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We continued our record of strong core operations and FFO growth with a 10% growth in normalized FFO per share in the quarter. In 2020, our MH portfolio increased occupancy by 293 sites. We experienced continued strength at our MH properties with full-year rent revenue growth of 4.6%. Throughout the fourth quarter, there were over 100 virtual home tours on our website. In the quarter, we saw an increase in core transient revenue of 15%. Our dues revenue increased over 4% to $53 million. We sold over 20,000 camping passes, an increase of over 6% from 2019. Our upgrade sales increased 15% over 2019 as we saw more customers interested in increasing their commitment to the Thousand Trails system. Based on the fourth quarter survey results, guests responding to customer experiences questions with the rating of over 4.5 out of 5. We have issued guidance of $2.31 at the midpoint, which is a 6.4% growth in normalized FFO per share. Over the last five years, we have sold more than 2,200 new homes in our communities. We finished the year strong with a 30% increase in new home sales year-over-year. We have noticed rent increases for approximately 60% of our residents and anticipate a 4.2% rate growth in MH revenue. Since our last call, we have closed on over $200 million of transactions. We added approximately 2,100 RV sites to the portfolio and approximately 500 MH sites, with over 700 sites of adjacent expansion and 500 marina slips. Additionally, we closed on four parcels of entitled land with 300 acres. We anticipate being able to build 1,000 sites in these acquired acres. The Board has approved setting the annual dividend rate at a $1.45 per share, a 6% increase. Consistent with the past, in 2021, we expect to have an excess of $90 million of discretionary capital after meeting our obligations for dividend payments, recurring capital expenditures and principal payments. Over the past five years, we have increased our dividend 71%. We have over 4,000 team members dedicated to ensuring success in our organization, and for that I am grateful. Fourth quarter normalized FFO was $0.57 per share. Strong performance in our Core Portfolio generated 3.6% NOI growth for the fourth quarter. Core NOI growth of 2.9% for the full year contributed to our normalized FFO per share growth of 3.9%. As Marguerite mentioned, full-year core community base rental income growth was 4.6%. Rate increases contributed 4.1% growth while occupancy generated the additional 50 basis points. Our 2020 core occupancy increase included a gain of 345 homeowners. Our rental homes continue to represent less than 6% of our MH occupancy. Full-year core resort base rental income growth from annuals was 5.6% with 4.9% from rate increases and 70 basis points from occupancy gains. Core RV seasonal and transient revenues declined 3.7% and 8%, respectively for the year. Fourth quarter seasonal RV revenues were approximately $2 million less than last year, mainly due to the travel-related restrictions impacting Canadian and U.S. domestic customers' decisions to spend the winter season in our Southern resorts. For the full year, net contribution from our membership business was $2.9 million higher than 2019, an increase of 5.3%. Dues revenues increased 4%, mainly as a result of increased rate. Strong demand for our upgrade products is evidenced by the full-year increase in sales volume of 16%. Full-year core property operating, maintenance and real estate taxes increased 5% compared to 2019. This increase includes approximately $5.1 million in unplanned expenses associated with cleanup following hurricanes Hanna and Isaias, as well as expenses incurred as a result of cleaning and safety protocols and frontline employee compensation following the onset of COVID-19. Our non-core properties, including those acquired during the fourth quarter, contributed $4.4 million in the quarter and $14.4 million for the full year. Property management and corporate G&A were $97.2 million for the full year. Other income and expenses, net, which includes our sales operations, joint venture income as well as interest and other corporate income, was $10.5 million for the year. Interest and amortization expenses were $102.8 million for the full year. Our guidance for 2021 normalized FFO is $445 million or $2.31 per share at the midpoint of our guidance range of $2.26 to $2.36 per share. We projected core NOI growth rate between 3.3% and 4.3% with 3.8% at the midpoint. Full-year guidance includes 4.2% rate growth for MH and 4.5% for annual RV rents. We estimate the first quarter decline in revenue from these line items compared to same period last year to be almost $10 million. Almost 50% of that shortfall is caused by our Canadian customers deciding not to visit for the season. As a reminder, in years prior to 2020, the first quarter represented approximately 50% of our seasonal RV revenues for the year. For the first quarter, we have seen an increase of 10% in the reservations from customers driving their RV to our resorts and a decline in our cottage rental business of almost 40%. This represents approximately $1 million less cottage rental income in 2020. We expect first quarter normalized FFO per share to represent approximately 24% to 25% of full-year normalized FFO per share. Those existing mortgages mature in 2022 and carry a weighted average rate of 5.1%. Current secured debt terms are 10 years at coupons between 2.5% and 3.5%, 60% to 75% loan-to-value and 1.4 times to 1.6 times debt service coverage. We continue to see strong interest from life companies, GSEs and CMBS lenders to lend at historically low rates for terms 10 years and longer. Our $400 million line of credit currently has approximately $297 million outstanding. Our ATM program has $200 million of available liquidity. Our weighted average secured debt maturity is approximately 13 years. Our debt-to-adjusted EBITDA is around 5.2 times and our interest coverage is 5.1 times.

The Board has approved setting the annual dividend rate at a $1.45 per share, a 6% increase. Fourth quarter normalized FFO was $0.57 per share. Our guidance for 2021 normalized FFO is $445 million or $2.31 per share at the midpoint of our guidance range of $2.26 to $2.36 per share. We expect first quarter normalized FFO per share to represent approximately 24% to 25% of full-year normalized FFO per share. Those existing mortgages mature in 2022 and carry a weighted average rate of 5.1%.

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We executed a strong second quarter with sales of $326.1 million, improving 7% year-over-year and 15% quarter-over-quarter on higher volume despite the significant level of macroeconomic challenges resulting from COVID-19. We maintained a strong gross profit margin of 45.9% due to a combination of sales mix and lower material costs on improved overhead absorption. This, when coupled with our effective expense management, resulted in a 35% year-over-year increase in our income from operations to $72.2 million and strong earnings of $1.22 per diluted share. The outcome of these efforts is directly evidenced by our 280 basis point improvement in our total operating expenses as a percent of sales for the second quarter of 2020 compared to the second quarter of 2019. So far in the first few weeks of July, our net sales have increased approximately 10% compared to July of 2019. Brian will provide additional detail regarding our reinstated financial outlook for the full year of 2020 shortly. I continue to believe our business is very well positioned, given our strong brand reputation and loyal customer base which has been built over 64 years, our deep-rooted industry relationships, our many, many talented employees and our superior customer service standards, industry-leading high quality trusted products, a high level financial flexibility and a healthy balance sheet and solid liquidity position. As Karen highlighted, our consolidated sales were strong, increasing 7% to $326.1 million. Within the North America segment, sales increased 10.7% to $286.8 million due primarily to the return of Lowe's and the corresponding higher sales volume necessary to support the rollout of our products into their stores. In Europe, sales decreased 14.4% to $37.4 million mainly due to government-mandated COVID-19 related closures which resulted in lower sales volume. Europe sales were further negatively impacted by $1.2 million from foreign currency translation resulting from Europe currencies weakening against the United States dollar. Wood Construction products represented 86% of total sales, compared to 84% and Concrete Construction products represented 14% of total sales compared to 16%. Gross profit increased by 11.6% to $149.8 million resulting in a gross margin of 45.9%. Gross margin increased by 190 basis points, primarily due to improved material costs which were partially offset by higher warehouse and shipping costs. On a segment basis, our gross margin in North America improved to 47.4% compared to 45.1% while in Europe our gross margin decreased to 35.1% compared to 37%. From a product perspective, our second quarter gross margin on wood products was 46.2% compared to 43.4% in the prior-year quarter and was 40.7% for concrete products compared to 44% in the prior-year quarter. Research and development and engineering expenses increased 10.3% to $12.2 million primarily due to increases in cash profit sharing expense and personnel costs. Selling expenses decreased 6.5% to $26.8 million due to declines in travel, fuel and entertainment expenses, professional fees and promotional expenses, which were partly offset by increases in cash profit sharing, stock based compensation and personnel costs. On a segment basis, selling expenses in North America were down 4.3% and in Europe they decreased 13.3%. General and administrative expenses decreased 8.1% to $38.6 million, primarily due to declines in professional and consulting fees and travel and entertainment expenses, which were partly offset by increases in cash profit sharing, stock based compensation, computer hardware and software expenses and depreciation and amortization. On a segment level general and administrative expenses in North America decreased 7.9%. In Europe, G&A decreased by 13.6%. Total operating expenses were $77.7 million, a decrease of $3.4 million or approximately 4.2%. As a percentage of sales, total operating expenses were 23.8%, an improvement of 280 basis points compared to 26.6%. Stock-based compensation expense included adjustments to performance-based shares of 5.2 million in the second quarter of 2020. Our strong gross margin and diligent management of costs and operating expenses helped drive a 34.6% increase in consolidated income from operations to $72.2 million compared to $53.7 million. In North America, income from operations increased 41% to $72.2 million due to the strength of our gross profit margin coupled with reduced operating expenses. In Europe, income from operations was $2.7 million compared to $4.7 million due to a combination of lower sales and slightly higher operating expense. On a consolidated basis, our operating income margin of 22.1% increased by approximately 450 basis points. The effective tax rate decreased to 25.8% from 26.4%, primarily due to a reduction in foreign losses subject to valuation allowances. Accordingly, net income totaled $53.5 million or $1.22 per fully diluted share compared to $39.6 million or $0.88 per fully diluted share. At June 30th cash and cash equivalents totaled $315.4 million, an increase of $13.7 million compared to the balance at March 31st. Our inventory position of $265.4 million at June 30th increased $9.6 million from our balance at March 31st, in line with the seasonal increase in inventory we typically experienced in the summer and fall months due to increased construction activity. We generated strong cash flow from operations of $29.3 million for the second quarter of 2020, a decrease of $14.6 million or 33.2%. During the second quarter, we used approximately $7.3 million for capital expenditures which included a minimal amount for our ongoing SAP implementation project. In regard to stockholder returns, we paid $10.2 million in dividend to our stockholders during the second quarter. On July 13th, our Board of Directors declared a quarterly cash dividend of $0.23 per share which will be payable on October 22nd to stockholders of record as of October 1st. Net sales are estimated to increase in the range of 1.5% to 4% compared to the full year ended December 31, 2019. Gross margin is estimated to be in the range of approximately 43% to 45%. Operating expenses as a percentage of net sales are estimated to be in the range of approximately 27% to 29% and the effective tax rate is estimated to be in the range of 24% to 26%, including both federal and state income taxes. For the second quarter of 2020 we generated strong cash flow from operations of $30 million for the second quarter of 2020, a decrease of $14 million or 31.2%.

We executed a strong second quarter with sales of $326.1 million, improving 7% year-over-year and 15% quarter-over-quarter on higher volume despite the significant level of macroeconomic challenges resulting from COVID-19. This, when coupled with our effective expense management, resulted in a 35% year-over-year increase in our income from operations to $72.2 million and strong earnings of $1.22 per diluted share. Brian will provide additional detail regarding our reinstated financial outlook for the full year of 2020 shortly. As Karen highlighted, our consolidated sales were strong, increasing 7% to $326.1 million. Accordingly, net income totaled $53.5 million or $1.22 per fully diluted share compared to $39.6 million or $0.88 per fully diluted share. Net sales are estimated to increase in the range of 1.5% to 4% compared to the full year ended December 31, 2019.

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In April, we collected in our residential business about 97% of the cash that we would usually collect. While no part of our country's economy will be immune from the coming recession, we feel that our portfolio of properties, populated with residents having average annual household incomes of $164,000 and often employed in technology and other knowledge industries, will fare relatively well. So today, I'm going to provide a quick recap of operations over the past 45 days. For us, this means that our more than 150,000 residents began staying at home 24 hours a day, seven days a week. When we look back to March 15, we saw our traffic and applications drop 50% compared to the same period in 2019. That being said, we continued to receive over 375 new applications each week through the end of March, which we see as a validation of the new leasing process. Overall, retention in April and May has improved as we are now renewing in the mid- to upper 60% range, which is a 300 basis point improvement from last April and an almost 800 basis point improvement from last May. New York is having the strongest renewal percents of nearly 70% for March, April and May. Despite this good retention, our overall occupancy since March 31 has declined by 130 basis points. At the beginning of April, we began to notice an improvement in demand, with both traffic and leasing activity rebounding by almost 30% and actually now trending on par with last year. In fact, we had over 900 applications last week, which is a significant improvement compared to the 375 that we were averaging in late March and very encouraging for us. Given the activity in the last 45 days, we would like to see that volume grow even more to help offset the lower demand that we experienced in March and to match the increased volume of applications that we usually get in May. On Page 13, we reported the first quarter and included April monthly pricing statistic by market. This is evident by the fact that we received a very strong 97% of the cash collections in April relative to our March collections. This resilience delivered 5.4% delinquency, which is quite good given these unprecedented circumstances. Notably, Seattle and Denver were our markets with the lowest delinquency at below 3% and Los Angeles was the laggard close to 8%. Sitting here today, our base rents are down 4% compared to the same week last year. We do so by providing April operational and collection statistics, by breaking out our same-store performance between residential and nonresidential, a practice that we would expect to continue as the performance from our main residential business, which makes up approximately 96% of total revenues, is likely to diverge meaningfully in the upcoming quarters for our much smaller nonresidential business. This includes modifying the schedules on Pages 10 through 12 of the release. This is a modest component of our business at 4% of total revenues and consists mostly of ground floor retail and public nonresident parking at our well-located apartment communities. Ground floor retail makes up about 2/3 of this 4%, with public nonresident parking making up the rest. This is evidenced by the 58% April collection rate for all retail that we disclosed, which, while certainly below what we would have hoped, may be higher than many other retail landlords. With nonresident parking, we've seen an approximately 30% decline in parking volume for April, given the lack of public events and increased work-from-home arrangements. We ended the first quarter with an incredibly strong net debt to normalized EBITDA of 4.9 times and nearly $1.8 billion in liquidity under our revolving credit facility. Subsequent to quarter end, we improved this already strong position by closing on a very attractively priced 2.6% or $195 million 10-year GSE loan and by closing on the sale of an asset in the San Francisco Bay Area. With these steps, we sit here today with over 84% of our total NOI unencumbered, about $150 million in commercial paper outstanding and readily available liquidity of over $2.2 billion under our revolving credit facility, which does not mature until 2024.

Subsequent to quarter end, we improved this already strong position by closing on a very attractively priced 2.6% or $195 million 10-year GSE loan and by closing on the sale of an asset in the San Francisco Bay Area.

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With record occupancy of 94% at quarter end, we have managed to grow occupancy by 460 basis points year-over-year, an incredible accomplishment, and I'm very proud of the entire Life Storage team. With this level of occupancy, we have been aggressively pushing asking rates while also decreasing free rent, resulting in higher net effective rates, which were up roughly 20% for the quarter. Further, we have been very active on the acquisition front, with 33 stores acquired or under contract since the beginning of the year. We also continue to see strong growth in our third-party platform with 18 new additions during the quarter and a very robust pipeline as more and more owners consider Life Storage as a leading candidate to manage their stores. We are raising the midpoint of our estimated adjusted funds from operations per share by more than 3% to $4.37 this year, which would be 10.1% growth over 2020. Last night, we reported adjusted quarterly funds from operations of $1.08 per share for the first quarter, an increase of 16.1% year-over-year. First quarter same-store revenue accelerated significantly again to 7.3% year-over-year, up 240 basis points from the 4.9% growth produced in the fourth quarter. Revenue performance was driven by a 410 basis point increase in average quarterly occupancy. In the quarter, our move-ins were paying almost 6% more than our move-outs, which is a significant improvement from the rent roll down that we experienced in the same quarter last year. Our move-ins have been paying more than our move-outs for six straight months, with March move-ins paying almost 8% more than move-outs. Same-store operating expenses increased 4.7% year-over-year for the quarter. Payroll and benefits, again, remained well controlled, up only 1.8% year-over-year, while advertising and Internet marketing costs were down 2.6%. The net effect of the same-store revenue and expense performance was an increase in net operating income of 8.6% for the quarter. We supported our acquisition activity and liquidity position by issuing approximately $180 million of common stock via our ATM program in the first quarter. Our net debt to recurring EBITDA ratio decreased to 5.5 times, and our debt service coverage increased to a healthy 4.9 times at March 31. At quarter end, we have $457 million available on our line of credit, and we have no significant debt maturities until April of 2024 when $175 million becomes due. Our average debt maturity is 6.7 years. Specifically, we expect same-store revenue to grow between 5.5% and 6.5%. Excluding property taxes, we continue to expect other expenses to increase between 2.25% and 3.25%, while property taxes are expected to increase 6.75% to 7.75%. The cumulative effect of these assumptions should result in 6.5% to 7.5% growth in same-store NOI relative to our original guidance of between 3.75% and 4.75%. We have also increased our anticipated acquisitions by $175 million to between $550 million and $600 million. Based on these assumptions changes, we anticipate adjusted FFO per share for the 2021 year to be between $4.33 and $4.41.

Last night, we reported adjusted quarterly funds from operations of $1.08 per share for the first quarter, an increase of 16.1% year-over-year. First quarter same-store revenue accelerated significantly again to 7.3% year-over-year, up 240 basis points from the 4.9% growth produced in the fourth quarter. Based on these assumptions changes, we anticipate adjusted FFO per share for the 2021 year to be between $4.33 and $4.41.

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Revenues in our environmental businesses, which represent more than 80% of total Harsco revenue, were up 15% versus the second quarter. The degree of employee compliance with our global COVID-related principles is quite high, and has served to counter the worrisome trends across the general populations of the more than 30 countries in which we operate. In the third quarter, Harsco's revenues totaled $509 million, and adjusted EBITDA totaled $59 million. Our revenues increased 14% over the second quarter of this year with each of our businesses realizing a nice improvement in revenues from the second quarter when we believe the impacts of the pandemic peaked for most of our end markets. The sequential improvement in revenue ranged from a 20% increase at Clean Earth, to a 9% increase at Harsco Environmental. Our third quarter adjusted EBITDA of $59 million is consistent with our expectations in August and is comparable to our adjusted EBITDA result in Q2, despite the unfavorable timing impact of certain expenditures we discussed on our earnings call last quarter. These incremental items consisting largely of the timing of insurance and compensation related amounts, negatively affected the quarter-on-quarter comps by approximately $10 million. Our EBITDA in the third quarter of 2019 totaled $87 million. Harsco's adjusted earnings per share from continuing operations for the third quarter was $0.08. And lastly, our free cash flow totaled $18 million in Q3, a strong performance considering that this figure is net of approximately $14 million of tax-related outflows that we had deferred from the second quarter. This figure compares with free cash flow of $5 million in the third quarter of 2019. And year-to-date, our free cash flow is now $10 million positive, significantly improved from 2019. Revenues totaled $223 million and adjusted EBITDA was $40 million, translating to a margin of 18%. This EBITDA figure compares to $60 million in the prior year with the change driven by pandemic effects on the demand for services and applied products as well as related impacts on new site ramp-ups. Steel output at our customer sites declined approximately 6% on a continuing site basis compared with the prior year quarter. Relative to the second quarter of this year, Harsco Environmental's revenues rose 9% on a similar improvement in steel volumes. However, as I mentioned earlier, the comp to Q2 was negatively impacted by the timing of expenses, which totaled approximately $5 million for HE. Harsco Environmental's free cash flow totaled $32 million in the quarter and now totaled $64 million for the year. This year-to-date figure compares with free cash flow of $10 million in the prior year. For the quarter, revenues were $194 million, and adjusted EBITDA totaled $20 million. Relative to the second quarter of 2020, revenues increased roughly 20% with ESOL and legacy Clean Earth experiencing similar improvements. ESOL contributed nearly $130 million of revenue in the quarter. Last quarter, I mentioned that we expect to realize approximately $5 million of benefits in 2020 from our initiatives. The segment's free cash flow totaled $17 million in the quarter and year-to-date, it now stands at $38 million versus adjusted EBITDA of $42 million. Rail revenues increased to $93 million, while the segment's adjusted EBITDA declined to $5 million in the third quarter. As a result, Rail's backlog remains robust, totaling more than $450 million at the end of the quarter. Our leverage, as expected stood at 4.5 times and our liquidity totaled $325 million at the end of the quarter. Reducing our leverage is a top priority for us and our goal remains to reduce our leverage to below 2.5 times within a couple of years. However, with this in mind and based on the current market environment, we see fourth quarter total Harsco adjusted EBITDA ranging from $58 million to $63 million. Also, we expect our free cash flow to be between $20 million and $25 million in the fourth quarter. And this outcome would place our free cash flow for the full year north of $30 million.

