growth.

We expect margins to be approximately 17% and earnings per share to be in the range of $3.25 to $3.45 for 2021. Our 4th quarter earnings per share increased 36% to $0.75. Lastly, as Keith mentioned earlier, our 2021 earnings per share estimate of $3.25 to $3.45 cents represents 7% earnings per share growth at the midpoint of the range.

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Yesterday, we posted our financial results for the first nine months of 2020, in which we generated adjusted EBITDA of just over $1 billion. Our 12-month rolling recordable incident rate at the end of September was 0.17 incidents per 200,000 labor hours, which is a new company record and substantially better than industry benchmarks. We are forecasting approximately 90 million planted corn acres in the United States in 2021. This is in line with the levels of the last 10 years and supported by improved farm economics due to higher corn futures, government payments and lower input prices. Our year-to-date DEF sales volumes are up 6% compared to 2019, which would have been difficult to foresee in April when economic activity and miles driven declined so dramatically. We also expect demand for urea imports into Brazil of approximately 6.5 million metric tons will continue to be supported by improved farm incomes and no active domestic urea production. For the first nine months of 2020, the company reported net earnings attributable to common stockholders of $230 million or $1.07 per diluted share. EBITDA was $982 million, and adjusted EBITDA was $1 billion. For the third quarter of 2020, we reported a net loss attributable to common stockholders of $28 million or $0.13 per diluted share. EBITDA was $196 million, and adjusted EBITDA was $204 million. On a trailing 12-month basis, net cash provided by operating activities was approximately $1.2 billion, and free cash flow was $756 million. At the end of October, cash on the balance sheet was well over $600 million, and we are well positioned to fulfill our commitment to repay the remaining $250 million on our 2021 notes. We expect capital expenditures for 2020 to be approximately $350 million as we maintain our high standards of reliability and safety. We expect our capital budget will return to our typical $400 million to $450 million range in 2021 and beyond. That said, we expect that additional steps we will take to enable the production of green and low-carbon ammonia will require investment beyond this $400 million to $450 million annual range. So after the repayment of the $250 million in 2021 notes, we would expect that our primary use of cash in the coming years will be in support of our strategic focus on clean hydrogen and ammonia projects.

For the first nine months of 2020, the company reported net earnings attributable to common stockholders of $230 million or $1.07 per diluted share. For the third quarter of 2020, we reported a net loss attributable to common stockholders of $28 million or $0.13 per diluted share.

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On a U.S. GAAP basis for the second quarter of 2021, NOV reported revenues of $1.42 billion and a net loss of $26 million. During the second quarter of 2021, NOV's consolidated revenue increased 8% sequentially, and EBITDA improved to $47 million, excluding the benefit arising from the cancellation of certain offshore rig projects. Operating leverage was strong at 50%, owing to cost reductions in prior periods, while price increases in certain product lines helped offset the inflation we are seeing in most product lines. Rig Technologies posted book-to-bill of 138% and on strength in orders for renewables. And Completion & Production Solutions book-to-bill ran 167% in the second quarter. Its last two quarters have seen it put up double-digit top line growth at greater than 50% EBITDA leverage, benefiting from the outstanding execution of cost reductions through the downturn as well as selected price increases where possible. Book-to-bill's above 100% for both in the second quarter also support our outlook. Overall, excluding the rig cancellation, NOV's consolidated North American revenues increased 22% in the second quarter, and international revenues increased 1%. Consolidated offshore revenues declined 5% sequentially in the quarter. Every business unit, with the exception of our Intervention & Stimulation Equipment business, posted book-to-bill ratios above 100%. The 11% sequential improvement in spare parts bookings during the quarter, more inquiries around rig reactivations and more engineering work we are being asked to do around upgrading BOPs, automating pipe handling and adding Crown Mounted compensators gives us confidence that we are seeing more offshore drilling activity on the horizon. The wind propulsion technology will supplement conventional propulsion systems and is expected to reduce the ship's carbon footprint by 40% to 50%. And Tuboscope's TK liner product line is becoming an indispensable piece of large geothermal projects internationally as evidenced by a contract award this quarter for approximately 60,000 feet of large diameter product. Our NOVOS operating system is at work today on 74 drilling rigs with another 84 in backlog, enabling these land and offshore rigs to access 10 different optimization applications written by NOV and third parties. Several customers came out to see our cost-effective industrial robots Dope and Trip over 25 stands per hour without any human hands touching the pipe or the controls. For the second quarter of 2021, NOV's consolidated revenue rose 13% sequentially to $1.42 billion, and EBITDA was $104 million or 7.3% of sales. Second quarter revenue included $74 million related to the final cash settlement and cost reimbursement from the cancellation of offshore project -- offshore rig projects. Excluding the settlement, revenue rose 8% sequentially to $1.34 billion and EBITDA was $47 million or 3.5% of sales. Consolidated U.S. revenue increased 27% sequentially, significantly outpacing the growth in U.S. drilling activity. International revenues, excluding the settlement, improved only 1% but we began to see international growth accelerate late in the second quarter. 50% incremental margins were the result of better absorption across our manufacturing base, better management of supply chain disruptions price improvements in certain areas and cost savings initiatives, which have nearly achieved our target for the year. Efforts to improve capital efficiencies across the organization helped drive $177 million in cash flow from operations. Capital expenditures totaled $49 million, resulting in $128 million of free cash flow. During the second quarter, we redeemed the remaining $183 million of our senior notes due in December 2022, and we ended the quarter with $1.6 billion of cash, $1.7 billion of gross debt and only $114 million of net debt. Our Wellbore Technologies segment generated $463 million in revenue during the second quarter, an increase of $50 million or 12% sequentially. Revenue improved 14% in North America and 10% in international markets as the early stages of a global recovery began to expand beyond the Western Hemisphere. An improved cost structure, higher volumes and pricing improvements more than offset inflationary costs and drove 58% incremental margins, resulting in a $29 million increase in revenue to $63 million or 13.6% of sales. Our ReedHycalog drill bit business posted solid top line growth, led by a 25% sequential improvement in U.S. revenue, resulting from improving activity and market share gains. Outside North America, sales improved 10% sequentially with our NOC customers, signaling an intent to continue increasing activity over the next several quarters. Our downhole tools business reported a 13% sequential improvement in revenue, with most major regions realizing double-digit percentage growth. Demand for capital equipment began to show signs of life in the second quarter, with bookings improving 1.7 times off the very low mark realized in the first quarter of 2021. Revenue from surface sensor and data acquisition sales and rentals improved 20% due to higher drilling activity and market share gains. Our Tuboscope pipe coating and inspection business posted an 11% sequential increase in revenue with strong incremental margins during the quarter, driven by a sharp increase in demand for our tubular coating services across all major market. We received an order for 121,000 feet of 12-inch line pipe for a saltwater disposal system in the Haynesville as well as an order for 14,000 feet of 16-inch line pipe for a system in the Permian. Our Grant Prideco drill pipe business posted revenue growth of 11% on higher sales of drill pipe and the delivery of the industry's first three million-pound 20,000 psi-rated landing string. For our Wellbore Technologies segment, we expect accelerating activity in the Eastern Hemisphere and modest improvements in the Western Hemisphere to result in 6% to 10% sequential growth in the third quarter. We anticipate improved absorption rates and higher pricing will be partially offset by inflationary pressures, ongoing raw material shortages and a less favorable product mix in our drill pipe business, limiting incremental margins to the mid-20% range during the third quarter. Our Completion & Production Solutions segment generated $497 million in revenue during the second quarter, an increase of $58 million or 13% sequentially. Lower margin sales, inflationary pressures and operational disruptions limited incremental margins to 14%, resulting in EBITDA of $4 million or 0.8% of sales. Orders improved 37% sequentially, totaling $462 million for a book-to-bill of 167%. All but one business unit achieved a book-to-bill of above 100% and the step change in order intake resulted in the segment achieving its highest booking quarter since 2019. Backlog for the segment at the end of the quarter was just north of $1 billion. Field trials for our e-frac system have validated its ability to significantly reduce maintenance costs and increase pump volume nearly 4 times compared to conventional equipment while significantly reducing emissions. Orders increased 2.6 times over the first quarter, and our pipeline of opportunities remains strong. Delays in final customer acceptance slowed production during the quarter, but order intake grew 85% sequentially, both of which should allow the unit to post better results in the third quarter. Our Fiberglass business unit reported a 13% sequential increase in revenue with solid EBITDA flow-through despite a continuation of global supply chain and COVID-related difficulties. We've seen certain raw material prices increase upwards of 40% and shipping costs increased fourfold compared to 24 months ago. Despite the difficult operating environment, our fiberglass business achieved its highest level of backlog in the last five quarters and we're finally beginning to see a pickup in demand for midstream customers in the U.S. For the third quarter of 2021, we anticipate revenue from our Completion & Production Solutions segment will improve between 5% to 10% sequentially, with incremental margins in the low 30% range. Our Rig Technologies segment generated revenues of $487 million in the second quarter, an increase of $56 million or 13% sequentially. Second quarter revenues included $74 million related to the final settlement from the cancellation of certain offshore rig projects. Excluding the impact of the settlement, revenues declined $18 million sequentially to $413 million as improving aftermarket sales and progress on land rig projects were more than offset by lower offshore rig equipment sales. Adjusted EBITDA, excluding $57 million from the settlement, improved $5 million to $18 million or 4.4% of sales due to a higher margin mix and improved operational efficiencies. Capital equipment orders for the segment more than doubled to $232 million, yielding a book-to-bill of 138%. As Clay mentioned, more than 50% of our Q2 orders related to wind installation vessel equipment where NOV's engineering designs and equipment continue to be the market standards. Orders received in Q2 position us well to achieve our stated target of a $200 million annual revenue run rate in our wind business by year-end. While awards have been robust during the past 12 months, we expect this momentum to continue and see the potential for our wind-related revenues to achieve a run rate of between $350 million and $400 million by the end of 2022. During the second quarter, our aftermarket sales improved 3% sequentially with spare part bookings growing 11%. For the third quarter, we expect revenues for our Rig Technologies segment to remain in line with the second quarter, excluding the impact of the settlement with margins that are flat to down 200 basis points.

On a U.S. GAAP basis for the second quarter of 2021, NOV reported revenues of $1.42 billion and a net loss of $26 million. For the second quarter of 2021, NOV's consolidated revenue rose 13% sequentially to $1.42 billion, and EBITDA was $104 million or 7.3% of sales.

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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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Currently, we have a $5 billion bank revolver that is undrawn. At year end\, MPC's gross debt-to-capital ratio is 21% and our long-term gross debt-to-capital target is approximately 30%. After the recent redemption in December, our current structural debt is approximately $6.5 billion, and we do not have any maturities until 2024. 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. 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.

Further reinforcing our commitment to return capital to shareholders, we obtained board approval for an additional $5 billion in share repurchase authorization. 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. While we were able to finish 2021 with a full year operating cost per barrel that was $5. MPC's 2022 capital investment plan totals approximately $1.7 billion. 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. Under income taxes, we received approximately $1.6 billion of our CARES tax refund in the fourth quarter. MPC's investment plan, excluding MPLX, totals approximately $1.7 billion. 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. Currently, we have a $5 billion bank revolver that is undrawn.

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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%. 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. Most recently, Apple announced plans to create, at least 3,000 jobs in the Raleigh-Durham area. 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 our Domain 9 project illustrates, we are not opportunity-constrained at Cousins. 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. First, physical customer utilization continues to track at an average of about 20% across the company. For instance, our Atlanta, Dallas and Tampa portfolios are all running at about a 30% or higher average utilization rate. 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. 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. As for leasing activity, we executed 271,000 square feet of leases this quarter. 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. 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. 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. In fact inward migration to Florida is back to over 1,000 people a day. 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. 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. 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%. 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. 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. 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. 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. A new $135.7 million nonrecourse loan was obtained replacing the original $77 million construction loan. As a quick reminder Carolina Square is held in a 50-50 joint venture partnership. At the end of the first quarter our net debt-to-EBITDA was 4.87x. 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%. 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%. 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 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.

On the operations front, the team delivered $0.69 per share in FFO. FFO was $0.69 per share. We currently anticipate full year 2021 FFO between $2.68 and $2.78 per share.

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Yesterday, we reported second quarter net income of $57 million or $0.59 per share. Excluding the special items, second quarter 2020 net income of $132 million or $1.38 per share compared to the second quarter of 2019, net income of $194 million or $2.04 per share. Second quarter net income was $1.54 billion in 2020 and $1.76 billion in 2019. Total company EBITDA for the second quarter, excluding special items, was $299 million in 2020 and $376 million in 2019. Second quarter net income included special items expenses of $0.79 per share related primarily to the impairment of goodwill associated with our paper segment. Excluding the special items that we mentioned, the $0.66 per share decrease in second quarter 2020 earnings compared to the second quarter of 2019 was driven primarily by lower prices and mix in our packaging segment of $0.66 and paper segment $0.05, lower volumes in our paper segment, $0.40 and higher depreciation expense, $0.04. These items were partially offset by lower operating costs of $0.33, primarily in the areas of labor and fringes, repairs, materials and supplies and several fixed cost areas. We also had lower annual outage expenses of $0.10, lower converting costs, $0.03, lower freight expenses, $0.02 and other costs, $0.01. EBITDA, excluding special items in the second quarter of 2020 of $313 million with sales of $1.4 billion resulted in a margin of 22% versus last year's EBITDA of $349 million and sales of $1.5 billion or 23% margin. As Mark indicated, our corrugated products plants achieved a new second quarter record for shipments per day, which were up 1.2% compared to last year's second quarter. Total shipments for the quarter were also up 1.2% over last year. As a comparison for the second quarter, the industry was down 1.4% in total and on a workday basis. Through the first half of 2020, our box shipment volume is up 2.5% on a per day basis versus the industry being up 0.6%. Outside sales volume of containerboard was about 10,000 tons below last year's second quarter and 23,000 tons below the first quarter of 2020, and as we ran our containerboard system to demand, supplied the record needs of our box plants and positioned our inventory for even higher demand during an expected stronger third quarter. Domestic containerboard and corrugated products prices and mix together were $0.61 per share below the second quarter of 2019 and down $0.18 per share compared to the first quarter of 2020. Export containerboard prices were down about $0.05 per share versus last year's second quarter and flat compared to the first quarter of 2020. Looking at the paper segment, EBITDA, excluding special items in the second quarter was $5 million with sales of $123 million or a 4% margin compared to second quarter 2019 EBITDA of $48 million and sales of $238 million for a 20% margin. Second quarter paper prices and mix were about 5% below last year, and less than 1% below the first quarter of 2020. As expected, our sales volume was about 45% below last year, and as announced back in April, we had our Jackson mill down for the months of May and June to help manage our supply with our demand outlook. Cash provided by operations for the second quarter was $227 million, with free cash flow of $146 million. The primary uses of cash during the quarter included capital expenditures of $81 million, common stock dividends of $75 million; net interest payments of $41 million and cash taxes of $39 million. We ended the quarter with $853 million of cash on hand or $977 million, including marketable securities. Our liquidity at June 30 was just over $1.3 billion. Based on this evaluation, we determined that goodwill was fully impaired for the paper segment and recognized a noncash impairment charge totaling $55.2 million. The results of this test indicated that these assets were 100% recoverable. The fourth quarter estimate for our scheduled outages is now $0.59 per share, and the full year increment is now $1.05 per share.

Yesterday, we reported second quarter net income of $57 million or $0.59 per share. Excluding the special items, second quarter 2020 net income of $132 million or $1.38 per share compared to the second quarter of 2019, net income of $194 million or $2.04 per share. Second quarter net income was $1.54 billion in 2020 and $1.76 billion in 2019. The fourth quarter estimate for our scheduled outages is now $0.59 per share, and the full year increment is now $1.05 per share.

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As a company, we delivered $235 million in revenue in the second quarter, growing revenues both year-over-year and sequentially and we achieved near record levels of profitability. Gross margins of 43% and operating margins of 21%, our second highest quarterly margin performance. We achieved GAAP earnings per share of $0.97 for adjusted earnings per share of $1.1 [Phonetic] and our best free cash flow quarter in the company's history, generating over $50 million in free cash flow in the second quarter. This ranges from our proprietary 3D-woven composites currently used on LEAP engine, fan blades and fan cases, to automated fiber placement composite wing skins for Lockheed Martin's F-35 Joint Strike Fighter to complex components on the Sikorsky CH-53K helicopter. Not surprisingly, publication grades continue their decline and only represented 16% of MC revenues in the second quarter. For the second quarter, total company net sales were $234.5 million, an increase of 3.8% compared to $226 million delivered in the same quarter last year. Adjusting for currency translation effects, net sales rose by 1% year-over-year in the quarter. In Machine Clothing, also adjusting for currency translation effects, net sales were up 0.8% year-over-year, driven by increases in packaging grades and engineered fabrics, partially offset by declines in all other grades. Publication revenue declined by over 7% in the quarter and as Bill mentioned, represented only 16% of MC's revenue this quarter. Engineered Composites net sales, again after adjusting for currency translation effects, grew by 1.3%, primarily driven by growth on LEAP and CH-53K, partially offset by a decline on the 787 platform. During the quarter, the ASC LEAP program generated little over $25 million in revenue. Comparable to the first quarter of this year, but up over $10 million from the second quarter of last year. At the same time, we reduced our inventory of LEAP-1B finished goods by over 20 engine shipsets in the quarter, leaving us with about 170 LEAP-1B engine shipsets on the balance sheet at the end of the second quarter. Also during the most recent quarter, we generated about $3 million in revenue on the 787 program, up from less than $1 million in the first quarter, but down from almost $14 million in the second quarter of last year. Second quarter gross profit for the company was $101.7 million, a reduction of 1% from the comparable period last year. The overall gross margin decreased by 220 basis points from 45.6% to 43.4% of net sales. Within the MC segment, gross margin declined from 54.5% to 52.9% of net sales principally due to foreign currency effects, higher input costs and higher fixed costs, partially offset by improved absorption. For the AEC segment, the gross margin declined from 26.7% to 23% of net sales, driven primarily by a smaller impact from changes in the estimated profitability of long-term contracts. During this quarter, we recognize the net favorable change in the estimated profitability of long-term contracts of just over $4 million. But this compares to a net favorable change of over $7 million in the same quarter last year. Second quarter selling, technical, general and research expenses increased from $47.4 million in the prior year quarter to $51.8 million in the current quarter and also increased as a percentage of net sales from 21% to 22.1%. Total operating income for the company was $50 million, down from $52.7 million in the prior year quarter. Machine Clothing operating income fell by $600,000, caused by higher STG [Phonetic] in our expense, partially offset by higher gross profit and lower restructuring expense. And AEC operating income fell by $1.1 million, caused by lower gross profit and higher STG in our expense, partially offset by lower restructuring expense. The income tax rate for this quarter was 30%, compared to 32.1% in the same quarter last year. Net income attributable to the company for the quarter was $31.4 million, reduction of $1 million from $32.4 million last year. Earnings per share was $0.97 in this quarter compared to $1 last year. After adjusting for the impact of foreign currency revaluation gains and losses, restructuring expenses and expenses associated with the CirComp acquisition and integration, adjusted earnings per share was $1.01 this quarter, compared to $1.09 last year. Adjusted EBITDA declined by 5.8% to $69.4 million for the most recent quarter compared to the same period last year. Machine Clothing adjusted EBITDA was $63 million, essentially flat compared to the prior year quarter and represented 39.4% of net sales. AEC adjusted EBITDA was $19.3 million or 25.9% of net sales, down from last year's $22.8 million or 31.4% of net sales. Total debt, which consists of amounts reported on our balance sheet as long-term debt or current maturities of long-term debt declined from $384 million at the end of Q1 2021 to $350 million at the end of Q2 and cash increased by just over $15 million during the quarter, resulting in the reduction in net debt of about $50 million. Capital expenditures in the quarter were approximately $11 million compared to $9 million in the same quarter last year. Compared to the same period last year, MC orders were up 10% in the second quarter and up over 3% year-to-date. Overall, we are raising our previously issued guidance of revenue for the segment to between $585 million and $600 million, up from the prior range of $570 million $590 million. From a margin perspective in Machine Clothing, we delivered another strong quarter with adjusted EBITDA margins of almost 40%. We saw some increase in the level of travel during the quarter, but we are still not back to a normal level of travel and the segment's travel expense in the quarter was still almost $2 million, below the level in the same quarter in 2019. So, we may see some additional pressure from that in the balance of the year as we continue with the return to normal. As a result of all of these factors and the increase in revenue guidance, we are increasing our adjusted EBITDA guidance for the MC segment to a range of $210 million to $220 million, up from the prior range of $195 million to $205 million. For the full year, we still expect 787 program revenue to be down over $40 million from the roughly $50 million generated on that program last year. With Boeing's recent announcement of a reduction in 787 build rate, all but eliminating the possibility for any upside on that program later in the year. However, on a more positive note, while F-35 revenue was down slightly in the second quarter compared to the same period last year, recent order volume has given us confidence that we will not see the full-year decline in F-35 revenue that we had previously expected. Overall, due to the increased confidence in F-35 revenue, the adjustments to long-term contract profitability this quarter and improvements in several other areas, we are raising our guidance for segment revenues to be between $290 million and $310 million, up from the previous range of $275 million to $295 million. From a profitability perspective driven by the same factors, we are raising our AEC adjusted EBITDA guidance to be between $65 million and $75 million, up from the prior range of $55 million to $65 million. We are also updating our previously issued guidance ranges for company-level performance including revenue of between $880 million and $910 million, increased from prior guidance of $850 million to $890 million; effective income tax rate of 28% to 30%, unchanged from prior guidance; depreciation and amortization of approximately $75 million, the top end of prior guidance; capital expenditures in the range of $40 million to $50 million, down from prior guidance of $50 million to $60 million; GAAP earnings per share of between $2.84 and $3.14 increased from prior guidance of $2.38 to $2.78; adjusted earnings per share of between $2.90 and $3.20, increased from prior guidance of $2.40 to $2.80; and adjusted EBITDA of between $225 million and $240 million, increased from prior guidance of $195 million to $220 million.

As a company, we delivered $235 million in revenue in the second quarter, growing revenues both year-over-year and sequentially and we achieved near record levels of profitability. We achieved GAAP earnings per share of $0.97 for adjusted earnings per share of $1.1 [Phonetic] and our best free cash flow quarter in the company's history, generating over $50 million in free cash flow in the second quarter. Earnings per share was $0.97 in this quarter compared to $1 last year. After adjusting for the impact of foreign currency revaluation gains and losses, restructuring expenses and expenses associated with the CirComp acquisition and integration, adjusted earnings per share was $1.01 this quarter, compared to $1.09 last year. So, we may see some additional pressure from that in the balance of the year as we continue with the return to normal. We are also updating our previously issued guidance ranges for company-level performance including revenue of between $880 million and $910 million, increased from prior guidance of $850 million to $890 million; effective income tax rate of 28% to 30%, unchanged from prior guidance; depreciation and amortization of approximately $75 million, the top end of prior guidance; capital expenditures in the range of $40 million to $50 million, down from prior guidance of $50 million to $60 million; GAAP earnings per share of between $2.84 and $3.14 increased from prior guidance of $2.38 to $2.78; adjusted earnings per share of between $2.90 and $3.20, increased from prior guidance of $2.40 to $2.80; and adjusted EBITDA of between $225 million and $240 million, increased from prior guidance of $195 million to $220 million.

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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. 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. 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. 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. 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. Our quarterly dividend of $0.18 per share underscores our continued commitment to returning capital to our shareholders. 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. 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.

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. 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. 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. Net income for the fourth quarter 2019 was $11.7 million or $1.03 per diluted share.

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This quarter set records once again as the markets rallied from the first quarter slump with the S&P 500, posting its strongest quarterly gains since 1998. Another factor affecting performance is that the S&P 500's five largest stocks, comprising about 20% of the overall index have business models that could take advantage of the constraints of the lockdown including working from home, and they exerted an outsized influence on the S&P 500's returns. The impact of the Top 5 stocks on the Russell 1000 Growth Index was even more pronounced, accounting for about 40% of index performance. Large cap value stayed ahead of its Russell 1000 benchmark year-to-date and for the trailing year and its peer rankings remains strong. Among its eVestment database institutional peers, large-cap value is top quartile for the trailing three- and seven-year periods, and 26% percentile for the trailing 10-year period and it's in the top third for the trailing one-year period. LargeCap Select finished the quarter ahead of the Russell 1000 value benchmark, and commands a top 20% ranking in the eVestment LargeCap Value manager universe for the trailing three-year time period. Our SMidCap strategy lagged the Russell 2500 Value Index for the quarter, but it's over 350 basis points ahead so far this year, which places it in the 29th percentile year-to-date, the 22nd percentile for trailing one year and the 25th percentile for the trailing three-year period. Adding to its relative outperformance against the Russell 2000 Value on a year-to-date basis. SmallCap maintained its attractive peer rankings with a 36 percentile placement year-to-date, a top quartile ranking for the trailing three-year period and 18th percentile for the trailing five-year period. 28th percentile for the trailing five year period and 12 percentile for the trailing 10-year period. Total return outperformed its benchmark by over 400 basis points and ranks in the 2nd percentile year-to-date among institutional peers while our high income strategy outperformed its benchmark by over 600 basis points. Strategic global convertibles long only strategy outperformed the Thomson Reuters convertible global focus Index by over 400 basis points, while our absolute return strategy, alternative income rose in absolute terms, nearly 600 basis points this quarter. Among institutional peers, strategic global convertibles has a top-decile ranking for trailing one year and it's 13 percentile for the trailing three-year time period. Our downside capture during the first quarter was less than 80%. In our institutional and intermediary sales group, we had inflows of nearly $430 million, offset by $1.4 billion and outflows, mostly in emerging markets were some large institutional clients withdrew funds. Gross sales across the institutional and intermediary channels increased to $430 million from $388 million in the prior quarter with positive net flows and SmallCap, SMidCap and AllCap. Well before COVID--19 struck, the asset management industry was experiencing significant disruptions and the pandemics impact now and for this foreseeable future exerts even more pressure on companies to evolve to meet the challenge. And we expect to save over 1 million a year in internal cost. Reviews of other business units and products not deem commercially viable in the long run are likely to lead to additional actions that will be covered in the 2Q10 call. Today, we reported total revenues of $15.9 million for the second quarter of 2020 compared to $16.7 million in the first quarter of 2020 and $21.7 million in the prior year's second quarter. Second quarter net loss was $2.6 million, or $0.33 per share compared to net income of $1.1 million, or $0.13 per share in the first quarter. Economic earnings, a non-GAAP metric was $0.2 million, or $0.03 per share in the current quarter versus $4.2 million, or $0.50 per share in the first quarter. Second quarter net loss of $2.6 million, or $0.33 per share compared to net income of $1.9 million, or $0.22 per share in the prior year second quarter. Economic earnings for the quarter was $0.2 million, or $0.03 per share compared to $4.8 million or $0.56 per share in the second quarter of 2019. Firmwide assets under management totaled $11.9 billion at quarter end and consisted of Institutional assets of $6.2 billion or 52% of the total, Wealth Management assets of $4 billion, or 34% of the total and mutual fund assets of $1.7 billion, or 14% of the total. Over the year, we experienced market depreciation of $1.6 billion and net outflows of $1.8 billion. Our financial position continues to be very solid with cash and short-term investments at quarter end, totaling $74.2 million and a debt-free balance sheet. In the second quarter we repurchased 47,697 shares of our common stock for aggregate purchase price of $8.1 million. We currently have authority to repurchase an additional $10 million [Phonetic] of our outstanding share.

Today, we reported total revenues of $15.9 million for the second quarter of 2020 compared to $16.7 million in the first quarter of 2020 and $21.7 million in the prior year's second quarter. Second quarter net loss was $2.6 million, or $0.33 per share compared to net income of $1.1 million, or $0.13 per share in the first quarter. Economic earnings, a non-GAAP metric was $0.2 million, or $0.03 per share in the current quarter versus $4.2 million, or $0.50 per share in the first quarter. Second quarter net loss of $2.6 million, or $0.33 per share compared to net income of $1.9 million, or $0.22 per share in the prior year second quarter. Economic earnings for the quarter was $0.2 million, or $0.03 per share compared to $4.8 million or $0.56 per share in the second quarter of 2019.

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In the third quarter, Frontline achieved $10,500 per day on our VLCC fleet; $7,900 per day on our Suezmax fleet; and $10,700 per day on our LR2/Aframax fleet. So far in the fourth quarter, we have booked 79% of our VLCC days at $21,600 per day; 72% of our Suezmax days at $17,900 per day; and 64% of our LR2/Aframax days at $16,000 per day. And in the third and the fourth quarter, we have entered into term loan facilities and obtained financing commitments for a total amount of up to $507 million to partially financed the acquisition on the two 2019 built VLCCs and also the six new building contracts. These facilities will finance 65% of market value. They will carry an interest rate of LIBOR plus a margin of 170 basis points. And they will have an amortization profile of mostly 20 years but also 18, commencing from the delivery date from yard. When we factor in 33.4 million available under the term loan facility entered into November 2020 to partially finance the delivery of the last LR2 tanker, we have established bank debt of up to $540.4 million. The company has also raised gross proceeds of 51.2 million under the equity distribution agreement and also net cash proceeds of approximately 67 million through the sale of four LR2 tankers. Frontline has also extended the terms of the senior unsecured revolving credit facility of up to $275 million by 12 months to May 2023, leaving Frontline with no loan maturities until 2023. Frontline achieved total operating revenues net of voyage expenses of $69 million and adjusted EBITDA of $17 million in the third quarter of 2021. We reported net loss of 33.2 million or $0.17 per share and adjusted net loss of 35.9 million or $0.18 per share in the third quarter. The adjustments consist of a 1.2 million gain on derivatives and 0.2 million gain on marketable securities, and a 1.3 million amortization of acquired time charters. The adjusted net loss in the third quarter increased by 12.7 million compared with the second quarter. And this increase in loss was driven by a decrease in our time charter equivalent earnings due to lower TCE rates and the recognition of a gain on the marketable securities sold in the second quarter of 4 million. This was partly offset by a decrease in ship operating expenses of 3.2 million, primarily as a result of lower dry-docking costs. The total balance sheet numbers have increased with 6 million in the third quarter. As of September 30th, 2021, Frontline has 190 million in cash and cash equivalents including undrawn amounts under our senior unsecured loan facility, marketable securities, and minimum cash requirements. Frontline's remaining new building and this acquisition capex of 659.4 million as per September 30th, 2021 is fully funded by a 540.4 million in estimated debt capacity and also the 118.2 million in cash raised with the ATM and the sale of the four LR2 tankers, which I mentioned. We estimate average cash cost breakeven base for the remainder of 2021 of approximately $21,400 per day for the VLCCs, $17,800 per day for the Suezmax tankers, and $14,100 per day for the LR2 tankers. And the fleet average estimate is about $17,600 per day. We recorded opex expenses in the third quarter of $8,200 per day for the VLCCs, $7,200 per day for the Suezmax tankers, and $8,800 per day for the LR2 tankers. Let's take an example, if we assume historic Clarkson TCE rates for non-ECO vessels in the period 2000 to 2021, November 2021, adjusted them for Frontline fleet scrubber and ECO vessels, Frontline will have a free cash flow yield of 38%. So global oil consumption averaged 98.6 million barrels per day. That's up 1.9 million barrels from the second quarter. Supply averaged 96.8 million, also increasing by close to 2 million barrels per day. But we continue to grow then kind of very close to 1.8 million barrels per day of inventories. OPEC plus supply rose an average of 1.4 million barrels per day. And in December, we're actually -- some market commentators actually arguing for us to end up in or at 100 million barrels per day. 2023 is destined to show very few VLCC and Suezmax deliveries. And basically, the considerations that shipowners need to make now, if you are to go into the market and order a VLCC, say at 110 or 115 or $120 million depending on who you speak to, you're actually making a bet on steel prices come 2023. The VLCC order book is now at 71 units, that's a little bit north of 8% of the existing fleet. But we still have this situation where 113 VLCCs will be above or past the 20-year mark during that period as the current order book delivers. For Suezmax, there are 41 units in the order book and 116 will be passing 20 years using the same metrics. 20 -- as you see on the chart at the top there, so 2017 and 2018 were the last big periods for vessel retirement. And now in Q3 alone, we saw close to 0.76% of the global tanker fleet sold for recycling. So basically, year to date, we've seen 15 VLCCs, 11 Suezmaxes, 18 Aframax, and eight LR2s that are reported sold for demolition. And broadly speaking, this amounts to actually close to 2% of the existing fleet. have released volumes from their SPR on a few occasions over the last 18 months. So whether it be released -- whether it's oil will be released at all from the SPR now after having a $10 drop in oil prices is obviously the question. And we do see that for tankers, it's actually showing a growth of 3.8% year on year in October compared to October 2020.

In the third quarter, Frontline achieved $10,500 per day on our VLCC fleet; $7,900 per day on our Suezmax fleet; and $10,700 per day on our LR2/Aframax fleet. So far in the fourth quarter, we have booked 79% of our VLCC days at $21,600 per day; 72% of our Suezmax days at $17,900 per day; and 64% of our LR2/Aframax days at $16,000 per day. Frontline achieved total operating revenues net of voyage expenses of $69 million and adjusted EBITDA of $17 million in the third quarter of 2021. We reported net loss of 33.2 million or $0.17 per share and adjusted net loss of 35.9 million or $0.18 per share in the third quarter. 2023 is destined to show very few VLCC and Suezmax deliveries.

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Demand trends remain robust across our business, which contributed to revenue reaching $543.3 million, more than $13 million above the high end of our guidance. We continue to execute very effectively with revenue upside falling to the bottom line as reflected in our non-GAAP net income of $1.45 per share, which was also above our guidance range. From a revenue perspective, we had a particularly strong quarter for optical communications, which grew 10% from the fourth quarter and 24% from a year ago. During our last call, we estimated that we would see a $25 million to $30 million revenue headwind in the first quarter from these constraints. Operationally, I'm very happy to announce that our COVID-19 vaccination program for employees in Thailand has been a great success and that, at this point, 99% or virtually all of our employees in Thailand are now fully vaccinated. This building will add approximately 1 million square feet or 50% to our global footprint, substantially increasing our manufacturing capacity. Revenue of $543.3 million was well above our guidance and represented an increase of 7% from the fourth quarter and 24% from a year ago. As we continue to execute very efficiently, our top line outperformance fell to the bottom line, with non-GAAP earnings of $1.45 per diluted share, which also exceeded our guidance. This result includes approximately $0.05 per share in foreign exchange gains, offsetting the expenses related to our vaccination program that we incurred in Q1. Optical communications revenue was $427.3 million, up 10% from the fourth quarter and made up 79% of total revenue. Within optical communications, telecom revenue increased 9% from the last quarter to $338.6 million, a new record, and datacom revenue of $88.7 million increased 15% from Q4. By technology, silicon photonics products reached a record $135.1 million or 25% of total revenue and was up 23% from the fourth quarter. Revenue from products rated at speed of 400 gig or higher was $173.3 million, up 30% from the fourth quarter and 149% from a year ago. Revenue from 100 gig product increased modestly from Q4 to $135.6 million. Nonoptical communications revenue was $116 million or 21% of total revenue, representing a 25% increase from a year ago, but a decrease of 5% from the fourth quarter. With the majority of our sensor revenues serving automotive applications, we are now reclassifying automotive revenue and other nonoptical communications revenue to include historical sensor revenue, which has represented less than 1% of quarterly revenue for the past two years. On this combined basis, automotive revenue was $48.2 million, a decrease of 8% from last quarter. While we don't intend to break this out in the future, for a more direct comparison purposes, automotive revenue, excluding sensors, declined 8% sequentially. Industrial laser revenue was $37.5 million, a decline of 9% from Q4, but stable when viewed on a trailing 12-month basis. Other nonoptical communications revenue was $30.3 million, up 7% from the fourth quarter. Gross margin was 12.1%, down 20 basis points from Q4, consistent with our expectation, considering the expenses related to our vaccination program annual merit increases. Operating expenses in the quarter were $13.2 million or 2.4% of revenue, resulting in operating income of $52.5 million or 9.7% of revenue. Effective tax rate was 1.2% in the first quarter, and we continue to anticipate that our tax rate in the fiscal year 2022 will be approximately 3%. Non-GAAP net income was a record at $54.2 million or $1.45 per diluted share. On a GAAP basis, net income was $1.20 per diluted share. At the end of the first quarter, cash, restricted cash and investments were $528.6 million, compared to $548.1 million at the end of the fourth quarter. Operating cash flow was $39 million. With capex of $34.6 million, free cash flow was $4.4 million in the quarter. We remain committed to return surplus cash to shareholders through a 10b5-1 share repurchase plan, combined with opportunistic open market share buybacks. Currently, we have $81.2 million in our share repurchase authorization. We estimate that the ongoing supply cost change will again impact our second quarter revenue by approximately $25 million to $30 million. With that backdrop, for the second quarter, we anticipate revenue in the range of $540 million to $560 million. From a profitability perspective, we anticipate non-GAAP net income to be in the range of $1.42 to $1.49 per diluted share.

We continue to execute very effectively with revenue upside falling to the bottom line as reflected in our non-GAAP net income of $1.45 per share, which was also above our guidance range. Revenue of $543.3 million was well above our guidance and represented an increase of 7% from the fourth quarter and 24% from a year ago. As we continue to execute very efficiently, our top line outperformance fell to the bottom line, with non-GAAP earnings of $1.45 per diluted share, which also exceeded our guidance. Non-GAAP net income was a record at $54.2 million or $1.45 per diluted share. On a GAAP basis, net income was $1.20 per diluted share. With that backdrop, for the second quarter, we anticipate revenue in the range of $540 million to $560 million. From a profitability perspective, we anticipate non-GAAP net income to be in the range of $1.42 to $1.49 per diluted share.

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U.S. GDP grew 6.7% in the second quarter but is expected to slow in the third quarter due to the surge in infections caused by the Delta variant. However, daily COVID infection levels have dropped over 50% from highs in September, which bodes well for strong economic growth in future quarters. The relatively low unemployment rate at 4.8% is being driven by both new job creation, which recently has been tepid and workers withdrawing from the workforce. There are over 10 million job openings across the U.S. and virtually every employer, including BXP, is experiencing a highly competitive labor market. Annual inflation remains high at 5.4% in September, driven largely by energy prices, which are up 25% versus one year ago. Lastly, the 10-year U.S. treasury rate has increased approximately 40 basis points to 1.6% since our last earnings call. Our FFO per share this quarter was $0.03 above market consensus and $0.04 above the midpoint of our guidance, which Mike will detail shortly. We completed over 1.4 million square feet of leasing, significantly more than double the volume achieved in the first quarter, well above the leasing achieved in the second quarter and just under our long-term third quarter average. Our clients continue to make even longer-term commitments as the leases signed in the third quarter had a weighted average term of 9.3 years versus 7.5 years in the second quarter. Year-to-date, we have completed 3.3 million square feet of leasing with an average lease term of 8.3 years. In addition to our leasing activity, which included a 524,000 square foot long-term renewal with Wellington at Atlantic Wharf, Google purchased a 1.3 million square foot building in New York for its use. In the Silicon Valley alone, Apple completed a 720,000 square foot new requirement. Facebook is looking for 700,000 additional square feet. And ByteDance is searching for approximately 250,000 to 300,000 square feet. In the Seattle region, Facebook is pursuing a 0.5 million square foot requirement in South Lake Union and Amazon has executed on enormous growth in Bellevue. Our leading region is New York City, which hit 52% occupied last week. Our lagging region is San Francisco, which is increasing, but currently at 18%, and the remaining regions are in between. $26 billion of significant office assets were sold in the third quarter, up 38% from last quarter and up 165% from the third quarter a year ago. Of note, this past quarter in all of our markets, One Canal Park, an empty 112,000 square foot office building in Cambridge sold to a REIT for $131 million or $11.70 a square foot. As mentioned, Google exercised its option to purchase St. John's Terminal in New York City, which is a 1.3 million square foot office building that fully occupies and the price was $2.1 billion or $1,620 a foot. Coleman Highline, which is a 660,000 square foot office complex under construction in North San Jose and fully leased to Verizon, sold for $775 million, which is $1,180 a square foot and a 4.2% initial cap rate to a non-U.S. buyer. 153 Townsend Street, which is 179,000 square foot office building in San Francisco sold for $231 million or $1,290 a square foot to a local operator and fund manager. West 8th is a 540,000 square foot office building in the Denny Triangle, Seattle, sold for $490 million or $910 a square foot to a REIT. 49% interest in 655 New York Avenue in Washington, D.C. sold for a gross price of $805 million or $1,060 a square foot and a 4.7% cap rate. The building comprises over 760,000 square feet, is 93% leased and sold to a non-U.S. investor with a domestic advisor. And lastly, The Post, which is 100,000 square foot fully leased office building in Beverly Hills, sold for $153 million, which is $1,530 a square foot and a 4.8% initial cap rate to a domestic fund manager. We're also on track to close the 360 Park Avenue South acquisition with Strategic Capital Program Partners on December 1, thereby entering the Midtown South market in New York City. Regarding dispositions, we completed the sale of our Spring Street Office Park in Lexington Mass this week, bringing our share of gross sale proceeds from dispositions year-to-date to $225 million. We're also marketing for sale two additional buildings, which, if completed, are projected to yield approximately $200 million in gross proceeds. On development activities, this quarter, we delivered 0.5 million square feet of Verizon and other tenant space at 100 Causeway and 285,000 square feet of Fannie Mae space at Reston Next. In the aggregate, we have 4.3 million square feet of development underway that is 72% pre-leased. These future deliveries plus the stabilization of recently delivered projects are projected to add approximately $190 million to our NOI and 3.8% to our annual NOI growth over the next few years. We believe BXP is about to experience a strong growth ramp, which we project to be approximately 13% in FFO per share in 2022, driven by improving economic conditions and leasing activity, recovery of variable revenue streams, delivery of a well-leased development pipeline, completion of four new acquisitions, a strong balance sheet combined with capital allocated from large-scale private equity partners to pursue additional new investment opportunities as the pandemic recedes, a rapidly expanding life science portfolio in the nation's hottest life science markets and low interest rates and decreasing capital costs. But when we're budgeting jobs that will start eight to 12 months from now, we're using a 5% to 6% escalation in our total construction costs. We are in the process of rebidding our Platform 16 base building project, which was previously budgeted in late 2019 with an eye toward our 2022 restart. We have net leases, under which 100% of the operating expense and real estate taxes are paid by the tenant, and we have gross leases with a base year that is set upon the lease commencement with increases in expenses over that base year added to the rental obligation of the tenant. The universe of square footage that is encompassed in the statistics is about 500,000 square feet and it includes 105,000 square feet of short-term transactions, 18 to 24 months, that we signed in the heart of the pandemic with tenants that were not in a position to make a long-term commitment but they were prepared to extend for a negotiated discounted as-is deal. One of those tenants has since agreed to lease space for 13 years, where the interim rent was $60 a square foot and they'll be paying $103 a square foot, and this is in a New York asset. If you eliminate that 105,000 square feet, the statistics that we would have shown you changed dramatically, going from down 14% to effectively flat. Our life science and office portfolio make up 91% of our revenues. As we look toward 2022, we currently have more than 800,000 square feet of signed leases that have not commenced. In 2022, lease expirations for the whole portfolio, not just our share, totaled about 2.9 million square feet, and we already have renewal conversations underway on over 25% of that space. Historically, we have leased well over 1 million square feet a quarter each and every year. You may remember that we were asked about a 200,000 square foot sublet at 399 Park Avenue during various conference calls in 2020. Now there still is significant supply of direct and sublease space in New York City and our view is that net effective rents remain down 10% to 15% from pre-pandemic levels. During the quarter, we completed eight deals totaling 113,000 square feet in the CBD portfolio. Many of these spaces were vacant, but the two largest had a roll up of 8% in one case and a roll down of 4% in another. About 70,000 square feet of leases are in the category of leases that will not have a revenue commencement until sometime in mid '22. Last week, we signed a lease at Dock 72 for 42,000 square feet. We have an additional 340,000 square feet of leases under negotiation in New York right now, including almost 200,000 square feet at Dock 72. We don't anticipate revenue commencement on 65% of that space until 2023. At Carnegie Center, down in Princeton, we did eight leases for 38,000 square feet and have another 106,000 square feet in active lease documentation. Our culinary collective, The Hugh, has opened at our 53rd Street campus in 601 Lex. During the quarter, we completed seven leases totaling 70,000 square feet in Reston, and we're in lease negotiation on another seven deals totaling 125,000 square feet. But the urban market core Reston is under 10% vacant, and it continues to dramatically outperform with starting rents in the high 40s to low 50s gross. The Reston Next development is welcoming Fannie Mae into the building this month, and we are actively marketing and leasing the remaining 160,000 square feet of available space. During the quarter, we completed a lease with a new theater operator for 50,000 square feet. Last week, we signed a 20,000 square foot lease with a local restaurant distillery and yesterday, a new 20,000 square foot fitness operator. We have three more restaurants totaling 22,000 square feet that are close to execution. This 115,000 square feet of leased retail is not expected to have any revenue contribution until 2023. In the District of Columbia, we continue to chip away at our current availability at Net Square 901 New York Avenue and Market Square North. We completed seven leases for 49,000 square feet during the third quarter and have signed another 32,000 square feet during October. And year-to-date, we've signed 162,000 square feet over eight transactions. The bulk of the demand in the last 18 months has come from traditional financial asset management and professional services firms that have focused on the best space in the best buildings. This quarter, we've completed over 100,000 square feet of leases, including full floor transactions in Embarcadero. The average starting rent was just over $100 a square foot on those full floor deals, a 21% increase over expiring rents. We are negotiating leases on another 106,000 square feet right now. The BXP ARE joint venture has signed an LOI with a full building user for 751 Gateway, 230,000 square feet and we're actively responding to proposals for our anticipated redevelopment of 651 Gateway, about 300,000 square feet, which won't commence until the third quarter of next year. Further down the Peninsula and Mountain View, activity has picked up in the last 30 days. This quarter, we completed two full building deals totaling 58,000 square feet. For those of you who saw that the Tesla announcement that they're moving their headquarters to Texas, you may have missed that they leased 325,000 square feet in Palo Alto contemporaneously with that announcement. High-quality new construction availability is very limited in the valley, and we're actively considering when we should restart the construction of Platform 16 next to Diridon Station and the future of Google development in San Jose. They agreed to expand by 70,000 square feet at Atlantic Wharf, and we're going to terminate 156,000 square feet at 100 Federal Street in 2023. We completed an additional 73,000 square feet of leases in our Back Bay portfolio, and we have about 50,000 square feet of leases under negotiation today in that same group of properties. We have signed an LOI for the 118,000 square feet formerly occupied by Lord & Taylor, as well as 40,000 square feet of in-line space that's currently vacant or in default. This 158,000 square feet will likely commence paying rent in early '23. Last week, we signed our first lease at 880 Winter Street, our lab conversion that we started four months ago, 37,000 square foot deal, which we'll deliver in the middle of next year, and we are in the final stages of negotiation on another 128,000 square feet, which will bring that 224,000 square foot building to 74% leased, and we have active dialogue on the rest of the space. And during the quarter, we signed over 105,000 square feet of leases with life science tenants at 1,000 Winner, 1,100 Winner and Reservoir Place traditional office buildings. This quarter, we took advantage of the low interest rate environment and very attractive credit spreads to issue $850 million of 12-year unsecured green bonds when the underlying 10-year treasury rate was 1.3%. We achieved a coupon of 2.45%, the lowest in the company's history. We utilized the proceeds to redeem $1 billion of 3.85% unsecured notes on October 15. The early prepayment will result in a redemption charge of $0.25 per share in the fourth quarter of 2021. The only other significant debt maturity we have in the next 18 months is our $620 million mortgage on 601 Lexington Avenue in New York City that expires in April of next year. Similar to the bond we redeemed, this loan also carries an above-market interest rate of 4.75%. For the third quarter, we announced FFO of $1.73 per share, that's $0.04 per share higher than the midpoint of our guidance and $0.03 ahead of consensus estimates. Our outperformance came from better portfolio NOI with $0.02 of higher rental and parking revenue and approximately $0.02 of lower-than-projected operating expenses. Our share of this quarter's parking revenue totaled $22 million. This compares to a comparable pre-COVID quarterly result from the third quarter 2019 of $28 million. At the bottom, in the second quarter of 2020, our share of parking revenue was $14 million, so we are over 50% of the way back. On an annualized basis, using the third quarter run rate, we have about $25 million of revenue or $0.14 per share to recover before we are back to pre-COVID annual parking levels of $113 million. Our Kendall Square hotel was profitable for the first time in six quarters contributing about $1 million of positive NOI. Given the hotel's location in the heart of Cambridge and adjacent to MIT, we expect that it will ultimately restabilize at or above the $15 million annual NOI generated in 2019, though certainly not in 2022. This quarter, our share of retail rental revenue was $43.6 million. On an annualized basis, this is $16 million less than our share of 2019 retail revenue, which totaled $190 million. If you combine and annualize our third quarter hotel NOI and our share of parking and retail revenues, we have the opportunity to gain approximately $52 million or $0.30 per share to return to 2019 full-year levels. Looking at the rest of this year, we released fourth quarter 2021 guidance of $1.50 to $1.52 per share and full-year 2021 guidance of $6.50 to $6.52 per share. Our fourth quarter guidance includes the $0.25 share redemption charge related to our bond refinancing. Excluding the charge, our fourth quarter guidance would be sequentially higher than third quarter results by $0.03 per share at the midpoint. The improvement is primarily from Verizon taking occupancy of its 440,000 square foot lease at the Hub on Causeway office development this quarter and lower interest expense after our refinancing. And while we expect our same property portfolio NOI will also grow sequentially, the growth is partially offset by the FFO dilution from the sale of our Spring Street office campus in suburban Boston that closed for $192 million this week. We have three major drivers that are all headed in the right direction, that provide for very strong FFO growth of 13% at the midpoint over 2021. We're delivering five of our development properties over the next four quarters totaling $1.6 billion of investment. These projects totaled 3 million square feet of additions to our portfolio and are 92% leased. They include the Hub on Causeway in Boston that is leased to Verizon, 325 Main Street in Cambridge that is leased to Google, the 200 West Street Life Science development in Waltham that is leased to Translate Bio; Marriott's new headquarters facility in Bethesda, Maryland; and Reston Next that is leased to Fannie Mae and Volkswagen in Reston. It is also possible that our Life Science conversion at 880 Winter Street in Waltham will begin to contribute in late 2022. In total, we expect our development deliveries to contribute an incremental $65 million to $70 million to our FFO in 2022. We expect these acquisitions will add $7 million to $10 million to our share of NOI next year. Our guidance assumes that our share of same-property NOI will grow between 2% and 3.5% next year. Our leasing velocity has picked up in the last two quarters where we've leased 2.7 million square feet of signed leases. On a cash basis, we expect our share of 2022 same-property NOI growth to be much stronger at between 5.5% and 6.5% over 2021. This equates to between $90 million and $100 million of incremental cash NOI to 2022. Much of our cash NOI growth is coming from approximately $50 million of free rent that is burning off in contractual leases. As I mentioned earlier, we will incur a debt redemption charge of $0.25 per share in the fourth quarter of '21. Also, we are aggressively refinancing loans that were placed five to 10 years ago in a higher interest rate environment with low-cost current market financing. In aggregate, we expect that 2022 interest expense will be $52 million to $60 million less than in 2021. That equates to $0.30 to $0.34 of incremental positive impact on our 2022 FFO. So to summarize, our guidance for 2022 FFO was $7.25 to $7.45 per share. The midpoint of our range is $7.35, which is 13% or $0.84 a share higher than the midpoint of our 2021 guidance. At the midpoint, the incremental growth is coming from $0.43 from development and acquisitions, $0.25 from our same property portfolio and $0.32 from lower interest expense. This will be offset by $0.06 of dilution from our 2021 disposition activity, $0.06 of lower termination income and $0.04 of higher G&A. The past 18 months have brought challenges and uncertainty to so many, including our team at BXP.

But when we're budgeting jobs that will start eight to 12 months from now, we're using a 5% to 6% escalation in our total construction costs. The early prepayment will result in a redemption charge of $0.25 per share in the fourth quarter of 2021. For the third quarter, we announced FFO of $1.73 per share, that's $0.04 per share higher than the midpoint of our guidance and $0.03 ahead of consensus estimates. Looking at the rest of this year, we released fourth quarter 2021 guidance of $1.50 to $1.52 per share and full-year 2021 guidance of $6.50 to $6.52 per share. Our fourth quarter guidance includes the $0.25 share redemption charge related to our bond refinancing. As I mentioned earlier, we will incur a debt redemption charge of $0.25 per share in the fourth quarter of '21. At the midpoint, the incremental growth is coming from $0.43 from development and acquisitions, $0.25 from our same property portfolio and $0.32 from lower interest expense.

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Consolidated net sales for the quarter were $298 million, up $19 million or 7% compared to last year. Consolidated operating income for the quarter was $34.3 million, up $300,000 or 1% compared to last year. Consolidated adjusted EBITDA for the quarter was $47.4 million, up $1.5 million or 3% compared to last year. That translates to a margin of 15.9% in Q3 this year compared to 16.4% last year. Net income for the quarter was $29.2 million, up $3.9 million or 15% from last year. That equates to GAAP earnings for the quarter of $0.47 per share, up 15% from $0.41 per share last year. On an adjusted basis, earnings per share for the quarter was $0.48 per share, an improvement of 14% compared to $0.42 per share last year. Both our GAAP earnings per share and adjusted earnings per share for the third quarter of this year included benefits from a tax planning strategy executed during the quarter, which resulted in approximately $3.3 million more in discrete tax benefits being recognized in Q3 this year compared to Q3 of last year. In the aggregate, these higher tax benefits represented approximately $0.05 of our year over year earnings per share improvement. Order intake for the quarter was again outstanding with orders of $350 million, representing an increase of $85 million or 32% compared to last year. Consolidated backlog at the end of the quarter set another new company record of $487 million. That represents an increase of $183 million or 60% from the end of last year. In terms of our group results, ESG's net sales for the quarter were $249 million, up $18 million or 8% compared to last year. ESG's operating income for the quarter was $30.8 million compared to $33 million last year. ESG's adjusted EBITDA for the quarter was $42.7 million compared to $43.9 million last year. That translates to an adjusted EBITDA margin of 17.1% in Q3 this year compared to 19% last year. ESG reported total orders of $292 million in Q3 this year, an improvement of $72 million or 33% compared to last year. SSG's net sales for the quarter were $49 million this year, up 1% compared to last year. SSG's operating income for the quarter was $7.6 million, up from $7.4 million last year, while its adjusted EBITDA for the quarter was $8.5 million, up from $8.2 million last year. That translates to an adjusted EBITDA margin for the quarter of 17.3%, up 50 basis points from last year. SSG's orders for the quarter were $58 million, up $13 million or 27% compared to last year. Corporate operating expenses for the quarter were $4.1 million compared to $6.4 million last year. Turning now to the consolidated income statement where despite the year over year sales increase, gross profit decreased by $1.7 million. Consolidated gross margin for the quarter was 23.8% compared to 25.9% last year. With steel and other commodity costs continuing to increase and chassis constraints delaying certain shipments out of our backlog, we experienced a slightly higher unfavorable price cost headwind of around $5 million during the quarter, about $2 million higher than we had previously anticipated. As a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down 160 basis points from Q3 last year. Other items affecting the quarterly results include a $200,000 increase in acquisition related expenses, a $200,000 increase in other income, and a $100,000 reduction in interest expense. Tax expense for the quarter decreased by $3.3 million, largely due to the recognition of the tax planning benefits that I just mentioned. Our effective tax rate for the quarter was 12.8% compared to 23.1% last year. At this time, we expect our full year effective tax rate to be approximately 18%. On an overall GAAP basis, we therefore earned $0.47 per share in Q3 this year compared with $0.41 per share in Q3 last year. In the current year quarter, we made adjustments to GAAP earnings per share to exclude acquisition related expenses and purchase [Technical Issues] On this basis, our adjusted earnings for the quarter were $0.48 per share compared with $0.42 per share last year. Looking now at cash flow, where we generated $16 million of cash from operations during the quarter, up 8% from Q3 last year. That brings the year to date operating cash generation to $55 million. Towards the end of the quarter, we increased our borrowings in anticipation of the Ground Force acquisition, which we completed in early October for an initial payment of $43 million. We ended the quarter with $164 million of net debt and availability under our credit facility of $240 million. On that note, we paid dividends of $5.5 million during the quarter, reflecting a dividend of $0.09 per share, and we recently announced a similar dividend for the fourth quarter. We also funded share repurchases of $3.2 million during the quarter at an average price of $38.44. While the teams have performed admirably, we estimate the delays in chassis deliveries and various other part shortages along with the constant production schedule adjustments caused an adverse top line impact of approximately $30 million during the quarter. As we did last year with the pandemic, so far this year our businesses have been able to navigate through a variety of supply chain related issues and deliver an EBITDA margin of almost 16% demonstrating that as a company we are more resilient than in the past, and we continue to believe that at this level of margin performance we would rank within the top decile of our specialty vehicle peers. Overall, our aftermarket revenues in Q3 this year were up $12 million or 18% over last year, growing to represent a higher share of ESG's revenues for the quarter at around 30%. Rental activity and demand for used equipment continues to be strong with rental income in Q3 up 29% year over year and used equipment sales exceeding $10 million for the third successive quarter. Demand for our product offering continues to be as strong as ever as demonstrated by our outstanding third quarter order intake of $350 million, contributing to another record backlog, reflecting strength across our end markets. In that package, approximately $350 billion was earmarked for state, local, and territorial governments for a variety of purposes including the maintenance of essential infrastructure such as sewer systems and streets. Conversations with our dealer channels suggest that the first $175 billion tranche has started to be distributed by the treasury in May with the second tranche expected next year. This is supported by the ongoing strength of U.S. municipal orders, which were up 50% for both the quarter and year to date period with notably strong demand for street sweepers and sewer cleaners. In fact, so far this year, our U.S. municipal orders for street sweepers are up $46 million or 84% over last year, while sewer cleaner orders are up $45 million or 64% over the same period. Within our industrial end market, we've also seen a 50% year over year improvement in domestic orders. The improvement has been almost across the board, but notably for our TRUVAC safe digging trucks and for our Guzzler industrial vacuum motors, which collectively were up $45 million or 87% year over year. Over the last 12 months, Ground Force generated revenues of approximately $34 million with an EBITDA margin within our group target range. Over the last 12 months, Deist has generated revenues of approximately $41 million with a double-digit EBITDA margin. We continue to see strong momentum in our markets as evidenced by the 50% improvement in both U.S. municipal and industrial orders so far this year. We expect that the volatile supply chain environment will continue for the rest of the year, and therefore, we are adjusting our full year adjusted earnings per share outlook to a new range of $1.68 to $1.78. Our new outlook range also excludes the impact of a one-time non-cash pre-tax pension settlement charge of approximately $11 million, which we expect to incur in the fourth quarter in connection with the defined benefit pension annuitization project. And we also expect the Infrastructure Bill, with $550 billion in new spending, we could see capital equipment demand increase to support infrastructure investments in areas such as roads, bridges, electrification, broadband, clean energy and water, and public transportation buildup. With an ongoing focus on 80-20 principle, Federal Signal has become a more resilient business delivering a consistent level of EBITDA margin above many of our peers. Recently, we took a survey, and in our three largest facilities, which comprise almost half of our U.S. hourly workforce, we currently have approximately 20 hourly job openings out of almost 1,000 positions. On that note, we recently issued our second annual Sustainability Report, which highlights many of our accomplishments in this area including our project 85 initiatives to increase vaccination rates across the organization.