In the third quarter, Harsco's revenues totaled $509 million, and adjusted EBITDA totaled $59 million. Harsco's adjusted earnings per share from continuing operations for the third quarter was $0.08. However, with this in mind and based on the current market environment, we see fourth quarter total Harsco adjusted EBITDA ranging from $58 million to $63 million.

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After buying back $72 million of our bonds at about $0.40 on the dollar in the first half of 2020, under our exchange, $350 million of the $328 million of our debt was due in 2021 was rolled into a new security. This new debt has a cash coupon of 6.25%, the same as the old debt, plus another 2.75% that is payable at the company's option in cash or in kind additional notes. $150 million principal amount of the new notes are convertible at a conversion price of $1.35 per share and are automatically and mandatorily convertible once form stock price trades through $1.50 for 20 business days. The conversion of $150 million of new debt at a conversion price that is more than 2.5 times the current stock price would represent about 50% dilution to current shareholders, while ensuring a strong and sustainable capital structure for the company. Compared to the year ago quarter, our second quarter cash costs, excluding our purchased materials costs, are down about $150 million or 39%, with most of that savings happening in the most recent quarter. Our total revenue for the quarter was $113 million, down 38% from the first quarter. Our book-to-bill ratio was 76% as orders for our consumable products, which are typically booked and shipped in the same period, were most severely impacted. In total, we reduced these costs by $24 million compared to the first quarter, a 30% reduction. These cost reductions, which have all occurred since March, amount to approximately $100 million in total savings on an annualized basis. As a direct result of these cost savings, sequential decremental EBITDA margins were limited to 23%, resulting in adjusted EBITDA of negative $11 million for the second quarter. For clarity, adjusted EBITDA results exclude roughly $3 million of noncash stock compensation expense for the second quarter. Our free cash flow after net capital expenditures in the second quarter was negative $3.5 million as the impact of lower earnings was mostly offset by reductions in working capital from strong collections of receivables and inventory management. Included in this result were approximately $5 million of cash severance and other restructuring costs paid in the quarter. Over this period, Forum generated $109 million of free cash flow. In the quarter, we decreased our net inventory position by $15 million and expect the monetization of excess inventory to continue in 2020 and beyond. Net loss for the quarter was $5 million or $0.05 per diluted share. Excluding a $39 million gain on extinguishment of debt and $9 million of special items, adjusted net loss was $0.29 per diluted share. Special items for the quarter on a pre-tax basis included $4 million of severance and other restructuring costs, $4 million of inventory and other working capital impairments and $1 million of foreign exchange loss. In our Drilling & Downhole segment, orders were $42 million, a 40% decrease from the first quarter, resulting from significant declines in drilling and well construction activity in North America. Orders for the second quarter include $14 million for this award with additional orders under the award anticipated in the second half of the year. Segment revenue was $47 million, a $29 million or 38% sequential decrease as book and ship activity across the segment was impacted by lower activity levels and lockdowns due to the COVID-19 pandemic. Adjusted EBITDA for the segment was negative $3 million in the second quarter, a sequential decrease of $10 million. In our Completions segment, orders decreased 72% to $14 million. Segment revenue was $18 million, a sequential decrease of $33 million or 65% due to the virtual standstill and well completion activity in the quarter. Adjusted EBITDA for the segment was negative $6 million, a $10 million sequential decrease. Production segment orders were $29 million, a sequential decrease of 43%, primarily due to a significant decline in customer bookings activity for our valves product line as customer activity ground to a halt due to the pandemic due to pandemic-related lockdowns and significant distributor destocking. Segment revenue was $49 million, a 13% decrease due to lower sales of valves. Adjusted EBITDA for the segment was $2 million, up $2 million sequentially due to lower overhead expenses from cost reductions. Our capital expenditures in the second quarter were less than $1 million. We are a capital-light business, and we expect our total capital expenditures for 2020 to be less than $5 million. In the second quarter, we reduced net debt by $32 million, primarily due to the repurchase of $72 million principal amount of senior notes at a discount. We ended June with $110 million of cash on the balance sheet and availability under our revolving credit facility of $84 million, resulting in total liquidity of $194 million. Our debt at the end of June included $85 million outstanding on our revolving credit facility and $328 million of unsecured notes due 2021. Following the debt exchange completed earlier this week, we now have $315 million of new secured notes due in 2025 and $13 million remaining on the old unsecured notes. The changes include: a reduction in the size of commitments from $300 million to $250 million, an increase in the interest rate margin, a limit on the amount of availability derived from our inventory collateral and certain other administrative changes. Pro forma for the credit facility amendment, our liquidity at the end of the second quarter would have been $126 million. Interest expense was $6 million in the second quarter. While we do expect higher interest expense following our debt exchange, the 6.25% of cash interest on the new convertible notes is consistent with cash interest on the previous notes. In the second quarter, depreciation and amortization and stock-based compensation were $12 million and $3 million, respectively. Adjusted corporate expenses were $6 million in the second quarter, and we expect them to be similar in the third quarter as well. As Cris and Lyle have mentioned, the unprecedented decline in drilling and completions activity due to COVID-19 significantly reduced demand for many of our products. Among the key components in that picture, seven were supplied by Forum, 7: our 3,000-horsepower pumps, our JumboTron radiators, our ICBM single-line manifold, our high-pressure flow wire, our AMT wireline pressure control equipment, our Hydraulic Latch Assemblies and our newest product from quality wireline and wireline cables.

Our total revenue for the quarter was $113 million, down 38% from the first quarter. Net loss for the quarter was $5 million or $0.05 per diluted share. Excluding a $39 million gain on extinguishment of debt and $9 million of special items, adjusted net loss was $0.29 per diluted share. As Cris and Lyle have mentioned, the unprecedented decline in drilling and completions activity due to COVID-19 significantly reduced demand for many of our products.

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On the earnings front, the team delivered $0.69 per share in FFO. Same-property NOI on a cash basis increased 3.6%, and importantly, we leased over 597,000 square feet, including over 500,000 square feet of new and extension leases with 7.7 years of weighted average lease term and a net effective rent of $24.06 per square foot, which is higher than our 2019 average. Second-generation cash rents increased 23.1%, our strongest rollout since 2015. And we ended the quarter with net debt to EBITDA of 4.54 times. Most recently, we acquired Heights Union, a 294,000 square foot office property in Tampa for a gross price of $144.8 million. Including Heights Union, we have invested approximately $1.1 billion in new acquisitions and development since the start of the COVID-19 pandemic. We are excited about the RailYard in Charlotte, 725 Ponce in Atlanta, Domain nine in Austin and New Hawk in Nashville. During the same period, we have sold approximately $1 billion of noncore properties, including Hearst Tower and one South in Charlotte, and Burnett Plaza in Fort Worth. The declining development fee stream has created challenging year-over-year earnings comps and the 370,000 square foot lease expiration on December 31 at 1,200 Peachtree created uncertainty. Looking forward to 2022 and beyond, our story simplified, and we are already making great early progress on our releasing efforts at 1,200 Peachtree as we are approximately 40% committed including LOIs. We have external growth opportunities in our $663 million development pipeline. In addition, we have a well-located land bank that can support another $2.6 billion in development, including over three million square feet of trophy office and over 1,500 multifamily units. This is evidenced by a 27% increase in transient parking revenue quarter-over-quarter. our total office portfolio lease percentage and weighted average occupancy came in at 91.3% and 89.8%, respectively. Our lease percentage increased 30 basis points this quarter driven by new and expansion leasing activity at Terminus and 3350 Peachtree in Buckhead and at Domain Point in Austin. Conversely, weighted average occupancy declined 120 basis points with the impact of the previously disclosed move out of Anthem at 3350 Peachtree in Buckhead. We executed 43 leases totaling 597,000 square feet in the quarter, and new and expansion leases were accounted for 84% of total activity. Net effective rents were $24.06 this quarter, an improvement over the second quarter and $0.24 higher than our reported net effective rents for the full year of 2019. The rent growth was outstanding this quarter as well with second-generation net rents increasing 23.1% on a cash basis. ULI projects that by the end of the year, those markets will collectively regain nearly all of their lost jobs in comparison to the greater United States, which is expected to still be down almost 2%. According to JLL, Atlanta saw positive net absorption this past quarter for the first time since the pandemic began at 756,000 square feet. In our nearly eight million square foot Atlanta portfolio, we signed an impressive 299,000 square feet of leases in the third quarter. That includes the previously disclosed 123,000 square foot lease with Visa at 1200 Peachtree in Midtown, serving as Visa's new Atlanta office hub. We also have a final LOI in hand with another potential customer at that property for 31,000 square feet. We view this activity at 1200 Peachtree as a strong validation of a truly irreplaceable location and quality of the to-be-repositioned assets. Another example of demand for high-quality and well-amenitized properties is our redeveloped Buckhead Plaza project, producing 121,000 square feet of leasing activity year-to-date at record rental rates. Our overall Buckhead portfolio also produced great activity this quarter, accounting for 43% of our Atlanta leasing activity. This includes 29,000 and 50,000 square feet of new and expansion leasing at 3350 Peachtree and Terminus, respectively. At one of our newest Atlanta assets located in Alpharetta, 10,000 Avalon, we signed a 51,000 square foot new lease after quarter end with [Indecipherable], a newly public financial technology company, taking the building to 99% leased. Further, CoStar showed a 496,000 square foot decline this quarter and Class A total sublease space available for lease. Our Austin portfolio is currently 95% leased, with our 1.9 million foot -- square-foot operating portfolio and the core of the domain at 100% leased. With regard to leasing activity in Austin, we signed 236,000 square feet of leases in the quarter, including a 73,000 square foot new lease with a growing technology company at Colorado Tower, which will entirely backfill the expiration of Atlassian at the end of January 2022. In Charlotte, our now 1.4 million square-foot uptown and South end operating portfolio is well-ositioned at a solid 96.1% leased with very little existing space available. Like in Austin, CoStar showed that Charlotte had a meaningful 139,000 square foot decline this quarter and Class A total sublease space available for lease. According to CBRE's 2021 Tech Talent report, Tampa ranks tenth among the 50 largest tech talent markets with its millennial population increasing by 14.5% since 2014. While average direct asking rents are down 2.5% year-over-year overall, many Class A buildings in the Westshore submarket, where the bulk of our portfolio is located, have increased asking rates to at or above pre-pandemic levels. We signed 41,000 square feet of leases in Tampa this past quarter. The Greater Phoenix area is one of the few places in the country that now has more jobs than before the pandemic, recovering 102.6% of jobs since April of 2020. While our completed activity in Phoenix was light this quarter, the recovery is reflected in our pipeline as we are currently in lease negotiations for 95,000 square feet of new and extension leases at our $100 million new development. Over the past two quarters, we've signed almost 1.1 million square feet of leases with almost 2/3 of that total representing new leases. NOI on a cash basis increased a very healthy 3.6% over the last year and excluding the single large move-out that Richard talked about, Athem's departure from our 3350 Peachtree property in Buckhead to a new consolidated campus in Midtown Atlanta, NOI on a cash basis would have increased 5.3%. After bottoming during the fourth quarter of 2020, same-property parking revenues are up over 20% in the last three quarters, but still remain 20% below pre-COVID levels. Focusing on our development efforts, one asset, Domain 10 an office property primarily leased to Amazon in the Domain submarket of Austin was moved off our development pipeline schedule and into our portfolio statistics, while another asset, Neuhoff, a mixed-use property in the Germantown submarket of Nashville was added to our schedule. Total development costs for Neuhoff are estimated to be $563 million with our joint venture interest representing 50% of that amount. The current development pipeline represents a total Cousins' investment of $663 million across 1.9 million square feet in four assets. As this series of transactions has unfolded, we've maintained our net debt-to-EBITDA around 4.5 times, as we've done with very few exceptions since 2014. On the Capital Markets front, we closed a $312 million construction loan for our new house development joint venture during the third quarter. We currently anticipate a full year 2021 FFO between $2.73 and $2.77 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. We currently anticipate a full year 2021 FFO between $2.73 and $2.77 per share.

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It was called the [Indecipherable] Philadelphia and I was certainly humbled and stunned by the almost 24/7 demands required at my parents'. 20 years ago, a mentor of mine who was a marketing wizard, taught me that brands win when they're different, better and special. We're 98% franchise and asset light. So far, I've spoken with 40 franchisees in the U.S. and around the world and they represent 50% of the Applebee's system and more than a third of our IHOP restaurants. And because we emerged in 2020 on sound financial footing, we plan to repay in full the $220 million drawn from our revolver last March. We expect to complete the repayment this month, resulting in interest expense savings of approximately $5 million. Our collection rate for royalty and marketing fees stands at approximately 99% and the fees we deferred during Q2 of last year are being paid back according to schedule. Overall weekly sales trends for both brands have also improved since the week ending January 3 of 2021, Applebee's improving by approximately 8 percentage points and IHOP posted gains of about 6 points. Our team is focused on three objectives over the next 12 months to 24 months. Second, we'll win the recovery and win the new normal by leveraging our recent investments in business and consumer insights, CRM and digital to reactivate our guests via one-to-one and highly targeted marketing and we'll realign our menu to reflect learnings in the past 12 months and we'll reset the channel mix to reflect those earnings as well. During a very challenging year, we took steps to maintain our financial flexibility, including drawing down $220 million in March 2020 from our revolving credit facility, all of which remain outstanding as of December 31. As John just mentioned, we plan to repay the $220 million during the month of March. We ended 2020 with total cash and cash equivalents of $456 million, which includes restricted cash of $72.7 million. Excluding the $220 million drawn from our revolver, cash on the balance sheet was $64 million higher at the end of 2020 compared to year-end 2019. For the fourth quarter, adjusted earnings per share of $0.39 compared to $1.78 for the same quarter of 2019. For 2020, adjusted earnings per share was $1.79 compared to $6.95 in 2019. For 2020, our bad debt was approximately $12.8 million as compared to virtually no bad debt for 2019. In 2020, it constituted 30% of our total revenues excluding advertising revenues. G&A for the fourth quarter of 2020 improved to $39.4 million from $41.7 million for the same quarter last year. G&A for the fourth quarter was lower than our guidance of approximately $45 million, primarily due to our ability to tighten G&A controls in response to the resurgence of coronavirus cases. G&A for 2020 was $144.8 million, including $4.3 million related to the company restaurants segment. This compares to $162.8 million in 2019. Cash from operations for 2020 was $96.5 million compared to $155.2 million in 2019. Our highly franchised model continued to generate strong adjusted free cash flow of $106.6 million in 2020 compared to $148.8 million in the prior year. As previously discussed, we plan to repay the $220 million drawn last March. Dine Brands provide approximately $55.7 million in royalty, advertising fees and rent payment deferrals to our franchisees and continue to provide assistance on a case-by-case basis. In total, we provided approximately $61 million deferrals to 223 franchisees across both brands, of which 61 have repaid their deferred balances in full. Overall, a total of approximately $32 million of the original subsequent deferrals have been repaid and repayments are on track. Regarding adjusted EBITDA, our consolidated adjusted EBITDA for 2020 was $158.7 million compared to $273.5 million for 2019. Because of our asset-light model and low capex requirements, we continue to have very high quality adjusted EBITDA as capex represented only 7% of 2020 adjusted EBITDA. Lastly, I will review our financial performance guidance for fiscal 2021, which reflects the projected impact over the pandemic on our guidance as of today. Due to ongoing uncertainty created by COVID-19, we clearly cannot provide a complete business outlook for the year. However, I can tell you, G&A is expected to range between approximately $160 million and $170 million including non-cash stock-based compensation expense and depreciation of approximately $45 million. Please note that this range includes approximately $5 million of G&A related to the company restaurants segment and capital expenditures are expected to be approximately $14 million inclusive of approximately $5 million related to the company restaurants segment. Applebee's comp sales progressed from minus 49.4% in Q2 to minus 13.3% in Q3 to minus 1.9% in the month of October when we last spoke. As a result, November comp sales were minus 15% while December came in at minus 30.1%. Now the good news is that business is now improving as comp sales for January and the first three weeks of February combined were minus 18.1%, rolling over a very strong 3.3% increase from the same timeframe last year. For context, at the end of December, 412 of our dining rooms were closed due to government imposed mandates. Now for the month of February, Applebee's sales mix consisted of 63% dine-in, 22% Carside To Go, and 15% delivery. I anticipate our 63% sales mix to naturally elevate this year, as indoor dining gradually returns. At the moment, Cosmic Wings remains an online delivery-only concept available via Uber Eats and fulfilled through approximately 1,250 Applebee's kitchens. While it's far too early to draw any conclusions, Cosmic Wings averaged $510 of incremental sales per restaurant last week in its first full week of operation, showing a steady build from day to day. To this point, last week, we launched our latest national event, 5 Boneless Wings for $1 with the purchase of any burger, which is resonating extraordinarily well. In fact, last week, Applebee's achieved our single highest sales volume week since the pandemic outbreak in mid-March of last year, that's 50 weeks ago. First, our quarterly comp sales improved meaningfully from a decline of 59.1% for the second quarter to a decline of 30.1% for the fourth quarter, reflecting a net increase of 29 percentage points since the pandemic began. As we closed out the fourth quarter, IHOP's comp sales declined 30.1%, which is on par with the family dining category. We were particularly impacted in California and Texas, which collectively comprised approximately 25% of our domestic restaurants. Our results for January 2021 improved to minus 26.8%, representing a gain of 10 percentage points from December. February comp sales through week ending February 21 were down 27.6%. For the same period, our sales mix consisted of 66% dine-in, 16.9% to-go and 17.1% delivery. Number 1, focusing on our PM daypart; Number 2, value; Number 3, maintaining our gains in off-premise sales; and Number 4, development growth. IHOPPY Hour is driving incremental sales in the mid to high teens and approximately 20% incremental traffic compared to the rest of the day. For the fourth quarter, off-premise was 33.3% of total sales, compared to 32.4% for the third quarter. To provide more color, to-go accounted for approximately 17% of sales mix and delivery accounted for approximately 16%. Off-premise comp sales for the fourth quarter grew by 130%, driven primarily by traffic. Conducive to this is our -- is the high portability of IHOP's menu and our proprietary off-premise packaging, which keeps our food warm approximately 40 minutes after leaving the restaurant. The results since the launch are very encouraging, with Burritos & Bowls capturing approximately 8% of check at order incidents based on our soft launch without a full media and marketing campaign. Second, non-traditional development, which is led by our largest agreement in our 62-year history, with TravelCenters of America for 94 restaurants over five years. As of December 31, 1,174 restaurants or 70% of our domestic system was open for in-restaurant dining with restrictions. This compares to 1,425 restaurants or 85% as of September 30. This program concluded with 41 closures over the last six months, which is well below our initial projection of up to 100 restaurants. We remain confident that we'll eventually replace these severely underperforming locations and grow our footprint with better performing restaurants that had volumes closer to our pre-COVID AUV of approximately $1.9 million.