Consolidated net sales for the quarter were $298 million, up $19 million or 7% compared to last year. That equates to GAAP earnings for the quarter of $0.47 per share, up 15% from $0.41 per share last year. On an adjusted basis, earnings per share for the quarter was $0.48 per share, an improvement of 14% compared to $0.42 per share last year. Order intake for the quarter was again outstanding with orders of $350 million, representing an increase of $85 million or 32% compared to last year. On an overall GAAP basis, we therefore earned $0.47 per share in Q3 this year compared with $0.41 per share in Q3 last year. In the current year quarter, we made adjustments to GAAP earnings per share to exclude acquisition related expenses and purchase [Technical Issues] On this basis, our adjusted earnings for the quarter were $0.48 per share compared with $0.42 per share last year. We expect that the volatile supply chain environment will continue for the rest of the year, and therefore, we are adjusting our full year adjusted earnings per share outlook to a new range of $1.68 to $1.78.

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Specifically, overall restaurant traffic in the US was between 85% and 90% of pre-pandemic levels. After a slow start to the quarter, traffic at full service restaurants recovered to 70% to 80% of prior-year levels. In contrast, demand in non-commercial customers, which includes lodging and hospitality, healthcare, schools and university, sports and entertainment, and workplace environments, remain around 50% of prior-year levels for the entire quarter. In retail, demand in the quarter was strong with weekly category volume at 115% to 125% of prior-year levels as consumers continued to eat more meals at home. In Europe, which is served by our Lamb-Weston/Meijer joint venture, fry demand in the quarter was 80% to 85% of prior-year levels. Second, as you may have seen a couple of weeks ago, we announced that we're building a new French fry processing facility in China at a total investment of around $250 million. This greenfield facility will complement our planned Shangdu and is expected to add about 250 million pounds of frozen potato product capacity. We chose to build this plant in China because it's a fast-growing 1 billion pound plus market and a key driver to our international growth. Specifically in the quarter, net sales declined 4% to $896 million. Sales volume was down 6%, largely due to the pandemic's impact on fry demand, but improved through the quarter after a slow start. Importantly, that rate of volume decline improved sequentially from the 14% decline that we realized during the first half of fiscal 2021. Gross profit declined $54 million as lower sales and higher manufacturing and distribution costs more than offset the benefit of favorable price/mix and productivity savings. Moving to the segments -- moving on from cost of sales, excuse me, our SG&A increased $8 million in the quarter. Equity method earnings were $11 million. Excluding the impact of unrealized mark-to-market adjustments and a comparability item in the prior-year quarter, equity earnings declined about $11 million. Adjusted EBITDA, including joint ventures, was $167 million, which is down $61 million. Adjusted diluted earnings per share in the quarter was $0.45, which is down $0.32, mostly due to lower income from operations. Sales for our Global segment, which generally includes sales for the top 100 North American based QSR and full service restaurant chains, as well as all sales outside of North America, were down 2% in the quarter. Volume was down only 2%, which is much better than the minus 12% we realized during the first half of fiscal 2021. Shipments to large chain restaurant customers in the US, of which approximately 85% are to QSRs, increased nominally versus prior year. International shipments, which historically comprise about 40% of the segment's volume, were about 95% of prior-year levels in the aggregate. That's up from around 75% of prior-year levels that we realized during the first half of fiscal 2021. Global's product contribution margin, which is gross profit less A&P expense, declined 27% to $79 million. Sales for our Foodservice segment, which services North American foodservice distributors and restaurant chains generally outside the top 100 North American restaurant customers, declined 22%. After a slow start, shipments to smaller chain and independent full service and quick service restaurants recovered to about 90% of prior-year levels for the entire quarter as governments gradually ease social and indoor dining restrictions. In contrast, shipments to non-commercial customers remained at around 50% of prior-year levels, with continued strength in healthcare more than offset by weakness in other channels such as travel, hospitality, and education. Price/mix increased 2% behind the carryover pricing benefit of pricing actions we took in the second half of fiscal 2020. Foodservice's product contribution margin declined 30% to $70 million. Sales for our Retail segment increased 23%, with volume up 13%. Sales of our branded portfolio, which include Alexia, Grown in Idaho and licensed restaurant trademarks, were up about 45%, continuing the strong growth trend we've seen since the start of the pandemic and well above category volume growth rates that have been between 15% and 25% in the quarter. Price/mix increased 10%, primarily reflecting the favorable mix benefit of selling more of our higher-margin branded products. Retail's product contribution margin increased 15% to $33 million. The increase was driven by favorable mix and was partially offset by higher manufacturing and distribution costs, as well as $1 million increase in advertising and promotional expense. At the end of the third quarter, we had nearly $715 million of cash on hand and our revolver was undrawn. Our total debt was more than $2.7 billion and our net debt-to-EBITDA ratio was about 3.5 times. In the first three quarters of fiscal 2021, we generated nearly $375 million of cash from operations, which is down about $60 million versus last year due to lower sales and earnings. We spent $107 million in capex and paid $101 million in dividends. In addition, in the third quarter, we resumed our share buyback program and bought back nearly $13 million worth of stock at an average price of just over $77.00 per share. US shipments in the four weeks ending March 28 were approximately 90% of levels during a similar period for the fourth quarter of fiscal 2019. In our Global segment, shipments to our large QSR and full service chain restaurant customers in the US were more than 85% of fiscal 2019 levels, and we expect that rate will largely continue for the remainder of the fourth quarter. In our Foodservice segment, shipments to our full service restaurants, regional and small QSRs, and non-commercial customers in aggregate were approximately 90% of fiscal 2019 levels. Shipments to non-commercial customers, which have historically comprised about 25% of the segment's volume, remained at around half of fiscal 2019 levels. In our Retail segment, shipments were approximately 110% of fiscal 2019 levels, with strong volume growth of our branded products partially offset by a decline in shipments of private label products. In Europe, shipments by our Lamb-Weston/Meijer joint venture were about 85% of fiscal 2019 levels. Shipments to our other international markets, which primarily include Asia, Oceania and Latin America, were approximately 75% of fiscal 2019 levels in aggregate.

Specifically in the quarter, net sales declined 4% to $896 million. Adjusted diluted earnings per share in the quarter was $0.45, which is down $0.32, mostly due to lower income from operations. US shipments in the four weeks ending March 28 were approximately 90% of levels during a similar period for the fourth quarter of fiscal 2019. In Europe, shipments by our Lamb-Weston/Meijer joint venture were about 85% of fiscal 2019 levels.

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Securities Act of 1933 and the U.S. Securities Exchange Act of 1934. Sales growth in the quarter came in better than expected and was quite good given the excellent 8% growth in the prior-year quarter. Total local currency sales growth in the quarter was 4%. We again faced meaningful headwinds in the quarter due to adverse currency and impact of tariffs. For the full-year 2019, we exceeded $3 billion in sales and achieved 5% growth in local currency. Excluding this business, we have 6% growth in local currency sales. We achieved a strong improvement in operating margins and a 12% increase in adjusted earnings per share. One final comment on full-year 2019, we generated more than $530 million in free cash flow. We expect the coronavirus to significantly impact sales in China in the first quarter due to the loss of selling days. Sales were $844 million in the quarter, an increase of 4% in local currency. On a U.S. dollar basis, total sales increased 3% as currencies reduced sales growth by approximately 1% in the quarter. 4, we show sales growth by region. Local currency sales grew 6% in the Americas, 1% in Europe, and 5% in Asia/Rest of World. China had growth of 8%, a little bit better than what we expected the last time we spoke. Local currency sales for the year grew 5%. And as Olivier mentioned, excluding Food Retail, local currency sales growth was 6% in 2019. By region for the year, sales increased 6% in the Americas, 3% in Europe and 6% in Asia/Rest of World. 6, we outline local currency sales growth by product area. For the fourth quarter, Laboratory sales grew 6%, Industrial increased 2%, with core industrial up 4%, while product inspection was flat. Food Retail declined 2% in the quarter. In 2019, Laboratory sales grew 7% in local currency, Industrial grew 4%, with core industrial up 6% and product inspection up 2%. Food Retailing declined 8% in 2019. Overall, total sales in 2019 were up 5% in local currency and 6% if we exclude Food Retailing. Gross margin in the quarter was 59%, a 60-basis-point increase over the prior-year level of 58.4%. R&D amounted to $35.3 million, which represents a 2% decline in local currency. This decline was impacted by timing of activity and the 15% local currency growth in R&D in the prior year. SG&A amounted to $206.7 million, a 3% increase in local currency over the prior year. Adjusted operating profit amounted to $256.3 million in the quarter, which represents a 7% increase over the prior-year amount of $239.7 million. We estimate currency reduced operating income by approximately $3.5 million. We also estimate tariffs were a gross headwind to operating income by approximately $2.5 million. Absent adverse currency and the gross impact of tariffs, operating income would have increased 9% in the quarter. Operating margins reached 30.4% in the quarter, the first time we crossed 30% and represented a 110-basis-point increase from the prior year. Amortization amounted to $12.8 million in the quarter. Interest expense was $9.6 million in the quarter. Other income amounted to $1.9 million. Our effective tax rate in the quarter was 20% before discrete tax items and adjust for the timing of stock option exercises. Moving to fully diluted shares, which amounted to $24.6 million in the quarter and is a 3.5% decline from the prior year, reflecting the impact of our share repurchase program. Adjusted earnings per share for the quarter was $7.78, a 14% increase over the prior-year amount of $6.85. Absent currency and the gross impact of tariffs, our adjusted earnings per share growth would have been 16% in the quarter, a level we are very pleased at. On a reported basis in the quarter, earnings per share was $7.84, as compared to $7.11 in the prior year. Reported earnings per share in 2019 includes $0.11 of purchased intangible amortization, $0.15 of restructuring, and a $0.32 difference between our quarterly and annual tax rate due to the timing of stock option exercises. In the quarter, we also incurred a one-time noncash deferred tax gain of $0.64 related to changes in Swiss tax law. We expect our effective tax rate to remain at 20%. One final point on reported earnings per share in Q4 of last year, 2018, we recorded a one-time noncash acquisition gain of $0.75. We achieved 5% growth in local currency sales, 100-basis-points improvement in operating margin, and 12% growth in adjusted earnings per share. In the quarter, adjusted free cash flow amounted to $186.2 million, a 23% increase over the prior year on a per share basis. Our working capital statistics remained solid, with DSO at 40 days and ITO at 4.5 times. For the year, adjusted free cash flow amounted to $531.3 million, as compared with $455.9 million in the prior year. This represents a 20% increase on a per share basis and represents a net income conversion of approximately 95%. We remain cautious on the macroeconomic environment as certain indicators are weak. We continue to expect local currency sales growth in 2020 will be approximately 4%. Our sales guidance for 2020 remains unchanged and we are also maintaining our full-year adjusted earnings per share guidance in the range of $24.85 to $25.10, which reflects a growth rate of 9% to 10%. In total, for 2020, we expect currency and the gross impact of tariffs to reduce our earnings per share growth by 2%. Absent currency and tariffs, our earnings per share growth of 11% to 12% is the same as what we provided in November. We expect interest expense to be approximately $42 million in 2020 and amortization to be $53 million. Other income in 2020 will be approximately $7 million. Based on market conditions today, we expect local currency sales growth to be approximately 0% to 1%. First, Q1 will be our toughest sales growth comparison for the year as we had 7% growth in the first quarter of last year; second, we expect food retail to be down double digits in the quarter, which impacts sales growth by approximately 1%; and third, as Olivier mentioned earlier, we expect the coronavirus to have an impact on our sales in the quarter, but not for the full year. In Q1, we would expect sales in China to be down mid- to high single digits which impacts our sales growth in the quarter by approximately 2%. Excluding the impact of the retail decline and adjusting our guidance for the estimated coronavirus impact, we would have expected sales growth in Q1 to be in the range of 3% to 4%. On a two-year stack basis, this would have been growth in the 10% to 11% range, which we're pleased with. We would expect that adjusted earnings per share in the first quarter to be in the range of $4.20 to $4.30, a growth rate of 2% to 5%. Absent currency and tariffs, adjusted earnings per share growth in the first quarter would be 7% to 10%. In terms of free cash flow, we expect approximately $560 million, which is a 10% increase on a per share basis. We plan to repurchase shares of approximately $800 million in 2020, which includes an incremental amount as we target a net debt-to-EBITDA leverage ratio of 1.5 times. With respect to the impact of currency on sales growth, we expect currency to reduce sales by approximately 100 basis points. In the first quarter, we would expect currency to reduce sales by 160 basis points. Our Lab business continues to perform very well with 6% local currency sales growth in the quarter. Overall, we expect good growth in our Laboratory business in 2020, although we faced more challenging comparisons after several years of very strong growth. Core industrial did great in the fourth quarter, increasing 4% against 13% growth in the prior year. Finally, Food Retail was down 2% in the quarter, pretty much on target with what we had expected. We would expect a modest decline in the first quarter, principally due to a significant decline in Food Retail, as well as the 9% growth in Q1 2019. Americas continues to do very well with 6% growth in the quarter. I want to point out that in Q1 last year, China grew 13%, the strongest quarter of the year. Service and consumables together represent about one-third of our sales growth, and both grew 7% in 2019. We can provide more than 40% of the instruments that the scientists or chemists uses daily in a typical analytical lab. We expect customers could achieve productivity improvements of up to 30% with this revolutionary product.

We again faced meaningful headwinds in the quarter due to adverse currency and impact of tariffs. For the full-year 2019, we exceeded $3 billion in sales and achieved 5% growth in local currency. We expect the coronavirus to significantly impact sales in China in the first quarter due to the loss of selling days. Sales were $844 million in the quarter, an increase of 4% in local currency. On a U.S. dollar basis, total sales increased 3% as currencies reduced sales growth by approximately 1% in the quarter. By region for the year, sales increased 6% in the Americas, 3% in Europe and 6% in Asia/Rest of World. SG&A amounted to $206.7 million, a 3% increase in local currency over the prior year. Adjusted earnings per share for the quarter was $7.78, a 14% increase over the prior-year amount of $6.85. On a reported basis in the quarter, earnings per share was $7.84, as compared to $7.11 in the prior year. We remain cautious on the macroeconomic environment as certain indicators are weak. Based on market conditions today, we expect local currency sales growth to be approximately 0% to 1%. Excluding the impact of the retail decline and adjusting our guidance for the estimated coronavirus impact, we would have expected sales growth in Q1 to be in the range of 3% to 4%. We would expect that adjusted earnings per share in the first quarter to be in the range of $4.20 to $4.30, a growth rate of 2% to 5%. Overall, we expect good growth in our Laboratory business in 2020, although we faced more challenging comparisons after several years of very strong growth.

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Contemporaneously, the concerns over systematic bias in our society led to demonstrations across the United States involving an estimated 15 million to 25 million people. According to F.W. Dodge, rolling three-month hotel construction starts were down 56% in June as compared to the prior year. Moreover, last quarter, we suggested as much as 10% of the existing supply in Midtown East, New York, may not reopen. In response to travel demand declining by over 90%, we suspended operations at 20 of our 30 operating hotels, leaving just 10 hotels open at one point in April. The quick action taken by the team allowed us to realize a 72% reduction in hotel-level expenses excluding wage of benefit accruals. Impressively, compared to the prior year, second quarter man hours decreased 83% at open hotels and 99% at hotels with suspended operations. And ultimately, we reopened a total of 12 additional hotels in the second quarter. The 22 hotels we had opened at the end of the quarter represent 58% of our hotel rooms. But since the openings were staggered, the math works such that just 43% of our rooms were available in the quarter. Weekly occupancy for our operating hotels, which had bottomed at 6.8% at the end of March, rose steadily to 27.8% by the last week in June. This trend has continued beyond Q2 with occupancy for operating hotels in July over 200 basis points higher than the full month of June. In April, five hotels achieved breakeven profitability on a GOP basis, and this figure grew to seven hotels in May and 10 hotels in June. From early May to the end of June, weekend occupancy at our resorts increased from 11% to nearly 56%, with healthy gains in ADR for the majority of the weeks. For the second quarter, leisure transient ADR was 1.6% higher than in the second quarter of 2019. The Shorebreak in Surf City Huntington Beach averaged nearly 50% occupancy in July. Our L'Auberge de Sedona, Orchards Inn and Havana Cabana Key West, each ran occupancy over 60%. L'Auberge actually had an average rate in July of $553, which was a 14% increase over the prior year. But our little star of the month was Landing in Lake Tahoe, which had 80% occupancy in July with average rate up nearly $100 a night to over $519. In April, the weakest month of the quarter, we saw less than $400,000 of revenue from business transient channels, but this grew to $1 million in May and $2.5 million in June. These are meager beginnings. Since the start of the COVID impact and through the second quarter, our portfolio experienced approximately $117 million of canceled group revenue. Over 80% of these cancellations occurred in March and April. The pace of cancellations was initially as high as $20 million per week in March, but has since slowed to just $2 million to $3 million per week. However, it was encouraging to see 250,000 to 350,000 room nights of group leads generated each month during the second quarter. Total revenue decreased 92.1% in second quarter 2020 as a result of a 92.8% decline in RevPAR. Total revenues were $3.3 million in April with 10 hotels open, $5.7 million in May with 12 hotels open and $10.9 million in June with 22 hotels open. Excluding the Sonoma Renaissance, which opened July 1, the same 22 hotels are on pace for nearly $13 million of revenue in July. As Mark mentioned, we decreased hotel-level operating expenses 72% from $170 million to approximately $48 million, excluding nearly $3 million of accrued benefits for furloughed employees. We were able to slash variable expenses by 80%. It is critical to understand that we achieved this level of cost reduction despite over 70% of our hotels partially open during the quarter. Hotel adjusted EBITDA in the quarter was negative $30.4 million. Corporate adjusted EBITDA in the quarter was negative $37 million. Finally, second quarter adjusted FFO per share was negative $0.20. For CapEx, we have canceled or delayed over 65% of our original capital expenditure plans. In the second quarter, we restricted capex spending to only $20.7 million, including $8.5 million for Frenchman's Reef to put the project in a position where we could pause work. In this regard, we spent $4.5 million to complete the F&B repositioning initiatives at our Renaissance hotels in Sonoma, Worthington and Charleston as well as the JW Marriott Cherry Creek. We expect these investments will be earnings contributors in 2021, and the average IRR is forecast to be over 30%. At the end of the quarter, we have $364 million of total liquidity between corporate and hotel level cash and undrawn revolver availability. At the hotel operating level, we averaged a $10.1 million monthly loss in the quarter, surpassing our initial forecast by 16%. Including corporate G&A, the average monthly loss was approximately $12 million or 12% ahead of our expectation. Finally, our total burn rate, including debt service, was approximately $17 million. Compared to our average pace in second quarter 2020, we expect our burn rate will improve slightly in July, mainly because we had 58% of our rooms open at the end of June as compared to only 43% during the quarter. Our preliminary estimate for our hotel-level cash burn in July is approximately $9 million to $10 million, which is potentially $1 million or 10% lower than the average monthly pace seen in the second quarter. Including cash, G&A and debt service, this works out to an overall burn rate of $16 million to $17 million and provides a runway before capex of up to 23 months based upon our total liquidity of $364 million at the end of the quarter. For example, net debt to undepreciated book value as of second quarter 2020 was just 26%. We ended the second quarter with net debt of only $106,000 per key on a portfolio with a replacement cost in the range of $450,000 per key. This implies a net debt to replacement cost of less than 24%. At the end of the quarter, we had $605 million of nonrecourse mortgage debt at a weighted average interest rate of 4.1%. We had $550 million of bank debt, comprised of $400 million in unsecured term loans and just under $149 million on our unsecured revolving credit facility. Collectively, we have $110 million for capital investment, which has proved to be one of the largest capital investment allowances relative to assets or pre-COVID EBITDA. We have no limitation on our ability to pursue equity funded unencumbered acquisitions, and our $300 million limitation on encumbered acquisitions is proportionately larger than the limitation many peers have on total acquisitions. We have no maturities in 2021, and we have only one loan for $48 million due in 2022 and even that can be extended to 2023 under certain conditions. Encouragingly, there are already 30 vaccines in human trial. We have 13 of 31 hotels that are leisure oriented. According to STR, hotels under 300 rooms have shown the best relative performance. Due to our focus on boutiques and drive to resorts, the median hotel in DiamondRock's portfolio is just 265 rooms. Three, the portfolio has numerous ROI projects, many with 30% plus IRRs. We have great assets, a solid balance sheet, strong industry relationships and an experienced management team that has weathered numerous prior downturns over the last 30 years.

These are meager beginnings. Finally, second quarter adjusted FFO per share was negative $0.20.

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As reported with respect to operating income at $135.9 million, operating income percentage at 6.2% and with respect to earnings per diluted share at $1.76 on a non-GAAP adjusted basis. We earned revenues of $2.2 billion in the quarter and had operating cash flow of $270 million. We have structurally reduced our SG&A by about $7 million to $9 million per quarter on a go-forward basis. We leveraged our cost structure across a solid mix of projects to earn strong and robust operating income margins of 9.2% in our Electrical Construction segment and 9% in our Mechanical Construction segment. With a record quarterly operating income percentage of 6.9%. Number 5, we have positioned ourselves into some good long-term markets, which I will talk about later, such as healthcare, manufacturing, high-tech manufacturing, data centers, commercial and food processing. Consolidated revenues of $2.2 billion are down $86 million or 3.8% from quarter 3, 2019. Our third quarter results include $81.4 million of revenues attributable to businesses acquired, pertaining to the time that such businesses were not owned by EMCOR in last year's third quarter. Excluding the impact of businesses acquired, third quarter consolidated revenues decreased approximately $167.5 million or 7.3%. United States electrical construction revenues of $508.9 million decreased $45.8 million or 8.3% from 2019's third quarter. United States Mechanical Construction segment revenues of $891.5 million, increased $22.3 million or 2.6% from quarter three of 2019. The results of this segment represent record third quarter revenue performance, excluding acquisition revenues of $61.1 million, the segment's revenues decreased $38.8 million or 4.5% organically. EMCOR's total Domestic Construction business third quarter revenues of $1.4 billion decreased by $23.5 million or 1.6%. United States Building Services quarterly revenues of $551.5 million increased $19.4 million or 3.7% and represents an all-time quarterly record for this segment. Excluding acquisition revenues of $20.3 million, this segment's revenues decreased approximately $900,000 or less than 0.25%. United States Industrial Services revenues of $139.7 million decreased $94.4 million or 40.3% and as this segment continues to be impacted by the negative macroeconomic conditions and uncertainty within the markets in which it operates. United Kingdom Building Services segment revenues of $110.1 million increased $12.5 million or 12.7% from last year's quarter. In addition, revenues of this segment were positively impacted by $5 million as a result of favorable foreign exchange rate movements within the quarter. Selling, general and administrative expenses of $226.8 million represent 10.3% of third quarter revenues and reflect an increase of $6.7 million. The current year's quarter includes approximately $8.9 million of incremental expenses from businesses acquired, inclusive of intangible asset amortization, resulting in an organic quarter-over-quarter decrease in selling, general and administrative expenses of approximately $2.2 million. SG&A expenses for the third quarter of 2019 and were favorably impacted by $4.5 million of insurance recovery and legal settlements within the Industrial Services segment. When excluding these recoveries from the prior year period, the adjusted organic decline in 2020's third quarter SG&A is $6.7 million. Additionally, with quarter-over-quarter a sequential increase in total incentive compensation expense previously mentioned, our SG&A as a percentage of revenues was unfavorably impacted by approximately 50 basis points within the third quarter of 2020. Reported operating income for the quarter of $135.9 million represents a $20.1 million increase or 17.4% as compared to operating income of $115.7 million in 2019's third quarter. Our third quarter operating margin is 6.2%, and which favorably compares to the 5.1% of operating margin reported in last year's third quarter. Specific quarterly performance by reporting segment is as follows: Our U.S. Electrical Construction segment operating income of $47.1 million increased $13.4 million from the comparable 2019 period. Reported operating margin of 9.2% represents a 310 basis point improvement over last year's third quarter. In addition, operating income and operating margin of this segment benefited from favorable project closeouts within the transportation and institutional market sectors, which positively impacted quarterly operating margin in the current year by 70 basis points. Third quarter operating income of our U.S. Mechanical Construction Services segment of $80 million represents an $18.8 million increase from last year's quarter, while operating margin in the quarter of 9% and represents a 200 basis point improvement over 2019. Our combined U.S. construction business is reporting a 9.1% operating margin and $127.1 million of operating income, which has increased from 2019's third quarter by $32.3 million or 34%. For the third quarter of 2020, operating income and operating margin for our U.S. Building Services segment was $38.2 million and 6.9%, respectfully. Operating income increased by $3.2 million over last year's third quarter, and operating margin improved by 30 basis points. Our U.S. industrial services operating loss of $9.8 million represents a decrease of $15.4 million compared to operating income of $5.6 million in last year's third quarter. U.K. Building Services operating income of $5.3 million represents an approximately $600,000 increase over 2019's third quarter due to an increase in gross profit within the segment. Operating margin of 4.8% is slightly reduced from 2019's third quarter operating margin of 4.9%. And additional financial items of significance for the quarter not addressed on my previous slides are as follows: quarter three gross profit of $363.2 million or 16.5% of revenues is improved over last year's quarter by $27.2 million and 180 basis points of gross margin. Diluted earnings per common share of $1.11 and compares to $1.45 per diluted share in last year's third quarter. Adjusting our record quarterly performance for the negative impact on our income tax rate resulting from the nondeductible portion of the noncash impairment charges recorded during the second quarter of this year, non-GAAP diluted earnings per share for the quarter ended September 30, 2020, and is $1.76, which favorably compares to last year's quarter by $0.31 or 21.4%. My last comment on this slide is a continuation of my income tax rate commentary which, as you can see on the bottom of slide nine, is 54.7% for the quarter due to the nondeductibility of the majority of quarter two's noncash impairment charges. With one quarter of 2020 remaining, I anticipate that our full year tax rate will be between 53% and 54%, which is a downward revision from the previous range provided on our quarter two call. Revenues of $6.52 billion, representing a decrease of $255.1 million or 3.8% and when compared to revenues of $6.77 billion in the corresponding prior year period. Our year-to-date results include $214.1 million of revenues attributable to businesses acquired, pertaining to the period of time that such businesses were not owned by EMCOR in the 2019 year-to-date period. Excluding the impact of businesses acquired, year-to-date revenues decreased organically 6.9%, primarily as a result of the significant revenue contraction experienced during quarter 2, given the containment and mitigation measures mandated by certain of our customers as well as numerous governmental authorities in response to COVID-19. Year-to-date gross profit of $1 billion is higher than the 2019 nine month period by $20.4 million or 2.1%. Year-to-date gross margin is 15.5% and which favorably compares to 2019's year-to-date gross margin of 14.6%. Selling, general and administrative expenses of $659 million represent 10.1% of revenues as compared to $652.5 million or 9.6% of revenues in the prior year period. Year-to-date 2020 includes $25.2 million of incremental SG&A, inclusive of intangible asset amortization pertaining to businesses acquired. Excluding such incremental cost, our SG&A has decreased on an organic basis, by approximately $18.7 million year-over-year. Reported operating income for the first nine months of 2020 is $119.2 million, adjusting this amount to exclude the noncash impairment loss on goodwill, identifiable intangible assets and other long-lived assets recorded in the second quarter, results in non-GAAP operating income of $352 million for 2020's nine month period as compared to $338 million for the corresponding 2019 year-to-date period. This adjusted non-GAAP operating income represents a $13.9 million or 4.1% improvement year-over-year. Diluted earnings per common share for the nine months ended September 30, 2020, is $0.96 when adjusting this amount for the impact of the noncash impairment charges previously mentioned, non-GAAP diluted earnings per share was $4.54, and as compared to $4.22 in last year's nine month period. This represents a $0.32 or 7.6% improvement period-over-period. EMCOR's liquidity profile continues to improve as we just completed another quarter of strong cash flow generation, bringing our year-to-date operating cash flow to $546.8 million. On a year-to-date basis, these measures have favorably impacted operating cash flow by approximately $81 million. With this strong operating cash flow, cash on hand has increased to $679.3 million, from the approximately $359 million on our year-end 2019 balance sheet and is the primary driver of the increase in our September 30 working capital balance. Largely as a result of $44.8 million of amortization expense recorded during the first nine months of this year. Total debt has decreased by approximately $30 million since the end of 2019, reflecting our net financing activity during the year. Although not included on this slide due to the periods presented, EMCOR has paid down approximately $273 million of borrowings under its credit facility, inclusive of borrowings executed during 2020. And EMCOR's debt to capitalization ratio has decreased to 12.3% as of September 30. Total RPOs at the end of the third quarter were a little over $4.5 billion, up $495 million or 12.3% when compared to the September 2019 level of $4 billion. RPOs, likewise, increased the same amount, $494 million for the first nine months of 2020. With all this growth being organic, except for approximately $86 million relating to two acquisitions in the current 12-month period. Taken together, our Mechanical and Electrical Construction segment, RPOs have increased $409 million or 12.4% since the year ago period. Commercial project RPOs comprised our largest market sector at over 42% of total. This is almost a 20% increase from the year-end, and it's really spurred by two things: really high-tech and data center projects it bears repeating. So I'm going to take the next two pages and cover on pages 13 and 14. And I'm now going to turn to page 13, and it says future affects our markets. We've done a good job here, and we're one of the leaders, and we've also made some strategic acquisitions, especially in the last 15 months, not only in fire protection assets, but also key electrical contractors like we did in the Midwest and also in the Southeast, which is emblematic of our BKI acquisition. So facilities are going to have to move between the 2. As we switch to page 14. Really the goal over the last 20 years. And actually, buildings are going back to 25 CFM per person, and that's cubic feet per minute. And we had got that down to 15%. We take things from a Merck 10 or 12 up to a 14 or 15. Needle 0.5 polar ionization, we're one of the leaders in the implementation of that technology. This is someone that has 240 buildings. We'll do this across 240. We'll do this in 90 sites. That retro market is going to gain strength as we move through 2021 on the HVAC side. With that, I'm going to turn to the last two pages, 15 and 16, and I'm going to close out here. We will move to $5.90 to $6.10 non-GAAP adjusted earnings per share and revenues of around $8.7 billion. And if you refer back to page 13, we have a lot of operating space in what we believe are resilient markets.