For the fourth quarter, adjusted earnings per share of $0.39 compared to $1.78 for the same quarter of 2019. Lastly, I will review our financial performance guidance for fiscal 2021, which reflects the projected impact over the pandemic on our guidance as of today. Due to ongoing uncertainty created by COVID-19, we clearly cannot provide a complete business outlook for the year. Please note that this range includes approximately $5 million of G&A related to the company restaurants segment and capital expenditures are expected to be approximately $14 million inclusive of approximately $5 million related to the company restaurants segment. As a result, November comp sales were minus 15% while December came in at minus 30.1%. First, our quarterly comp sales improved meaningfully from a decline of 59.1% for the second quarter to a decline of 30.1% for the fourth quarter, reflecting a net increase of 29 percentage points since the pandemic began. As we closed out the fourth quarter, IHOP's comp sales declined 30.1%, which is on par with the family dining category.

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Third quarter revenue was $577 million, an increase of 22% compared to the third quarter of the prior year. This dynamic, combined with new client wins, helped us deliver net income of $19 million in the third quarter versus $9 million in the third quarter of the prior year. And adjusted EBITDA was up $11 million year-over-year, with corresponding margin up 130 basis points. First, we are excited third quarter revenue for PeopleScout, our highest-margin business, surpassed pre-pandemic levels, up 9% versus Q3 2019. Our hardest hit market, travel and leisure, was up 308% during the quarter, and new business wins were up 217% year-to-date, with annualized revenue of $38 million. At PeopleManagement, revenue was down only 1% versus Q3 2019. New business wins continue to be strong for this segment, which had $22 million of new wins in August, bringing the annualized total to $86 million or up 34% year-to-date. Revenue for PeopleReady was down 16% versus Q3 2019. We have serviced this industry for 15 years and have specialized teams and processes in place to capitalize on this market expansion. For example, in PeopleReady, billable associates are up 9% in October versus the Q3 weekly average. PeopleReady weekly revenue trends in October are encouraging as well, up 17% year-over-year versus a 14% increase year-over-year in September. PeopleReady is our largest segment, representing 58% of total trailing 12-month revenue and 62% of total segment profit. Year-over-year, PeopleReady revenue was up 19% during the quarter. PeopleManagement is our second largest segment, representing 31% of total trailing 12-month revenue and 13% of total segment profit. Year-over-year, PeopleManagement revenue grew by 7% in the third quarter. PeopleScout represents 11% of total trailing 12-month revenue and 25% of total segment profit. PeopleScout revenue surpassed pre-pandemic levels with year-over-year growth of 108% in the third quarter. Since rolling out the application to associates in 2017, and our clients in 2018, associate adoption has grown to over 90%, and our JobStack client user count ended the quarter at 29,100, up 11% versus Q3 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 U.S. on-demand revenue compared to 31% in Q3 2020. We've also seen continued growth in our digital fill rates, which have increased 3 times to nearly 60% with 940,000 shifts filled via the app during the quarter. The service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch. We are seeing strong results as PeopleManagement secured $22 million of new deals in August, bringing the year-to-date annualized new business wins to $86 million, up more than 40% versus the three prior year comparable average. Our efforts are delivering results with annualized new wins of $38 million so far this year, versus the three prior year comparable average of $9 million. This has led to a rapid recovery in the third quarter, where revenue exceeded pre-pandemic levels by 9%. Total revenue for Q3 2021 was $577 million, representing growth of 22%, driven by new business wins and higher existing client volumes. We posted net income of $19 million or $0.53 per share, an increase of $10 million compared to net income of $9 million in the prior year. Adjusted net income was $21 million or an increase of $13 million, which is greater than the increase in GAAP net income, primarily due to $4 million of government subsidies in Q3 2020 that were excluded from adjusted net income. We delivered adjusted EBITDA of $29 million, an increase of $11 million and adjusted EBITDA margin was up 130 basis points, again driven by revenue growth and gross margin expansion. Gross margin of 25.4% was up 210 basis points. Our staffing segments contributed 110 basis points of margin expansion comprised of 70 basis points from lower workers' compensation costs primarily due to favorable development of prior period reserves, and the remaining 40 basis points largely due to increased sales mix from our PeopleReady segment, which has a higher gross margin profile than PeopleManagement. PeopleScout contributed 100 basis points of expansion driven by operating leverage from higher volumes. SG&A expense increased 32%, which was higher than our revenue growth of 22% due to the severity of the cost actions taken in Q3 last year. In Q3 2020, our cost management actions produced a decline in SG&A of 31%, which outpaced the revenue decline of 25% for that quarter. Q3 2020 also benefited from $4 million in government subsidies, which were excluded from our adjusted net income and adjusted EBITDA calculations. Compared to Q3 2019, SG&A as a percentage of revenue in Q3 2021 was 20 basis points lower despite having $60 million less revenue. Our effective income tax rate was 15% in Q3. PeopleReady revenue increased 19%, while segment profit increased 32% with margin of 70 basis points. PeopleReady revenue was up 17% during the first three weeks of October versus growth of 14% in September. PeopleManagement revenue increased 7%, while segment profit decreased 48% with 160 basis points of margin contraction. PeopleManagement had $86 million of annualized new business wins through September, with $9 million of new business revenue recorded this quarter and approximately $30 million expected for the full year. The decline in segment profit margin is partially due to the severity of employee-related cost reductions last year, such as cuts in pay and 401(k) match as well as additional recruiting costs to stay ahead of the holiday surge given the tight labor market. PeopleScout revenue increased 108% with segment profit up $9 million and nearly 1,300 basis points of margin expansion. Revenue benefited from strong recovery in our hardest hit industries, including travel and leisure, which grew over 300%. New business wins also contributed to revenue growth as PeopleScout delivered $38 million of annualized new wins through September this year versus $9 million in the prior three-year comparable average. New wins generated $5 million of revenue in Q3 with $28 million expected for the full year. We finished the quarter with $49 million in cash and no outstanding debt. While our profitability increased compared to Q3 last year, cash flow from operations decreased largely due to a $60 million payment in Q3 this year for 2020 employer payroll taxes that were allowed to be deferred as part of the CARES Act.

Third quarter revenue was $577 million, an increase of 22% compared to the third quarter of the prior year. Total revenue for Q3 2021 was $577 million, representing growth of 22%, driven by new business wins and higher existing client volumes. We posted net income of $19 million or $0.53 per share, an increase of $10 million compared to net income of $9 million in the prior year.

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We will get into more detail on each of these later in the call, but at a high level, include, progressing on divesting our noncore assets, including our beauty businesses and excess property holdings, enabling us to focus more time and resources on growing our core Tupperware brands and utilizing the recently authorized share repurchase facility to buy back 1 million shares during the third quarter, accelerating returns to shareholders. As a result, our net sales of $377 million reflects our core Tupperware business, which declined 13%, primarily reflecting difficult comparisons from 2020, along with COVID-related market closures in 2021 and disruption in our US and Canada business due to the implementation of a new technology platform. From an earnings standpoint, our adjusted earnings per share of $1.19 reflects our improved cost structure and new tax strategy that Sandra will describe later on the call. Remember, we grew 21% in Q3 of 2020, yet our team executed well. Now that we are six quarters into our third year turnaround plan, this midway point feels like an appropriate time to summarize the progress we have made over the last 18 months. We did this by rightsizing our cost structure, delivering $192 million in savings in 2020. Given that the legacy system was customized to the needs of our sales force for the last 20 years, the new technology solution caused disruption to our sales force in the past few months. We're not even close to the same company that we were 18 months ago, and we're proud of the progress we've made. We also intend to resume incentive trips and events that were put on hold in the past 18 months due to travel restrictions. For the year-to-date period through September, business expansion represented 21% of total sales, which is an increase compared to where we were in Quarter 2. Looking ahead, it is our goal to be a very different and even stronger company 18 months from now. I will note that we did record an approximate $148 million noncash loss within discontinued operations, primarily driven by accumulated currency translations, which is standard GAAP accounting practice. Net sales of $377 million in the quarter represents a decrease of 13% compared to last year. In the quarter, total business expansion or nondirect selling business, which includes B2B, importers, EU markets, and other business expansion efforts represented 24% of total sales. For the year-to-date period, total business expansion was 21% of total sales, up 100 basis points compared to the same year-to-date period through June. B2B partnership sales in the quarter were $16 million or 4% of total sales. Historically, our annual B2B sales have been between $30 million to $35 million. And for this fiscal year, our goal is to reach $50 million. Year-to-date through September, we've already achieved $35 million. In Asia Pacific, sales decreased by 15%. Other areas within the region were down 12% in the quarter, severely impacted by COVID, including by mandatory or strict lockdowns in Malaysia, Indonesia, and the Philippines, which significantly impacted sales efforts, particularly as digital adoption is low in many of these regions. In Europe, sales decreased by 20%. Excluding B2B, sales decreased by 17%, mainly due to the timing of a B2B deal in Italy in the prior year that was not repeated this year. In North America, sales decreased by 15% in the quarter, while US and Canada decreased by 20%. Sales in Mexico decreased by 6%, driven by a significant sales force reduction stemming from service issues during the second quarter as well as lower-than-expected recruitment due to primarily COVID restrictions. In South America, sales increased by 9%. Gross profit in the third quarter was $248 million or 65.8% of net sales, a decrease of approximately 300 basis points compared to last year. This was driven primarily by 240 basis points related to higher resin and manufacturing costs and 60 basis points related to country mix. SG&A as a percentage of sales in the third quarter was 50.6% versus 48.5% last year, an increase of 210 basis points, primarily reflecting higher logistics costs and the investments we plan to make in the second half of the year. Adjusted operating profit in the third quarter was $52 million, and as a percentage of sales, it was 14%. Adjusted EBITDA for the third quarter was $69 million versus $100 million in the prior year. Trailing 12-month adjusted EBITDA through September was $328 million. Our operating tax rate was a negative 20.4% versus the same quarter in 2020 of 28.3%. While nonrecurring in nature, this valuation allowance release is part of our strategic tax initiative that we were executing as part of our turnaround plan to help us effectively utilize our existing tax assets and achieve our overall tax rate of below 30%. Adjusted earnings per share of $1.19 for Q3 versus $1.12 last year is better by $0.07 per share. The favorable tax item just discussed contributed $0.52 of the variance and was offset by $0.41 due to lower volumes, higher resin costs and incremental investments, and $0.05 of higher inventory reserves. We also bought back shares in the quarter, which Miguel mentioned, and I will discuss more in a minute, that contributed $0.01 per share. Year to date, operating cash flow net of investing was a negative $7 million, compared to $108 million last year. I should note that our full year free cash flow target may be less than $200 million and is largely dependent on the timing of cash proceeds from the sale of our noncore assets. We ended the quarter with a healthy cash balance of $124 million, which compares to $134 million last year. And we ended the quarter with a total debt balance of $678 million. Our debt to adjusted EBITDA ratio for debt covenant purposes was $2.28 million versus 3.72% last year and well below the required covenant of 3.75%. Of the $250 million that was recently authorized by our board, we repurchased 1 million shares of common stock during the third quarter at an acquisition cost of $25 million. Although we focused on the continuing operations for the third quarter, net sales from discontinued operations were $45 million or 11% of total net sales and adjusted earnings per share, excluding the cumulative translation adjustments from discontinued operations was $0.03 or 3% of our total adjusted earnings per share. For the year-to-date period through September, net sales from discontinued operations were $140 million or 10% of total net sales and adjusted earnings per share, excluding the CTA from discontinued operations was $0.11 or 4% of total adjusted earnings per share.

From an earnings standpoint, our adjusted earnings per share of $1.19 reflects our improved cost structure and new tax strategy that Sandra will describe later on the call. Net sales of $377 million in the quarter represents a decrease of 13% compared to last year. Adjusted earnings per share of $1.19 for Q3 versus $1.12 last year is better by $0.07 per share. Although we focused on the continuing operations for the third quarter, net sales from discontinued operations were $45 million or 11% of total net sales and adjusted earnings per share, excluding the cumulative translation adjustments from discontinued operations was $0.03 or 3% of our total adjusted earnings per share.

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Core income was $735 million, or $2.70 per share, and net income for the year was $690 million, or $2.53 per share. This compares to $979 million and $1 billion in 2019, respectively. The shortfall from the prior year primarily attributed to the impact of the elevated pre-tax catastrophe losses of $550 million, which included our reserve charge for the pandemic of $195 million that we announced in the second quarter of 2020 as compared to $179 million of catastrophe losses in 2019. On the other hand, our P&C underlying underwriting profit for the full-year increased 38% to $498 million as the underlying combined ratio improved 1.7 points to 93.1%. Our underlying loss ratio improved 0.8 points from 2019. The expense ratio improved 0.9 points from 2019 to 32.6%, which reflected our disciplined approach to managing expenses as we grow the business and continue to make meaningful investments in talent, technology and analytics. The all-in combined ratio was 100.9% with 7.7 points of catastrophe losses and flat prior period development. Gross written premium growth ex-captives grew 9% in 2020 despite the impacts of the economic downturn, which reduced our exposure almost 3 points from the prior year. Net written premium increased 6% for the full-year. We successfully achieved rate increases of 11% for the full-year, more than double our 2019 rate increases, and new business was up 6% for the year. The 11% of written rate we achieved in 2020 was 8 points on an earned basis for the full-year, while our long run loss cost trends were about 4 points. Core income for the quarter was a record $335 million, $1.23 per share, an increase of $70 million over the prior year fourth quarter. Net income for the quarter was $387 million, or $1.42 per share, and was an increase of $114 million over 2019's fourth quarter. The P&C underlying combined ratio was 92.7%, a significant improvement over last year's fourth quarter results and in line with Q3 results, both of which are the best two underlying combined ratios CNA has had in over 10 years. The all-in combined ratio was 93.5%, slightly more than 2 points of improvement compared to the fourth quarter a year ago, driven by commercial, which improved 4.4 points to 96.2% and international, which improved 3.4 points to 96.9%. Although specialty had less favorable prior period development in the fourth quarter a year ago, they had a very strong combined ratio of 89.4%. Pre-tax catastrophe losses were benign at $14 million, or 0.8 points of the combined ratio. Our estimated ultimate losses from COVID-19 are unchanged at $195 million as claim activity continues to unfold slowly, as we expected. The underlying loss ratio was 60.5% for the quarter, a 0.4 point year-over-year improvement and consistent with Q3. Specialty was 60%, commercial was 61.1%, and international was 60.1%. In the fourth quarter, the expense ratio was 32%, 1.7 points better than the prior year quarter as we maintained a disciplined approach to managing expenses as we continue to grow the business. Gross written premium ex our captive business grew 15% in the quarter with significant contributions across all operating segments, with specialty at plus 17% and commercial at plus 13%. International was also strong at plus 14%, fueled by strong rate in the quarter in our London operation and strong rate and new business growth in our Canadian operations. Net written premium for total P&C increased 12% in the quarter. In the quarter, the hardening market persisted as evidenced by our continued double-digit rate achievement of plus 12%, while increasing our retention by 3 points to 85% from the third quarter. We achieved strong rate across the board with specialty at plus 13%, commercial at plus 12%, and international at plus 18%. New business growth was strong in the quarter, 17% higher compared to last year's fourth quarter. Specialty grew 23% and commercial 22%, while international remained slightly negative. Finally, we completed our annual asbestos and pollution reserve review, which resulted in a non-economic after-tax charge of $39 million, which compares to last year's after-tax charge of $48 million, and we also had positive core income of $26 million from our life and group operations. Core income for the quarter was a record at $335 million, 26% higher than the prior year quarter results. With a core ROE of 11.4% for the period, we are certainly pleased with the close to 2020 and the significant progress made to build upon our underlying underwriting profitability. Our fourth quarter expense ratio of 32% reflects significant progress on a year-over-year basis, as well as on a sequential quarter basis during 2020. The expense ratio improvement was reflected in all three of our P&C business segments, especially in international notably recording improvements of 2 and 3 points, respectively, versus the prior year quarter. Turning to net prior period development and reserves, for the fourth quarter overall P&C net prior period development was flat compared to 2.2 points of favorable development in Q4 2019. For the full-year 2020, overall development was essentially flat versus 0.7 points of favorable development in 2019. This segment produced core income of $26 million in the quarter and $9 million for the full-year. This compares with Q4 2019 loss of $4 million and a full-year 2019 loss of $109 million. Our Corporate segment produced a core loss of $60 million in the fourth quarter and $108 million for the full-year. This compares to a $68 million loss in Q4 2019 and $102 million loss for the full-year 2019. The results of the review included a non-economic after-tax charge of $39 million driven by the strengthening of reserves associated with higher defense and indemnity costs on existing claims, and this compares to last year's non-economic charge of $48 million. Following this review, we have incurred cumulative losses of $3.3 billion, well within the $4 billion limit of our loss portfolio transfer cover that we purchased in 2010, and paid losses are now at $2.1 billion. This non-core portfolio has been in runoff for over 10 years and the transaction enables us to strengthen our focus on going forward operations while reducing potential future reserve volatility. Pre-tax net investment income was $555 million in the fourth quarter, compared with $545 million in the prior year quarter. As a point of reference, pre-tax effective yield on our fixed income holdings was 4.4% at Q4 2020 compared to 4.7% as of Q4 2019. Pre-tax net investment income for the full-year was $1.9 billion, compared with $2.1 billion in the prior year. While lower interest rates have certainly been a headwind for our net investment income, it's also driven the increase of our unrealized gain position on our fixed income portfolio, which stood at $5.7 billion at year end, up from $5 billion at the end of the third quarter and $4.1 billion at the end of 2019. Fixed income invested assets that support our P&C liabilities had an effective duration of 4.5 years at quarter end. The effective duration of the fixed income assets that support our Life & Group liabilities was 9.2 years at quarter end. At quarter end, shareholders' equity was $12.7 billion, or $46.82 per share, reflective of the increase in our unrealized gain position during the quarter. Shareholders' equity excluding accumulated other comprehensive income was $11.9 billion, or $43.86 per share. Book value per share ex-AOCI and excluding the impact of dividends paid has grown by 6% over the last year. We have a conservative capital structure with a leverage ratio below 18% and continue to maintain capital above target levels in support of our ratings. In the fourth quarter, operating cash flow was strong at $367 million, compared to $160 million during Q4 2019. On a full-year basis, operating cash flow was $1.8 billion versus $1.1 billion for 2019, a significant increase substantially driven by the improvement in our current accident year underwriting profitability and a lower level of paid losses. Finally, we are pleased to announce an increase in our regular quarterly dividend to $0.38. In addition, notwithstanding an extraordinary year in 2020, including the elevated impact of catastrophe on our results, we were pleased to declare a special dividend of $0.75 per share.