As reported with respect to operating income at $135.9 million, operating income percentage at 6.2% and with respect to earnings per diluted share at $1.76 on a non-GAAP adjusted basis. We earned revenues of $2.2 billion in the quarter and had operating cash flow of $270 million. Diluted earnings per common share of $1.11 and compares to $1.45 per diluted share in last year's third quarter. Adjusting our record quarterly performance for the negative impact on our income tax rate resulting from the nondeductible portion of the noncash impairment charges recorded during the second quarter of this year, non-GAAP diluted earnings per share for the quarter ended September 30, 2020, and is $1.76, which favorably compares to last year's quarter by $0.31 or 21.4%. That retro market is going to gain strength as we move through 2021 on the HVAC side. We will move to $5.90 to $6.10 non-GAAP adjusted earnings per share and revenues of around $8.7 billion.

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We expect to grow our earnings per share by 6.5% per year through at least 2026, supported by our updated $37 billion five-year growth capital program, resulting in an approximately 10% total return. We now expect to invest $37 billion on behalf of our customers. The investment programs are highlighted on Slide 5, with over 85% focus on decarbonization. We now project $73 billion of green investment opportunity through 2035, nearly all of which will qualify for regulated cost of service recovery. Our fourth quarter 2021 operating earnings, as shown on Slide 7, were $0.90 per share, which included a $0.03 hurt from worse-than-normal weather in our utility service territories for the quarter. Full year 2021 operating earnings per share were $3.86 above the midpoint of our guidance range even in the face of a $0.05 from weather for the year. We're initiating 2022 operating earnings per share guidance of $3.95 to $4.25 per share. The midpoint of this range is in line with prior annual earnings per share growth guidance of 6.5% in 2022, when measured midpoint to midpoint. We now expect operating earnings per share to grow at 6.5% per year through at least 2026. Finally, we expect first quarter 2022 operating earnings per share to be between $1.10 and $1.25. We expect our 2020 full year dividend to be $2.67, reflecting our target payout ratio of approximately 65%. We're also extending the long-term dividend per share growth rate of 6% per year through 2026. We continue to forecast a total five-year rate base CAGR 9% broken out here by segment, a major driver; and over 75% of its planned growth capex is eligible for rider recovery. Our plan assumes we issue programmatic equity of just 1% to 1.5% of our current market cap annually through our existing DRIP and ATM equity programs in line with prior guidance. The transaction value achieved through a competitive sale process represents approximately 26 times 2021 net income and two times rate based. As a reminder, Hope Gas operates only in West Virginia and serves about 110,000 customers. Turning now to electric sales trends, fourth quarter weather-normalized sales increased 1.4% year over year in Virginia and 2.3% in South Carolina. Full year 2021 weather-normalized sales increased 1.4% year over year in Virginia and 1.6% year over year in South Carolina. Looking ahead, we expect electric sales growth in our Virginia and South Carolina service territories to continue at a run rate of 1% to 1.5% per year. As was disclosed at that time in November, we've entered into five major fixed cost agreements, which collectively represent around $7 billion of the total capital budget. Within those contracts, only about $800 million remain subject to commodity indexing, most of it steel. We initiated 2022 full year operating earnings per share guidance that represents a 6.5% annual increase midpoint to midpoint. We affirmed the same 6.5% operating earnings per share growth guidance through 2026. We introduced a $37 billion high quality decarbonization-focused, five-year growth capex plan that drives an approximately 9% rate based growth. In the past year, our customers in our electric service areas in Virginia, South Carolina, and North Carolina had power 99.9% of the time, excluding major storms. As we did for the first winter storm of 2022, the damp, wet, heavy snow on most of the northern, central and western regions of Virginia, interrupting service to over 400,000 customers. Over 87% of those customers had service restored after two days of restoration and 96% within four days. Based on these trends, the Virginia-based investment balance as a percentage of total Dominion Energy declined to about 13% by 2026 and is expected to continue to decline as a percentage in the future. Second, unlike any other such project in North America, this investment is 100% regulated and eligible for rider recovery in Virginia. The project is currently about 43% complete. Final orders are expected later this year, as outlined on Page 18. Through 2020, we have successfully reduced our enterprisewide CO2 equivalent emissions by 42%. By 2035, we expect to improve that reduction to between 70% and 80% versus baseline on our way to meet net zero by 2050. Back in 2005, more than half of our company's power production was from coal-fired generation. By 2035, we project that to be less than 1%. You'll also note that zero carbon generation grows significantly, such that by 2026, over 65% of our investment base will consist of electric wires and zero carbon generation. In North Carolina, the commission approved a comprehensive settlement last month for our gas operations with rates based on a 9.6% ROE. As part of that report, we also published our EEO 1 data. This enhanced external reporting builds upon our commitment to increase our total workforce diversity by 1% each year with the goal of reaching at least 40% by year end 2026. In addition to our current commitment to achieve enterprisewide net zero scope one carbon and methane emissions by 2050, we now aim to achieve net zero by 2050 for all Scope 2 emissions and for Scope 3 emissions associated with three major sources, LDC customer end-use emissions, upstream fuel, and purchase power. That's why the company continues to take meaningful steps to address Scope 3 emissions. For downstream emissions, we expect to increase our annual spend on energy efficiency over the next five years at our LDCs by nearly 50%, and to provide our customers with access to a carbon calculator and carbon offsets. And finally, we continue to pursue innovative hydrogen use cases, including our blending pilot in Utah, which based on early assessment, confirms the ability to blend at least 5% and potentially up to 10% without adverse impacts to appliance performance, leak survey, system safety, or secondary emissions. We affirm the same 6.5% operating earnings per share growth guidance through 2026 and affirmed our existing dividend growth guidance through 2026.

Our fourth quarter 2021 operating earnings, as shown on Slide 7, were $0.90 per share, which included a $0.03 hurt from worse-than-normal weather in our utility service territories for the quarter. We're initiating 2022 operating earnings per share guidance of $3.95 to $4.25 per share. Finally, we expect first quarter 2022 operating earnings per share to be between $1.10 and $1.25.

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We believe we will make these investments and remain well-positioned to achieve our operating margin target of 22.5% in 2024. Quarterly revenue surpassed $900 million for the first time and a $914.6 million in the second quarter of 2021, represented a 34% increase over last year. Organic revenue growth of 24.1% was increased by approximately 8%, when compared to last year's COVID-19 impact in the second quarter of 2020, with the greatest impact in the Research Models and Services segment. The operating margin was 20.8%, an increase of 350 basis points year-over-year. Notwithstanding this favorable year-over-year comparison, we were pleased with the margin progression in the first half of the year and are on track to achieve a full year operating margin of approximately 21% or 100 basis points higher than last year. Earnings per share were $2.61 in the second quarter, an increase of 65.2% from $1.58 in the second quarter of last year. This result widely exceeded our prior outlook of more than 50% earnings growth for the quarter, primarily as a result of the exceptional demand environment. Based on the second quarter performance and our expectation for sustained demand through the remainder of the year, we are increasing our revenue growth and non-GAAP earnings per share guidance for 2021. We now expect organic revenue growth in a range of 13% to 15%, 100 basis point increase from our prior range. Non-GAAP earnings per share are expected to be in the range from $10.10 to $10.35, which represents 24% to 27% year-over-year growth and an increase of $0.35 at midpoint from our prior outlook. Revenue was $540.1 million in the second quarter, an 18.1% increase on an organic basis over the second quarter of 2020, driven by broad-based demand for both Discovery and Safety Assessment Services. The DSA operating margin increased by 30 basis points to 23.5% in the second quarter. Foreign exchange reduced the DSA operating margin by 150 basis points in the quarter as revenue and costs are not naturally hedged at certain DSA sites, including our Safety Assessment operations in Canada. We continue to expect the DSA margin will be in the mid-20% range for the year. RMS revenue was $176.7 million, an increase of 44.5% on an organic basis over the second quarter of 2020. Approximately 33.4% of this growth was attributable to the comparison to last year's COVID-related revenue impact from client site closures and disruptions, which reduced research model order activity. Adjusted for the COVID impact, the RMS growth rate was above 10% as strong research activity across biopharmaceutical academic and government clients led most RMS businesses to grow above their targeted growth rates. The RMS operating margin increased to 27.4% from 9.1% in the second quarter of last year. Revenue for the Manufacturing segment was $197.8 million, a 26.6% increase on an organic basis over the second quarter of last year. Consistent with the first quarter, Microbial Solutions growth rate in the second quarter was well above the 10% level, reflecting strong demand for our Endosafe Endotoxin testing systems, cartridges, and core reagents in all geographic regions, as well as Accugenix microbial identification services. The Biologics Testing business reported another exceptional quarter of strong revenue growth that was well above the 20% growth target for this business. There has been a rapid increase in the number of cell and gene therapy programs in development to approximately 3,000 programs now in the pipeline, with approximately two-thirds in the preclinical phase, which is expected to continue to fuel the strong growth. COVID-19 vaccine work was also a meaningful driver of Biologics second quarter growth, but the underlying Biologics growth trends remained above the 20% level, even without the incremental COVID-19 testing revenue. The Manufacturing segment second quarter operating margin declined by 420 basis points to 33.2%. Coupled with the addition of Vigene in the third quarter, we expect a full year Manufacturing margin slightly below the mid-30% range. It will also allow us to achieve our longer-term financial targets of low double-digit organic revenue growth and an average of approximately 50 basis points of operating margin improvement beyond 2021. Organic revenue growth of 24.1%, including 8% related to last year's COVID-19 impact and operating margin expansion of 350 basis points, were the primary drivers behind earnings-per-share growth share growth of 65.2% to $2.61. Based on our strong second quarter results and expectations for the underlying strength of demand to continue, we have increased our full year financial guidance and now expect to deliver organic revenue growth in a range of 13% to 15% for the full year. Primarily as a result of the enhanced growth prospects this year, and to a lesser extent, a favorable tax rate, we raised our earnings per share guidance by $0.35 to a range of $10.10 to $10.35, which represents year-over-year growth of 24% to 27%. Including the acquisitions of Cognate and, more recently, Vigene Biosciences, Manufacturing's reported revenue growth rate is expected to be in the low to mid-40% range. With regard to operating margin, our expectations for segment contributions remain mostly unchanged from our prior outlook, with the RMS operating margin meaningfully above 25% for the full year, DSA in the mid-20% range and Manufacturing slightly below the prior mid-30% outlook, principally reflecting the addition of Vigene in late June. Lower unallocated corporate costs contributed to the second quarter margin expansion, totaling 5.6% of revenue or $51.2 million in the second quarter, compared to 6.1% of revenue last year. We continue to expect unallocated corporate costs to be in the mid-5% range as a percentage of revenue for the full year. The second quarter non-GAAP tax rate was 20.4%, representing a 60 basis point decline from 21% in the second quarter of last year. or the full year, we are reducing our tax rate outlook to a range of 19.5% to 20.5% from our prior outlook of a tax rate in the low 20% range, principally driven by a higher benefit from stock-based compensation. Total adjusted net interest expense for the second quarter was $20.8 million, an increase of $3.7 million sequentially and $1.7 million year-over-year, due to higher debt balances primarily to fund the Cognate acquisition. At the end of the second quarter, we had an outstanding debt balance of $2.7 billion, representing gross and net leverage ratios of about 2.5 times. For the full year, we now expect total adjusted net interest expense to be slightly below our prior outlook in a range of $82 million to $85 million, primarily reflecting the accelerated debt repayment. Free cash flow was $140.2 million in the second quarter, an increase of 3.5% over the $135.5 million for the same period last year. In view of our robust results in the first half of the year, we have increased our free cash flow outlook by $65 million and now expect free cash flow of approximately $500 million for the full year. capex was $46.4 million in the second quarter last year, compared to $26.8 million last year. We continue to expect capex to be approximately $220 million for the full year. Accordingly, we expect organic revenue growth in the low to mid-teens range and reported revenue growth in the low 20% range. We expect low double-digit earnings-per-share growth when compared to last year's third quarter level of $2.33. I will remind you that the DSA operating margin in the third quarter of last year included a 50 basis point benefit from a discovery milestone payment, which will impact the year-over-year comparison.

Quarterly revenue surpassed $900 million for the first time and a $914.6 million in the second quarter of 2021, represented a 34% increase over last year. Earnings per share were $2.61 in the second quarter, an increase of 65.2% from $1.58 in the second quarter of last year. Based on the second quarter performance and our expectation for sustained demand through the remainder of the year, we are increasing our revenue growth and non-GAAP earnings per share guidance for 2021. We now expect organic revenue growth in a range of 13% to 15%, 100 basis point increase from our prior range. Non-GAAP earnings per share are expected to be in the range from $10.10 to $10.35, which represents 24% to 27% year-over-year growth and an increase of $0.35 at midpoint from our prior outlook. Organic revenue growth of 24.1%, including 8% related to last year's COVID-19 impact and operating margin expansion of 350 basis points, were the primary drivers behind earnings-per-share growth share growth of 65.2% to $2.61. Based on our strong second quarter results and expectations for the underlying strength of demand to continue, we have increased our full year financial guidance and now expect to deliver organic revenue growth in a range of 13% to 15% for the full year. Primarily as a result of the enhanced growth prospects this year, and to a lesser extent, a favorable tax rate, we raised our earnings per share guidance by $0.35 to a range of $10.10 to $10.35, which represents year-over-year growth of 24% to 27%.

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Occupancy rates in both business segments grew 500 basis points on a same-quarter year-over-year basis. Overall, our net revenue for the first quarter increased 9.3% to $1.55 billion. Net revenue in our critical illness recovery hospital segment in the first quarter increased 18.9% to $595 million, compared to $501 million in the same quarter last year. Patient days were up 8.4% compared to same quarter last year with over 293,000 patient days. Occupancy in our critical illness recovery hospital segment was 75% in the first quarter, compared to 70% the same quarter last year. Net revenue per-patient day increased 10.1% to $2,024 per-patient day in the first quarter. Case mix index in our critical illness recovery hospitals was 1.35 in the first quarter, compared to 1.27 in the same quarter last year. Net revenue in our rehabilitation hospital segment in the first quarter increased 14.2% to $208 million, compared to $182 million in the same quarter last year. Patient days increased 8.3% compared to same quarter last year with over 102,000 patient days. Occupancy in our rehabilitation hospitals was 84% in the first quarter, compared to 79% same quarter last year. Net revenue per-patient day increased 7% to $1,853 per day in the first quarter. Net revenue in our outpatient rehab segment for the first quarter declined 1.3% to $252 million, compared to $255 million in the same quarter last year. Patient business were down 1.1% with 2.1 million visits in the quarter. Our net revenue per visit was $104 in both the first quarter this year and last year. Net revenue in our Concentra segment in the first quarter increased 6.1% to $423 million, compared to $399 million in the same quarter last year. For the centers, patient business were down 2.8%, a 2-point [Technical difficulty] in business in the quarter. Net revenue per visit in the centers increased slightly to $125 in the first quarter, compared to $123 in the same quarter last year. I also want to highlight that we recorded $34 million in other operating income in the first quarter this year. This included $16.1 million related to payments received under the CARES Act for incremental costs incurred as a result of COVID. It also included $17.9 million related to the positive outcome of litigation with CMS. The adjusted EBITDA results for our critical illness recovery hospital segment included the recognition of this income. Total company adjusted EBITDA for the first quarter increased 37.9% to $258.3 million, compared to $187.3 million in the same quarter last year. Our consolidated adjusted EBITDA margin was 16.7% for the first quarter, compared to 13.2% for the same quarter last year. Our critical illness recovery hospital segment adjusted EBITDA increased 27.9% to $113.3 million, compared to $88.6 million same quarter last year. Adjusted EBITDA margin for the segment was 19% in the first quarter, compared to 17.7% in the same quarter last year. Our rehab hospital segment adjusted EBITDA increased 31% to $50.5 million, compared to $38.6 million the same quarter last year. Adjusted EBITDA margin for the rehab hospital segment was 24.3% in the first quarter, compared to 21.2% in the same quarter last year. Our outpatient rehab adjusted EBITDA was $26.3 million, compared to $27.1 million in the same quarter last year. Adjusted EBITDA margin for the outpatient segment was 10.4% in the first quarter, compared to 10.6% same quarter last year. Our Concentra adjusted EBITDA increased 33.4% to $82 million, compared to $61.5 million in the same quarter last year. Adjusted EBITDA margin was 19.4% in the first quarter, compared to 15.4% in the same quarter last year. Earnings per common share increased 105% to $0.82 for the first quarter, compared to $0.40 for the same quarter last year. Adjusted earnings per common share was $0.37 in the first quarter last year. The proposed inpatient rehab rule, if adopted, would see an increase in the standard payment amount 2.47% and an increase in the high-cost outlier threshold. The proposed long-term acute care rule, if adopted, would see an increase in the standard federal rate of 2.45% and an increase in the high-cost outlier threshold. Additionally, the Medicare Sequester Relief bill extended temporary suspension of the 2% Medicare sequestration cut that was set to expire March 31 through the end of 2021. For the first quarter, our operating expenses, which include our cost of services and in general and administrative expenses, were $1.33 billion or 85.9% of net revenue. For the same quarter last year, operating expenses were $1.23 billion and 87.3% of net revenues. Cost of services were $1.29 billion for the first quarter. This compares to $1.2 billion in the same quarter last year. As a percent of net revenue, cost of services were 83.6% for the first quarter. This compares to 84.9% in the same quarter last year. G&A expense was $35.4 million in the first quarter. This compares to $33.8 million in the same quarter last year. G&A as a percent of net revenue was 2.3% in the first quarter. This compares to 2.4% of net revenue for the same quarter last year. As Bob mentioned, total adjusted EBITDA was $258.3 million, and the adjusted EBITDA margin was 15.7% for the first quarter. This compares to total adjusted EBITDA of $187.3 million and adjusted EBITDA margin of 13.2% in the same quarter last year. Depreciation and amortization was $49.6 million in the first quarter. This compares to $51.8 million in the same quarter last year. We generated $9.9 million in equity and earnings [Technical difficulty] subsidiaries during the first quarter. This compares to $2.6 million in the same quarter last year. We also had a nonoperating gain of $7.2 million in the first quarter last year. Interest expense was $34.4 million in the first quarter. This compares to $46.1 million in the same quarter last year. We recorded income tax expense of $45.1 million in the first quarter this year, which represents an effective tax rate of 24.7%. This compares to the tax expense of $21.9 million and an effective rate of 23.7% in the same quarter last year. Net income attributable to noncontrolling interest were $26.7 million in the first quarter. This compared to $17.3 million in the same quarter last year. Net income attributable to Select Medical Holdings was $110.5 million in the first quarter, and earnings per common share was $0.82. At the end of the first quarter, we had $3.4 billion of debt outstanding and over $750 million of cash on the balance sheet. Our debt balances at the end of the quarter included $2.1 billion in term loans, $1.2 billion and 6.25% senior notes and $75 million of other miscellaneous debt. Net leverage based on our credit agreement EBITDA dropped to 3.02 times at the end of the first quarter. This is down from 3.48 times at the end of the year and 4.76 times at the end of the first quarter last year. Operating activities provided $239.9 million of cash flow in the first quarter. This compares to $44.1 million in the same quarter last year. Our day sales outstanding, or DSO, was 56 days at the end of March. This compares to 56 days at the end of December of 2020 and 53 days at March 31 of 2020. Investing activities used $52.6 million of cash in the first quarter. The use of cash included $39.7 million -- $39.7 million in the purchase of property and equipment and $12.9 million in acquisition and investment activities in the first quarter. Financing activities used $14.1 million of cash in the first quarter. This includes $13.7 million in payments and distributions to noncontrolling interest of $400,000 in net repayments of other debts in the quarter. Our total available liquidity at the end of the first quarter was $1.25 billion, which includes $75 million of cash and close to $500 million in revolver availability under the Select and Concentra credit agreements. For the full-year 2021, we now expect revenue in the range of $5.7 billion to $5.9 billion, expected adjusted EBITDA to be in the range of $870 million to $900 million and expected earnings per common share to be in the range of $2.41 to $2.58.

Overall, our net revenue for the first quarter increased 9.3% to $1.55 billion. Earnings per common share increased 105% to $0.82 for the first quarter, compared to $0.40 for the same quarter last year. Net income attributable to Select Medical Holdings was $110.5 million in the first quarter, and earnings per common share was $0.82. For the full-year 2021, we now expect revenue in the range of $5.7 billion to $5.9 billion, expected adjusted EBITDA to be in the range of $870 million to $900 million and expected earnings per common share to be in the range of $2.41 to $2.58.

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We have Ryan Lance, our chairman and CEO; Bill Bullock, executive vice president and chief financial officer; Dominic Macklon, executive vice president of strategy, sustainability, and technology; Tim Leach, executive vice president of Lower 48; and Nick Olds, executive vice president for global operations. We produced 1.6 million barrels per day and brought first production online at GMT2 in Alaska, the third Montney well pad, and the Malikai Phase 2 and S&P Phase 2 projects in Malaysia. Financially, we achieved a 14% full-year return on capital employed or 16% on a cash-adjusted basis and generated $15.7 billion in CFO, with over $10 billion in free cash flow. And we returned $6 billion to our shareholders, representing 38% of our cash from operations. In the Asia Pacific region, we exercised our pre-emption right to acquire an additional 10% in APLNG and announced the sale of assets in Indonesia for $1.4 billion. In the Lower 48, we generated $0.3 billion in proceeds from the sale of noncore assets last year, and last week, we signed an agreement to sell an additional property set, outside of our core areas for an additional $440 million. Collectively, these transactions reduced both the average cost of supply and the GHG intensity of our more than 20-billion-barrel resource base and we're well down the road toward achieving our $4 billion to $5 billion in dispositions by 2023. We also introduced a new variable return of cash, or VROC, tiered to our distribution framework and provided a full-year target of $7 billion in total returns of capital to our shareholders. Based on current prices on the forward curve, we've increased the target to $8 billion, with the incremental $1 billion coming in the form of increased share repurchases and a higher variable return of cash. The $0.30 per share VROC announced for the second quarter represents a 50% increase over our inaugural variable return to shareholders that we paid this quarter. Now, to put the $8 billion in perspective, it equates to an increase of more than 30% from the $6 billion returned last year and a greater than 50% increase in projected cash return to shareholders. We need to generate competitive returns on and of capital for our shareholders and achieve our Paris-aligned net-zero ambition by 2050. We increased our medium-term emissions intensity reduction target to 40% to 50% by 2030 and expanded it to include both gross operated and net equity production. And as highlighted in our December release, we've allocated $0.2 billion of this year's capital program for projects to reduce the company's Scope 1 and 2 emissions intensity and investments in several early stage, low-carbon opportunities that address end-use emissions. Looking at fourth-quarter earnings, we generated $2.27 per share in adjusted earnings. Lower 48 production averaged 818,000 barrels of oil equivalent per day for the quarter, including 483,000 from the Permian, 213,000 from the Eagle Ford and 100,000 from the Bakken. As previously communicated, our Permian and overall Lower 48 production were both increased roughly 40,000 barrels of oil equivalent per day in the quarter due to the conversion from two- to three-stream accounting for the acquired Concho assets. At the end of the year, we had 20 operated drilling rigs and nine frac crews working in the Lower 48, including those developing the acreage we recently acquired from Shell. Turning to cash from operations, we generated $5.5 billion in CFO, excluding working capital, resulting in free cash flow of $3.9 billion in the quarter. For the full year 2021, we generated $15.7 billion in CFO, $10.4 billion of free cash flow, and returned $6 billion to shareholders. In addition to the asset dispositions Ryan covered, we also sold 117 million shares we held in Synovis in the year, generating $1.1 billion in proceeds that we used to fund repurchases of our own shares. This left us with a little over 90 million Synovis shares at the end of the year, which we intend to fully monetize by the end of this quarter. We ended the year with over $5 billion in cash, maintaining our differential balance sheet strength, even after completing the all-cash acquisition of Shell's Delaware Basin assets. Our businesses are running very well around the globe, and we have had an overall reserve replacement ratio of nearly 380%, establishing an incredibly powerful platform for the company as we head into this year and beyond. Now, demonstrating this point and appreciating that it's helpful for the market to have an accurate sense of our stronger CFO generating capacity, at a WTI price of $75 a barrel with a $3 differential to Brent and a Henry Hub price of $3.75, we estimate our 2022 full-year cash from operations would be approximately $21 billion, which reflects us reentering a tax-paying position in the U.S. this year at those price levels. And our free cash flow for the year would be roughly $14 billion.

Based on current prices on the forward curve, we've increased the target to $8 billion, with the incremental $1 billion coming in the form of increased share repurchases and a higher variable return of cash. Now, to put the $8 billion in perspective, it equates to an increase of more than 30% from the $6 billion returned last year and a greater than 50% increase in projected cash return to shareholders. And as highlighted in our December release, we've allocated $0.2 billion of this year's capital program for projects to reduce the company's Scope 1 and 2 emissions intensity and investments in several early stage, low-carbon opportunities that address end-use emissions. Looking at fourth-quarter earnings, we generated $2.27 per share in adjusted earnings. We ended the year with over $5 billion in cash, maintaining our differential balance sheet strength, even after completing the all-cash acquisition of Shell's Delaware Basin assets.

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Total company adjusted EBITDA increased 4% to $1.324 billion and EBITDA margin expanded by 150 basis points. Cash generation continued to be strong with operating cash flows increasing by 9% to $1.1 billion. And finally, one of our principal measures, return on invested capital improved by 40 basis points to 14.3%. These results were particularly noteworthy considering our annual aggregates volume declined by 3% as compared to 2019. Aggregates pricing improved by just over 3% on both a reported and mix-adjusted basis. Our total cost of sales per ton increased by 2%, while our unit cash cost of sales, which is more controllable, only grew by 1%. This led to a 5.5% gain in our aggregates cash gross profit per ton. At $7.11, we are making good progress toward our longer term goal of $9 per ton. Collectively, gross profit improved 12% across these three segments. Asphalt gross profit increased $12 million or 19% over the prior year, even though volumes declined 7%. Our ready-mix concrete unit profitability increased 8%. Average selling prices increased by 2% and volume declined by 5%, primarily as a result of the cement shortages in California. These projects are typically more aggregate intensive, and 90% of the near-term growth in this sector will occur in Vulcan-served states according to Dodge. That said, we expect our adjusted EBITDA to be between $1.34 billion and $1.44 billion. We anticipate 2021 aggregates shipments could follow a range of a 2% decline to a 2% increase as compared to 2020. We expect aggregates freight-adjusted average selling prices to increase by 2% to 4% in 2021. We expect to further leverage our overhead costs in 2021 and anticipate our SG&A expenses to be between $365 million and $375 million. We anticipate interest expense to approximate $130 million for the full year. Barring any changes to federal tax law, our effective tax rate will be about 21%. The category of depreciation, depletion, accretion and amortization expenses will be around $400 million. Now with respect to capital expenditures, we invested $361 million in 2020. We expect to spend between $450 million and $475 million 2021. Adjusted EBITDA was $311 million, up 4% from last year's fourth quarter. Aggregates volume declined by 1%, while reported pricing increased by 3% and mix adjusted pricing by 2%. First, we recorded a one-time non-cash pension settlement charge of $23 million or $0.13 per diluted share in connection with the voluntary lump sum distribution of benefits to certain fully vested plan participants. The resulting earnings per share effect was $0.04 per diluted share in the fourth quarter and $0.18 per diluted share for the full year. Moving on to the balance sheet, our financial position remains very strong with a weighted average debt maturity of 13 years and a weighted average interest rate of 4%. Our net debt to EBITDA leverage ratio was 1.6 times as of December 31, reflecting $1.2 billion of cash on hand. Approximately $500 million of this cash will be used to repay a debt maturity coming due next month. We returned $206 million to shareholders through increased dividends and share repurchases. Our capital allocation priorities, which have helped to drive an improvement of 220 basis points and our return on invested capital over the last three years, remain unchanged.

Our total cost of sales per ton increased by 2%, while our unit cash cost of sales, which is more controllable, only grew by 1%. Average selling prices increased by 2% and volume declined by 5%, primarily as a result of the cement shortages in California. We anticipate 2021 aggregates shipments could follow a range of a 2% decline to a 2% increase as compared to 2020. We expect aggregates freight-adjusted average selling prices to increase by 2% to 4% in 2021. We expect to spend between $450 million and $475 million 2021. Aggregates volume declined by 1%, while reported pricing increased by 3% and mix adjusted pricing by 2%.

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Adjusted third quarter net income was $36.4 million flat with prior year. Year-to-date adjusted net income was $121 million or $5.20 per diluted share. Both adjusted net income and adjusted earnings per share were up 22% versus the first nine months of 2020. Surfactant operating income was down 16% largely due to higher North American supply chain cost, driven by inflation, higher planned maintenance costs and the $2.2 million insurance recovery related to the Millsdale plant in 2020. Our Polymer operating income was down 12%, mostly due to the non-recurrence of the insurance recovery and the compensation received from the Chinese government in the third quarter of 2020. Global Polymer sales volume rose 27% and was largely driven by the INVISTA acquisition. Our Specialty Product business rose by 53%, and was mainly due to order timing differences within our food and flavor business. Our Board of Directors declared a quarterly cash dividend on Stepan's common stock $0.335 per share payable on December 15, 2021. With this 9.8% increase, Stepan has now increased and paid its dividend for 54 consecutive years. The Board also authorized the Company to repurchase up to $150 million of its common stock, further demonstrating our commitment to deliver stockholder value through disciplined capital allocation. Adjusted net income for the third quarter of 2021 was $36.4 million or $1.57 per diluted share, basically flat versus the third quarter of 2020. Adjusted net income for the quarter exclude deferred compensation income of $1.1 million or $0.05 per diluted share compared to deferred compensation expense of $2.6 million or $0.11 per diluted share in the same period last year. The Company's effective tax rate was 20% for the first nine months of 2021 compared to 24% in the same period last year. We expect the full year 2021 effective tax rate to be in the 20% to 22% range. Surfactant net sales were $388 million, a 16% increase versus the prior year. Selling prices were up 20% primarily due to improved product and customer mix as well as the pass-through of higher raw material costs. The effect of foreign currency translation positively impacted sales by 2%. Volume decreased 6% year-over-year. Surfactant operating income for the quarter decreased $6.7 million or 16% versus the prior year, primarily due to supply chain disruption impacts and the one-time insurance payment of $2.2 million recognized in the third quarter of 2020. We estimate the supply chain disruption had a negative impact of approximately $4 million during the current quarter. Now turning to Polymers on Slide 7, net sales were $199 million in the quarter, up 70% from prior year. Selling prices increased 44% primarily due to the pass-through of higher raw material costs. Volume grew 27% in the quarter driven by 33% growth in global rigid polyol. Polymer operating income decreased $2.6 million or 12%, driven by one-time benefits of $4 million in the third quarter of 2020 and significant supply chain disruptions in the current quarter. We estimate the supply chain disruptions had a negative impact of approximately $3 million during the quarter. The Specialty Product net sales were up 15% driven by volume up 9% between quarters. Operating income increased $0.8 million or 53% due to order timing differences within our food and flavor business and improved margins within our MCT product line. We had a strong cash from operations in the first nine months of 2021 which we have used for capital investments, dividends, share buybacks and working capital given the strong sales growth and raw material inflation. We executed a $50 million private placement note at a very attractive and fixed interest rate of around 2%. For the full year, capital expenditures are expected to be in the range of $200 million to $220 million. We remain optimistic about future opportunities in this business as oil prices have recovered to the $80 per barrel level, and we continue to promote our new cost-effective product solutions that improve oilfield operator ROI and protect their wells. As discussed previously, we are increasing North American capability and capacity to produce low 1,4-dioxane sulfates. 1,4-dioxane is the minor byproduct generated in the manufacture of ether sulfate surfactants which are key cleaning and foaming ingredients used in consumer product formulations. This project, along with our announcement today to invest $220 million to build under an EPC contract 75,000 metric tons per year Alkoxylation production facility at our Pasadena, Texas site are the primary drivers of our 2021 capital expenditure forecast of $200 million to $220 million. Tier 2 and Tier 3 customers continue to be a focus of our Surfactant growth strategy. We added 300 new customers during the quarter and approximately 800 customers during the first nine months of the year. The integration of the business acquired from INVISTA is going well and expect this acquisition to deliver more than $20 million of EBITDA in 2021. Looking forward, we believe our Surfactant volumes in North American consumer product end markets will continue to be challenged by raw material and transportation availability.

Our Board of Directors declared a quarterly cash dividend on Stepan's common stock $0.335 per share payable on December 15, 2021. The Board also authorized the Company to repurchase up to $150 million of its common stock, further demonstrating our commitment to deliver stockholder value through disciplined capital allocation. Adjusted net income for the third quarter of 2021 was $36.4 million or $1.57 per diluted share, basically flat versus the third quarter of 2020. We had a strong cash from operations in the first nine months of 2021 which we have used for capital investments, dividends, share buybacks and working capital given the strong sales growth and raw material inflation. Looking forward, we believe our Surfactant volumes in North American consumer product end markets will continue to be challenged by raw material and transportation availability.

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Net sales totaled $1.1 billion, gross profit increased 42% from last year's third quarter, and we generated earnings per share on an adjusted basis of $0.35 per share, up from a loss per share of $0.14 a year ago. For the third quarter of 2019, adjusted net income per diluted share was $0.35, compared with an adjusted loss per diluted share of $0.14 in 2018. Adjusted gross profit increased 42% to $75 million in the third quarter of 2019, compared with $53 million in 2018. Adjusted operating income for the quarter increased to $25 million, compared with $3 million in the prior year. And adjusted net income was $17 million, compared with an adjusted net loss of $7 million in the third quarter of 2018. In our fresh and value-added business segment for the third quarter of 2018, net sales were $653 million, compared with $640 million in the prior year period. Gross profit increased 27% to $54 million, compared with $42 million in the third quarter of 2018, primarily due to higher gross profit in our fresh-cut, pineapple and vegetable product lines. Our gross profit margin for the segment improved by 1.6 percentage point, maintaining the growth trend of the first half of 2019. In our pineapple category, net sales decreased to $102 million, compared to $112 million in the prior year period. Overall volume was 20% lower, unit pricing was 14% higher and unit cost was 7% higher than the prior year period. In our fresh-cut fruit category, net sales were $145 million, compared with $132 million in the prior year period, primarily due to higher sales volume and higher selling prices in North America. Overall volume was 10% higher, unit pricing was 1% higher and unit cost was 2% lower than the third quarter of 2018. In our fresh-cut vegetable category, net sales increased to $124 million, compared with $123 million in the third quarter of 2018. Volume was 9% lower, unit pricing was 11% higher and unit cost was 9% higher than the prior year period. In our avocado category, net sales increased to $98 million, compared with $85 million in the third quarter of 2018, supported by higher selling prices as a result of tight industry supply. Volume decreased 8%, pricing was 26% higher and unit cost was 28% higher than the prior year period. In our fresh vegetable category, net sales increased to $46 million, compared with $40 million in the third quarter of 2018, due to higher sales volume and increased selling prices. Volume increased 9%, unit price increased 6% and unit cost was 1% lower. Net sales decreased to $32 million, compared with $42 million in the third quarter of 2018, primarily due to planned rationalization of low-margin products in this category beginning in 2018. Volume decreased 22%, unit pricing was in line with the prior year period and unit cost was 2% lower. In our banana business segment, net sales were $386 million, compared with $397 million in the third quarter of 2018, primarily due to lower net sales in North America and Asia, partially offset by higher sales in the Middle East and Europe. Overall volume was 7% lower than last year's third quarter, worldwide price increased 4% over the prior year period and total worldwide banana unit cost was 3% higher than the prior year period and gross profit increased to $17 million, compared with $10 million in the third quarter of 2018, reflecting a 1.7 percentage point increase in gross profit margin. Regarding foreign currency, our foreign currency was impacted at the sales level for the third quarter with an unfavorable impact of $7 million, and at the gross profit level the impact was unfavorable by $2 million. Interest expense, net for the third quarter was $6 million compared with $7 million in the third quarter of 2018, due to lower debt and volume. Income tax expense was $3 million during the quarter, compared with income tax expense of $1 million in the prior year, mainly due to higher taxable earnings in North America. At the end of the quarter, our cash flow -- cash from operating activities was $130 million, compared with net cash provided by operating activities of $271 million in the same period of 2018, primarily due to lower accounts payable and accrued expenses, partially offset by higher net income. At the end of the quarter, we were able to reduce our debt by an additional $50 million to $590 million from $640 million at the end of the second quarter of 2018. In October 2019, we amended and restated our $1.1 billion unsecured credit agreement and extended the credit facility until October 2024, with a more favorable rate. We also included an accordion feature that could increase the availability by, up to $300 million. As it relates to capital spending, we invested $94 million on capital expenditures in the first nine months of 2019, compared with $119 million in the same period in 2018. This is a 33% or $0.02 increase over the dividend paid in September 2019.

Net sales totaled $1.1 billion, gross profit increased 42% from last year's third quarter, and we generated earnings per share on an adjusted basis of $0.35 per share, up from a loss per share of $0.14 a year ago. For the third quarter of 2019, adjusted net income per diluted share was $0.35, compared with an adjusted loss per diluted share of $0.14 in 2018. In October 2019, we amended and restated our $1.1 billion unsecured credit agreement and extended the credit facility until October 2024, with a more favorable rate. This is a 33% or $0.02 increase over the dividend paid in September 2019.

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On October 29, we received a formal Pennsylvania Public Utility Commission acceptance of Pennsylvania American Waters application for the acquisition of York Wastewater. We believe our submitted superior offer, which was the highest by $15 million, will provide the most benefit for that community. You saw the incredible photos of how our flood wall protected our plant, enabling us to continue to provide water service for more than 1 million people in Central New Jersey during Hurricane Ida.

On October 29, we received a formal Pennsylvania Public Utility Commission acceptance of Pennsylvania American Waters application for the acquisition of York Wastewater.

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Net sales for the fourth quarter of 2020 were $789.8 million, which is a 26.5% increase on a reported basis, versus $624.4 million in Q4 of 2019. On a currency neutral basis, sales increased 24.4%. The fourth quarter sales included $32 million of damages award related to intellectual property litigation with 10x Genomics, covering the period between 2015 and 2018. Excluding the $32 million, the fourth quarter year-over-year currency neutral revenue growth was 19.4%. The fourth quarter year-over-year revenue growth also benefited from an easy compare of about $10 million revenue carryover to Q1 of 2020, related to the December 2019 cyberattack. Generally, we are seeing most academic and diagnostic labs now running between 70% and 90% capacity, which is similar to what we saw in Q3. We estimate that COVID-19 related sales were about $132 million in the quarter. Sales of Life Science group in the fourth quarter of 2020 were $428.5 million, compared to $242 million in Q4 of 2019, which is a 77.1% increase on a reported basis and a 73.9% increase on a currency neutral basis, and it was driven by our PCR product lines, as well as strong performance in the biopharma segment. The fourth quarter revenue also included a $32 million damages award related to intellectual property litigation. Excluding that $32 million damages award, the currency neutral revenue growth was 60.9%. Excluding process media sales and the $32 million damages award, the underlying Life Science business grew 64.6% on a currency neutral basis versus Q4 of 2019. Sales of Clinical Diagnostics products in the fourth quarter were $359.6 million compared to $379 million in Q4 of 2019, which is a 5.1% decline on a reported basis and a 6.6% decline on a currency neutral basis. The reported gross margin for the fourth quarter of 2020 was 58.3% on a GAAP basis and compares to 52.9% in Q4 of 2019. The current quarter gross margin benefited mainly from better product mix, lower service costs, higher manufacturing utilization, as well as $23 million [Phonetic] gross margin benefit, associated with the 10X Genomics damages award. Amortization related to prior acquisitions, recorded in cost of goods sold was $4.6 million compared to $4.5 million in Q4 of 2019. SG&A expenses for Q4 of 2020 were $219.1 million or 27.7% of sales compared to $214.2 million, or 34.3% in Q4 of 2019. Total amortization expense related to acquisitions recorded in SG&A for the quarter was $2.4 million versus $2.1 million in Q4 of 2019. Research and Development expense in Q4 was $65.8 million or 8.3% of sales compared to $57.1 million, or 9.1% of sales in Q4 of 2019. Q4 operating income was $175.2 million or 22.2% of sales, compared to $59.2 million or 9.5% of sales in Q4 of 2019. Looking below the operating line, the change in fair market value of equity securities holdings added $904 million of income to the reported results and this is substantially related to holdings of the shares of Sartorius AG. During the quarter, interest in other income resulted in a net expense of $1 million compared to $5.8 million of expense last year. Our GAAP effective tax rate for the fourth quarter of 2020 was 22.2% compared to 20.9% for the same period in 2019. Reported net income for the fourth quarter was $839.1 million, and diluted earnings per share were $27.81. In sales, we have excluded the $32 million damages award. In cost of goods sold, we have excluded $8.7 million IP-license costs associated with the damages award. $4.6 million of amortization of purchased intangibles, and a small restructuring benefit. These exclusions moved the gross margin for the fourth quarter of 2020 to a non-GAAP gross margin of 58.2% versus 54.1% in Q4 of 2019. Non-GAAP SG&A in the fourth quarter of 2020 was 28.2% versus 31.7% in Q4 of 2019. In SG&A on a non-GAAP basis, we have excluded amortization of purchase intangibles of $2.4 million, legal related expenses of $6.3 million and restructuring and acquisition-related benefits of $3.1 million. Non-GAAP R&D expense in the fourth quarter of 2020 was 8.7% versus 8.2% in Q4 of 2019. The cumulative sum of these non-GAAP adjustments result in moving the quarterly operating margin from 22.2% on a GAAP basis to 21.4% on a non-GAAP basis. These non-GAAP operating margin compares to a non-GAAP operating margin in Q4 of 2019 of 14.3%. We have also excluded certain items below the operating line, which are the increase in value of the Sartorius equity holdings of $904.3 million, $2.1 million associated with venture investments and $3 million of interest income, associated with the 10X damages award. Our non-GAAP effective tax rate for the fourth quarter of 2020 was 24.3% compared to 17.7% in 2019. And finally, non-GAAP net income for the fourth quarter of 2020 was $121 million or $4.01 diluted earnings per share, compared to $70 million and $2.32 per share in Q4 of 2019. Moving on to the full year results, net sales for the full year of 2020 were $2.546 billion on a reported basis, excluding the 10X damages award of $32 million, sales were $2.514 billion which is 8.9% growth on a currency neutral basis. We estimate that COVID-19 related sales were about $313 million. Sales of Life Science group for 2020 were $1.23108 billion. Excluding the 10X damages award of $32 million, the year-over-year growth was 35% on a currency neutral basis. Sales of Clinical Diagnostics products for 2020 were $1.305 billion which is down 7.1% on a currency neutral basis. The full year non-GAAP gross margin was 56.9% compared to 55% in 2019. Full year non-GAAP SG&A was 30.9% compared to 34.4% in 2019. Full year non-GAAP R&D was 9.1% versus 8.5% in 2019 and full year non-GAAP operating income was 17% compared to 12% in 2019. Lastly, the non-GAAP effective tax rate for the full year of 2020 was 24%, compared to 24.1% in 2019. The non-GAAP effective tax rate for 2020 was consistent with our guidance of 24%. Moving on to the balance sheet; total cash and short-term investments at the end of 2020 was $997 million, compared to $1.120 billion at the end of 2019 and $1.160 billion at the end of the third quarter of 2020. In December, we repaid the $425 million of outstanding senior notes. Year-end inventory decreased by about $18 million from the third quarter of 2020. We have a total of $273 million available for potential share buybacks. Full year share buybacks was about 292,000 shares for $100 million. In 2019, we purchased about 88,000 shares of our stock for $28 million. For the fourth quarter of 2020, net cash generated from operating activities was $284.7 million, which compares to $159.8 million in Q4 of 2019. For the full year of 2020, net cash generated from operations was $575.3 million versus $457.9 million in 2019. The adjusted EBITDA for the fourth quarter of 2020 was 25.2% of sales. The adjusted EBITDA in Q4 of 2019 was 18.7%. Full year adjusted EBITDA, included the Sartorius dividend, was $546.4 million or about 21.7% compared to 17.5% in 2019. Net capital expenditures for the fourth quarter of 2020 were $39.2 million and full year capex spend was $98.9 million. Depreciation and amortization for the fourth quarter was $36.2 million and $138.1 million for the full year. We project revenues to grow to an overall range of $2.75 billion and $2.85 billion by the end of 2023. We expect non-GAAP gross margin in 2023 to land in a range of 57% to 57.5%. Adjusted EBITDA margin should be in the range of 23% and 24%, based on top-line growth, productivity improvements, and SG&A leverage. The restructuring plan is expected to eliminate a total of approximately 530 positions, approximately 200 positions in manufacturing, and 330 positions across our SG&A and R&D functions. And subsequently creation of a total of about 325 new positions, approximately 100 new positions in manufacturing and 225 new positions across SG&A and R&D functions. As a result of this restructuring plan, we expect to incur between approximately $125 million and $130 million in total costs, which we anticipate will consist of approximately $86 million cash expenditures, in the form of one-time termination benefits to the affected employees. Approximately $19 million in capital expenses associated with the restructuring plan, and about $20 million to $25 million in one-time transaction cost. We anticipate about $80 million to $90 million of restructuring charges related to this restructuring plan will be recorded in the first quarter of 2021, with the balance recorded by the end of 2022. We are guiding a currency neutral revenue growth in 2021 to be between 4.5% and 5%. We estimate about 10% to 11% revenue growth for the Diagnostics group. Full year non-GAAP gross margin is projected between 56.2% and 56.5%, and full year non-GAAP operating margin to be between 16% and 16.5%. We estimate the non-GAAP full year tax rate to be between 24% and 25%. Capex is projected between $120 million and $130 million and full year adjusted EBITDA margin of about 21%.

Net sales for the fourth quarter of 2020 were $789.8 million, which is a 26.5% increase on a reported basis, versus $624.4 million in Q4 of 2019. Reported net income for the fourth quarter was $839.1 million, and diluted earnings per share were $27.81. And finally, non-GAAP net income for the fourth quarter of 2020 was $121 million or $4.01 diluted earnings per share, compared to $70 million and $2.32 per share in Q4 of 2019. We are guiding a currency neutral revenue growth in 2021 to be between 4.5% and 5%. Full year non-GAAP gross margin is projected between 56.2% and 56.5%, and full year non-GAAP operating margin to be between 16% and 16.5%.

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Our sales for the quarter were $301 million. Excluding favorable currency translation, our organic growth was up 37% from the prior year. 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. We generated $31 million in free cash flow and further reduced our net debt in the quarter. 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. 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. 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 strong fourth quarter drove our EV sales for the full year to over 12% of total consolidated sales. 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. Methode Electronics was founded in 1946 by William J. McGinley in Chicago. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.

Our sales for the quarter were $301 million. 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%. 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. 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.

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Our portfolio occupancy has increased to approximately 35%, the predominance of tenants returning has though expanded beyond just small employers, as occupancy for tenants 50,000 square feet and below is now over 50%. We have reduced our forward rollover exposure through 2024 to an average of 6.8%, a slight improvement over last quarter. Our forecasted rollover exposure is now below 10% annually, through 2026. Key near-term earnings drivers for us are, as you all know, we have several key vacancies, that upon lease-up will generate between $0.07 and $0.10 per share of growth and we're delighted to report that we have now leased about 46% of that targeted square footage and achieved about 45% of that forward revenue growth, at an average mark to market of 12% cash and 19% GAAP and that income will be substantially in place by the third quarter of 2022, which can create a good growth opportunity for us. Some notable components of that during the quarter, the last 38,000 square feet vacated by [Indecipherable] in Austin has been leased and we've also signed a replacement lease for the 42,000 square foot tenant in Radnor, Pennsylvania. And lastly we did sign three new leases at Commerce Square, totaling just shy of 29,000 square feet. From a financial standpoint, for the third quarter, we posted FFO of $0.35 per share, which is 1% per share above consensus estimates, which Tom will walk you through. We do anticipate about a 100,000 square feet of positive absorption during the fourth quarter, and we will achieve our year-end occupancy and lease percentage guidance ranges. And to reinforce our leasing progress to date, we are increasing our speculative revenue target by $500,000 from our mid-point range of $25.5 million to $21 million and we are over 99% complete on that revised target. It's important to note that that $21 million target that we're now circling is about 15% above the bottom end of our original range and it does reflect ever improving office market conditions. Of the 59 new deals that we signed this year, the weighted average lease term is 7.8 years, 68% of those lease terms are longer than four years and our medium lease term has remained fairly consistent with what we are able to achieve in 2018, '19, and in 2020. Third quarter capital cost came in below 8% of generated revenue, so well within our business plan range. Cash mark to market was a positive 12% and our GAAP mark to market was a positive 16%. Our third quarter GAAP same store NOI was 2% and year-to-date results were within our '21 range. Our third quarter cash same store NOI was 5.5% and above our 2021 range of 3% to 5%. We are still forecasting a 21 year end debt to EBITDA in the range of 6.3 times to 6.5 times. The Philadelphia suburban market produced more than 350,000 square feet of leasing activity in the second quarter, it was at 42.7% increase quarter-over-quarter. The CBD market also posted 181,000 square feet of leasing activity, and Philadelphia generally is making a strong recovery from the pandemic in comparison to a number of other major American cities. Our vacancy rate is lower than the national average and based upon a major brokerage report Philadelphia is in the top 10 of all American cities for pandemic recovery, as measured by recovery rates and employment, vaccination and leasing activity. During the quarter, we had a total of over 1,500 virtual tours and inspected over 758,000 square feet in line with second quarter results. Physical tours were down slightly over the second -- from the second quarter and we attribute this really more to the summer months as third quarter physical tours outpaced first quarter tours by over 13%. Our overall pipeline stands at 1.6 million square feet, which increased by about 600,000 square feet during the quarter. So our pipeline today is 7% better than our third quarter '19 results. Now as you might expect and we've reported last quarter, median deal cycle time continues to trail pre-pandemic levels by approximately 30 days. But on a very positive note, during the quarter, we executed 464,000 square feet of leases, including 347,000 square feet of new leasing activity. First, quality product does matter, since the beginning of the pandemic approximately 100,000 square feet of deals have moved up in the Brandywine buildings versus lower quality competitors. Secondly, we have seen approximately 20 tenants expand their premises by approximately 122,000 square feet since the beginning of the pandemic. In looking at our liquidity and dividend coverages, as Tom will report, we have excellent liquidity and anticipate having approximately $515 million available on our line of credit by the end of the year. We have no unsecured bond maturities until 2023, have a weighted average effective rate of 3.73% as a fully unencumbered wholly owned asset base. Our dividend remains extremely well covered with a 54% FFO and 81% CAD payout ratio and as we noted, our five year dividend growth rate has been 5.3% while our five year CAD growth rate has been just shy of 8%, well in excess of our core peer averages. As part of our land recycling program we did sell three non-core land parcels, generating just shy of $11 million of proceeds and at a $900,000 gain. Also, as we noted in our supplemental package, during the quarter, at $50 million preferred equity investment in two office properties in Austin, Texas were redeemed. We did record a $2.8 million incremental investment income during the quarter due to that early redemption, that $50 million preferred equity generated just shy of a 21% internal rate of return during the whole period. 250 King of Prussia Road, which we note in our supplemental package, is a 169,000 square foot project under renovation in the Radnor Submarket, that was started in the second quarter and will be wrapped up by the second quarter of '22. Those two items did impact our targeted yields by reducing it about 20 basis points. The project, as we noted before, is really the first delivery in our Radnor Life Science Center, which will consist of more than 300,000 square feet of life science space, and one of the region's best performing submarkets, our current pipeline for 250 King of Prussia Road totals more than 200,000 square feet, including 51,000 square feet in lease negotiations. That project will be delivered -- a 7% blended yield, as you may recall, it consists of 326 apartment units, 200,000 square feet of commercial and life science space and 9,000 square feet of street level retail. We have an active pipeline continuing to build on that project and our $56.8 million equity commitment is fully funded. Looking at 405 Colorado and Austin, Texas; this project is now complete. During the quarter we did increase our lease percentage from 24% to 44%. The 522 space garage did open during the summer and is currently just shy of about 12% occupied and we have signed already 102 monthly contracts since we opened the garage. 3000 Market Street in University City, Philadelphia, is a 91,000 square foot life science renovation as part of our Schuylkill Yards neighborhood, base building construction is complete. The building is fully leased for 12 years at a development yield of 9.6%. The redevelopment did include increasing the building size from 64,000 to about 91,000 by converting below grade space into labs. Cira Labs, which we announced a couple of quarter agos, where we partnered with PA Biotech Center to create a 50,000 square foot, 239 seat life science incubator, within the CIra Center Project, that will be completed later in the fourth quarter and will open January 1, 2022. Since we announced, we have had great leasing success announced and just shy of 50% -- about 49% leased, with 118 of that 239 seats leased and a pipeline with 17 additional proposals, aggregating more seats than we have available capacity. We can develop that 3 million square feet of life science space. We've already delivered 3000 Market, the Bulletin Building, 3151 Market, which is our 424,000 net rentable square foot life science building, is fully designed, ready to go and with a strong leasing pipeline, and our goal remains to be able to start that project in early 2022 [Technical Issues] assuming market conditions permit and the pipeline continues to build. At Broadmoor, Block A, which consists of 363,000 square feet of office and 341 apartments at a total cost of $321 million, will be starting later in the fourth quarter. The first phase of Block F, which is a 272 apartment units will be starting in the same venture format in Q1 of '22. And on the office leasing component, our leasing pipeline right now is slightly over 500,000 square feet with about an additional 1.5 million square feet of inquiries. Our third quarter net income totaled 900,000 or $0.01 per diluted share and our FFO totaled 61.1 million or $0.35 per diluted share and that was $0.01 above consensus estimates. Portfolio operating income at $68.5 million was in line with our guidance for the second quarter. Interest and investment income totaled $4.5 million and was $2.5 million above our $2 million guidance number. As Jerry mentioned this variance was due to the early termination of a $50 million preferred equity investment, which resulted in the acceleration of some fees, totaling about $1.5 million, and to make whole interest, on the investment income side of about $1.3 million, that's all was recorded in the third quarter. We forecasted 2.3 million in land gains and tax provisions, which was $1.4 million below our actual results, two land sales were delayed and we believe they will both close in the fourth quarter. As a result of those two that nets to a $0.01 increase to the reason we're above consensus. Interest expense of 15.2 was below our second quarter forecast, by $800,000 and that was primarily due to higher than anticipated capitalized interest on our 405 Colorado. Termination of other income totaled $1.8 million and was 400,000 above second quarter forecast, primarily due to the timing of some anticipated transactions, G&A was $7.1 million, 400,000 below our $7.5 million second quarter guidance. Our third quarter, fixed charge and interest coverage ratios were 4.3 and 4.1 respectively, both metrics improved from the second quarter, primarily due to the higher investment income. Our third quarter annualized net debt to EBITDA decreased to 6.5 and is currently at the high end of our 6.3 to 6.5 guidance. On the additional reporting, as we look at cash collections, they were over 99%, continue to be very strong. We did have some net operating write-offs of tenants, that totaled about 700,000 and did lower our portfolio operating income for the quarter. For portfolio changes 3000 Market, based on Brandywine completing our base building obligations 3000 Market will be added to our core portfolio during the fourth quarter as it's 100% life -- 100% leased life science to Spark Therapeutics [Phonetic]. Portfolio operating income will total $70 million and would be sequentially higher in the third quarter, that's due to the approximately 212,000 square feet that's going to be moving in during the quarter at a positive mark to market and will commence, and in addition to 3000 Market. FFO contribution from unconsolidated joint ventures will total about $6.1 million for the fourth quarter, relatively flat compared to the third quarter. G&A will total roughly $7.1 million again sequentially flat to the third quarter. Interest expense will be approximately 15.5 with approximately $2 million of capitalized interest. Termination fees and other incomes should total about $2.5 million. Net management fees will be about $3 million and interest in other -- interest and investment income about $400,000. We do anticipate land sales and tax provision to be about $1.3 million mainly based on the slides from the land sales that didn't occur in the third quarter, and this will generate about $6 million in net cash proceeds. On other business plan assumptions there will be no property acquisitions, we did note one JV sale in our all state portfolio, which should generate about $12 million of net cash proceeds, no anticipated ATM or share buyback activity, no financing or refinancing activity in the quarter and our share count will be about 73.5 million diluted shares. On the financing front, as previously mentioned, we did close on our construction loan at Schuylkill Yards, which represents a 65% estimate to -- estimated cost -- loan to cost. Initial interest rate will be about 3.75% based on our current capital plan we will start drawing on that during the fourth quarter of 2022. We plan to restructure and extend our current line -- our current loan, encovering our joint venture and 4040 Wilson [Phonetic] and that will lower our borrowing costs by about 100 basis points, generate minimal initial proceeds but allow for increased borrowings to complete the leasing of the vacant office space. Looking at our capital plan, our second quarter CAD was 65% of our common dividend and year-to-date coverage is within our range. Our fourth quarter 2021 capital plan is very straightforward at 140 million, and includes $70 million of development and redevelopment activity, $33 million of common dividends, $15 million of revenue maintained and $15 million of revenue create capital expenditures and contributions to our joint ventures totaling about $5 million. The primary sources will be cash flow from interest payments of -- after interest payments of $38 million, $42 million used as the line of credit, $42 million cash on hand and cash -- other sales and land totaling about $18 million. Based on our capital plan, we will have about 558 available in line of credit. The increase, in our projected line of credit, is partially due to the build-out of our incubator at Cira Center and we also project the net debt to EBITDA to fall within the 6.3 to 6.5 range with a big variable being this timing and scope of capital development payments that could reduce cash. Our net debt to GAV will be 39% to 40%. In addition, we anticipate our fixed charge ratios to approximate 3.6 on interest coverage and will approximate 3.9% -- Sorry fixed charge of 3.6 interest coverage at 3.9 which represent sequential decrease, again primarily due to some of the investment income that we received in the thirrd quarter. The success we've had added 3000 Market, the Bulletin Building just reported results on Cira Labs, as well as a focus on starting 3151 early next year.