Core income was $735 million, or $2.70 per share, and net income for the year was $690 million, or $2.53 per share. Core income for the quarter was a record $335 million, $1.23 per share, an increase of $70 million over the prior year fourth quarter. Net income for the quarter was $387 million, or $1.42 per share, and was an increase of $114 million over 2019's fourth quarter. At quarter end, shareholders' equity was $12.7 billion, or $46.82 per share, reflective of the increase in our unrealized gain position during the quarter.

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We're very grateful for the more than 15 years of outstanding work he dedicated to Copa. Daniel has over 12 years of experience with the company in many areas, including airports, scheduling and most recently, fleet and network planning. In terms of capacity, we reached 48% of second quarter 2019 ASMs compared to 39% in the first quarter. Load factor came in at 77%, which is an improvement of eight percentage points compared to the first quarter. Revenues increased by 64% over the previous quarter to $304 million, as a result of the additional capacity, higher load factors and improved yields. The additional capacity also allowed us to reduce our ex fuel CASM from $0.085 in Q1 to $0.076 in Q2. We reported an operating profit of $8.7 million in the quarter. Excluding a $10.4 million passenger revenue adjustment the company would have reported an operating loss of $1.7 million. Cash accretion averaged $21 million per month, which was better than our expectations, primarily due to stronger sales in the quarter. We ended the quarter with a cash balance of $1.3 billion and total liquidity of over $1.6 billion. In terms of our operations and despite the complexity imposed by the multiple biosafety protocols, we're pleased to report an on-time performance of 92% for the quarter and a flight completion factor of 99.5%, which again, places us among the best in the world and is a true testament to our employees' continuous commitment to providing a world-class product to our passengers. We can report that it's now operating six 737-800s compared to the four it operated pre-pandemic. Our capacity came in at $2.9 billion available seat miles, which amounts to about 48% of the capacity operated during the second quarter of 2019. Load factor came in at an average of 77% for the quarter. We reported a net profit of $28.1 million or $0.66 per share. Excluding special items, we would have reported a net loss of $16.2 million or a loss of $0.38 per share. Special items for the quarter are comprised mainly of an unrealized mark-to-market gain of $33.9 million, related to the company's convertible notes issued in 2020 and $10.4 million in revenues related to unredeemed tickets, which corresponds to sales made during 2019 and early 2020. We reported a quarterly operating profit, which came in at $8.7 million. On an adjusted basis, not including the $10.4 million in unredeemed ticket revenues, we had an adjusted operating loss of $1.7 million for the quarter. It's worth noting that we achieved this result while operating at 48% of our pre-COVID capacity. Unit costs, excluding fuel for the second quarter came in better than the first quarter at $0.076 per ASM, driven by quarter-over-quarter capacity growth as well as our continued focus on maintaining the savings achieved during the past year. We continue with our cost savings initiatives, and we are targeting to achieve our unit cost below $0.06 once we reach 100% of our pre-COVID-19 capacity. Aside from our cost performance, our operating results for the quarter were driven primarily by our yields, which at $0.119 on an underlying basis, came in 1% better than those in Q2 2019. We also achieved cash accretion of approximately $21 million per month for the quarter, which is ahead of our expectation and driven mainly by increased sales during the period as well as some timing of operational cash outflows. As of the end of the second quarter, we had assets of close to $4.1 billion and our cash, short and long-term investments ended at $1.3 billion. We also ended the quarter with an aggregate amount of $345 million in unutilized committed credit facilities, which added to our cash brought our total liquidity to more than $1.6 billion. In terms of debt, we ended the quarter with $1.6 billion in debt and lease liabilities, similar levels to the ones reported for the end of the first quarter. And in the month of July, we delivered the last remaining Embraer-190 aircraft in our fleet. During the month of July, we also entered into an agreement for the sale of six 737-700s and decided to keep in our fleet the remaining six 737-700s. We ended the second quarter with 81 aircraft. 68 737-800s and 13 737-MAX9s. In these figures, we include our 737-800s that were sent to temporary storage during 2020. During the fourth quarter, we expect to receive two more 737 MAX 9s and considering we are now keeping the six 737-700s, we expect to end the year with a total of 89 aircraft. We -- We expect capacity to be approximately 70% of Q3 2019 levels at about $4.5 billion ASMs, revenues to be approximately 58% of Q3 2019 levels at about $415 million. We expect our CASM ex fuel to be approximately $0.66, a decrease of 14% versus the second quarter. Given these operating assumptions, an all-in fuel price of $2.15 per gallon, as well as the incremental capex that we will incur during the quarter to reactivate our fleet, we expect to be cash neutral for the third quarter.

We reported a net profit of $28.1 million or $0.66 per share. Excluding special items, we would have reported a net loss of $16.2 million or a loss of $0.38 per share. We expect our CASM ex fuel to be approximately $0.66, a decrease of 14% versus the second quarter.

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In Q1 revenues of $506 million were above the midpoint of our guidance for the quarter led by continued global strength in our semi-cap sector, which grew 37% year-over-year. Our non-GAAP gross margins of 8.3%, non-GAAP operating margins of 2.3% and earnings per share of $0.21 were all in line with our forecast guidance. We had another strong quarter of working capital results as the cash conversion cycle was in 65 days, which enabled $37 million of operating cash flow and $30 million of free cash flow for the quarter. Our pipeline continues to grow, and our trailing four quarter wins are over $800 million, which is a new record for our organization. Total Benchmark revenue was $506 million in Q1, which was slightly above the midpoint of our guidance. Semi-Cap revenues were up 12% in the first quarter and up 37% year-over-year from continued demand strength from our wafer fab equipment customers, who are continuing to boost capacity to support greater chip output. A&D revenues for the first quarter decreased 19% sequentially from further deterioration in demand from our commercial aerospace customers, with no signs of demand recovery in the near future. As a reminder, revenues to commercial aerospace customers was approximately 25% of our 2020 A&D sector revenue. Overall, the higher value markets represented 80% for our first quarter revenue. Our traditional markets represented 20% of first quarter revenues. Our top 10 customers represented 44% of sales in the first quarter. Our GAAP earnings per share for the quarter was $0.22. Our GAAP results included restructuring and other one-time costs, totaling $1.6 million related to reductions in force and other restructuring activities around our network of sites, $3.4 million of insurance recovery. For Q1, our non-GAAP gross margin was 8.3%. This is 10 basis points better than the midpoint of our Q1 2021 guidance and 10 basis points less than our year-over-year comparison, which has stronger higher value market mix. On a sequential basis, we were lower by 130 basis points, as a result of our lower revenue, reduced absorption, higher discrete medical claims activity and higher variable compensation. Our SG&A was $30.5 million, a decrease of $1.9 million sequentially due to lower variable compensation costs. Non-GAAP operating margin was 2.3%. In Q1 2021, our non-GAAP effective tax rate was 16.9%, as a result of a mix of profits between the US and foreign jurisdictions, Non-GAAP earnings per share was $0.21 for the quarter, which is a $0.01 higher than the midpoint of our Q1 guidance and non-GAAP ROIC was 6.4%. Our cash conversion cycle days were 65 in the first quarter, an improvement of six days from the fourth quarter from the timing of inventory receipts, shipments to customers and collections within the quarter. Our cash balance was $400 million at March 31 with $153 million available in the US. Our cash balances grew $4 million sequentially because of our strong cash conversion cycle performance, even while we have invested in inventory for future ramps. We generated $37 million cash flow from operations in Q1 and our free cash flow was $30 million. At March 31, we had $135 million outstanding on our term loan with no borrowings outstanding on our available revolver. In Q1, we can pay cash dividends of $5.8 million and use $13.1 million to repurchase 441,600 shares. As of March 31, we had approximately 191 million remaining in our existing share repurchase authorization. We expect revenue to range from $515 million to $555 million, which at the midpoint, represents a 9% year-over-year improvement. We expect that our gross margins will be 8.5% to 8.7% for Q2 and SG&A will range between $31 million and $32 million. We still expect gross margins for the full year to be at least 9%. Implied in our guidance is a 2.5% to 2.9% non-GAAP operating margin range for modeling purposes. We expect to incur restructuring and other non-recurring costs in Q2 of approximately $0.8 million to $1.2 million. Our non-GAAP diluted earnings per share is expected to be in the range of $0.23 to $0.29 for a midpoint of $0.26. Based on the strength of new bookings, execution of new program ramps and continued growth in our Semi-Cap sector, we are increasing our capex plans for the year to be between $50 million to $60 million. We estimate that we will generate approximately $80 million to $100 million of cash flow from operations for the fiscal year 2021. Other expenses net is expected to be $2.5 million, which is primarily interest expense related to our outstanding debt. We expect that for Q2, our non-GAAP effective tax rate will be between 19% and 21% because of the distribution of income around our global network. The expected weighted average shares for Q2 are $36.5 million. For the second quarter, we expect revenue to be up sequentially by about $30 million. With this current demand strength and signals from our customers, we are revising our outlook for this sector upward from 10% growth to greater than 20% revenue growth over 2020 levels. Growth is expected in Q2, even though demand for commercial aerospace programs, which was about 25% of the sector demand in 2020, continues to deteriorate. This recognition puts us in the top 25% of companies rated. To that point, in Q1, about 50% of our new wins have an engineering component. Our differentiated offerings in support of the Semi-Cap market and our new program wins have enabled significant growth in the Semi-Cap vertical, which we expect will now grow over 20% this year. This strength, coupled with new programs and high-performance computing in mid-2021 and additional new program ramps in the higher value markets, gives us confidence that we can achieve greater than 5% growth in 2021. Even though we continue to invest in our business, we are committed to driving an efficient shared services organization and continuing our focus on expense management to maintain our SG&A spend at or below 6% of revenue. With revenue growth from increasing demand in new ramps, we still expect to achieve 9% gross margin for the full year. While we are still forecasting cash flows from operations for the full year between $80 million and $100 million.

In Q1 revenues of $506 million were above the midpoint of our guidance for the quarter led by continued global strength in our semi-cap sector, which grew 37% year-over-year. Our non-GAAP gross margins of 8.3%, non-GAAP operating margins of 2.3% and earnings per share of $0.21 were all in line with our forecast guidance. Total Benchmark revenue was $506 million in Q1, which was slightly above the midpoint of our guidance. Our GAAP earnings per share for the quarter was $0.22. In Q1 2021, our non-GAAP effective tax rate was 16.9%, as a result of a mix of profits between the US and foreign jurisdictions, Non-GAAP earnings per share was $0.21 for the quarter, which is a $0.01 higher than the midpoint of our Q1 guidance and non-GAAP ROIC was 6.4%. We expect revenue to range from $515 million to $555 million, which at the midpoint, represents a 9% year-over-year improvement. Our non-GAAP diluted earnings per share is expected to be in the range of $0.23 to $0.29 for a midpoint of $0.26.

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In the first half of 2021, IFF achieved $5.6 billion in sales representing 8% growth or 5% on a currency neutral base. For comparable purposes and to reflect the portfolio differences between our peers, I want also to highlight that both businesses performed well with legacy IFF achieving a very strong high-single digit growth rate with nearly 100 basis points of EBITDA margin expansion, and legacy N&B growing in mid-single digits. In the first half combined EBITDA growth was a solid 6% and a combined EBITDA margin of 22.5%. Importantly, our strong free cash flow of $533 million enables IFF to maintain significant financial flexibility, including our efforts to delever. We remain on track to achieve our deleveraging targets of under three times by year three post transaction close and we improved our net debt to credit adjusted EBITDA leverage on 4.3 times in the first quarter to 4.2 times in the second quarter. Similar to the first quarter, our Asian markets continue to perform well achieving a 5% increase in sales led by double-digit growth in India and a mid single-digit performance in China. Latin America, our strongest performing region, we achieved 12% sales growth driven by double-digit performance in nearly all of IFF's business segments and underpinned by favorable currency movements. We achieved a 2% increase in sales in the first half as COVID 19 related restrictions eased. I will provide a more detailed look at our sales performance across IFF's key business segments through the first half of 2021, particularly those that significantly contributed to our overall 8% sales growth, or 5% growth on a currency neutral basis that I mentioned earlier. Nourish achieved currency-neutral growth of 6% driven by a strong performance in flavors ingredients and Food design. Similar to the first quarter, Scent remains our largest sales driver on a year-to-date basis, achieving 8% of currency-neutral growth led by a strong performance in Fine Fragrance and Consumer Fragrance. However, on a year-over-year basis, EBITDA grew about 7%. Our leading growth and profit -- profitability driver Scent achieved an operating EBITDA margin increase of 170 basis points and absolute EBITDA grew nearly 20%. Lastly, in Pharma Solutions, the segment's 1% growth was driven primarily by improvements in industrials, so our margin was significantly challenged due to higher energy costs, lower manufacturing utilization and the result in the weather related raw material shortages. Now on slide 10 and 11, I would like to discuss our continued synergy progress in connection with our merger with N&B. From a revenue synergy perspective, we remain on track to meet our $20 million revenue synergy target this year. Coupled with continued demand and positive feedback from our customers, we are also confident in our ability to meet our 2024 run rate revenue synergy target of approximately $400 million. This opportunity represents more than $5 million in annual sales potential. We made significant strides in the second quarter from an integration perspective, ramping up our cost synergies from a few million dollars in the first quarter to a total of approximately $15 million on the first-half basis. I'm very encouraged by the continued progress on this front and we are on track to deliver at least $45 million cost synergies for the full year, and ultimately our three-year run rate cost synergy target of $300 million. In Q2, IFF generated approximately $3.1 billion in sales, representing a 13% year-over-year increase or 9% on a combined currency-neutral basis, primarily driven by double-digit growth in our Nourish and Scent divisions and a strong Health & Biosciences performance. This enabled us to deliver adjusted operating EBITDA growth of 7%. We also achieved strong adjusted earnings per share, excluding amortization of $1.50 for the second quarter. Total company sales were up 8% on a two-year basis with double-digit growth in Nourish and Pharma Solutions, a high single-digit increase in Scent, and mid single-digit growth in H&B. Sales for the division increased by 15% year-over-year or 11% on a currency neutral basis, driven by robust double-digit growth in flavors with Frutarom contributing to growth, and a strong ingredients performance particularly from our protein solutions, cellulosic, locust bean gum, and Food Protection categories. Nourish also saw a strong rebound in Food design including a very strong 24% growth in foodservice as pandemic related restrictions continue to ease and consumer behavior and away from home channels continue to normalize. Although we are pleased to have delivered adjusted operating EBITDA growth of 7%. Our Health & Biosciences division saw year-over-year growth of 9%, or 5% on a currency neutral basis, led by double-digit growth in Home and Personal Care. Health & Biosciences also delivered adjusted operating EBITDA growth of 5%. Our Scent division generated $550 million in total sales representing year-over-year growth of 16%, or 13% on a currency neutral basis. Scent also achieved adjusted operating EBITDA growth of 34% with margin expansion of 300 basis points, driven by robust volume mix and productivity, which did offset some inflationary pressures. While Consumer Fragrances was down slightly this quarter against a very strong double-digit year ago comparison, a significant rebound in Fine Fragrances which grew by approximately 85% led by new wins and improved volumes more than offset Consumer Fragrance's more modest performance due to last year's double-digit growth. On a two-year basis, growth was solid at about 3.5%. As you will see in the first half IFF generated $533 million in free cash flow, with free cash flow from operations totaling $698 million, driven by an improvement in core working capital. CapEx for the first half totaled $165 million or approximately 3% of sales as we continue to invest in growth accretive areas that we believe will ultimately prove rewarding over the long term as well as in integration-related activities. In the first half, we also delivered $274 million in dividends to our shareholders. From a leverage perspective, our cash and cash equivalents finished at $935 million with gross debt holding steady at $12 billion. Our trailing 12 month credit adjusted EBITDA totaled $2.61 billion, and our net debt to credit adjusted EBITDA was 4.2 times. For the full year 2021, we are once again increasing our forecast for total revenues with an expectation to achieve 2021 total revenues of approximately $11.4 billion, which equates to about 7% growth. This is up from our previous $11.25 billion or 6% growth as we have confidence in our sales momentum continuing into Q3 and through the rest of the year. Breaking down the contributors of growth, we expect currency-neutral sales to be about 5% and FX benefits to be approximately 2%. At the same time, we now see full-year 2021 adjusted EBITDA margin at about 22.5% versus approximately 23% previously. The combination of unfavorable price to raw material costs and higher logistics costs are negatively impacting operating margin in 2021 by more than 100 basis points. However, through higher sales, strong cost discipline, and our focus on unlocking additional cost synergies, we believe we will end up only about 50 basis points lower than our previous expectations with higher revenues and a roughly similar dollar EBITDA level.

However, on a year-over-year basis, EBITDA grew about 7%. This enabled us to deliver adjusted operating EBITDA growth of 7%. We also achieved strong adjusted earnings per share, excluding amortization of $1.50 for the second quarter. Although we are pleased to have delivered adjusted operating EBITDA growth of 7%. CapEx for the first half totaled $165 million or approximately 3% of sales as we continue to invest in growth accretive areas that we believe will ultimately prove rewarding over the long term as well as in integration-related activities. For the full year 2021, we are once again increasing our forecast for total revenues with an expectation to achieve 2021 total revenues of approximately $11.4 billion, which equates to about 7% growth.