From a financial standpoint, for the third quarter, we posted FFO of $0.35 per share, which is 1% per share above consensus estimates, which Tom will walk you through. Our third quarter net income totaled 900,000 or $0.01 per diluted share and our FFO totaled 61.1 million or $0.35 per diluted share and that was $0.01 above consensus estimates. As a result of those two that nets to a $0.01 increase to the reason we're above consensus.

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This is a company that is focused on continuing to grow adjusted EBITDA and coupling that with balanced capital management to deliver more than $10 of earnings per share in the near future. 2021 is expected to be a solid result for Olin for the reasons shown on Slide number 3. While there maybe some end-of-year holiday slowdowns, which are really supply driven, not demand driven, and some seasonality that result in a sequentially flattish fourth quarter results, we still expect 2022 to exceed 2021. The reason thematic for better results in 2022 is shown on Slide number 4. Even though we have grown our earnings for five consecutive quarters and delivered a levered free cash flow that is approaching 20%, we still must show that our performance will continue to improve, but maybe more importantly, we must demonstrate our ability to manage uncertainty and volatility. Slide number 5 has an illustration. Continuing with the theme of good fundamentals on Slide number 6, our perceived old world chemistry has new world application and value. I won't read all of these mega trend multipliers, as I'm sure they're familiar to you, but instead jump to Slide number 7 and hit on the differentiated growth profile of Epoxy. Even though we recognize the value of this business in Epoxy resin sales and in Epoxy systems sales, the value driver is really epichlorohydrin and we will be expounding on our globally leading epichlorohydrin position in future earnings calls. We expect it won't be long before our Epoxy business delivers greater than $1 billion of EBITDA and carries the same enterprise value that all of Olin carries today, more representative of a highly engineered materials company. Finally, I will close on Slide number 8. No doubt that a majority of our forward discussion will center on leadership, our linchpin products, great supply demand fundamentals, parlaying and lifting Olin people, however, new ways to create shareholder returns are evolving for Olin and help us earn above $10 of earnings per share.

While there maybe some end-of-year holiday slowdowns, which are really supply driven, not demand driven, and some seasonality that result in a sequentially flattish fourth quarter results, we still expect 2022 to exceed 2021. Even though we recognize the value of this business in Epoxy resin sales and in Epoxy systems sales, the value driver is really epichlorohydrin and we will be expounding on our globally leading epichlorohydrin position in future earnings calls.

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One early access customer leveraged Vantage and IoT sensor data stored in AWS three to perform predictive maintenance on more than 650,000 pieces of equipment, keeping the fleet running, drives more consistent and predictable operations for them and increasing customer satisfaction. In a great showing of the demand for Teradata expertise, we saw more than 14,000 people take advantage of that learning opportunities. Further, we reimagined all of our events into 100% virtual experiences, and our teams collaborated remotely with hundreds of customers and prospective customers explaining how companies can leverage Teradata to get the insights they need. Based on our unmatched capabilities to scale and the flexibility in our pay-for-what-you-use consumption model, the customer has an extensive set of use cases, including expanding its 360-degree view of its 11 million B2C customers, improving the customer journey and defining use customer segments based on advanced analytics. The firm utilizes Teradata to drive its loyalty rewards program and $9 out of every $10 of revenue flows through applications run on Vantage. We generated $52 million in incremental ARR this quarter, $39 million in constant currency. This resulted in $358 million in recurring revenue, growing 6% reported and 8% in constant currency and was well above our guidance range. Consulting revenue declined 26%, 24% in constant currency. Recurring revenue gross margins were 69.8%, up 230 basis points sequentially but down 120 basis points year-over-year as the mix of recurring revenue that includes hardware and lower-margin cloud revenue created a near-term headwind. Over time, we expect recurring revenue gross margins to expand as we see less mix headwinds and expect to see significant gross margin expansion in our cloud offering over the next 18 to 24 months. Consulting revenue gross margin was 15.9% as improved utilization and better price realization helped drive significant movement versus last year. Total gross margins came in at 58.9%, up 620 basis points year-over-year. Total operating expenses were up 2% year-over-year. The primary driver of this increase was amortization from capitalized sales compensation as required under ASC 606. Additionally, we also converted a portion of our annual performance cash-based incentive comp to share-based performance grants that potentially helps non-GAAP operating margin and earnings per share in 2020 between 50 and 100 basis points and $0.05 to $0.10 of EPS, which we believe will have no significant share dilution impact in 2021 when the final annual performance incentive achievement is determined. As we mentioned last quarter, we had roughly $30 million in collections that slipped from Q1 but were collected in April. And this, combined with the overall strong quarter, resulted in free cash flow for the quarter of $115 million, bringing free cash flow for the first half to $130 million. Our financial position remains very strong and we ended the quarter with $494 million in cash. As a reminder, less than 12% of our revenue comes from industries hardest hit by the economic changes brought on by COVID-19. For Q3, we expect recurring revenue in the range of $359 million to $361 million and non-GAAP earnings per share between the range of $0.28 and $0.31. In addition, we continue to expect our full year tax rate to be approximately 23% and a full year share count of approximately 111 million shares.

For Q3, we expect recurring revenue in the range of $359 million to $361 million and non-GAAP earnings per share between the range of $0.28 and $0.31.

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Revenue was essentially flat against the second quarter last year, but operating earnings are up $125 million and net earnings are up $112 million. Earnings per share are up $0.43. To be a little more granular, revenue on the defense side of the business is up against last year's second quarter by $308 million or 4.2%. The Aerospace is down $352 million, pretty much as planned. Operating earnings on the defense side are up $98 million, or 14.3%, and operating earnings in Aerospace are up $36 million on a 390 basis point improvement in operating margin. The operating margin for the entire company was 10.4%, 140 basis points better than the year-ago quarter. From a slightly different perspective, we beat consensus by $0.07 per share on somewhat lower revenue than anticipated by the sell side. However, operating margin is 20 basis more than anticipated, coupled with a somewhat lower share count. On a year-to-date basis, revenue is up $596 million or 3.3%, and operating earnings are up $129 million or 7.3%. Overall, margins are up 40 basis points. The defense numbers are particularly good with revenue up $752 million or 5.2%, and operating earnings up $143 million or 10.3%. On the Aerospace side of the business, revenue on a year-to-date basis is down $156 million or 4.3%, but earnings are up $16 million or 4% on a 90 basis point improvement in operating margins. Free cash flow of $943 million is 128% of net income. Cash flow from operating activities was 151% of net income. Aerospace had revenue of $1.6 billion and operating earnings of $195 million, with a 12% operating margin. Revenue was $352 million less than the year-ago quarter or 17.8% as a result of fewer planned aircraft deliveries. On the other hand, operating earnings are up $36 million or 22.6% on a 390 basis point improvement in margins. In dollar terms, Aerospace had a book-to-bill of 2:1. Gulfstream alone had a book-to-bill of 2.1:1, even stronger if expressed in unit terms. We have delivered 115 of these aircraft to customers as we speak. The G700 has approximately 1,600 test hours on the five test aircraft. Looking forward, we have planned 32 deliveries in the third quarter and 39 in the fourth. Combat systems had revenue of $1.9 billion, up 8.3% over the year-ago quarter. It is also interesting to observe that combat systems revenue has grown in 17 of the last 19 quarters on a quarter over the year-ago quarter basis. For the first half of the year, combat systems revenue of $3.7 billion, is $257 million or 7.4% over the first half of last year. Operating earnings for the quarter at $266 million are up 11.3% on higher volume and a 40 basis point improvement in margin. For the first half, combat systems earnings of $510 million are up $48 million or 10.4% over the last year's first half. The quarter was also good for combat systems from an order perspective with a 1:1 book-to-bill, leaving a modest increase in total backlog. Revenue of $2.54 billion is up $65 million over the year-ago quarter. In the quarter, the growth was led by the DDG-51 and T-AO volume. For the first half, revenue is up $302 million or 6.4%. In fact, revenue in this group has been up for the last 15 quarters on a quarter versus the year-ago quarter basis. Operating earnings are $210 million in the quarter, up $10 million or 5% on operating margins of 8.3%. The segment has revenues of $3.16 billion in the quarter, up $98 million from the year-ago quarter or 3.2%. The revenue increase supplied by information technology, mostly associated with the ramp-up of new programs, was almost 10%. Operating earnings at $308 million are up $61 million or 24.7% on a 9.7% operating margin. EBITDA margin is an impressive 13.7%, including state and local taxes, which are a 50 basis point drag on that result. Total backlog grew $95 million, so good order activity in the quarter with a book-to-bill of 1:1 and good order prospects on the horizon. The book-to-bill at IT was a little better than 1:1, and somewhat less at Mission Systems. In total, GDIT has nearly $34 billion in submittals awaiting customer decision with most representing new work. In addition to these submittals, our first half order book does not reflect approximately $4.6 billion of awards made in GDIT that are now in protest, including two sizable contracts challenged by a competitor. Business has the opportunity to submit another nearly $20 billion in proposals through the end of the year. From an operating cash flow perspective, we generated over $1.1 billion on the strength of the Gulfstream order book and additional collections on our large international combat vehicle contract. Including capital expenditures, our free cash flow, as Phebe noted, was $943 million, or a 128% net earnings conversion. So the strong quarter derisks that profile somewhat and reinforces our outlook for the year of free cash flow conversion in the 95% to 100% range. I mentioned capital expenditures, which were $172 million in the quarter or 1.9% of sales. That's down from last year, but our full-year expectation remains in the range of 2.5% of sales. We also paid $336 million in dividends and spent approximately $600 million on the repurchase of 3.3 million shares. That brings year-to-date repurchases to 7.9 million shares at an average price of just under $173 per share. We have 279.5 million shares outstanding at the end of the quarter. We repaid $2.5 billion of notes that matured in May, in part with proceeds from $1.5 billion in notes we issued in May. We also issued $2 billion of commercial paper during the quarter to facilitate the repayment of those notes and for liquidity phasing purposes, but we expect to fully retire that CP before the end of the year. After all this, we ended the second quarter with a cash balance of just under $3 billion and a net debt position of $11.4 billion, consistent with the end of last quarter and down more than $900 million from this time last year. As a result, net interest expense in the quarter was $109 million, down from $132 million in the second quarter of 2020. That brings the interest expense for the first half of the year to $232 million, down slightly from $239 million for the same period in 2020. We repaid another $500 million of notes on July 15, as we continue to bring down our debt balance this year and beyond. At this point, we expect our interest expense for the year to be approximately $425 million. The tax rate in the quarter and the first half at 16.3% is consistent with the full-year expectation. So no change to our outlook of 16% for the year. Order activity and backlog were once again a strong story in the second quarter with a 1:1 book-to-bill for the company as a whole. As Phebe mentioned, order activity in the aerospace group led the way with a twice book-to-bill, while combat and technologies each recorded a book-to-bill of 1:1 on solid year-over-year revenue growth. We finished the quarter with a total backlog of $89.2 billion. That's up over 8% over this time last year. And total potential contract value, including options and IDIQ contracts, was $130.3 billion. You'll recall in the second quarter of last year, we recognized a loss of approximately $40 million on an international contract that resulted from scheduled delays caused by COVID-related travel restrictions. And despite the fact that our activity on the contract has been dormant for over a year, the accounting rules required us to reverse approximately $45 million of previously recognized revenue in the quarter. Without this reversal, the technologies group would have seen organic growth of 6.4% in the quarter. In our aerospace, we expect an additional $200 million of revenue with an operating margin of around 12.4%, which is 10 basis points below what we previously forecasted. This will result in an additional $10 million of operating earnings. With respect to the defense businesses, combat systems should have another $100 million of revenue and add another 10 basis points of operating margin. So total revenue of $7.4 billion and operating margin number around 14.6%. Marine Systems has an additional $300 million and 10 basis points of improved margin. So annual revenue of $10.6 billion with an operating margin around 8.4%. Technology revenue will be down $200 million from our previous forecast but adds 30 basis points of operating margin. So annual revenue of $13 billion with an operating margin of around 9.8%. So on a companywide basis, we see annual revenue of about $39.2 billion and an overall operating margin around 10.6%. This rolls up to earnings per share around $11.50, $0.45 to $0.50 better than our forecast going into the year.

We finished the quarter with a total backlog of $89.2 billion. And total potential contract value, including options and IDIQ contracts, was $130.3 billion.

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In these unprecedented times rather than trying to predict the unpredictable, our emphasis is on deployment of rapid feedback groups. 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. Excluding these non-routine items, annual earnings per share improved 10%. Adjusting for them consistently each year Q4 earnings per share would have increased by 45%. 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 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. Operating cash flow during fiscal 2020 increased 14% to $399 million. Total capital spending declined to $132 million. 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.

In these unprecedented times rather than trying to predict the unpredictable, our emphasis is on deployment of rapid feedback groups. And as we previously announced and Michael highlighted, we have suspended share repurchases and future dividends.

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However, this segment remains profitable through 9/30, and we remain confident in our ability to succeed across economic and insurance cycles. It was another solid quarter, and we reported net income of $12.2 million or $0.23 per share and operating income of $13.8 million or $0.25 per share. Consolidated gross premiums written increased nearly 26% year-over-year, driven primarily by the addition of NORCAL's premium to our Specialty P&C results as well as $15.5 million of new business written in the quarter from our core operating segments. Our consolidated current accident year net loss ratio was 85.2%, a year-over-year increase of 4.5 points as improvements in our legacy Specialty P&C business were offset by higher average loss ratios in the NORCAL book of business and a higher net loss ratio in our Workers' Compensation business. We recognized net favorable development of $8.6 million in the current quarter, driven largely by the Specialty P&C segment at $6.8 million, which includes $2.3 million related to the amortization of the purchase accounting fair value adjustment on NORCAL's assumed reserve. We also recorded $1.5 million and $1.6 million of favorable development in the workers' compensation insurance and segregated portfolio sale reinsurance segments, respectively. The Lloyd's segment recorded unfavorable development of $1.3 million, primarily related to natural catastrophe losses. Excluding onetime transaction-related costs, our consolidated underwriting expense ratio decreased approximately seven points in the quarter to 23.3%. From an investment perspective, our consolidated net investment result increased nearly 60% year-over-year to $34.5 million. This includes $15.2 million of equity in earnings from our unconsolidated subsidiaries due to the results of our investments in LPs and LLCs. Consolidated net investment income was $19.3 million in the quarter, up significantly from the year ago period and primarily due to higher investment balances following the NORCAL transaction. We successfully integrated reinsurance programs, financial and investment operations and retained 87% NORCAL's business, while achieving average rate increases of approximately 11% on the book since the close of the transaction. We are ahead of plan on targeted expense synergies, achieving $17.2 million through the end of the third quarter on an overall plan of $18 million. Gross premiums written during the quarter increased by over 48% or approximately $77 million. NORCAL contributed just over $72 million of that increase. Premium retention for the segment was 84% in the quarter, driven by retention rates that have either improved or remained consistent in all lines of business. Furthermore, we achieved average renewal pricing increases of 9% in the segment this quarter, driven by 9% in standard physicians and 13% in specialty healthcare. Both our small business unit and medical technology liability business achieved average rate gains of 8%. New business written in the quarter totaled $11.2 million, an increase of $2.5 million from the year ago quarter and primarily driven by $6.4 million written in our HCPL specialty business. The segment net loss ratio decreased to 86.6% due to a higher net favorable reserve development, which was $6.8 million in the quarter. His includes $2.9 million related to the amortization of the purchase accounting fair value adjustment on NORCAL's reserves. The segment reported an expense ratio of 17.7% for the first -- third quarter, a year-over-year improvement of 6.1 points driven by significantly higher earned premiums, the impact of transaction accounting and benefits from prior organizational restructuring and expense management efforts. The Workers' Compensation Insurance segment recorded an underwriting loss of $2.2 million and a combined ratio of 106.3% in the third quarter of 2021. The combined ratio, excluding these items for 2021 was 103% for the quarter and 97.4% year-to-date, an indicator of the results of our ongoing business performance. During the quarter, the segment booked $64.6 million of gross premiums written, an increase of 2.5% quarter-over-quarter. Renewal pricing increased 1% in our traditional book of business in 2021 compared to a decrease of 3% in 2020 and premium renewal retention was 87% for the third quarter of 2021 compared to 84% in 2020. Traditional new business writings for 2021 were $3.5 million compared to $6.2 million in 2020. Audit premium in our traditional book of business improved $700,000 quarter-over-quarter to an audit premium return to customers of $100,000, a significant improvement over recent quarters. The increase in the calendar year loss ratio from 62.2% in 2020 to 74.3% in 2021 reflects an increase in the current accident year loss ratio. Favorable prior year reserve development was $1.5 million in 2021 compared to $2 million in 2020. We recorded a current accident year loss ratio of 77.8% for the third quarter of 2021, which brings the ratio for the nine months ended September 30 to 74%. Despite the increase in claim activity in our small book of business, overall frequency continues to be below pre-pandemic levels and the lowest in 10 years with the exception of accident year 2020. The claims operation closed 12.2% of 2020 and prior claims during the 2021 quarter consistent with third quarter historical trends. There were 160 reported COVID claims with accident dates in the third quarter of 2021 with a total recorded incurred loss expense of $127,000, which management relates to the spread of the Delta variant. The 2021 underwriting expense ratio decreased to 32% from 35.2% in 2020 and primarily due to the realization of the restructuring initiatives implemented in August of 2020 and the recording of $900,000 in employee severance costs in the third quarter of 2020. Other underwriting and operating expenses were $8.6 million in the third quarter of 2021, a decrease of 13.7%. The Segregated Portfolio Cell Reinsurance segment produced income of $539,000 and a combined ratio of 87.7% for the third quarter of 2021. The SPC Re segment calendar year loss ratio increased from 42.7% in 2020 to 56.7% in 2021, driven largely by a decrease in prior year favorable development quarter-over-quarter. The 2021 accident year loss ratio was 67.2% compared to 67.3% in 2020. Favorable loss reserve development was $1.6 million in the third quarter of 2021 compared to $4 million in 2020. Despite the increase in loss activity in the Workers' Compensation Insurance segment, I want to emphasize that there were several positive indications for the quarter, including a decreased expense ratio, gross written premium growth of 2.5%, strong premium renewal retention, improved audit premium and rate increases of 1%, the first rate increase in many years. As you know, for the 2021 underwriting year, we reduced our participation in Syndicate 1729 from 29% to 5%. And our participation in Syndicate 6131 from 100% to 50%.

It was another solid quarter, and we reported net income of $12.2 million or $0.23 per share and operating income of $13.8 million or $0.25 per share.

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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. 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. 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. 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. 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. 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. 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%. 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. We recorded an 86% occupancy and an average daily rate of $332 last quarter, which led to a 24% RevPAR growth over the period. 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. 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. 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. 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. 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. 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%. 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 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. And this will present a major inflection point for our hotels, with 75% of our rooms situated in major gateway cities. 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. During the third quarter, 31 of our 33 hotels were cash flow positive, a 21% increase versus the second quarter. 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. 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. 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. 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. 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. 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 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. 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. 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.

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.

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Fast forward to today, after year 1 of DN Now and we have met or exceeded on every commitment we made and are on track for future targets. As shown on Slide 3, we reported total revenue of just over $4.4 billion which was within our initial range, and our results also included substantial currency headwinds of approximately $150 million. We delivered adjusted EBITDA of $401 million which was within our initial outlook from February of 2019, and which represents a 25% increase over 2018. And also included a foreign exchange impact of approximately $7 million. Most importantly, we exceeded our free cash flow target, generating $93 million versus our initial expectation of breakeven. We increased our non-GAAP gross margin by 280 basis points to 25.2% with strong margin expansion in all three segments and business lines. Our progress enabled DN to boost its adjusted EBITDA margin by 210 basis points to 9.1%. Free cash flow increased by $256 million. And unlevered free cash flow jumped by $315 million reflecting our companywide focus on driving both operating and net working capital efficiencies while delivering these against the backdrop of significantly stronger customer satisfaction levels. Our progress reduced our leverage ratio by more than a full turn, ending 2019 at 4.4 times. In Belgium, we won a multiyear ATM-as-a-Service agreement to update and maintain approximately 1,560 ATMs with a joint venture called JoFiCo. In the retail segment, we increased our retail self-checkout shipments by more than 50% in 2019. In the fourth quarter, we won a new $6 million contract at the U.S. value retailer for kiosks and dynamic software. Important wins in the quarter included a $15 million contract with the Swiss gaming cooperative for 5,000 point-of-sale terminals, and a new 3-year $14 million agreement with a European do-it-yourself retailer to refresh the end-to-end customer checkout experience at several hundred stores spanning 12 countries. For example, we're very encouraged by the broad-based success of our services modernization plan which includes proactively upgrading hardware of software on more than 140,000 terminals and implementing standard practices globally. In addition, we dramatically improved the efficiency of our inventory levels, collections and payables which added $110 million to our cash flow and our improving performance led to a successful extension of nearly $800 million of credit in August. Our execution momentum gives us confidence to increase our targeted gross savings from $400 million to $440 million through 2021. First, the transition to our new operating model is complete and about $100 million of savings have been realized in 2019. In 2019, we divested or shut down a half a dozen businesses which generated about 2% of revenue. We successfully reduced the number of ATM terminals by about 30% in 2019, and we have solidified plans to further reduce legacy terminals by about 45% in 2020. When coupled with changes to our manufacturing footprint and better rigor on contract bids, we expanded our non-GAAP product gross margin by 310 basis points in the quarter to 22% which is a multi-year high for the company. We have initiated the certification process for DN Series with 240 customers across 35 countries. Our service renewal rate continue to exceed 95% during the fourth quarter while our contract base of ATMs remained stable at 582,000. This chart shows our revised contract based figures which exclude about 35,000 units in China, following our reduction in ownership, the strategic alliance as part of our non-core asset divestiture actions. And as a result, we expect the services contract base to expand modestly to 590,000 by year-end 2020. Our gross services margin increased 330 basis points versus the prior year to 28.2% in the fourth quarter. Our momentum underpins our confidence in achieving full-year gross margins of 28% to 29% by 2021. With respect to our real estate footprint, we reduced our office square footage by about 10% by closing or rightsizing more than 40 locations. For 2020, our goal is to reduce office space by another 10%, while also implementing more agile workforce practices. In the fourth quarter, we were pleased to drive non-GAAP SG&A expense to $169 million, our low point for the year. Excluding the impact from foreign currency headwinds and our divestitures, revenue declined 8.1% to $1.15 billion for the quarter. Many of you should recall that we reported exceptional strength in our product revenue in the fourth quarter of 2018 which was approximately $50 million more than we would typically expect, resulting in an unfavorable comparison. And that have been proactively reducing our exposure to lower-margin business which had a fourth-quarter revenue impact of approximately $40 million. We increased gross margins by 300 basis points to 26.3% which translates to higher gross profit of $3 million. Higher gross profit, coupled with lower operating expenses, enabled the company to boost operating profit by 20% from $83 million to $100 million. Correspondingly, our operating margin increased by 230 basis points to 8.7%, while the adjusted EBITDA margin improved 180 basis points to 11.4%. Return on invested capital was approximately 10% in 2019, much better than our mid-single-digit result in 2018. Slides 10 through 12 contain segment financials for the fourth quarter and full year. Excluding currency and divestiture, revenue declined 8.8%. For the full year, revenue declined 2.4% adjusted for currency, divestitures and other actions. Operating profit increased by $19 million or 13% to $169 million, and includes foreign currency headwinds of approximately $10 million. Fourth-quarter revenue declined 1.5% after adjusting for currency headwinds and divestitures. Operating profit nearly tripled in the quarter from $14 million to $40 million when compared with the prior-year period. Again, execution of our DN Now initiatives resulted in a 630 basis point expansion of the profit margin to 9.5%. For the full year, revenue increased 7% excluding the impact of currency divestitures and related actions. Operating profit increased by more than $100 million to $120 million primarily due to our DN Now initiatives and revenue growth. Revenue decreased 15% after factoring in currency headwinds and divestitures due primarily to a challenging comparison. Our fourth-quarter 2018 retail revenue was approximately $50 million or 15% above our quarterly average as we delivered on a number of large POS refresh contracts. Higher quality revenue and better cost structure from the DN Now initiatives, increased operating profit by 62% to $21 million. For the full year, retail revenue decreased 2.5%, again, excluding the impact of currency divestitures and related actions. Operating profit increased by 23% to $58 million as we benefited from a more favorable mix of self-checkout products, higher services gross margins attributable to our services modernization plans and lower operating expenses. Referencing Slide 13, I am pleased with our team's ability to generate $93 million of free cash flow for the full year of 2019. On a year-on-year improvement of $256 million demonstrates the broad-based commitment to financial discipline across the company. The DN Now initiatives were the key to our success as we increase adjusted EBITDA to $401 million and harvested $110 million of net working capital. To put a finer point on our improvements, the company reduced net working capital as a percentage of revenue by 440 basis points from 18.3% to 13.9%. Our free cash flow progress is even more impressive, considering that we offset $60 million of incremental interest payments. Unlevered free cash flow was $275 million, an improvement of $315 million. For the fourth quarter, the company generated free cash flow of $116 million and unlevered free cash flow of $168 million. Total liquidity of approximately $770 million includes nearly $388 million of cash plus available credit. Company ended the year with gross debt of $2.1 billion and net debt of $1.76 billion. Our leverage ratio continues to improve declining to approximately 4.4 times at year-end. Over the next few weeks, for our credit agreements, we will use approximately $50 million of our free cash flow to pay down secured debt reducing 2020 interest cost. Our workforce streamlined finance, personnel and processes which should lead to incremental G&A savings of $30 million in 2020 and another $20 million in 2021. First, the company finalized the transaction to consolidate its joint venture operations in China with the Inspur Group. As a result, DN will repatriate approximately $25 million of cash and become a minority shareholder in the combined operations. Moving from approximately 55% ownership to approximately 48% ownership. Due to our minority ownership status in the consolidated JV, we will report pro rata profit or loss on the P&L as equity and earnings of unconsolidated subsidiaries, deconsolidating approximately $50 million of future revenue. In a separate transaction, the company signed a definitive agreement to sell its 68% ownership stake in Portalis to Data Group. DN will harvest approximately $10 million in cash for 68% interest and will receive relief from future liabilities, including capital and pension obligations while maintaining good relationships with common customers. During 2019, this business generated revenue of approximately $60 million. We are expecting revenue will be relatively flat excluding approximately $110 million impact from our recent divestitures and reflecting expected currency fluctuations. Adjusted EBITDA is expected to be in the range of $430 million to $470 million reflecting approximately $130 million of DN Now savings, plus $25 million for growth initiatives, $10 million of nonrecurring profit from our divestitures, and typical inflation headwinds and other items. Specifically, we expect to generate approximately 45% of our annual revenue and approximately one-third of adjusted EBITDA during the first half of the year. Additionally, as Gerrard mentioned, we are working with 240 customers and certifying our DN Series, so it follows the production activity or ramp in the second half of the year. From a free cash flow perspective, we expect to generate between $100 million and $130 million for 2020, including the following components, an EBITDA midpoint of $450 million and net working capital benefits of approximately $30 million. Net interest payments of approximately $170 million. Restructuring cash outflows of approximately $80 million. Capital expenditure is approximately $70 million which includes certain investments in our internal systems supporting our digital transformation. And cash taxes and other payments of approximately $45 million.

In the fourth quarter, we won a new $6 million contract at the U.S. value retailer for kiosks and dynamic software. Our execution momentum gives us confidence to increase our targeted gross savings from $400 million to $440 million through 2021. First, the company finalized the transaction to consolidate its joint venture operations in China with the Inspur Group. From a free cash flow perspective, we expect to generate between $100 million and $130 million for 2020, including the following components, an EBITDA midpoint of $450 million and net working capital benefits of approximately $30 million. Capital expenditure is approximately $70 million which includes certain investments in our internal systems supporting our digital transformation.

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We delivered revenue growth of 4% year-over-year, which represents growth of 8% compared to 2019. Next, the decisive actions we took early this year delivered strong double-digit margins of 11.1%, which largely offset the expected cost inflation of 650 basis points. Additionally, we generated positive adjusted free cash flow of $1.3 billion, a $1.1 billion increase compared to a year ago. Lastly, we opportunistically executed $441 million in share buybacks in the third quarter, and added to our previous investments in Elica India by acquiring the majority interest in the company. Our ability to successfully deliver strong results in a difficult operating environment gives us the confidence to increase our guidance to approximately $26.25 per share. Raw material inflation, particularly steel and resins resulted in an unfavorable impact of 650 basis points. Price and mix delivered 600 basis points of margin expansion led by the execution of the previously announced cost base price increases. Additionally, ongoing cost productivity initiatives delivered 50 basis points of net cost margin improvement. Lastly, increased investments in marketing and technology and the continued impact from currency in Latin America impacted margins by a combined 75 basis points. We expect to drive strong net sales growth of approximately 13%, and EBIT margins of 10.8%. Additionally, we continue to expect to deliver $1.7 billion in adjusted free cash flow, or 7.7% of net sales. Finally, we are raising our ongoing earnings per share guidance to approximately $26.25, a year-over-year increase of over 40%. We continue to expect 600 basis points of margin expansion driven by price mix. We have increased our expectation for net cost takeout to 200 basis points as we realized further efficiencies and continue to focus on cost productivity. And still expect our business to be negatively impacted by about $1 billion, with the peak increase already realized in the third quarter. We continue to expect increased investments in marketing and technology, and unfavorable currency primarily in Latin America to impact margins by 125 basis points. Overall, we are confident in our ability to continue to navigate in this environment and deliver 10.8% EBIT margin, representing our fourth consecutive year of margin expansion. Our commitment to fund innovation and growth remains unchanged, as we expect to invest over $1 billion in capital expenditures and research and development. Next, with a clear focus on returning significant levels of cash to shareholders, we expect to repurchase over $940 million of shares in 2021, which includes over $300 million in the fourth quarter. Including dividends, we expect to return a total of over $1.2 billion to shareholders this year. In North America, we delivered 5% revenue growth with sustained and robust consumer demand in the region. The region delivered stable revenue year-over-year, which represents growth of over 15%, compared to 2019. We remain confident in the actions we have in place. Net sales increased by 17%, led by cost-based price increases and strong demand across Mexico. The region delivered very strong EBIT margins of 8.7%, despite supply constraints, inflation and continued negative impact from currency. Excluding this, the region grew by 3% year-over-year or 10% compared to 2019. The region delivered very strong EBIT margins of 8.6%, driven by cost-based price actions and positive impact from our Whirlpool China divestiture. From our introduction of a first electric wringer washer and first stand mix in the early 1900 to our launch of the first French door build-in refrigerator, and our leadership in connected appliances today. These new long-term value creation goals build on our strong foundation, but reflect the fact that we are very different Whirlpool than 10 years ago, operating in a very different world. We now expect revenue to grow at a rate of 5% to 6%, almost doubling our previous goal of approximately 3%. Next, we are increasing our EBIT margin expectation from approximately 10% to a range of 11% to 12%. Additionally, we expect to continue to convert cash at a high level and have increased our adjusted free cash flow as a percentage of net sales from 6% plus to a range of 7% to 8%. Lastly, we expect to deliver return on invested capital of 15% to 16%, an increase from our previous target of 12% to 14%. Now, turning to Slide 19, I will discuss why we expect revenue growth of 5% to 6%. Over the past years, we've built our own Whirlpool direct-to-consumer business that represents today approximately $1 billion. Our multi-year investment in our strategic digital transformation has been and will continue to deliver growth rate of over 25%. As we exited the Great Recession of 2009 to 2011, we took many difficult actions enabling the low fixed cost position we have to date. We removed over $1 billion in costs by reducing our fixed asset base by over 30% in just the last five years. Sustained healthy market demand and strong operational execution gives us the confidence to increase our ongoing earnings per share to approximately $26.25, while delivering adjusted free cash flow of $1.7 billion. Next, we are unwavering on our commitment to drive strong shareholder value as we expected to deliver record ongoing earnings per share and return over $1.2 billion to shareholders in 2021.

We expect to drive strong net sales growth of approximately 13%, and EBIT margins of 10.8%. Finally, we are raising our ongoing earnings per share guidance to approximately $26.25, a year-over-year increase of over 40%. We remain confident in the actions we have in place.

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The past 12 months, however, have been anything but normal. Local and US M&A volume increased 92% and 163% respectively compared to the first half and the number of global and US deals increased 18% and 16% respectively. And in the US, the largest M&A market for all firms, and for Evercore particularly, M&A volume was down 21%. Fourth quarter adjusted net revenues of $969.9 million grew 45% year-over-year and full-year adjusted net revenues of $2.33 billion grew 14% compared to 2019, the highest annual revenues in our history. Fourth quarter advisory fees of $790 million grew 40% year-over-year and full year advisory fees of $1.76 billion grew 6% compared to 2019 and also were the highest in our history. Based on current consensus estimates and actual results, we expect to maintain our number 4 ranking on advisory fees among all publicly traded investment banking firms and we also expect to grow our market share among these firms. Importantly, our growth in 2020, combined with declining advisory revenues at the three top bulge bracket firms, resulted in a nearly 50% reduction in the gap between us and the number 3 ranked firm and we narrowed the gap between Evercore and the number 1 and number 2 firms as well. Fourth quarter underwriting fees of $95 million and full-year underwriting fees of $276.2 million each more than tripled year-over-year. Fourth quarter commissions and related fees of $52.4 million increased 1% year-over-year and full year commissions and related fees of $205.8 million increased 9% compared to 2019. Fourth quarter asset administration fees of $20.1 million increased 20% year-over-year and full-year asset management and administration fees of $67.2 million increased 11% compared to 2019. Turning to expenses, our adjusted compensation rate for the fourth quarter is 52.3% and for the full year is 58.9%. Fourth quarter non-compensation costs of $85.8 million declined 12% year-over-year. And full-year non-compensation costs of $316.7 million declined 10% versus [Technical Issues]. Fourth quarter adjusted operating income and adjusted net income of $376.4 million and $277.4 million increased 110% and 113% respectively and adjusted earnings per share of $5.67 increased 108% versus the fourth quarter of 2019. Full-year operating income and adjusted net income of $639.3 million and $459.6 million increased 28% and 23% respectively and adjusted earnings per share of $9.62 increased 25% versus 2019. We produced a full-year adjusted operating margin of 27.5%, roughly 300 basis points of margin expansion compared to 2019. Our Board declared a dividend of $0.61 and we will resume our normal annual reassessment of that dividend in April. We sustained our number one League Table ranking for volume of announced M&A transactions both globally and in the US among independent firms in 2020 and are advising on 4 of the 10 largest US M&A transactions in 2020. Our restructuring team ranked number 2 in the League Tables for number of announced US transactions in 2020. Our restructuring business can deliver service and advice far beyond the traditional Chapter 11 bankruptcy advice and many companies called on us in 2020 for our liability management and financing capabilities. In 2020, we participated in more than 100 equity and equity-linked transactions that raised nearly $70 billion in total proceeds. Our team advised on more than $30 billion of deals in GP and LP-led transactions, increased significantly in the second half of the year, and we continue to raise primary capital successfully for these clients. Finally, our wealth management business grew AUM past the $10 billion mark for the first time in 2020 and provided important investment advice to clients in a challenging environment. Our continued efforts with the Evercore 100, our program to expand service to targeted large cap nationals and multinationals, our dedicated coverage of financial sponsors and investing in talent to grow in areas of whitespace with the addition of A plus talent will all facilitate our expanded coverage model. For the fourth quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $927 million, $220 million and $5.02 respectively. For the full year, net revenues, net income and earnings per share on a GAAP basis were $2.3 billion, $351 million and $8.22 respectively. In total, we incurred separation and transition benefits and related costs of approximately $45 million, which reflect a modest increase in the costs from our prior estimate of $43 million. During the fourth quarter of 2020, we recorded approximately $4 million of special charges, which are excluded from our adjusted results. There, there is a loss of approximately $31 million for the year included in other revenue that is related to our transition in Mexico. Our adjusted results for the fourth quarter and full-year 2020 also exclude special charges of $1.3 million and $3.3 million respectively related to accelerated depreciation expense and $1.7 million related to the impairment of assets resulting from the wind down of our Mexico business. Turning to taxes, our GAAP tax rate for the fourth quarter was 23.2% compared to 21.7% in the prior-year period. Our GAAP tax rate for the full year was 23.7% compared to 21.2% in the prior period. And on a GAAP basis, the share count was 43.9 million for the fourth quarter and 42.6 million for the full year. Our share count for adjusted earnings per share was 48.9 million for the fourth quarter and 47.8 million for the full year. Firmwide non-compensation costs per employee were approximately $47,000 for the fourth quarter and $172,000 for the full year, each down 9% and 11% on a year-over-year basis respectively. As of December 31, we held approximately $830 million in cash and cash equivalents and $1.1 billion in investment in securities. As of December 31, we have made commitments to pay more than $450 million related to future cash payment obligations under our long-term deferred compensation programs and these payment obligations exist at various dates through 2024.

Fourth quarter adjusted net revenues of $969.9 million grew 45% year-over-year and full-year adjusted net revenues of $2.33 billion grew 14% compared to 2019, the highest annual revenues in our history. Fourth quarter adjusted operating income and adjusted net income of $376.4 million and $277.4 million increased 110% and 113% respectively and adjusted earnings per share of $5.67 increased 108% versus the fourth quarter of 2019. Our Board declared a dividend of $0.61 and we will resume our normal annual reassessment of that dividend in April. For the fourth quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $927 million, $220 million and $5.02 respectively.

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Today, we see a very clear future for Darling Ingredients as our dedicated global team of 10,000 plus employees continue to execute our business strategy in a safe and efficient manner. Our earnings for the first quarter of 2021 we're certainly energized by a rising commodity price environment, which undoubtedly had a positive impact and enabled Darling to report a record $284.8 million of combined EBITDA for the quarter. The Feed segment's EBITDA was $124.4 million, which was $34 million better than the fourth quarter of 2020 and $54 million higher than the first quarter of 2020. Protein and fat prices averaged in the range of 40% to 60% higher than the year ago period and have continued to move higher into the current period. Our Food segment turned in a solid performance to start 2021 with an EBITDA of $46.4 million, which was approximately 18% higher than a year ago. In the Fuel segment, we continue to see solid results from our European bioenergy business, which reported another solid quarter, producing $20.5 million of EBITDA in Q1. Diamond Green Diesel generated another outstanding quarter with a $2.77 EBITDA per gallon on 78 million gallons sold. Darling's half was $108.2 million of EBITDA plus our bioenergy results produced a strong $128.7 million of combined EBITDA in Q1 for our Fuel segment. As travel increases, we are seeing energy prices go higher as ultra low-sulfur diesel is trading above $2 a gallon in the NYMEX spot for the first time in a couple of years. Net income for the first quarter of 2021 totaled $151.8 million or $0.90 per diluted share compared to net income of $85.5 million or $0.51 per diluted share for the 2020 first quarter. Net sales increased 22.7% to $1.05 billion for the first quarter of 2021 as compared to $852.8 million the first quarter of 2020. Operating income increased 62% to $199.5 million for the first quarter of 2021 compared to $122.8 million for the first quarter of 2020. The 62% increase in operating income was primarily due to the first quarter 2021 gross margin improving approximately $68 million over the prior year and increasing from 24.1% to 26.2%. Depreciation and amortization declined $6.1 million in the first quarter of 2021 when compared to the first quarter of 2020. SG&A increased slightly by $1.2 million in the quarter as compared to the prior year and there were $778,000 of additional restructuring and impairment charges related to the biodiesel facilities shutdown in the prior quarter. Lastly, regarding the improved operating income, our 50% share of Diamond Green diesels net income was $102.2 million as compared to $97.8 million for the first quarter of 2020. Interest expense declined $2.7 million for the first quarter of 2021 as compared to the 2020 first quarter. The company recorded income tax expense of $28.7 million for the three months ended April 3, 2021. The effective tax rate for the first quarter is 15.8%, which differs from the federal statutory rate of 21% due primarily to the biofuel tax incentives, the relative mix of earnings among jurisdictions with different tax rates and excess tax benefits from stock-based compensation. The company also paid $15.6 million of income taxes in the first quarter. For 2021, we are projecting an effective tax rate of 20% and cash taxes of approximately $30 million for the remainder of the year. Looking at the Q1 balance sheet, our total debt declined $63.5 million to $1.44 billion and the bank covenant leverage ratio ended the first quarter at 1.6 times adjusted EBITDA. Capital expenditures were $60.8 million for Q1 2021 and is in line with Darling's planned capex spend of approximately $312 million on capital expenditures for fiscal 2021. As you saw at the end of March, Diamond Green Diesel successfully entered into a new $400 million senior unsecured revolving credit facility. We feel comfortable with the increased range of $1.075 billion to $1.15 billion of combined EBITDA as the increase is coming from two segments, our Feed segment and our Fuel segment. Yes, commodity prices have steepened versus on the futures curve, but that futures price is still 30% to 50% higher than the historical price when you get to that future period. And with that, the Q2 margin is averaging in the current environment, we are putting a potential range of $2.25 to $2.40 EBITDA per gallon for DGD for 2021. As our joint venture partner announced several weeks ago, we believe the start-up at Norco expansion will be in the middle of Q4, that DGD will ultimately sell 365 million gallons of renewable diesel in 2021. Those higher gallons and the range of EBITDA per gallon provided puts Darling's half of the EBITDA from DGD between $410 million and $435 million for 2021. Since the beginning of 2020, Darling has had 100% ownership of EnviroFlight. I'd like to note that we are proud to be selected by Bloomberg and TV Media Group as one of the 50 sustainable climate leaders in the world.

Net income for the first quarter of 2021 totaled $151.8 million or $0.90 per diluted share compared to net income of $85.5 million or $0.51 per diluted share for the 2020 first quarter. Net sales increased 22.7% to $1.05 billion for the first quarter of 2021 as compared to $852.8 million the first quarter of 2020. We feel comfortable with the increased range of $1.075 billion to $1.15 billion of combined EBITDA as the increase is coming from two segments, our Feed segment and our Fuel segment.

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Occupancy increased each month of the quarter peaking at 47% in September, which led to third quarter RevPAR of $47, a 63.5% decline year-over-year, but that was a significant improvement from the second quarter RevPAR of $23. Market share gains were substantial, once again, in the third quarter as we finished with 151% RevPAR index, an increase of approximately 39 percentage points compared to the third quarter of last year and an 8 percentage point increase relative to last quarter. Preliminary October results reflect a modest continuation of the improvements we experienced throughout the third quarter as October RevPAR is expected to finish at $50, with the highest ADR of any month since the onset of the crisis, running nearly $10 higher than the rates achieved in the second quarter. Occupancy in October was over 47% across the total portfolio, more than 24 percentage points higher than the second quarter occupancy and flat to September, despite the strong Labor Day weekend results. Excluding the five hotels that were either closed or consolidated into adjacent operations at various times during the quarter, occupancy was more than 50% in October. Weekend occupancy was 56% during the third quarter as the relative outperformance compared to week day results accelerated each month during the quarter. This led to weekend RevPAR that was 40% higher than our weekday RevPAR, primarily driven by occupancies that ran nearly 20 percentage points higher by the end of the quarter. Weekend occupancy at our hotels located in markets we consider as drive-to was nearly 64% in the third quarter. Our extended stay hotels which comprise nearly 25% of our total guest rooms were also relative outperformers again during the third quarter, finishing with occupancy of more than 63% and exceeded 60% in each month of the quarter while achieving a 51% RevPAR premium to our overall portfolio. This trend continued as our preliminary October results indicate our extended stay hotels achieved 65% occupancy for the month. Our suburban and airport hotels, which comprise more than a third of our portfolio guest rooms were also outperformance during the quarter, posting occupancies of 58% and 56% respectively, both increases of more than 20 percentage points from the second quarter results. These hotels achieved RevPAR premiums of 27% and 29% respectively to the total portfolio in the quarter. Urban hotels have continued to lag the industry recovery though occupancy increases for our portfolio during the quarter were in line with all other location types, finishing the quarter 20 percentage points higher than in the second quarter. RevPAR growth at our urban hotels led the portfolio on a percentage increase basis relative to the second quarter, posting a nominal RevPAR 2.5 times higher than our urban portfolio's second quarter RevPAR. We are currently averaging less than 14 FTEs per hotel compared to approximately 30 FTEs per hotel prior to the pandemic. Finally, to preserve liquidity, we have continued to delay most nonessential capital expenditures for the remainder of 2020, along with common dividend distributions, which combined, preserved approximately $30 million in the third quarter and will preserve $30 million of cash for the balance of the year. But with approximately $255 million of current liquidity and a manageable monthly cash burn rate that has been further reduced as our portfolio operating metrics have improved, we are well positioned to navigate the recovery. In the third quarter, our hotel EBITDA retention across the portfolio was more than 47%, which resulted in hotel level profitability in each month of the quarter, positive adjusted EBITDA for the quarter, and a reduction of our corporate cash burn rate to an average of just over $5 million per month. Commensurate with increases in RevPAR, our cash burn rate improved sequentially in each month of the third quarter and finished September at just $4.5 million, the lowest of any month since the onset of the pandemic. This represents a significant improvement from the second quarter when our cash burn averaged $11 million on a monthly basis. We currently have $225 million available on our revolving credit facility and approximately $30 million of unrestricted cash on hand which combined gives us $255 million of total liquidity. Today, our weighted average interest rate is approximately 3.5% and weighted average term to maturity is approximately 3.3 years, with no maturities until November of 2022.

Our extended stay hotels which comprise nearly 25% of our total guest rooms were also relative outperformers again during the third quarter, finishing with occupancy of more than 63% and exceeded 60% in each month of the quarter while achieving a 51% RevPAR premium to our overall portfolio.

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We expect to grow our earnings per share by 6.5% per year through at least 2025, supported by our updated $32 billion five-year growth capital plan. Keep in mind that over 80% of that capital investment is emissions reduction enabling and that over 70% is rider eligible. We offer an attractive dividend yield of approximately 3.2%, reflecting a target payout ratio of 65% and an expected long-term dividend per share growth rate of 6%. This resulting approximately 10% total shareholder return proposition is combined with an attractive pure-play, state-regulated utility profile characterized by industry-leading ESG credentials and the largest regulated decarbonization investment opportunity in the country, as shown on the next slide. Our 15-year opportunity is estimated to be over $70 billion, with multiple programs that extend well beyond our five-year plan and skew meaningfully toward rider-style regulated cost of service recovery. Our first-quarter 2021 operating earnings, as shown on Slide 6, were $1.09 per share, which included a $0.01 hurt from worse than normal weather in our utility service territories. GAAP earnings for the quarter were $1.23 per share. For the second quarter of 2021, we expect operating earnings to be between $0.70 and $0.80 per share. Since January, we've issued $1.3 billion of long-term debt, consistent with our 2021 financing plan guidance at a weighted average cost of 2.4%. We're pleased that the 2.6-gigawatt Coastal Virginia offshore wind project has been declared a covered project under Title 41 of the Fixing America's Surface Transportation Act program, also known as FAST 41. Recall, we had assumed a lifetime capacity factor of around 41% for the full-scale deployment. As we observed within the industry recently, utility systems are only as good as they are resilient, which is one of the reasons that we made the decision in 2019 to go the extra distance to connect to our 500 kV transmission system to ensure that the project's power will be available when our customers need it most. Taken as a whole, there's no change to our confidence around the project's expected LCOE range of $80 to $90 per megawatt-hour. On solar, on Friday, the Virginia State Corporation Commission approved our most recent clean energy filing, which included 500 megawatts of solar capacity across nine projects, including over 80 megawatts of utility-owned solar, the fourth consecutive such approval. We also recently issued an RFP for an additional 1,000 megawatts of solar and onshore wind, as well as 100 megawatts of energy storage and 100 megawatts of small-scale solar projects, and eight megawatts of solar to support our community solar program. Since our last call, we've continued to derisk our plan to meet the VCEA solar milestone by putting another 30,000 acres of land under option, bringing the total to nearly 100,000 acres of options or exclusive land agreements, which is enough to support the approximately 10 gigawatts of utility-owned solar as called for by the Virginia Clean Economy Act. The Surry station provides around 15% of the state's total electricity and around 45% of the state's zero-carbon generation. For example, as part of our recently filed natural gas rate case in North Carolina, we asked the North Carolina Utilities Commission to approve five new sustainability-oriented programs: hydrogen blending pilot, that's part of our goal to be able to blend hydrogen across our entire gas utility footprint by 2030; a new option to allow our customers to purchase RNG attributes; and three new energy efficiency programs. As a reminder, the preferred plan and the revised filing calls for the retirement of all coal-fired generation in our South Carolina system by the end of the decade, which helps to drive a projected carbon reduction of nearly 60% by 2030 as compared to 2005. Consider these facts, 99.9% average reliability delivered at rates that are between 8% and 35% lower than comparable peer groups. Our filing also reflects over $200 million of customer arrears forgiveness as directed by the general assembly, relief that is helping our most vulnerable customers address the financial impacts of COVID-19. The filing also identifies nearly $5 billion of investment in rate base on behalf of our customers over the four-year review period, including $300 million of capital investment in renewable energy and grid transformation projects that we believe meet the eligibility criteria for reinvestment credits for customers. In Virginia, during the now adjourned session, the Virginia General Assembly passed House Bill 1965, which adopts low and zero-emissions vehicle programs that mirror vehicle emission standards in California. We affirmed our existing long-term earnings and dividend guidance.

Our first-quarter 2021 operating earnings, as shown on Slide 6, were $1.09 per share, which included a $0.01 hurt from worse than normal weather in our utility service territories. GAAP earnings for the quarter were $1.23 per share. For the second quarter of 2021, we expect operating earnings to be between $0.70 and $0.80 per share. We affirmed our existing long-term earnings and dividend guidance.

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Revenue was up 27% sequentially to $435 million. And our earnings and profitability, they were both very good, with $66 million of adjusted EBITDA, and a 15.2% adjusted EBITDA margin. And as we've said since early March, I do believe there will be more change in the next two years than in the last 10 years, and that brings tremendous opportunity, real tangible opportunity for Korn Ferry. Across the globe, our goal is to take our expertise in IP and develop 1 million new leaders from diverse backgrounds, using our Korn Ferry Advance and Leadership U platforms. For example, we're moving from analog to digital delivery of our assessment in learning business, which represents about 23% of the Firm's revenue in FY '20 in a way that makes our IP more relevant and scalable. We have about 300 marquee and regional accounts, representing about 34% of global revenue, which we'd like to increase to 40% or so. First, our more diversified business is clearly demonstrating greater resilience than in the Great Recession, where fee revenue in the quarter, immediately following the trough quarter, was approximately 43% less than the prior peak quarter. For the current COVID-19 recession, the decline in fee revenue from the peak quarter to the quarter immediately following the trough is only 16%. Through the first six months of fiscal '21, we saw our marquee and regional account fee revenue decline approximately 14% year-over-year, which compares favorably to the decline in the rest of our portfolio, which was down 23%. Our FY '21 Q2 subscription base fee revenue was $22.7 million, which was up 43% year-over-year, and up 7% quarter sequential. Subscription-based new business also improved in the second quarter, reaching $29 million, which was up 39% year-over-year, and 25% quarter sequential. And as we said in the past, those that are valued at 500,000 and more. In FY '21, our Q2 consulting new business was pretty steady with the prior year, despite last year's number being an all-time high, which included a single non-recurring engagement of $12 million. RPO new business in the second quarter was $120 million, which is just shy of an all-time high. For the second quarter of FY '21, our fee revenue was $435 million, which was up $91 million or 27% sequentially, and down only 12% measured year-over-year. On a quarter sequential basis, fee revenue in the second quarter for exec search was up 23%, RPO and pro search was up 25%, with pro search being up 20%, and RPO up 27%, consulting was up 28%, and digital was up 34%. Adjusted EBITDA in the second quarter was up $56 million sequentially to slightly over $66 million, with an adjusted EBITDA margin of 15.2%. Our adjusted fully diluted earnings per share were also up in the second quarter, reaching $0.54, which was up $0.73 sequentially. At the end of the second quarter, cash and marketable securities totaled $774 million. When you exclude amounts reserved for deferred comp arrangements and for accrued bonuses, our investable cash balance at the end of the second quarter was approximately $458 million. And it is important to note that based on our Q2 performance, we have in the second quarter made an accrual to pay all of our employees 100% of their salaries for the second quarter. Global fee revenue for KF Digital was $75 million in the second quarter and up 34% sequentially, and up approximately $9.3 million or 14% year-over-year. The subscription and licensing component of KF Digital fee revenue in the second quarter was approximately $23 million, which was up 7% sequentially, and up $7 million or 43% year-over-year. Global new business in the second quarter for the digital segment was up approximately 17% year-over-year. Adjusted EBITDA for the second quarter of KF Digital was up $15.1 million sequentially to $23.1 million with a 30.8% adjusted EBITDA margin. In the second quarter, consulting generated $126.7 million of fee revenue, which was up approximately 28% sequentially, and down approximately 12% year-over-year. And in particular, growth was strong in some of our virtually delivered solutions in leadership and professional development, and assessment and succession, which were up sequentially 53% and 38%, respectively. In the second quarter, consulting new business was up approximately 17% sequentially, with growth in North America, Europe and APAC. Adjusted EBITDA for consulting in the second quarter was up $13.5 million sequentially to $20.1 million, with an adjusted EBITDA margin of 15.9%. RPO and professional search generated global fee revenue of $85.6 million in the second quarter, which was up 25% sequentially and down 10% year-over-year. RPO fee revenue was up approximately 27% sequentially, and professional search fee revenue was up approximately 20% sequentially. With regards to new business in the second quarter, professional search was up 9% sequentially, and RPO was awarded a near record $120 million of new business, consisting of $59 million of renewals and extensions, and $61 million of new logo work. Adjusted EBITDA for RPO and professional search in the second quarter was up approximately $7.8 million sequentially to $13.8 million, with an adjusted EBITDA margin of 16.1%. Finally, for executive search, global fee revenue in the second quarter of fiscal '21 was approximately $148 million, which was up approximately 23% sequentially with growth in every region. Sequentially, North America was up approximately 32%, while EMEA and APAC were up approximately 5% and 21%, respectively. The total number of dedicated executive search consultants worldwide in the second quarter was 512, down 73 year-over-year, and up two sequentially. Annualized fee revenue production per consultant in the second quarter was $1.16 million, and the number of new search assignments opened worldwide in the second quarter was 1,331, which was down approximately 15% year-over-year, but up 19% sequentially. Executive search also benefited from cost reductions, productivity enhancements, and streamline virtual delivery processes in the second quarter, as adjusted EBITDA grew approximately $20 million sequentially to $28.2 million, with an adjusted EBITDA margin of 19.1%. Excluding new business awards for RPO, our global new business in the second quarter measured year-over-year was down only approximately 7% and that was from record-high new business in the second quarter of fiscal '20. Now on the positive side, there have been several announcements regarding vaccines that have greater than 90% effectiveness. So consistent with our approach for the prior three quarters, we will not issue any specific revenue or earnings guidance for the third quarter of FY '21. Typically, what you would see is the sequential decline from second to our third quarter, does range sort of 3% to 5%.