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In our efforts to continue to enhance shareholder value, Prosperity repurchased 2,092,000 shares of its common stock at an average weighted price of $52.59 per share during the first quarter of 2020. The net income was $130 million for the three months ended March 31, 2020, compared with $82 million for the same period in 2019. Our earnings per diluted common share were $1.39 for the three months ended March 31, 2020, compared with $1.18 for the same period in 2019, a 17.8% increase. For the first quarter of 2020, on an annualized basis, return on average assets was 1.67%, return on average common equity was 8.86% and return on average tangible common equity was 20.1%. Prosperity's efficiency ratio, excluding net gains on the sale of assets and taxes, was 42.9% for the three months ended March 31, 2020. Our loans at March 31, 2020, were $19.1 billion, an increase of $8.7 billion or 83.7% compared with the $10.4 billion at March 31, 2019. Linked quarter loans increased $281 million, 1.5% or 6% annualized compared with the $18.8 billion at December 31, 2019. Our deposits at March 31, 2020, were $23.8 billion, an increase of $6.6 billion or 38.5% compared with the $17.1 billion at March 31, 2019. Our linked quarter deposits decreased $373 million or 1.5% from the $24.2 billion at December 31, 2019. Excluding deposits we assumed in the merger and new deposits we generated at the acquired banking centers since November 1, 2019, deposits at March 31, 2020, grew $1 billion or 6% compared with March 31, 2019, and grew $162 million, nine basis points, or 3.6% compared annualized with December 31, 2019. Our nonperforming assets totaled $67 million or 25 basis points of quarterly average interest-earning assets at March 31, 2020, compared with $40 million or 21 basis points of quarterly average interest-earning assets at March 31, 2019, and $62 million or 25 basis points of quarterly average interest-earning assets at December 31, 2019. During the first quarter of 2020, Prosperity increased its allowance for credit losses to $327 million from $87 million in the fourth quarter of 2019 after adopting accounting standard ASU 2016-13, also known as CECL. Our allowance for credit losses to total loans excluding the warehouse purchase program loans, now stands at 1.88% compared with 51 basis points at December 31, 2019. Net interest income before provision for credit losses for the three months ended March 31, 2020, was $256 million compared to $154.9 million for the same period in 2019, an increase of $101.1 million or 65.3%. The increase was primarily due to the merger with LegacyTexas in November 2019 and $28.5 million in loan discount accretion in the first quarter of 2020. The net interest margin on a tax equivalent basis was 3.81% for the three months ended March 31, 2020, compared to 3.2% for the same period in 2019 and 3.66% for the quarter ended December 31, 2019. Excluding purchase accounting adjustments, the core net interest margin for the quarter ended March 31, 2020, was 3.36% compared to 3.16% for the same period in 2019 and 3.26% for the quarter ended December 31, 2019. Noninterest income was $34.4 million for the three months ended March 31, 2020, compared to $28.1 million for the same period in 2019. Noninterest expense for the three months ended March 31, 2020, was $124.7 million compared to $78.6 million for the same period in 2019. For the second quarter 2020, we expect normalized noninterest expense to range around $120 million to $125 million. In addition to this, we expect $3 million to $5 million in onetime merger expenses related to upcoming June conversion. To date, we have already realized some cost savings from the merger and eventually expect additional cost savings of approximately $8 million to $9 million per quarter. Combined, this will be in line with announced 25% cost savings. The efficiency ratio was 42.9% for the three months ended March 31, 2020, compared to 42.94% for the same period in 2019 and 58.07% for the three months ended December 31, 2019, which included $46.4 million in merger-related expenses. The bond portfolio metrics at 3/31/2020, showed a weighted average life of 3.08 years and projected annual cash flows of approximately $2.2 billion. Our nonperforming assets at quarter end March 31, 2020, totaled $67,179,000 or 35 basis points of loans and other real estate. The March 31, 2020, nonperforming assets total was made up of $61,449,000 in loans, $278,000 in repossessed assets and $5,452,000 in other real estate. Of the $67,179,000 in nonperforming assets, $13,187,000 or 20% are energy credits, $12,869,000 of which are service company credits and $318,000 are production company credits. Net charge-offs for the three months ended March 31, 2020, were $801,000. The average monthly new loan production for the quarter ended March 31, 2020, was $476 million. Loans outstanding at March 31, 2020, were $19.127 billion. The March 31, 2020, loan total is made up of 36% fixed rate loans, 36% floating rate loans and 28% that reset at specific intervals.

Our earnings per diluted common share were $1.39 for the three months ended March 31, 2020, compared with $1.18 for the same period in 2019, a 17.8% increase.

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Full year net sales were $19.1 billion. That's up 4% year-on-year and included a 2 point drag from currency rates. Organic sales grew 6%, with healthy underlying performance and increased demand related to COVID-19. Volumes were up 4%, and net selling prices and product mix each increased 1%. Full year adjusted gross margin was 37.1%, up 210 basis points year-on-year. Adjusted gross profit increased 10%. We generated $575 million of cost savings from our FORCE and restructuring programs. For 2021, we're targeting $400 million to $460 million in total cost savings. Commodities were favorable by $175 million in 2020 although they turned inflationary in the fourth quarter. We're planning for commodity inflation of $450 million to $600 million in 2021. Moving further down the P&L, between the line spending was up 110 basis points as a percent of sales. That was driven by advertising, which was up 90 basis points. Adjusted operating margin was 18.7%, up 90 basis points, and adjusted operating profit grew 9%. In terms of Company profitability for 2021, the midpoint of our planning assumptions implies a 70 basis point decline in adjusted operating margin. Full year adjusted earnings per share were $7.74, up 12%. Our October guidance was for earnings of $7.50 to $7.65. Now let's turn to cash flow [Technical Issues] Cash provided by operations was an all-time record $3.7 billion, up $1 billion year-on-year, reflecting outstanding working capital performance and strong earnings. Capital spending was $1.2 billion in 2020, in line with plan and the prior year. We plan to spend between $1.2 billion and $1.3 billion in 2021, including activity for our restructuring program and a pickup in growth projects. On capital allocation, dividends and share repurchases totaled $2.15 billion. That's the 10th consecutive year we've returned at least $2 billion to shareholders. We're about 85% to 90% through the total pre-tax charges, which we've increased somewhat to reflect delays as a result of COVID-19 and costs for additional savings opportunities. So far, we've generated $420 million of savings and expect to achieve between $540 million and $560 million of savings by the end of 2021. Our original savings estimate was $500 million to $550 million. Finally, at this point cash payments are about 75% to 80% complete. Looking more closely at our business segments, we saw excellent performance in Personal Care, with 5% organic sales growth and strong share performance. In North America, organic sales rose 6%, driven by broad-based growth in baby and child care. In D&E markets, personal care organic sales were also up 6% despite volatile market conditions. Organic sales were up 13% in Consumer Tissue and down 7% in K-C Professional. Importantly, we grew or maintained market share in approximately 60% of the 80 key cohorts that we track. Our plans call for total sales growth of 4% to 6% in 2021, and that includes 2 points from the Softex acquisition and a 1 to 2 point benefit from currencies. We expect to grow organic sales 1% to 2%. On the bottom line, we're targeting adjusted earnings per share of $7.75 to $8. That's even to up 3% year-on-year. So on that basis, using the midpoint of our 2021 outlook, we're projecting to grow organic sales approximately 4% and to increase adjusted earnings per share 7% on average over that two-year period.

Looking more closely at our business segments, we saw excellent performance in Personal Care, with 5% organic sales growth and strong share performance. Our plans call for total sales growth of 4% to 6% in 2021, and that includes 2 points from the Softex acquisition and a 1 to 2 point benefit from currencies. On the bottom line, we're targeting adjusted earnings per share of $7.75 to $8.

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Fourth quarter revenue was $271 million, compared to $247 million in Q3 and $299 million in Q4 of last year. Our revenue guidance coming into the fourth quarter was a range of $225 million to $255 million. So compared to guidance, revenues were better than what we projected as we had a true-up of about $25 million in the quarter related to Q3 shipments, which was about $15 million higher than the true-up that we had last quarter, and with most of that improvement coming from TVs and set-top boxes, and PCs. Total company revenue in Q4 increased sequentially by $24 million compared to Q3, as we benefited from higher unit volumes in TVs, set-top boxes, DMAs and PCs, along with the higher true-up that I just discussed. Now looking at Q4 on a year-over-year basis, total company revenue is down by $28 million from last year's Q4 and we can attribute that mainly to COVID-19, especially in products and services, which were down by about $20 million or nearly 60% below last year. The composition of Q4 revenue was $257 million in licensing and $14 million in products and services. Broadcast represented about 47% of total licensing in the fourth quarter. Broadcast revenues increased by about 2% year-over-year, helped by the higher true-up related to the Q3 shipments and also driven by higher adoption in TVs and set-top boxes. On a sequential basis, broadcast was up by about 35% due to higher volume in TVs and set-top boxes along with higher recoveries and the higher true-up. Mobile represented approximately 15% of total licensing in Q4. Mobile was down by about 13% over last year due to lower recoveries, but partially offset by higher adoption of Dolby Technologies. For the sequential comparison, I should point out that last quarter Q3, Mobile was about 33% licensing, which was higher than normal, and that was due to timing of revenue under customer contracts, so we came into Q4 expecting Mobile revenue to decline this quarter and return to a more normalized percentage of revenue, which is what it did. So accordingly Mobile revenue was down sequentially by about 50%, and that was primarily due to timing of revenue under customer contracts. Consumer electronics represented about 13% of total licensing in the fourth quarter. On a year-over-year basis, CE licensing was down by about 8%, mainly due to lower recoveries. On a sequential basis, CE was about 68% higher than Q3. And as a reminder, Q3 was lower than usual and only 9% of licensing because of timing under contract. PC represented about 12% of total licensing in Q4. PC was higher than last year by about 26%, helped by the higher true-up and also because of the increased adoption of Dolby Technologies. And sequentially, PC was up by about 32% that's for similar reasons. Other markets represented about 13% of total licensing in the fourth quarter and they were down by about 19% year-over-year due to significantly lower Dolby Cinema box office share and that's because of the COVID restrictions and lack of big titles, and also because of lower revenues from gaming due to console life cycles and/or recoveries in automotive. On a sequential basis, other markets was up by about 32%, driven by higher revenue from gaming and from via admin fees and that's the patent pool that we administered. Beyond licensing, our products and services revenue was $14.3 million in Q4, compared to $11.8 million in Q3 and $34 million in last year's Q4. Total gross margin in the fourth quarter was 84.3% on a GAAP basis and 85.1% on a non-GAAP basis. Products and services gross margin on a GAAP basis was minus $15.5 million in the fourth quarter and a large portion of that consisted of charges for excess and obsolete inventory associated with conferencing hardware and that relates back to what I just said a minute ago, about our plans in that space. Going forward into Q1, we anticipate that products and services margin will still be negative, but more along the lines of around minus $3 million or minus $4 million. Products and services gross margin on a non-GAAP basis was minus $14.1 million in the fourth quarter, and my comments here are similar to what I just said for GAAP gross margins. Operating expenses in the fourth quarter on a GAAP basis were slightly above the high-end of the range that we had guided, coming in at a $198.7 million, compared to $182.9 million in Q3. Operating expenses in the fourth quarter on a non-GAAP basis were $176.5 million, which is within our range and that was compared to $159.2 million in the third quarter, and basically the same comments that I made in GAAP apply here as well. Operating income in the fourth quarter was $30.1 million on a GAAP basis or 11.1% of revenue, compared to $51.2 million or 17.1% of revenue in Q4 of last year. Operating income in the fourth quarter on a non-GAAP basis was $54.3 million or 20% of revenue, compared to $77.6 million or 26% of revenue in Q4 of last year. Income tax in Q4 was 21.8% on both the GAAP and non-GAAP basis. Net income on a GAAP basis in the fourth quarter was $26.8 million or $0.26 per diluted share, compared to $43.9 million or $0.43 per diluted share in last year's Q4. Net income on a non-GAAP basis in the fourth quarter was $45.8 million or $0.45 per diluted share, compared to $67.6 million or $0.66 per diluted share in Q4 of last year. During the fourth quarter, we generated about $113 million in cash from operations, which compares to about $130 million generated in last year's fourth quarter. We ended the fourth quarter with nearly $1.2 billion in cash and investments. During Q4, we bought back about 640,000 shares of our common stock and ended the quarter with about $187 million of stock repurchase authorization still available to us. We also announced today a cash dividend of $0.22 per share. Total revenue in FY '20 was $1,162 million that compares to $1,241 million in the prior year with a year-over-year decline due to the impact from COVID-19. Within total revenue, licensing was $1,079 million, which was down about $28 million from last year due to lower consumer activity because of the pandemic, while products and services revenue was $83 million for the year, down about $51 million from last year due mainly to lower demand from the cinema industry because of restrictions brought on also by the pandemic. Operating income for the full-year FY '20 was $219 million on a GAAP basis or about 19% of revenue and operating income on a non-GAAP basis was $318 million or about 27% of revenue. Net income on a GAAP basis was $231 million or $2.25 per diluted share and net income on a non-GAAP basis was $305 million or $2.97 per diluted share. And cash flow from operations for the full-year was $344 million and that's slightly up from the previous year, where cash flow from operations was $328 million. And then for that same reason, we are anticipating cinema product sales to be down year-over-year. In the first quarter of FY '21, we anticipate that total revenue could range from $330 million to $360 million. Within that, we estimate that licensing could range from $320 million to $345 million, while products and services is projected to range from $10 million to $15 million. So with that in mind, and based on what we currently see and having just gone over the Q1 revenue outlook, we currently see our Q2 revenue scenario looking like a range of about $270 million to $300 million. And doing the math for you on the first half of FY '21 by combining the Q1 and Q2 figures that I just went over, our current outlook scenario assumes a first half FY '21 revenue range of $600 million to $660 million. So let me now finish up by providing the outlook on the rest of the P&L for Q1, already highlighted the revenue range scenario of $330 million to $360 million. So Q1 gross margin on a GAAP basis is estimated to range from 90% to 91%, and the non-GAAP gross margin is estimated to range from 91% to 92%. Within that, products and services gross margin is estimated to range from minus $3 million to minus $4 million on a GAAP basis, and from minus $2 billion to minus $3 million on a non-GAAP basis. Operating expenses in Q1 on a GAAP basis are estimated to range from $207 million to $219 million. Included in this range is approximately $7 million to $9 million of restructuring charges for severances and related benefits that are being provided to employees that are impacted by the actions that I just mentioned a minute ago. Operating expenses in Q1 on a non-GAAP basis are estimated to range from $175 million to $185 million, and this range excludes the estimated restructuring charge. Other income is projected to range from $1 million to $2 million for the quarter, and our effective tax rate for Q1 is projected to range from 20% to 21% on both the GAAP and non-GAAP basis. So based on a combination of the factors I just covered, we estimate that Q1 diluted earnings per share could range from $0.70 to $0.85 on a GAAP basis and from $0.97 to $1.12 on a non-GAAP basis. With the launch of the iPhone 12, consumers are now able to see the benefits of Dolby Vision when they record video and share it. This quarter, we began partnering with SoundCloud to enable artists to improve the quality of their tracks using our mastering APIs and have seen nearly 200,000 tracks mastered through our APIs in the few months since launch. For example, now that consumers can create Dolby Vision with the iPhone 12.

Net income on a GAAP basis in the fourth quarter was $26.8 million or $0.26 per diluted share, compared to $43.9 million or $0.43 per diluted share in last year's Q4. Net income on a non-GAAP basis in the fourth quarter was $45.8 million or $0.45 per diluted share, compared to $67.6 million or $0.66 per diluted share in Q4 of last year. And then for that same reason, we are anticipating cinema product sales to be down year-over-year. In the first quarter of FY '21, we anticipate that total revenue could range from $330 million to $360 million. So with that in mind, and based on what we currently see and having just gone over the Q1 revenue outlook, we currently see our Q2 revenue scenario looking like a range of about $270 million to $300 million. So let me now finish up by providing the outlook on the rest of the P&L for Q1, already highlighted the revenue range scenario of $330 million to $360 million. So based on a combination of the factors I just covered, we estimate that Q1 diluted earnings per share could range from $0.70 to $0.85 on a GAAP basis and from $0.97 to $1.12 on a non-GAAP basis.

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Generating $240 million in free cash flow exceeded probably all estimates and is a testament to the SM team, achieving that during a very challenging 2020. Debt reduction of nearly $500 million was also a significant achievement. Compared with the original February 2020 plan, we reduced capital by nearly 30%, while delivering production in 2020 within the original guidance range. Midland Basin flaring was reduced 75% compared with the prior year, which is in part attributable to the construction of interconnections that enable gas production to be redirected in the event an individual third-party processor cannot receive it. On top of the nearly $500 million overall debt reduction, we reduced near-term maturities through 2024 by more than $600 million and ended the year with nearly $1 billion in liquidity and reduced our leverage, net debt to adjusted EBITDAX from 2.8 to 2.3 times. Here we graphically present the five-year plan and the financial priorities, which are: first, to maximize free cash flow over this five-year period; second, continue strengthening the balance sheet by applying free cash flow to debt reduction, which targets less than two times leverage by the end of next year 2022 and close to one time leverage by the end of the five-year period; and third, achieve a consistent, sustainable reinvestment rate south of 75% in the years 2022 through 2025. Specifics of the 2021 plan include delivering positive free cash flow, which we estimate will approach $100 million at current strip, capital expenditures of $650 million to $675 million consistent with preliminary discussion last fall. Total production of approximately 47 million to 50 million BOE or 129,000 to 137,000 BOE per day, with oil volumes at 52% to 53% of total production. So regarding the current quarter, we are estimating capital of about $180 million. Slide 10 includes a little more detail on 2021 capital allocation, which we expect to be 90% DC&E and allocated roughly 70% to the Midland Basin. The plan includes drilling net 55 wells in Midland and 39 in South Texas and completing net 72 wells in Midland and 21 wells in South Texas. So comparing that with preliminary guidance, our drill pace is now about 17% faster, which results in more wells drilled as we optimize efficiency under our drilling contracts, also compared with preliminary guidance, fewer completions are largely the result of timing differences. We go into 2021 with about 75% to 80% of oil hedged and about 85% of gas. Capital expenditures reflected further capital efficiencies in Midland, where DC&E costs averaged less than $500 a foot for the quarter. The larger proppant loadings were included in the less than $500 per lateral foot average for the quarter as we realized further cost efficiencies on completions. The majority of our activity in 2021 is directed at the Midland Basin, where the drilling program has very robust economics with an average 10% IRR breakeven flat price of $16 to $31 per barrel. Costs are now expected to average $520 per lateral foot, and we expect to drill an average lateral length of around 11,300 feet. Just in the past month, they drilled and cased the longest lateral in Texas at about 20,900 feet or almost four miles, and did it in 20 days. That is almost 3,000 feet longer than the previous record also in Howard County. It shouldn't surprise you then that we have drilled 25 of the 50 longest laterals in the Midland Basin. And we are now pumping an average of about 10 stages a day per frack spread in the Midland Basin with our primary pumping service provider. Approximately 30% of our capital is allocated to South Texas in 2021, and it will primarily target the Austin Chalk. Projected well costs are down to $520 per lateral foot, with an average lateral length of around 12,000 feet. The plan includes 21 South Texas net completions, of which 18 are Austin Chalk. They also have a favorable cost structure, about 35% to 40% lower per BOE produced. As you know, this year, SEC reserves were run at very low commodity prices, sub $40 oil and sub $2 gas. Because of the robust economics of our wells, the negative proved reserves impact of price revisions totaled only 33 million barrels equivalent, and this was predominantly from Eagle Ford gas wells. The wells underpinning these reserves that were moved are robust with an estimated average IRR of nearly 70% at $50 per barrel oil and $2.50 per Mcf gas. You may wonder by how much we scaled back activity, for the planned period 2021 to 2025, we reduced the number of turn-in-lines by 29% compared to last year's plan. We have over 13 years of total company inventory and nine years in the Midland Basin. It's important to highlight this inventory has an average IRR of more than 50% when run at a price deck of $50 per barrel and $2.50 per Mcf gas and current costs. The chart on this slide reflects Enverus data published last week indicating about eight years of inventory at sub $40 and $2.25 gas, underscoring the quality of our inventory base. We include this to simply make the point about quality, meaning robust inventory even at that very low price deck, $40 and $2.25 gas.

Total production of approximately 47 million to 50 million BOE or 129,000 to 137,000 BOE per day, with oil volumes at 52% to 53% of total production. So regarding the current quarter, we are estimating capital of about $180 million.

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The Company closed the fourth quarter with record sales of $2.426 billion, and record GAAP and adjusted diluted earnings per share of $1.15 and $1.13, respectively. Sales were up 13% in U.S. dollars and up 11% in local currencies and organically compared to the fourth quarter of 2019. Sequentially, sales were up 4% in U.S. dollars and 3% in local currencies and organically. The interconnect business, which comprised 96% of our sales, was up 14% in U.S. dollars and 11% in local currencies compared to the fourth quarter of last year. Our cable business, which comprised 4% of our sales, was down 4% in U.S. dollars and 2% in local currencies compared to the fourth quarter of last year. For the full year 2020, sales were $8.599 billion, which was up 5% in U.S. dollars, 4% in local currencies and 2% organically compared to 2019. From a segment standpoint, in the interconnect segment, margins were 22.5% in the fourth quarter of 2020, which increased from 22% in the fourth quarter of 2019 and 22.4% in the third quarter of 2020. In the cable segment, margins were 10.3%, which increased from 10% in the fourth quarter of 2019 and decreased from 10.7% in the third quarter of 2020. For the full year 2020, adjusted operating income was $1.650 billion, which was slightly up from 2019 and resulted in a full year 2020 adjusted operating margin of 19.2% compared to 20% in 2019. This 80 basis point decline reflects the challenges and results -- resulting impacts related to the COVID-19 pandemic, primarily in the first half of the year. The Company's GAAP effective tax rate for the fourth quarter was 21.7%, which compared to 20.3% in the fourth quarter of 2019. On an adjusted basis, the effective tax rate was 24.5% for both the fourth quarter of 2020 and 2019. For the full year, the Company's GAAP effective tax rate for 2020 and 2019 was 20.5% and 20.2%, respectively. On an adjusted basis, the effective tax rate for both the full year 2020 and 2019 was 20.5% -- 24.5%. On a GAAP basis, diluted earnings per share increased by 12% to $1.15 in the fourth quarter compared to $1.03 in the prior year period. Adjusted diluted earnings per share increased by 15% to $1.13 in the fourth quarter of 2020 from $0.98 in the fourth quarter of 2019. For the full year, GAAP diluted earnings per share was $3.91, a 4% increase from 2019 GAAP diluted earnings per share of $2.75. Adjusted diluted earnings per share was $3.74 for 2020, which was unchanged compared to 2019. Orders for the quarter were $2.512 billion, which was up 14% compared to the fourth quarter of 2019 and up 10% sequentially, resulting in a book-to-bill ratio of 1.04 to 1. Cash flow from operations was a strong $441 million in the fourth quarter, or 124% of net income. Net of capital spending, our free cash flow was $371 million, or 104% of net income. Cash flow from operations for the full year was $1.592 billion, or approximately 132% of net income. And net of capital spending, our free cash flow for 2020 was $1.328 billion, or 110% of net income. From a working capital standpoint, inventory days, days sales outstanding and payable days, were 79, 72 and 61 days, respectively, all within a normal range. During the quarter, the Company repurchased 1.5 million shares of common stock for approximately $182 million under the $2 billion open market stock repurchase plan, bringing total repurchases for the year to 6 million shares or $641 million. Total debt at December 31 was $3.9 billion and net debt at the end of the year was $2.1 billion. Total liquidity at the end of the quarter was $4.2 billion, which included total cash and short-term investments on hand of $1.7 billion plus the availability under our credit facilities. Fourth quarter and full year 2020 EBITDA was approximately $600 million and $2 billion, respectively. And at December 31, 2020, our net leverage ratio was 1.1 times. Lastly, the Company announced a 2-for-1 stock split, which will be effective as of March 4, 2021. Sales grew 13% in U.S. dollars and 11% organically, reaching a new record $2.426 billion. The Company booked a record of $2.512 billion in orders in the fourth quarter and that's a strong book-to-bill of 1.04 to 1. Despite continuing to face some operational challenges related to the ongoing pandemic, adjusted operating margins were strong in the quarter, reaching 20.6%, a 10 basis point increase from third quarter levels and 60 basis points from prior year. Craig already highlighted the operating and free cash flow of the Company, very strong at $441 million and $371 million, respectively, in the fourth quarter. As we announced on December 9, we're very pleased to have signed an agreement to acquire MTS Systems, a leading supplier of advanced test systems, motion simulators and precision sensors, for $58.50 a share. We expect the addition of MTS Sensors to add approximately $350 million in revenues and to generate approximately $0.10 per share of earnings accretion in the first year post closing. Now here in the last few weeks of January, we're also pleased to have closed two additional acquisitions of outstanding entrepreneurial companies, which we purchased for a combined price of $160 million. Based in Springfield, Missouri and with also operations in France, India and Singapore, and with annual sales of approximately $80 million, Positronic represents a great addition to our harsh environment product offering. Next El-Cab, which is based in Poland, is a manufacturer of cable assemblies and related interconnect products, primarily serving the industrial market and with annual sales of approximately $55 million. Sales reached a record $8.6 billion, growing 5% in U.S. dollars and 2% organically, and actually surpassed our pre-pandemic outlook that we had given back a year ago. Our full year adjusted operating margins of 19.2%, did decline 80 basis points from prior year, but this decline was due to the significant cost challenges we experienced in the first half of 2020, after which our team was able to return to more typical profit levels in the second half. And that enabled us to achieve adjusted diluted earnings per share of $3.74, which was the same level as we achieved in 2019. We generated record operating and free cash flow of $1.592 billion and $1.328 billion, respectively. In addition, in 2020, we bought back over 6 million shares under our buyback program and increased our quarterly dividend to 16%. And as Craig mentioned, we're announcing today, a 2-for-1 stock split of the Company's shares. Now turning to our -- the trends and our progress across our served markets, I would just comment that we remain very pleased that the Company's balanced and broad end-market diversification continues to create value for the Company, with no single end-market representing more than 22% of our sales in the year 2020. The military market represented a 11% of our sales in the fourth quarter and 12% of our sales for the full year. Sales in the quarter grew modestly from prior year, increasing by approximately 1% in the fourth quarter, with growth in naval, space and avionics applications offset in part by moderations in ground vehicles, rotorcraft and airframe. Sequentially, our sales increased as we had expected coming into the quarter by 3%. For the full year 2020, our sales grew by 3% in U.S. dollars and 2% organically, reflecting our leading market position and strong execution across virtually all segments of the military market, offset in part by the impact of the pandemic-related production disruptions that we experienced in the first half of 2020. The commercial air market represented 2% of our sales in the fourth quarter and 3% of our sales for the full year. Not surprisingly, fourth quarter sales were down significantly, reducing by approximately 50%, as the commercial air market continued to experience unprecedented declines in demand for new aircraft, due to the pandemic-related disruptions to the global travel industry. Sequentially, our sales were a little bit better than expected, declining 10% from the third quarter and for the full year 2020, sales declined by 34%, reflecting that significant impact of the pandemic on travel and aircraft production. The industrial market represented 22% of our sales in the quarter and in the full year of 2020. Our sales in this market significantly exceeded expectations that we had coming into the quarter, increased by a very strong 29% in U.S. dollars and 24% organically from prior year. On a sequential basis, sales increased by 4% from the third quarter. We're really pleased with our results in industrial for the full year, with sales growing 15% in U.S. dollars and 11% organically, as we saw strong demand in really those same markets, battery and EV, instrumentation, heavy equipment, also alternative energy and of course, medical, which was a very strong segment in the year. The automotive market represented 20% of our sales in the fourth quarter and 17% of our sales for the full year 2020. Sales in this market were also much stronger than we had expected coming into the quarter, with revenue growing by 24% in U.S. dollars and 19% organically in the fourth quarter, and that was really driven by broad-based growth across all geographies in the automotive market. Sequentially, our automotive sales increased by a very strong 22% as we continue to benefit from the broad recovery in the global automotive market. For the full year 2020, our sales declined by 6% in U.S. dollars and 8% organically. The mobile devices market represented 18% of our sales in the fourth quarter and 15% of our sales for the full year. Our sales in the quarter to mobile device customers increased by a much stronger-than-expected 32% from prior year, with strength in all product types, but particularly in wearables and laptops. Sequentially, our sales increased by 15% and that was driven by higher sales to smartphones and wearable devices. For the full year 2020, sales in the mobile devices market increased by a very strong 16%, as we continued to benefit from our agility in reacting to changes in demand in this dynamic market. Looking into the first quarter, we anticipate a typically significant seasonal sequential decline of approximately 40%. The mobile networks market represented 5% of our sales in the quarter and 6% of our sales for the full year of 2020. Sales in the quarter decreased from prior year by 8% in U.S. dollars and 9% organically, with declines in sales to both equipment manufacturers as well as operators. Sequentially, our sales did increase by a bit less than we had expected, 12%. For the full year 2020, sales declined by 16% from prior year, which reflected the impact of the U.S. government restrictions on certain Chinese customers that had been imposed in 2019, as well as other impacts related to the COVID-19 pandemic. The information technology and data communications market represented 18% of our sales in the quarter and 21% of our sales for the full year of 2020. Sales in the quarter was stronger than expected, rising by 3% in U.S. dollars and 2% organically from prior year, as stronger sales of networking equipment and server-related products were offset by lower sales of storage-related products. Sequentially, our sales declined by 8% from our very robust third quarter. We're very pleased with our performance for the full year for IT datacom, with our sales growing a very strong 15% in U.S. dollars and 11% organically, as we capitalized on increased demand from our OEM and service provider customers, as they work to accelerate bandwidth capacity expansions, in particular to support home-based work, school and entertainment. The broadband communications market represented 4% of our sales in the quarter and 4% for the full year. Sales increased by 3% in the fourth quarter from prior year, driven by stronger demand for home installation related equipment from our broadband operators. On a sequential basis, sales decreased as expected by 9% from the third quarter. Accordingly, we will not be providing full year guidance at this time. Assuming no new material disruptions from the pandemic, as well as constant exchange rates, for the first quarter, we now expect sales in the range of $2.120 billion to $2.180 billion and adjusted diluted earnings per share in the range of $0.90 to $0.94. I would just note that on a post-split basis, this adjusted diluted earnings per share guidance would be $0.45 to $0.47. This guidance represents sales growth in the first quarter of 14% to 17% year-over-year and adjusted diluted earnings per share growth of 27% to 32%, again compared to the first quarter of 2020.

The Company closed the fourth quarter with record sales of $2.426 billion, and record GAAP and adjusted diluted earnings per share of $1.15 and $1.13, respectively. On a GAAP basis, diluted earnings per share increased by 12% to $1.15 in the fourth quarter compared to $1.03 in the prior year period. Adjusted diluted earnings per share increased by 15% to $1.13 in the fourth quarter of 2020 from $0.98 in the fourth quarter of 2019. Orders for the quarter were $2.512 billion, which was up 14% compared to the fourth quarter of 2019 and up 10% sequentially, resulting in a book-to-bill ratio of 1.04 to 1. Lastly, the Company announced a 2-for-1 stock split, which will be effective as of March 4, 2021. The Company booked a record of $2.512 billion in orders in the fourth quarter and that's a strong book-to-bill of 1.04 to 1. And as Craig mentioned, we're announcing today, a 2-for-1 stock split of the Company's shares. Sales in the quarter grew modestly from prior year, increasing by approximately 1% in the fourth quarter, with growth in naval, space and avionics applications offset in part by moderations in ground vehicles, rotorcraft and airframe. Accordingly, we will not be providing full year guidance at this time. Assuming no new material disruptions from the pandemic, as well as constant exchange rates, for the first quarter, we now expect sales in the range of $2.120 billion to $2.180 billion and adjusted diluted earnings per share in the range of $0.90 to $0.94. I would just note that on a post-split basis, this adjusted diluted earnings per share guidance would be $0.45 to $0.47.

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We booked orders of $227 million in the quarter, which were up 34% sequentially and 7% versus prior year on an organic basis. We saw strong sequential increases in demand in both businesses, with industrial up 25% and A&D up 55%. We ended the quarter with $421 million of backlog, up 11% versus prior quarter. Revenue in the quarter was $181 million, down 8% organically, driven by lower industrial backlog entering 2021, the timing of large defense order shipments and slowly recovering demand in commercial aerospace. Adjusted operating income was $12 million, representing a margin of 6.9%, up 110 basis points from prior year. The company delivered $0.24 of adjusted earnings per share and generated free cash flow of negative $21 million, both in line with our expectations. Industrial organic orders were up 11% versus last year and 25% sequentially. Notably, we booked two large international downstream orders in the quarter, which we will deliver over the next 12 months. We delivered a strong book-to-bill ratio of 1.3 in the quarter. Industrial revenue was $121 million, down 6% versus last year and 9% from prior quarter. Adjusted operating margin was 8.1%, an improvement of 380 basis points versus last year. Adjusting for the impact of this receivable write off, organic decrementals in the quarter were 32%. Our aerospace and defense segment booked orders of $73 million in the quarter, flat versus last year and up 55% sequentially. The sequential improvement was driven by the timing of large defense program orders for the Joint Strike Fighter, as well as the CVN-80 and 81 aircraft carriers. Revenue in the quarter was $60 million, down 10% year over year and 23% from prior quarter. Sequential sales were lower due to seasonality and the timing of defense shipments for the Joint Strike Fighter, Dreadnought submarines and F-16 spares. Finally, operating margin was 18% in the quarter, down 130 basis points year over year. Organic decremental margins in the quarter were 29%. Our free cash flow was negative $21 million in the quarter. We ended the quarter with $461 million of net debt, up slightly, driven by our cash flow in the quarter. In the second quarter, we expect revenue to be down 2% to 4% organically. We're expecting adjusted earnings per share of $0.30 to $0.35 in the second quarter, which implies approximately 75% of our full-year earnings that are expected in the second half. We now expect organic revenue growth at the high end of our original guidance and higher adjusted earnings per share of $2.10 to $2.30. And we still expect to convert 85% to 95% of adjusted net income into free cash flow for the year. For Q2 industrial revenue, we expect a moderate improvement year over year, with growth ranging between 1% and 4%. Finally, pricing is expected to be a benefit of roughly 1%, consistent with prior quarters. Revenue in the second quarter is expected to be flat to down 5% versus prior year. Defense revenue is expected to be up 0% to 5% with strong volume on our top OEM programs. Commercial revenue is expected to be down between 10% and 15%. Finally, pricing is expected to be a benefit of 3% in the quarter with additional price increases coming in the second half. We expect more than 50% of industrial's product shipments to have a QR code attached by the end of the second quarter. We're expecting to launch 45 new products in 2021, with revenue generated from new products launched in the last three years accounting for approximately 10% of our total 2021 revenue. By implementing the CIRCOR operating system, the team has improved on-time delivery to 95%, improved product quality and cost and significantly lowered working capital as a percentage of sales. Over the last three years, the business has grown 55% and expanded operating margins by 670 basis points.

Revenue in the quarter was $181 million, down 8% organically, driven by lower industrial backlog entering 2021, the timing of large defense order shipments and slowly recovering demand in commercial aerospace. The company delivered $0.24 of adjusted earnings per share and generated free cash flow of negative $21 million, both in line with our expectations. In the second quarter, we expect revenue to be down 2% to 4% organically. We're expecting adjusted earnings per share of $0.30 to $0.35 in the second quarter, which implies approximately 75% of our full-year earnings that are expected in the second half. We now expect organic revenue growth at the high end of our original guidance and higher adjusted earnings per share of $2.10 to $2.30.

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Earlier this month, we completed the sale of EnerBank, grossing over $1 billion in proceeds. As we double down on the clean energy transformation, I'm also pleased to share that we received approval for our Voluntary Green Pricing program, which would add an additional 1,000 megawatts of owned renewable generation to our growing renewable portfolio. Our prices remain competitive as the average residential customer pays about $2 a day to heat their home and $4 a day to keep the lights on. In fact, as we approach the winter heating season, our 90-day arrears are back to prepandemic levels with an 80% reduction in our uncollectible accounts. In the first nine months of this year, we surpassed our full year cost reduction target of more than $40 million. Within just a few months of the program introduction, we were working with nearly 20 different customers on their fleets and have another 50 who have indicated interest in the next tranche, exceeding our expectations. Our commitment to diversity, equity and inclusion continues to be recognized nationwide and most recently by Forbes, where we were ranked the #1 utility in the U.S. for both America's best employers for women and #1 for diversity, delivering excellence every day continues to position the business for sustainable long-term growth. During the storm, we had more than 3,700 members of our team working around the clock to safely restore customers. Year-to-date, we've delivered ahead of plan with adjusted earnings per share of $2.18 for continuing operations. Our strong performance, coupled with the completion of the EnerBank transaction and the financial flexibility that provides -- gives us further confidence in our ability to meet our full year guidance, which we've raised to $2.63 to $2.65 from $2.61 to $2.65 for continuing operations. For 2022, we are reaffirming our adjusted full year guidance of $2.85 to $2.87 per share. Longer term, we are committed to growing our adjusted earnings per share toward the high end of our 6% to 8% growth range as we highlighted on our Q2 call. As we move forward, we continue to see long-term dividend growth of 6% to 8% with a targeted payout ratio of about 60% over time. Most of the gas is already locked in at just under $3 per thousand cubic feet, which is well below current levels in the spot market and offers tremendous customer value. For the third quarter, we delivered adjusted net income of $156 million or $0.54 per share. Year-to-date, we've delivered adjusted net income of $628 million or $2.18 per share, which is up $0.19 per share versus the first nine months of 2020, exclusive of EnerBank's financial performance. For the first nine months of the year, rate relief continues to be the primary driver of our positive year-over-year variance to the tune of $0.45 per share given the constructive regulatory outcomes achieved in the second half of 2020 for our electric and gas businesses. This upside has been partially offset by the aforementioned storms in the quarter, which drove $0.16 per share of negative variance versus the third quarter of 2020 and $0.11 per share of downside on a year-to-date basis versus the comparable period in 2020. To round out the customer initiatives bucket, planned increases in our operating and maintenance expenses to fund safety, reliability and decarbonization initiatives added the balance of spend for the first nine months of the year, which, in addition to the August storm activity, added $0.35 per share of negative variance versus the comparable period in 2020. To close out our year-to-date performance, we also benefited from favorable weather relative to 2020 in the amount of $0.07 per share and another $0.02 per share of upside, largely driven by recovering commercial and industrial load. As we look ahead to the remainder of the year, we feel quite good about the glide path for delivering on our earnings per share guidance range, which has been revised upward to $2.63 to $2.65 per share, as Garrick noted. As we look ahead, we continue to plan for normal weather, which in this case, translates to $0.06 per share of positive variance, given the absence of the unfavorable weather experienced in the fourth quarter of 2020. We'll also continue to benefit from the residual impact of our 2020 rate orders, which equates to $0.07 per share and is not subject to any further MPSC actions. And we'll make steady progress on our operational and customer-related initiatives which are forecasted to have a financial impact of roughly $0.07 per share of negative variance versus the comparable period in 2020. In the third quarter, we issued $300 million of first mortgage bonds at a coupon rate of 2.65%, one of the lowest rates ever achieved at Consumers Energy. We also remarketed $35 million of tax-exempt revenue bonds earlier this month at a rate of under 1% through 2026. Due to the strong execution implied by these record-setting issuances coupled with the EnerBank sale, which provided approximately $60 million of upside relative to the sale price announced at signing, we now have the flexibility to reduce our equity needs for the year even further, which will now be limited to the $57 million of equity forwards we have already contracted.