Our adjusted fully diluted earnings per share were also up in the second quarter, reaching $0.54, which was up $0.73 sequentially. So consistent with our approach for the prior three quarters, we will not issue any specific revenue or earnings guidance for the third quarter of FY '21.

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For example, China revenue returned a healthy growth of 17%. Western Europe, overall, was back to relative stability at 2% growth. The U.S. saw only slight recovery, still dealing with pandemic response and coming in at down 11%, although improving sequentially. In addition to big wins with England and in Winston-Salem which we mentioned last quarter, the team recently won another marquee project in Columbus, Ohio, worth $94 million. The Columbus, Winston-Salem and England deals have together added about $250 million to Xylem's backlog. Digital transformation has gone from being attractive to becoming an imperative, and that's reflected in strong quoting activity in our digital solutions business which has also increased by 50% its number of revenue-generating clients. Revenue declined 7% which was better-than-anticipated as we entered the third quarter. Despite the China business returning to pre-pandemic growth rates, emerging markets overall declined 7%. Western Europe grew 2% in the quarter as countries reopened and activity resumed, with revenue growing in each of our end markets with the exception of industrial. We also saw operating margins expand quarter sequentially to 13% which drove earnings per share of $0.62, both better than expected. Water Infrastructure orders declined 5%. Treatment orders were up 20%. Wastewater transport orders down 9% for the quarter would have been up mid-single digits but for lapping the large deal we won last year in India. Long-term backlog continues to build as we're up over 30% for backlog shippable in 2021 and beyond. Segment revenues declined 2% in the quarter compared to the prior year. Our wastewater transport business grew 4% in the quarter. And we saw continued strength in our treatment business which grew 3% in the quarter. Revenues declined 14%, most of which was in the North American construction and industrial markets which have seen -- which have been significantly impacted by site closures and access restrictions. Operating margin in the quarter was 18.5%, down modestly year over year from higher inflation, lower volumes and unfavorable mix. However, the margin performance exceeded our expectations as the team's strong execution on cost reductions and productivity initiatives delivered 630 basis points in margin expansion. Orders in the applied water segment declined 1% in the quarter, and revenues declined 4% as softness in the industrial and commercial markets continued, particularly in the United States and the Middle East. The commercial end market declined 5% in the quarter. Industrial was affected by similar regional dynamics including site access restrictions and declined 7%. A bright spot in the quarter was residential which grew 4%. Overall, emerging markets declined 8% in the quarter. China had a very strong performance, growing 23% as the team executed well, delivering on pent-up demand. Revenue in the United States declined 6% but improved quarter sequentially, with some softness across end markets driven by continued virus impacts. Operating margin in the segment was 15.9%. Volume declines and inflation impacts reduced margins in the quarter but were largely offset by 530 basis points of cost reduction and productivity benefits. Measurement and control solutions orders declined 19% in the quarter and revenue declined 15%. As a reminder, our opex exposure accounts for about 70% of our revenues. We've seen much more variability in the 30% of our metrology business that's tied to large project deployments or capex, particularly in our gas segment, where project revenues were down 60% in the quarter. This is a $60 million contract to provide water metrology products under our network as a service offering, leveraging our Flexnet communications network. This is reflected in our fourth quarter guidance which Sandy will cover later, as shippable backlog for the fourth quarter is down roughly 25%. As a result, MCS shippable backlog in 2021 and beyond is up over 30% which is a pretty good indication of the power we're seeing with our digital platform. EBITDA margin in the segment was 14.8%. This impact was partially offset by 630 basis points of cost reduction in the quarter. We ended the quarter with approximately $1.6 billion of cash and short-term investments and $2.4 billion of liquidity driven by our very successful green bond issuance last quarter, combined with our strong cash flow performance throughout the year. At quarter end, working capital was 20.3% of sales, representing an improvement of 30 basis points versus this time last year. The team's focus on working capital, disciplined capex spending and cost control through the quarter have continued to pay off, enabling us to generate free cash flow of $234 million, a conversion rate of over 200% in the quarter which did see some benefit from favorable timing on payments primarily related to taxes and interest. On the top line, we expect organic revenues in the range of down 6% to down 8%. Operating margin in the quarter is expected to be in the range of 13 to 13 and a half percent. We expect to end 2020 with free cash flow conversion of greater than 100% for the full year. Restructuring and realignment costs are now expected to be between $75 million and $85 million, slightly lower than our previous guidance, while structural annual cost savings remain unchanged at approximately $70 million. We are lowering our estimated tax rate this year to 18 and a half percent to reflect our updated mix of earnings.

We also saw operating margins expand quarter sequentially to 13% which drove earnings per share of $0.62, both better than expected.

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Our innovation, product development and manufacturing capabilities from across all businesses are overseen by 1 centralized team which enables our talent to focus on solving the most pressing needs for our customers, focusing on deployment of resources, while driving the highest levels of innovation within our markets. These changes have not only enabled a better customer experience but also allowed Wabash to be more productive as evidenced by our $20 million of structural cost efficiencies achieved during 2020. And as a result, we have adjusted 3 noncore businesses: Garsite, Beall and Extract. Given we now have 1 face to the customer for our first to final mile portfolio of equipment, we will now have 2 reportable segments. The first new segment, Transportation Solutions comprises of vans, platforms, tank trailers and truck bodies and accounts for about 90% of our year-to-date sales. Additionally, incremental demand for dry van trailers is being generated by customers that did not consume trailer supply to 10 years ago. As 1 example, our management team has spent time with our supply partners at Hydro, a global leader in aluminum extrusions which have historically been in high demand during times of elevated trailer industry build rates. We now have over 25 million miles logged to date and we are excited to scale this opportunity as we move into full commercialization of this product technology. Finally, we believe long-term investors will be rewarded in the near term by our dry van capacity project as our converted traditional refrigerated van facility will produce 10,000 units post conversion which is twice as many dry vans as compared to the reefers that were previously manufactured. All told, we expect to realize $0.15 to $0.20 of annual earnings per share accretion in 2023 and beyond as a result of this near-term capacity move. The strength within our customer businesses from First to Final Mile has been well reflected in our backlog which increased by $600 million sequentially in Q3 to a total of $1.9 billion. This represents an 87% increase versus the same period last year. $1.9 billion in backlog also establishes a new record for our order book which is a testament to our new commercial structure and market strength as well as changing dynamics of how the market utilizes trailers. The strength in our backlog creates the visibility necessary to offer an initial earnings per share outlook for 2022 $1.70, assuming no improvement in supply chain conditions. Following our strategic, organizational and capacity update, today's company branding and segmentation refreshes are the culmination of work that has been going on behind the scenes for the last 2 years. Consolidated third quarter revenue was $483 million with new trailer and truck body shipments of approximately 12,455 units and 3,780 units, respectively. Gross margin was 10.6% of sales during the quarter, while operating margin came in at 3.8%. Operating EBITDA for the third quarter was $33 million or 6.8% of sales. Finally, for the quarter, net income was $11 million or $0.22 per diluted share. From a segment perspective, Transportation Solutions generated revenue of $443 million and operating income of $26 million. Parts and Service generated revenue of $42 million and operating income of $4.1 million. Year-to-date operating cash flow was negative $74 million. Our current target for 2021 capital spending is approximately $50 million which is higher than normal as we catch up on projects that were deferred during COVID and prepared for our strategic capacity expansion and the conversion of our Laveya-base south plant from reefer capacity to drive an capacity. With regard to our balance sheet, our liquidity or cash plus available borrowings as of September 30 was $259 million with $49 million of cash and cash equivalents and approximately $220 million of availability on our revolving credit facility. In late September and early October, we upsized our revolving credit facility by $50 million to $225 million and closed an issuance of $400 million in senior notes, respectively. After repaying our previous senior notes and term loan, our improved debt structure will result in $3 million of annual interest expense savings and more importantly, create a reasonably priced patient debt structure that allows us to invest in our business and enhances our opportunities to create value with a lower cost of capital. With regard to capital allocation during the third quarter, we utilized $14 million to repurchase shares and our quarterly dividend of $4 million and invested $9 million in capital projects. Thinking about the next 3 to 5 years, I expect our capital allocation to continue to support our internal opportunities for organic growth. We expect revenue in the range of $490 million to $520 million and earnings per share of $0.10 to $0.15 for the quarter. As Brent mentioned, our record backlog allows us to offer an initial outlook for 2022 of $1.70 per share. Pricing recovery from commodity headwinds experienced in 2021 have been effective and we expect average selling prices for trailers to increase in the range of $5,000 to $6,000 year-over-year. This would represent a $0.60 tailwind in the bridge from our anticipated $0.52 of earnings per share in 2021 to our guide of $1.70 in 2022. We're also assuming over $0.90 from improved build rates which are based on the ramp in factory floor associate count we've been able to achieve to date. We expect to gain a total of $0.10 from the combination of reduced year-over-year share count as well as lower interest expense. Operating margins are expected to be approximately 6% at the midpoint and we are well on our way to achieving our 8% operating margin target by 2023. In conclusion, the announcements we've made today are the culmination of work that has been going on behind the scenes for the last 3 years.

Finally, for the quarter, net income was $11 million or $0.22 per diluted share. This would represent a $0.60 tailwind in the bridge from our anticipated $0.52 of earnings per share in 2021 to our guide of $1.70 in 2022.

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All three towers currently under construction are now 86% presold and are all progressing on time and on budget. In addition, new home sales, a leading indicator of future land sales, grew 23% year-over-year. Summerlin had an all-around great quarter, selling 49 acres of residential land, while also increasing its price per acre 14% compared to the same period last year. Additionally, Summerlin saw a 66% year-over-year increase in new home sales, demonstrating the demand from homebuyers in this region remains strong. The Summit's increase in earnings was due to closing of 16 units during the quarter versus three units during the prior year period. In Bridgeland, land sales softened in the quarter with 25 acres of residential land sold compared to 38 acres in the prior year period. Lastly, we relaunched our Summer Concert Series on The Rooftop at Pier 17, which was canceled last year due to the pandemic. Our Operating Assets segment generated NOI of $57.9 million in the quarter, which was a material improvement year-over-year and sequentially. Retail NOI increased for the third consecutive period totaling $14.8 million in the quarter, increasing 72% year-over-year and 23% sequentially. Specifically in Downtown Summerlin, we are beginning to see activity surpass pre-pandemic levels as sales per square foot in June totaled $668 compared to $636 in June of 2019. Our retail assets have continued to improve with consecutive increases in collection rates, which have been steadily improved to 80% from a low of 50% in the second quarter of last year. Our hotels have experienced a meaningful recovery and during the quarter, generated $2.7 million of NOI compared to a slight loss in the prior quarter and a $1.8 million loss in the prior year period. The Las Vegas Ballpark had a tremendous quarter, generating quarterly NOI of $3.1 million. This was substantially higher than the $1.1 million loss reported during the prior year period due to the cancellation of the Minor League Baseball season in 2020. The continuous lease-up of our latest multifamily assets helped drive quarterly NOI to $7.4 million, a 94% increase year-over-year and a 29% increase sequentially. Office NOI increased 2% sequentially to $26.3 million as strong leasing velocity more than offset the tenant expirations experienced during the prior quarter. Year-to-date, we have executed 216,000 square feet of new and renewal leases with 95% of that activity occurring in the second quarter. In addition, we have nearly 300,000 square feet of leases in progress, predominantly concentrated in the Woodlands. Furthermore, we have limited lease expirations that do not exceed 10% of our office portfolio during a given year until 2025. As I mentioned during our Investor Day and on last quarter's call, we plan to develop a single-family for rent community in Bridgeland that will encompass 263 homes distributed across three product types. At 250 Water Street, we continue to advance our plans for this site following the New York City Landmark Preservation Commission's approval of our proposed design for a 28-story mixed-use building. Additionally, we have agreed with the city on an extension to our ground lease to 99 years, subject to a separate land use review process, which will also include our contribution to the Seaport Museum's revival, improvements to the Esplanade and the opening of an important drive way around the Tin Building. During the quarter, we contracted to sell 45 condos, which has further reduced our already limited supply of available units. And of its 349 units, only 23 condos remain, which speaks to the level of demand we are seeing in Ward Village. Our other two towers under construction, 'A'ali'i and Ko'ula are well sold at 87% and 81% and remain on time and on budget, with completion expected in the fourth quarter of 2021 and 2022, respectively. Finally, we sold out our third condo tower in Hawaii during the quarter with the closing of the final unit at Anaha for $12.9 million. First, our MPCs delivered strong results in the quarter with earnings before taxes, or EBT, of $69.8 million, which is a 10% increase compared to an EBT of $63.4 million in the prior quarter and a 66% increase compared to an EBT of $42.2 million in the prior year period. Next, our operating assets generated $57.9 million of quarterly NOI, which represented a 20% increase compared to an NOI of $48.4 million in the prior quarter, and a 42% increase compared to an NOI of $40.8 million in the prior year period. Lastly, we sold 45 condo units in Hawaii, just one shy of the 46 units sold in the prior quarter and a 246% increase compared to the 13 units sold in the prior year period. At the Seaport, we recorded a $4.4 million loss in NOI, which is only 1% lower compared to the prior quarter and 18% lower compared to an NOI loss of $3.7 million in the prior year period. For the second quarter, we reported a net income of $4.8 million or $0.09 per diluted share compared to a net loss of $34.1 million or $0.61 per diluted share during the prior year period. To reiterate our 2021 guidance, we expect MPC EBT to range between $210 million to $230 million and expect operating asset NOI to range between $195 million to $205 million. For the first half of 2021, our G&A totaled $42.1 million, representing a 31% decrease compared to $61.3 million in the prior year period. Based on our current run rate, we expect G&A to be within our guidance range of $80 million to $85 million in 2021. Based on the presale volume at 'A'ali'i as well as our other sales at Ko'ula and Anaha, we remain confident we can generate between $100 million to $125 million of condo profits in 2021, which was our original guidance for the full year. In May, we sold Monarch City, a 229-acre land parcel outside of Dallas, resulting in a book gain of $21.3 million before realizing a noncash tax expense of $4.6 million. This sale generated net proceeds of $49.9 million, bringing our total net proceeds from noncore asset sales to $263.7 million since the fourth quarter of 2019. We ended the quarter with just over $1.2 billion of liquidity that comprised of $1.1 billion of cash and $185 million of undrawn revolving credit facility. We have nearly 10,000 acres of raw land across the country that enables us to repeat this process for decades to come.

For the second quarter, we reported a net income of $4.8 million or $0.09 per diluted share compared to a net loss of $34.1 million or $0.61 per diluted share during the prior year period.

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Net sales of $798.4 million increased $115 million or 16.8% compared to last year, due to significantly higher sales in the Irrigation and Utility Support Structures segments. Starting with Utility, sales of $271 million, grew 16.9% year-over-year, led by significantly higher sales of global generation products, as expected. Moving to Engineered Support Structures, sales of $256.1 million were similar to last year. Turning to Coatings, sales of $89.3 million, were similar to last year, but improved sequentially from the third quarter as demand continues to recover. In Irrigation, sales of $199.3 million, grew nearly 50% compared to last year with growth across all global regions. During the quarter, we purchased the remaining 40% stake of Torrent Engineering and Equipment, a global designer integrator of high pressure water systems for the agricultural and industrial sectors. Turning to the full year summary on slide 5, net sales of $2.9 billion, grew 4.6% compared to last year and 5.4 % excluding currency impacts. Access Systems sales were down 23% compared to last year due to a strategic decision to exit certain product lines. Turning to Coatings, sales were down 6.1% for the year, but improved sequentially in the second half of the year, tracking in line with improving industrial production levels. In Brazil, very strong demand led to record sales with sales in local currency, growing 32% year-over-year. Additionally, sales of advanced technology solutions globally grew nearly 20% year-over-year to $67 million. These proprietary solutions now connect over 110,000 of our growers machines helping them to maximize yields, improve water efficiency and optimize input costs. We accelerated innovation through new products and services including our Spun Concrete Distribution Poles and small cell solutions, as well as technology advancements in our Valley 365 platform for connected crop management and all segments benefited from disciplined pricing strategies throughout the year. We secured the largest irrigation order in the industry's history to supply $240 million of products, services and technology solutions to the Egypt market and we generated over $200 million in free cash flow through a continued intense focus on working capital management. Together, we have committed to build a local facility with an annual production capacity of up to 1000 pivots. As the largest economy in the region, Kazakhstan is rapidly embracing agriculture as a key economic contributor with a national plan to more than double the number of irrigated acres over the next 10 years. Growing regional demand coupled with excellent infrastructure will allow us to quickly and efficiently serve the greater market, starting with the multi-year agreement to supply a minimum of 4000 pivots. Fourth quarter operating income of $68.8 million or 8.6% of sales, grew 180 basis points, or 36% compared to last year, driven by improved operational efficiency in all segments, higher volumes in Utility and Irrigation and the non-recurrence of last year's losses in the Access System product line. Fourth quarter diluted earnings per share of $2.20, grew 46% compared to last year, driven by higher net earnings and non-recurrence of losses in the Access Systems business and a more favorable tax rate. Fourth quarter tax rate was 24.4% on an adjusted basis. This excludes a non-recurring $1 million benefit or $0.05 per share from the adoption of US Tax Regulation finalized in 2020 which allows for more favorable treatment of tax payments by our foreign subsidiaries. Turning to the Segments, on slide 10, in Utility Support Structures operating income of $28 million or 10.3% of sales decreased 110 basis points compared to last year. Moving to slide 11, in Engineered Support Structures, operating income of $24.4 million or 9.5% of sales increased 540 basis points over the last year. Turning to slide 12, in the Coatings Segment, operating income of $11.8 million or 13.2% of sales was similar to last year. Moving to slide 13, in the Irrigation Segment, operating income of $25.3 million or 12.7% of sales, was 380 basis points higher, compared to last year. Turning to cash flow on slide 14, our rigorous focus on working capital management helped us deliver solid operating cash flow of $316.3 million this year, an improvement over last year's strong performance and despite an early payment of approximately $18 million for the required 2021 Annual UK Pension Plan contribution. Capital spending for 2020 was $107 million, which includes approximately $42 million of investment in strategic growth opportunities and approximately $60 million of maintenance capital in line with historical levels. As mentioned last quarter, we resumed our share repurchase program in September returning approximately $93.4 million of capital to shareholders through dividends and share repurchases in 2020, ending the year with approximately $400 million of cash. Our balance sheet remains strong with no significant long-term debt maturities until 2044. Our leverage ratio of total debt to adjusted EBITDA of 2.2 times remains within our desired range of 1.5 to 2.5 times and our net debt to adjusted EBITDA is at one time. For the first quarter, we estimate net sales to be between $740 million and $765 million and operating income margins between 9% to 10% of net sales. For the full year, net sales are estimated to increase 9% to 14% year-over-year, which assumes a foreign currency translation benefit of 2% of net sales. Earnings per share is estimated to be between $9 and $9.70, excluding any restructuring activities. A reminder that pricing actions in response to rapid inflation in this segment historically take one to two quarters to recover, so we expect unfavorable gross margin comparisons of approximately 220 basis points in the first half of the year when compared to 2020. Moving to Engineered Support Structures, we have entered the year with a solid global backlog of $247 million. We expect demand for wireless communication products and components remains strong and anticipate curious investment in 5G to accelerate throughout 2021, with sales expected to grow approximately 15% this year. Full year sales are expected to substantially increase 27% to 30% year-over-year. Finally, as part of our ongoing strategic portfolio review, we have decided to divest the access System product line, which generated $88 million of sales in 2020 and serves the Australia and Asia-Pacific markets. Moving to slide 19, as we have consistently stated over the past year, the fundamental market drivers of our business remain intact and we are seeing a solid set up for 2021 across all end markets as evidenced by our record, $1.1 billion backlog at the end of the year. In Utility, our strong year-end backlog of nearly $565 million remains at elevated levels and demonstrates the ongoing demand and necessity for renewable energy solutions and grid hardening. We are pleased to announce that in the first quarter, we were awarded the third purchase order of approximately $70 million for the large project in the Southeast U.S., confirming our customers' confidence in our execution, quality and value. If one is past, this segment will experience upside growth approximately 9 to 12 months after an enactment. And in Irrigation, recent improvements in net farm income have improve grower sentiment and tighter ending stocks have driven corn and soybean prices to 6 and 7 year highs. This improved demand along with strength across international markets and the large-scale multi-year project in Egypt is providing a good line of sight for 2021 as evidenced by our year-end global backlog of $328 million, an increase of 5 times the level from one year ago. As we entered the third year of offering this innovative solution, I'm excited to share that the number of monitored acres more than doubled to $5 million in 2020 leading to twice as many growers using the service as compared to 2019. Altogether, I am very proud that approximately 90% of Valmonts net sales supports ESG efforts. As the world continues to transition to a clean energy economy, approximately 90% of our Utility Support Structures sales are tied to ESG, including 45% to renewable energy initiatives and 45% to grid resiliency and critical reliability efforts. Approximately 90% of Engineered Support Structures sales are also attributable to ESG. In coatings, nearly 100% of our sales helps preserve and extend the life of metals up to 3 times longer. Zinc and steel are both 100% recyclable and hot-dip galvanizing is a proven corrosion protection system and has one of the lowest carbon footprints of any coatings application. In terms of our own sustainability efforts, I'm very pleased that at the end of 2020, we exceeded our global electricity conservation goal set in 2018, resulting in a 14% reduction in normalized electricity consumption, well ahead of our 8% goal. As a further benefit, we also reduced our scope to carbon footprint by approximately 10,000 metric tons in 2020, a notable accomplishment by our green teams. As we prepare to celebrate our 75th anniversary as a company in March, I want to again recognize our 10,000 global employees.

Net sales of $798.4 million increased $115 million or 16.8% compared to last year, due to significantly higher sales in the Irrigation and Utility Support Structures segments. Fourth quarter diluted earnings per share of $2.20, grew 46% compared to last year, driven by higher net earnings and non-recurrence of losses in the Access Systems business and a more favorable tax rate. For the first quarter, we estimate net sales to be between $740 million and $765 million and operating income margins between 9% to 10% of net sales. Earnings per share is estimated to be between $9 and $9.70, excluding any restructuring activities.

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We delivered total sales of $1.8 billion this quarter. That's a same-store sales improvement of 97.4% compared to last year. On that basis, this quarter represents same-store sales growth of 38.1%. Total revenue was nearly $425 million higher than two years ago despite having roughly 450 fewer stores, a 16% reduction in store count. As we continue to transform our operating model, we delivered non-GAAP operating margin of 12.5% this quarter, representing an 860 basis point improvement compared to this time two years ago. Our recent research also shows that 80% of U.S. consumers believe they are the same or better off economically today than they were before the pandemic. In the week leading up to Mother's Day, we drove brick-and-mortar same-store sales growth of more than 30% to two years ago, with average transaction value up 18%. Similarly, growth in eCommerce over the same time period was more than 90%, showing that our Connected Commerce experience is resonating, both in store and online. Our research indicates 15% of committed couples or approximately 2.3 million couples plan to get engaged this calendar year, which is up high single digits to a typical prepandemic year. Customers are responding as we saw total sales of our bridal category increased over $150 million or 25% this quarter to two years ago. For example, our data analytics on Kay shows that new customers are 700 basis points more likely to be on a milestone gifting and holiday or holiday purchase journey, aligning with Kay's target of the generous sentimentalist. Zales' new customers in the first half of the year are 400 basis points more likely to be on a self-purchase journey than two years ago. Through a series of integrated initiatives, we've driven a 40% improvement to our overall inventory turn since we began our transformation. New or high-turn inventory penetration at Kay is now 50% higher than it was two years ago. We see an opportunity to grow services into $1 billion business. In a recent survey, 36% of retail consumers expressed interest in customizing their products and services and 20% indicated that they're willing to pay a premium. Over 80% of bridal customers express interest in some level of customization for their engagement and wedding rings. Stores with foundries delivered roughly 10% higher sales than Jared locations without them this quarter. With roughly 50 foundry locations today, we will continue investing in its rollout as we plan to have more than 70 Jareds with foundry experience this fiscal year. In the second quarter, Jared's average transaction value was 86% higher than Kay's, up from roughly 31% differential this time two years ago. On the value end of the mid-market, we've continued the rollout of our rebranding test, Banter by Piercing Pagoda, that we began in 100 stores at the end of April. Based on promising results, we expanded to bring the total to 200 stores on August 2. Online traffic has doubled, and interaction times on the site have increased 25%. We recognize that the pandemic was a factor in this shift as 78% of consumers have said that the pandemic made them realize that shopping online is better and easier than their previous perception. Of engaged couples in 2021, roughly 30% said they bought their engagement ring online, which is more than double the amount in calendar 2019. In Kay, more than 25% of online orders this quarter utilized at least one of these capabilities. And in Jared, it was over 30% of online orders. For example, within Ernest Jones, 20% of our in-store business is now the result of appointments that were made online. Of those appointments, over 70% results in a sale that averages four times what a walk-in customer spends. Our research indicates that younger unvaccinated customers, those aged 18 to 49 and particularly those with young children, are more concerned about COVID variants than older customers. In a recent survey, 85% of our team members said they are proud to work at Signet, illustrating the dedication and commitment to performance within our company. And third, aligned with our capital priorities, we've expanded our authorized repurchases to $225 million to reflect our confidence in our longer-term growth opportunities and the strength of our balance sheet and cash flow. Our total sales of $1.8 billion reflect growth of more than 100% over last year. We delivered approximately $780 million this quarter or 40% of sales. This is a 650 basis point improvement compared to the second quarter two years ago. Leveraging of fixed cost contributed more than 400 basis points of the improvement. SG&A was approximately $503 million or 28% of sales. This rate reflects a 210 basis point improvement to two years ago. This model has delivered a sales per labor hour improvement of more than 70% to this time two years ago, while also contributing to our decrease in employee turnover compared to the same time period. Non-GAAP operating profit was $223 million compared to an operating loss of $41.7 million in the prior year. Second quarter non-GAAP diluted earnings per share was $3.57, including a discrete tax benefit of $0.80 per share. This compares to prior year non-GAAP diluted loss per share of $1.13 and diluted earnings per share of $0.51 two years ago. This has resulted in both a 40% improvement to inventory turn and a reduction in overall inventory levels. And as we announced today, we've expanded our current authorization of share repurchases to $225 million, which we'll evaluate on an opportunistic basis. We expect third-quarter sales in the range of $1.26 billion to $1.31 billion, with same-store sales in the range of down 3% to up 1% and non-GAAP EBIT of $10 million to $25 million. For the fiscal year, we now expect total sales within range of $6.8 billion to $6.95 billion with same-store sales in the range of 30% to 33% and non-GAAP EBIT of $618 million to $673 million. As we continue to optimize our footprint, we remain on track to open up to 100 locations and close at least 100. We've opened 37 locations so far this year and closed 33, including 10 mall closures that were then reopened in off-mall locations. Recall over the past 18 months, we've evolved our real estate strategy from strict fleet rationalization to fleet optimization. Lastly, recall that I mentioned expected capital expenditures in the range of $190 million to $200 million. This represents a narrowing of our previous range of $175 million to $200 million as we continue fueling Connected Commerce. Further, as we've identified incremental cost savings within gross margin and other indirect spend, we're raising our expected cost savings for the year from a range of $75 million to $95 million to a range of $85 million to $105 million.

We delivered total sales of $1.8 billion this quarter. On that basis, this quarter represents same-store sales growth of 38.1%. On the value end of the mid-market, we've continued the rollout of our rebranding test, Banter by Piercing Pagoda, that we began in 100 stores at the end of April. Our total sales of $1.8 billion reflect growth of more than 100% over last year. Second quarter non-GAAP diluted earnings per share was $3.57, including a discrete tax benefit of $0.80 per share. We expect third-quarter sales in the range of $1.26 billion to $1.31 billion, with same-store sales in the range of down 3% to up 1% and non-GAAP EBIT of $10 million to $25 million. For the fiscal year, we now expect total sales within range of $6.8 billion to $6.95 billion with same-store sales in the range of 30% to 33% and non-GAAP EBIT of $618 million to $673 million. As we continue to optimize our footprint, we remain on track to open up to 100 locations and close at least 100.

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