Our strong performance, coupled with the completion of the EnerBank transaction and the financial flexibility that provides -- gives us further confidence in our ability to meet our full year guidance, which we've raised to $2.63 to $2.65 from $2.61 to $2.65 for continuing operations. For 2022, we are reaffirming our adjusted full year guidance of $2.85 to $2.87 per share. For the third quarter, we delivered adjusted net income of $156 million or $0.54 per share. As we look ahead to the remainder of the year, we feel quite good about the glide path for delivering on our earnings per share guidance range, which has been revised upward to $2.63 to $2.65 per share, as Garrick noted.

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Adjusted EBITDA in the third quarter reached $125 million. Free cash flow in the quarter exceeded $130 million, including the Canada sales proceeds. Without those proceeds and the funding for our geothermal investments, we generated free cash flow of $55 million. In line with the cash generation, net debt decreased to $2.3 billion in the third quarter, driven by the combination of our strong operating performance, disciplined capital spending, improved working capital and our strategic capital allocation evidenced by the Canadian sale. Our margin performance in the Lower 48 remains strong. As we expected, for the third quarter, we held daily margins above the $7,000 mark. We bring the same elements to support our Lower 48 business to our International segment. Currently, we have 40 rigs working in Saudi Arabia. We expect each of these rigs to contribute annual EBITDA of approximately $10 million. SANAD's long-term plans call for a total of 15 new builds over 10 years. Each successive generation of five rigs today at $50 million annually. With that expected growth, our International EBITDA could increase by 20% versus the third quarter just reported. Quarterly EBITDA in our Drilling Solutions segment increased sequentially by 22%. Penetration on Nabors' Lower 48 rigs and on third-party rigs increased. Revenue on third-party rigs improved sequentially by more than 20%. In the third quarter, 74% of our rigs in the Lower 48 ran five or more NDS services. This compares to 62% in the second quarter. Earlier this month, Rig 801 reached total depth of 20,000 feet on its initial well. With less physical labor required, Rig 801 has the potential to greatly expand the pool of talent available to work on our rigs. We remain on track for an additional 5% reduction in greenhouse gas emissions in the U.S. in 2021. The quarter began with WTI above $70. Since then, it has reached the $80 mark where it remains recently. Comparing the averages of the third quarter to the second quarter, the Baker Lower 48 land rig count increased by 11%. According to Inverness, from the beginning of the third quarter through the end, the Lower 48 rig count increased by 47 or approximately 9%. Once again, we surveyed the largest Lower 48 clients at the end of the third quarter. Our survey indicates an increase in activity approaching 10% for this group by the end of the year. Recently, this has become more difficult, particularly in Lower 48. Natural gas prices have increased to levels not seen in more than 10 years. The net loss from continuing operations was $122 million or $15.79 per share. The third quarter included a $13 million after-tax nonrecurring expense or $1.63 per share related to the purchase of technology in the energy transition space. This compares to a loss of $196 million or $26.59 per share in the second quarter. The second quarter results included charges of $81 million after taxes, mainly for an impairment of assets on the sale of our Canada drilling rigs and a tax reserve for contingencies in our International segment. Revenue from operations for the third quarter was $524 million, a 7% improvement compared to the second quarter. Excluding Canada, revenue increased by 9% with all of our segments providing strong contributions both in the U.S. and internationally. rig technologies and Drilling Solutions were particularly strong, growing by 22% and 17%, respectively. In the Lower 48, we are seeing increased rig demand from larger public customers in addition to continued expansion for private operators. Total adjusted EBITDA of $125 million increased by $8 million or 7%. Drilling EBITDA of $62.1 million was up by $2.3 million or 4% sequentially. Our Lower 48 rig count increased by 4.1 from 63.5 in the second quarter to 67.6 in the third quarter. Daily rig margins came in at $7,025, in line with the prior quarter. Currently, our rig count stands at 72. International EBITDA gained almost $5 million in the third quarter or 7% sequentially at $7 million in early termination revenue more than compensated for a move-related decrease in Mexico. Daily gross margins for International increased by almost $1,000 to $14,375. Early termination revenue added $1,100 per day to our margins but the Mexico moves offset some of the improvement. Without the early termination revenue and with the anticipated improvement in Mexico, the fourth-quarter daily margin should come in between $13,000 and $13,500 per day. International average rig count came in at 67 rigs, a one rig reduction as compared to the second quarter. Current rig count in the International segment stands at 69. Drilling Solutions EBITDA of $15.6 million was up $2.8 million or 22% in the third quarter. Activity in the Lower 48 generally improved, taking our combined drilling rig and Drilling Solutions daily gross margin to $8,900. This translates into a $1,900 per day contribution from our rapidly growing solutions segment. Rig technologies generated adjusted EBITDA of $3 million in the third quarter, a $1 million improvement. In the third quarter, total free cash flow reached $133 million. This compares to free cash flow of $68 million in the second quarter. The third quarter included a net benefit of $78 million from strategic transactions, namely the sale of our Canadian business for $94 million, partly offset by several investments in geothermal and other energy transition initiatives. Outside of these transactions, our free cash generation of $55 million reflected the strong operational results, disciplined capital spending and continued progress on working capital reductions. Free cash flow for the fourth quarter should reach $80 million to $90 million. This translates into a total 2021 free cash flow of around $350 million. Capital expenses in the third quarter of $62 million, including $19 million for SANAD newbuilds were down from $77 million in the second quarter. The $15 million reduction reflected $13 million lower spend for the SANAD newbuilds. In the fourth quarter, we now forecast roughly $80 million in capital expenditures, including $30 million for the SANAD newbuilds. Our forecast capital spending for 2021 is approximately $270 million, including $90 million for Saudi newbuilds. Our net debt on September 30 was $2.3 billion, a reduction of $120 million in the quarter. At the start of the pandemic, our net debt stood at $2.9 billion.

Our margin performance in the Lower 48 remains strong. We bring the same elements to support our Lower 48 business to our International segment. Penetration on Nabors' Lower 48 rigs and on third-party rigs increased. In the third quarter, 74% of our rigs in the Lower 48 ran five or more NDS services. Comparing the averages of the third quarter to the second quarter, the Baker Lower 48 land rig count increased by 11%. According to Inverness, from the beginning of the third quarter through the end, the Lower 48 rig count increased by 47 or approximately 9%. Once again, we surveyed the largest Lower 48 clients at the end of the third quarter. Recently, this has become more difficult, particularly in Lower 48. The net loss from continuing operations was $122 million or $15.79 per share. The third quarter included a $13 million after-tax nonrecurring expense or $1.63 per share related to the purchase of technology in the energy transition space. Revenue from operations for the third quarter was $524 million, a 7% improvement compared to the second quarter. In the Lower 48, we are seeing increased rig demand from larger public customers in addition to continued expansion for private operators. Drilling EBITDA of $62.1 million was up by $2.3 million or 4% sequentially. Our Lower 48 rig count increased by 4.1 from 63.5 in the second quarter to 67.6 in the third quarter. Without the early termination revenue and with the anticipated improvement in Mexico, the fourth-quarter daily margin should come in between $13,000 and $13,500 per day. Activity in the Lower 48 generally improved, taking our combined drilling rig and Drilling Solutions daily gross margin to $8,900. Our forecast capital spending for 2021 is approximately $270 million, including $90 million for Saudi newbuilds.

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Slide Number 12 in the appendix demonstrates this activity and effect. In fact, maybe the most important slide we have ever published is Slide Number 12. It is not cyclical and is quite steady when Olin does not push excess volume and chase the poor quality side of the ECU down across an inflection point on Slide Number 12 into an over-supplied swamped of poor pricing. Now, turning your attention to Slide Number 3, Olin's quarterly ECU profit contribution index chart, even though the global Chlor Alkali market configuration is in the poorest state for Olin, in other words when strong, back integrated PVC production, which Olin does not directly participate in, pushes out lots of co-produce caustic into a weak caustic demand environment, really the emphasis being on the weak caustic demand point here, we still sequentially lifted our ECU PCI by lifting margins across chlorine, EDC and virtually every chlorine derivative while simultaneously not allowing Olin caustic to decline in price as much as industry indices would have anticipated. And speaking of quality and moving to Slides 4 and 5, Winchester delivered the best quarterly performance in the business's 155-year history with even better quarters expected throughout 2021. The Olin Winchester team relishes its commitment to support both the U.S. war fighter and the more than 55 million of us who enjoy shooting sports. So wrapping up my opening comments with Slide Number 6, our first half quarterly average EBITDA should be better than the fourth quarter of 2020 across every business. Note that we do have a number of turnarounds in the second quarter to contend with and we expect a 10% improvement in the ECU PCI across the first half. Point number 1, Epoxy will be the star of the show and is expected to surpass our prior quarterly EBITDA record as the team lifts the permanent earnings foundation of that business to match the value of our product offering. Point number 2, our merchant chlorine net-backs go to a multi-year high, following our fourth quarter activations, which included shifting an additional 30% of our ongoing business away from arbitrary external trade indices. Point number 3, our broad productivity gains start to show up as our fourth quarter project pipeline grew by 20%. We start 2021 with 633 active projects. Please see Slide number 15 in the appendix for some more detail on that. Point number 4, the early redemption of $120 million of the high cost acquisition bonds this month was funded a 100% with cash from operations, as was the additional $100 million of bonds repaid last October. Through a combination of improved adjusted EBITDA, disciplined capital spending and debt reduction, we expect our net debt to adjusted EBITDA ratio to improve to roughly three times within the next 12 months. So looking out just a bit beyond 2021 we have the team, the skill, the operating model and the assets we need to achieve at least $1.5 billion in EBITDA. Additionally, we have adjusted down our forward annual capital spend requirements to around $200 million, reflecting a better match of our physical plant assets to our model. This adjustment in turn enhances our levered free cash flow and that cash flow inflection point should be clearly evident in 2021. At the same time we rinked $1.5 billion in EBITDA, global ECU supply demand fundamentals are likely to be improved and Olin will expand our strategy to incorporate fixed asset light structural moves to take us to the next higher EBITDA level, as more molecules move through our sphere of influence. We will look forward to speaking with you in the future about the next EBITDA tranche above $1.5 billion and those supporting activities.

This adjustment in turn enhances our levered free cash flow and that cash flow inflection point should be clearly evident in 2021.

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However, at the same time, I am hopeful and I know that all my colleagues and all our partners in more than 200 countries, we will do their best to recover from the virus as soon as possible. Starting with the big picture, our cross-border consumer-to-consumer or C2C business grew principal 28%, which was the highest quarterly growth in years and the third consecutive quarter with growth over 20%. Total company revenue grew 2% on a constant currency basis, around a 300 basis points increase from declines in the third and fourth quarter of last year. C2C revenues and transactions grew 4% and 9%, respectively, and both digital and retail revenue trends improved sequentially. Revenues were up from the fourth quarter and grew 45% year-over-year to over $240 million, putting us on target to exceed $1 billion in 2021. Digital comprised 34% of transactions and 23% of revenues for the C2C segment and was a key source of new customers and incremental profit. This is the fourth consecutive quarter of transaction growth of 50% or more and average monthly active users growth of over 40%. Wu.com led money transfer peers in mobile app downloads by a wide margin and grew principal 78% off of an already large base, which we believe is well ahead of the market. Digital partnerships revenue more than doubled year-over-year, and it has exceeded our expectation over the past 18 months since we announced it in late 2019. Starting with wu.com, we continue to invest in consumer acquisition and marketing, which drove 46% growth in average monthly active users for the first quarter. During the quarter, we renewed agreements with 34 existing agents and added 41 new agents with favorable terms. Over 50% of our global account payout transaction volume was delivered real time. Our launch with Walmart is off to a good start, and we look forward to getting all 4,700 US locations up and running in the second quarter. Given the strong customer trends, we have seen over the last year in our C2C business, including almost 9 million wu.com annual active users in 2020, the agenda for the rest of 2021 is largely centered around enhancing the customer experience. According to the United Nations, there are more than 270 million migrant residents globally and many of them send remittances. Factoring in remittance, recipients in home country, who also use our services and desire more options for financial services could more than double the potential customer base to over 0.5 billion people. According to our 2019 new American economy study, migrants represented $1.3 trillion of spending power in the US alone. Revenue of $1.2 billion increased 2% on both a reported and constant currency basis. In the C2C segment, revenue increased 4% on a reported basis or 2% constant currency with transaction growth partially offset by mix. B2C transactions grew 9% for the quarter, led by 77% transaction growth in digital money transfer. Total C2C cross-border principal increased 28% on a reported basis or 26% constant currency, driven by growth in digital money transfer and retail. Total C2C principal per transaction or PPT was up 15% or 12% constant currency led by retail and wu.com. Digital money transfer revenues, which include wu.com and digital partnerships, increased 45% on a reported basis or 44% constant currency. Revenue grew 38% or 37% constant currency on transaction growth of 55%. Cross-border revenue was up 49% in the quarter. North America revenue was flat on a reported basis or increased 1% constant currency on transaction growth of 1%. Revenue in the Europe and CIS region increased 8% on a reported basis or 4% constant currency on transaction growth of 28%. Revenue in the Middle East, Africa and South Asia region increased 1% on a reported basis or was flat constant currency while transactions grew 13%. Revenue growth in the Latin America and Caribbean region continued to improve sequentially and was up 3% or 8% constant currency on transaction declines of 8%. Revenue in the APAC region increased 9% on a reported basis or 3% constant currency, led by strength in Australia. Transactions declined 2%, primarily driven by the Philippines domestic business, which has limited impact on revenue. Business Solutions revenue decreased 2% on a reported basis or 8% constant currency as COVID-19 continue to impact certain verticals and hedging activity. The segment represented 8% of company revenues in the quarter. Other revenues represented 5% of total company revenues and declined 18% in the quarter. Consolidated operating margin in the quarter was 19.2% compared to the prior year period margin of 19.6% on a GAAP basis and 20.5% on an adjusted basis, which excluded costs related to our restructuring program. Foreign exchange hedges had a negative impact of $4 million on operating profit in the quarter and a benefit of $10 million in the prior year period. B2C operating margin was 19.6% compared to 20.7% in the prior year period. Given that our C2C segment comprises almost 90% of total company operating income, the decrease in operating margin was driven by the same factors that impacted total company margin. Business Solutions operating margin was 13.1% in the quarter compared to 14.1% in the prior year period. Other operating margin was 22.6% compared to 26.1% in the prior year period, with the decline primarily due to lower revenue. The effective tax rate in the quarter was 10.4% compared to a 12.5% effective tax rate on both a GAAP and adjusted basis in the prior year period. Earnings per share or earnings per share was $0.44 compared to the prior year period GAAP earnings per share of $0.42 and adjusted earnings per share of $0.44. Cash flow from operating activities in the first quarter was $176 million. Capital expenditures in the quarter were approximately $97 million driven by agent signing bonuses and should be in a normal range for the full year. At the end of the quarter, we had cash of $1.5 billion and debt of $3.2 billion. We returned $172 million to shareholders in the first quarter consisting of $97 million of dividends and $75 million in share repurchases. The outstanding share count at quarter end was 410 million shares. And we had $708 million remaining under our share repurchase authorization, which expires in December of this year. We are also on track to achieve our digital revenue target exceeding $1 billion. Operating margin is expected to be approximately 21.5%, reflecting revenue growth and benefits from our three year productivity program that we expect to generate approximately $150 million of annual savings by the end of 2022, partially offset by higher operating expenses and investments in strategic initiatives. GAAP earnings per share for the year is now expected to be in a range of $2.06 to $2.16, including approximately a $0.06 net benefit in other income on an investment sale and debt retirement expenses that occurred early in the second quarter of 2021. Adjusted EPS, which excludes those items, is expected to be in a range of $2 to $2.10. Although, we still expect to generate more than $1 billion in digital money transfer revenues this year.

Revenue of $1.2 billion increased 2% on both a reported and constant currency basis. B2C transactions grew 9% for the quarter, led by 77% transaction growth in digital money transfer. Earnings per share or earnings per share was $0.44 compared to the prior year period GAAP earnings per share of $0.42 and adjusted earnings per share of $0.44. GAAP earnings per share for the year is now expected to be in a range of $2.06 to $2.16, including approximately a $0.06 net benefit in other income on an investment sale and debt retirement expenses that occurred early in the second quarter of 2021. Adjusted EPS, which excludes those items, is expected to be in a range of $2 to $2.10.

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Our 2.4% pre-tax margin in the fourth quarter continues that trend, especially considering the disproportionate impact that severe weather had on our hubs, and the Omicron-related impacts we began to face at the end of the year. Our completion factor was extremely challenged at the end of the year, which resulted in flying approximately 1 point less than our expected capacity in the quarter and 2.5 points less than we planned to operate in December alone. Our fourth quarter result was worse by approximately $70 million, and our pre-tax margin was reduced by 3.5 points. Even with this outsized impact, Alaska was profitable in Q4 and strongly led the industry in pre-tax performance over the second half of 2021. In response to the ongoing impacts of Omicron in early January, we proactively reduced our remaining Q1 scheduled client by about 10%. We expect the bulk of the Omicron impact to be felt in the first quarter, specifically in January and February, as revenue has reduced and as unit costs are pressured, given lower ASM production and higher staffing-related costs. First, our revenues recovered to $6.2 billion or 70% of 2019 levels, and we achieved this while flying less capacity than many of our peers, who had similar revenue-recovery results. Second, while the full year adjusted pre-tax loss was $342 million, we recorded $282 million of adjusted pre-tax profit during the second half of the year. Our second-half adjusted pre-tax margin was over 7%, clearly outperforming the industry, even though West Coast travel has recovered slower than much of the country. Excluding any CARES funding, we generated more than $100 million in operating cash flow for the year, which reflects $100 million pension contribution we funded in the third quarter. Fourth, as profits and cash flow returned to positive territory, we have essentially repaired our balance sheet. We closed the year with a 49% debt-to-cap ratio, 12 points lower than prior year and within our target range. For the average employee, this payout amounts to about 6.2% on top of their annual pay. All told, I'm really pleased to report that our bonus programs will pay out $151 million to our employees for the year. The remaining 27 Airbus A320s that are flying today, will be retired by the end of 2023, enabled by our Boeing MAX order of 93 firm and 52 options. We announced sustainability goals, committed to net zero carbon emissions by 2040 and further embracing a sustainability mindset by linking a portion of our annual performance-based pay plan for all employees to the carbon intensity of our operations. I expect full year capacity to be up versus 2019, between 2% and 6%, dependent on demand. This guidance reflects first-half capacity that is flat, to slightly up and second-half capacity that could be up as much as 10% versus 2019. Fourth quarter revenues totaled $1.9 billion and were only down 15% versus 2019, which was better than our guide. And with flowing capacity also down 15%, our fourth quarter unit revenues were flat in 2019. As Ben mentioned, end-of-quarter weather disruptions were significant, impacting revenue by approximately $45 million. Even with these setbacks, our revenue recovery improved by 3 points from what we viewed was a relatively strong third quarter. Load factors showed continued improvement throughout the quarter as well, progressing from 75% in October to 80% in November and 83% in December, signaling demand for travel continues to move in the right direction. November revenues were down just 7% versus 2019 on 12% less capacity. Another encouraging indicator of yields, which ended the quarter up 3% versus 2019. The net result of all of this was posting the best unit revenue performance in the industry for the second half of 2021 is down just 0.5%. First-class-paid load factor ended the quarter up 2 points and premium-class-paid load factor was up 8 points, both versus the fourth quarter of 2019. Our bank card remuneration reached record levels in the fourth quarter, up 13% versus the fourth quarter of 2019. We estimate Q1 bookings lost to this way by approximately $160 million. As Ben mentioned, we've seen bookings start to recover from down 40% versus 2019 in the first week of January, to around 25% today. We will fly approximately 10% to 13% below the same period in 2019. With the lost bookings in January and February, we expect total revenues in Q1 to be down 14% to 17% from 2019 levels. As Ben shared, we're targeting to return to pre-COVID capacity by the summer and the growth through the back half of the year for full year 2022 capacity growth of between 2% and 6%, depending on demand. This summer, Alaska partners will have over 100 non-stop flights per week of the West Coast to Europe. We ended the year with $3.5 billion in total liquidity, inclusive of on-hand cash and undrawn lines of credit, which is essentially unchanged from Q3 and reflects $112 million in debt repayments during the quarter. Our Q4 cash flow from operations was $129 million, above our previous guidance, largely driven by stronger demand recovery than anticipated, given we were dealing with the now old news Delta variant, as we came into the quarter. This year, our debt-to-cap ratio fell to 49%, 12 points below year-end 2020, placing us within our stated target range and as Ben said, essentially back to our pre-COVID balance sheet strength. In fact, in a period marked by increasing debt across the industry, our adjusted net debt ended the year 40% lower than 2019. The weighted average effective rate of our outstanding debt is 3.3% and our debt service is entirely manageable going forward. Contractual debt repayments in 2022 are about $370 million with $170 million in Q1. Rounding out the strength of our balance sheet, our pension plans ended the year at 98% funded, the highest level we've achieved since 2013. Our strong balance sheet and ample liquidity put us in a terrific position to pay cash for the 32 737-9 aircraft deliveries we have in 2022. By the end of 2022, I expect our total liquidity will step down to around $2.5 billion. Turning to the P&L, our 2.4% pre-tax profit was a solid outcome, given the circumstances in the quarter. Our non-fuel costs were $1.4 billion in the fourth quarter, inclusive of approximately $25 million of unexpected costs from the December disruption. This was driven by approximately $18 million for overtime and wage premiums, as we worked to stabilize the operation from staffing disruptions, and $7 million incurred for passenger remuneration, EIC and other related costs. The December event lasted an entire week, impacted both Seattle and Portland and was exacerbated by the start of a surge in Omicron-related staffing shortages. As Andrew indicated, the revenue impact of our cancellations was $45 million. And given the $25 million in incremental cost, this event alone raised $70 million of profit from the December month and quarter. The combination of lower ASM production and higher costs, resulted in our CASMex being up 12% versus 2019 outside the high end of our range. For the first quarter, Q1 CASMex is expected to be up 15% to 18% and capacity down 10% to 13% versus 2019. 7 points of this is purely driven by our late pull down of first-quarter capacity. Absent the capacity pull down, our unit cost guide would have been up 8% to 11%. In addition, our costs in Q1 include two items contributing another 3.5 points of pressure that are worth detailing. First, approximately 2.5 points of our Q1 unit cost increase is related to lease return expenses for our Airbus aircraft. I currently expect the total waste return expense to be between $200 million and $275 million in total with more than half of that being recorded this year. So while a headwind right now, it will become a tailwind to our cost structure in the next eight quarters, which will be further helped as we replace the 150-seat Airbus with the 178-seater, cost-efficient Boeing 737-9 aircraft. To move from 80% to 85% of pre-COVID flying to 100% and then beyond, we must staff up early, given the throughput capacity of our hiring and training infrastructure. We expect fuel prices to be between $2.45 and $2.50 per gallon in Q1, also increased from the last quarter. We expect full year 2022 unit costs inclusive of lease return expense, to be up 3% to 6%, and on an ex-lease return basis, to be up 1% to 3%.

Even with this outsized impact, Alaska was profitable in Q4 and strongly led the industry in pre-tax performance over the second half of 2021. We expect the bulk of the Omicron impact to be felt in the first quarter, specifically in January and February, as revenue has reduced and as unit costs are pressured, given lower ASM production and higher staffing-related costs. Fourth, as profits and cash flow returned to positive territory, we have essentially repaired our balance sheet. We will fly approximately 10% to 13% below the same period in 2019. With the lost bookings in January and February, we expect total revenues in Q1 to be down 14% to 17% from 2019 levels. The December event lasted an entire week, impacted both Seattle and Portland and was exacerbated by the start of a surge in Omicron-related staffing shortages. For the first quarter, Q1 CASMex is expected to be up 15% to 18% and capacity down 10% to 13% versus 2019. 7 points of this is purely driven by our late pull down of first-quarter capacity.

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IDACORP's 2021 third quarter earnings per diluted share were $1.93, a decrease of $0.09 per share from last year's third quarter. Earnings per diluted share over the first nine months of 2021 were $4.20, which were $0.25 above the same period last year. The year-to-date earnings are the highest in the history of the company over the first 9 months of the year. Today, we also tightened our full year 2021 IDACORP earnings guidance estimate upward to be in the range of $4.80 to $4.90 per diluted share, with our expectation that Idaho Power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings under its Idaho regulatory settlement stipulation. You'll see on slide five that customer growth has increased 2.9% since September 2020. As of the end of September, unemployment in our service area was 2.6% compared to the current rate of 4.8% nationally. Total employment in our service area has increased 3.3% over the past 12 months. Moody's forecasted GDP now calls for economic growth of 6.1% in 2021 and 4.2% in 2022. We are encouraged by this growth trend and forecast, especially considering the challenges we have all faced over the past 18 months. This demand is fueling significant industrial spec development to construct shell buildings ranging from 50,000 to 250,000 square feet. Idaho Power hit a new all-time peak load of 3,751 megawatts on June 30, and exceeded the previous peak load more than 60 separate hours during June and July, as the weather remained hot and dry over most of the summer. Last quarter, I mentioned, Idaho Power had issued a request for proposal to add 80 megawatts of new resources by summer 2023 and expects to issue an additional RFP in late 2021 or early 2022 to meet anticipated needs beyond 2023. Based on our efforts to address the 2023 projected load deficits, you'll see on slide six that we now could potentially add approximately $100 million in additional capital expenditures related to the 80-megawatt project during the current 5-year forecast window. Last quarter, I mentioned our filing with the Idaho Commission to increase rates $30.8 million in December of this year. In September, PacifiCorp, our co-owner and operator of the Jim Bridger plant, submitted an IRP to the Idaho Commission that contemplates ceasing coal-fired generation in units 1 and 2 in 2023, and converting those units to natural gas generation by 2024. Current weather projections for November through January show a 33% to 40% chance for both above normal precipitation and above normal temperatures in much of Idaho Power service area. While this year's third quarter was a bit lower than last year's related to the timing of irrigation sales in both years, IDACORP has achieved the highest first 9 months of earnings ever recorded. On the table of quarter-over-quarter changes, you'll see our continuing customer growth added $5.1 million to operating income. Increased usage per customer drove operating income higher by $22.9 million. Cooling degree days were 14% higher than last year's third quarter, and the hot and dry conditions lead to 3% higher residential per customer usage, while more normal operating conditions lead to a respective 3% and 1% higher usage per commercial and industrial customers. The timing of precipitation, which was higher than last year's dry third quarter, and the early start of the irrigation season that was reflected in our second quarter's results, along with some limitations on water in the third quarter all led to a 4% decline in irrigation per customer usage. You'll note on the table that the combined usage changes lead to a $0.2 million increase to operating income. A higher usage for residential and small general service customers was partially offset by $1.4 million of lower revenues from the FCA mechanism next on the table. Further down, you'll see a decrease in operating income of $3 million that relates to the change in the per megawatt hour revenue, net of power supply costs, and power cost adjustment impacts quarter-to-quarter. Recall that Idaho customers generally bear 95% of power supply cost fluctuations and those costs were higher as the summer heat wave impacted wholesale energy prices; at a time of increased energy usage by our customers. The heat wave also affected transmission wheeling-related revenues, which increased operating income by $4.7 million. Wheeling volumes increased as utilities work to serve high demand by moving energy across our system throughout the region during the quarter, combined with 2 new long-term wheeling agreements that also increased transmission within related revenues this quarter and run through March of 2024. Wheeling customers also paid 10% more for Idaho Power's out-rate ph that increased in October of 2020 to reflect higher transmission costs. That out-rate ph increased an additional 4% on October 1, 2021, to further reflect higher costs going forward. Next on the table, other operating and maintenance expenses increased by $4.9 million, primarily due to a return to more normal levels of purchase services and maintenance costs, compared with the previous year's third quarter, which was more negatively impacted by the COVID-19 pandemic. Finally, income tax expense increased $3.4 million this quarter due mostly to plant related income tax return adjustments, which were positive last year and slightly negative in 2021. The changes collectively resulted in a net decrease to IDACORP's net income of $4.1 million or $0.09 per share. Earnings per diluted share over the first 9 months of 2021 are well above the same period last year by $0.25. Cash flows from operations were about $19 million higher than the first 9 months of last year. Given the results year-to-date, we have listed the bottom end of our range and now expect IDACORP's 2021 earnings to be in the range of $4.80 to $4.90 per diluted share. Recall that above a 10% return on equity in the Idaho jurisdiction, Idaho customers would receive 80% of any excess earnings. Our expected full-year O&M expense guidance remains in the range of $345 million to $355 million. We also reaffirm our capex forecast for this year in the range of $320 million to $330 million. Our expectation for hydro-generation was tightened within the range of 5.4 to 5.7 megawatt hours.

IDACORP's 2021 third quarter earnings per diluted share were $1.93, a decrease of $0.09 per share from last year's third quarter. Today, we also tightened our full year 2021 IDACORP earnings guidance estimate upward to be in the range of $4.80 to $4.90 per diluted share, with our expectation that Idaho Power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings under its Idaho regulatory settlement stipulation. Given the results year-to-date, we have listed the bottom end of our range and now expect IDACORP's 2021 earnings to be in the range of $4.80 to $4.90 per diluted share.

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Total revenue for Q2 was up 31% year-over-year to $5.9 billion. Gross profit increased 20% or $55 million compared to the prior year to $329 million. Gross margin was 5.6%, down from 6.1% in the prior year, primarily due to product mix. Total adjusted SG&A expense was $159 million or 2.7% of revenue, down $14 million compared to the year-ago quarter, primarily due to COVID-related expenses in the prior year. Non-GAAP operating income was $170 million, improved by $68 million or 67% versus the prior year and non-GAAP operating margin was 2.9%, up 62 basis points year-over-year. Q2 interest expense and finance charges were approximately $23 million and the effective tax rate was 25%, both in line with our expectation. Total non-GAAP income from continuing operations was $109 million, up $44 million and improved by 68% over the prior year. And non-GAAP diluted earnings per share from continuing operations was $2.09, up from $1.26 in the prior year. We ended the quarter with cash and cash equivalents of $1.7 billion and debt of $1.6 billion. Accounts receivable totaled $2.5 billion, down 12% year-over-year and inventories totaled $2.7 billion, flat from the prior year. Our cash conversion cycle for the second quarter was 26 days, 17 days improved from last year. Cash generated from operations was approximately $280 million in the quarter. And including our cash and credit facilities, we had approximately $3.1 billion of available liquidity. We are pleased to report that our Board of Directors have approved a quarterly cash dividend of $0.20 per common share for the current quarter. Since our announcement in March, we have established the capital structure for the planned merger through a new $5 billion credit facility and are on track with the debt financing for the merger. Revenue is expected to be in the range of $4.95 billion to $5.45 billion. Non-GAAP net income is expected to be in the range of $99.9 million to $110.4 million. And non-GAAP diluted earnings per share is expected to be in the range of $1.90 to $2.10 per diluted share based on weighted average shares outstanding of approximately 51.9 million. Our Q3 non-GAAP net income and non-GAAP diluted earnings per share guidance exclude the after-tax cost of $7 million or $0.13 per share related to the amortization of intangibles and $5.3 million or $0.10 per share related to share-based compensation.

Total revenue for Q2 was up 31% year-over-year to $5.9 billion. And non-GAAP diluted earnings per share from continuing operations was $2.09, up from $1.26 in the prior year. Revenue is expected to be in the range of $4.95 billion to $5.45 billion. And non-GAAP diluted earnings per share is expected to be in the range of $1.90 to $2.10 per diluted share based on weighted average shares outstanding of approximately 51.9 million.

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As I described on our second quarter call, these characteristics include that approximately 70% of our revenue is generated from essential services, including our tax services, insurance services, payroll services and a host of others that we provide to our clients regardless of economic conditions in the market. We generally retain approximately 90% of our clients from year-to-year. The total revenue growing by 1.6% for the full year and margin on pre-tax earnings from continuing operations increasing by 90 basis points. We were pleased to report earnings per share of $1.42 for the full year, up 11.8% over $1.27 reported a year ago. We ended 2020 with $108 million of outstanding debt on our credit facility, increasing only $2.5 million from $105.5 million at year-end a year ago. After an active first quarter in 2020, repurchasing 1.2 million shares and closing three acquisitions, we paused both acquisitions and share repurchase activity from mid-March through mid-September until we could develop more confidence with the stability of our cash flow trends. For the full year of '20, we closed seven acquisitions and utilized $89.7 million of capital for acquisition activities. We also deployed $57.6 million to repurchase approximately 2.3 million shares for the full year, including the repurchase of one million shares in the fourth quarter. For the full year, with $147.3 million of capital used for these two purposes, our borrowing increased by only $2.5 million. This results in a leverage ratio of approximately 0.8 times on adjusted EBITDA of $132.1 million, with $286 million of unused capacity. Through February 16 to date this year, we have repurchased an additional 600,000 shares, and we intend to continue to repurchase shares. With this recent activity, when combined with shares repurchased in 2020, this has resulted in the repurchase of more than 5% of our shares outstanding. When you also consider the 1.2 million shares repurchased in the prior year 2019, we have repurchased approximately 4.1 million shares or roughly 7.5% of shares outstanding within the past two years, and we've utilized nearly $100 million of capital for these activities. With the seven acquisitions closed in 2020, plus an eighth transaction we announced effective on January one this year, collectively these newly acquired operations will generate approximately $48 million of annualized revenue. Acquisition-related payments for earn-outs from previously closed transactions are estimated at $13.6 million in 2021. In 2022, we estimate a use of approximately $15.4 million, approximately $9.1 million in 2023, $13 million in 2024 and approximately $800,000 in 2025. For 2020, capital spending for the full year was $11.7 million, of which $2.2 million was in the fourth quarter. We expect capital spending within a range of $12 million to $15 million, looking ahead into 2021. Depreciation and amortization expense for the full year of '20 was $23.1 million, $9.6 million of depreciation with $13.5 million of amortization. In the fourth quarter, depreciation and amortization expense was $5.9 million. At the end of the year, days sales outstanding stood at 72 days compared with 75 days a year earlier. At the end of the first quarter in 2020, we recorded an additional $2 million of reserve for bad debt. For the full year of '20, bad debt expense was 45 basis points of total revenue compared with 25 basis points of total revenue for 2019. Total consolidated revenue for the full year was up 1.6%, with same unit revenue declining slightly by 0.4%. In the fourth quarter, total revenue grew by 3.9% and same unit revenue grew by 1.1%. Within Financial Services, total revenue for the full year was up 2.1%, with same unit revenue up 0.8%. In the fourth quarter, total revenue in Financial Services was up 6.6% with same unit revenue up 3.3%. For the year, total revenue grew by 0.5%, with same unit revenue declining by 3%. And in the fourth quarter, revenue declined by 0.8% and same unit revenue declined by 3.2%. For the full year, these businesses represented 16% of our total revenue, but collectively, these businesses declined by 12.8% in 2020 compared with the prior year. Adjusting total revenue to exclude the impact of these businesses, the remaining core revenue would reflect growth of 4.9% rather than the 1.6% reported. Same unit revenue would reflect growth of 2.5% rather than the 0.4% decline reported. Fourth quarter revenue adjusted to exclude these businesses, grew by 8.3% versus the reported 3.9% and same unit revenue grew by 4.7% versus the reported 1.1%. With pre-tax income margin improving by 90 basis points to 10.7% from 9.8% the prior year, we saw a favorable impact resulting from the cost control measures we took in deferring discretionary items, plus the favorable impact from the natural reduction in travel, entertainment expense and from the lower cost for our self-funded healthcare benefits. Among other things, for 2020, T&E costs came in at approximately 30% of the prior year levels, and healthcare costs came in at approximately 85% of expectations as discretionary and elective medical procedures were deferred. Adjusting the reported operating margin to remove the impact of accounting for gains and losses on assets held in the deferred compensation plan, operating income was 11.2% for the full year, up 70 basis points compared with 10.5% in 2019. We are projecting total revenue growth in 2021 within a range of 5% to 8%. With the 5% to 8% revenue growth expectation, we are looking to increase earnings per share within a range of 8% to 12% over the $1.42 recorded for 2020. Consistent with our longer-term goals, we can manage a number of discretionary items, and we expect to improve margin within a range of 20 to 50 basis points. You will note the effective tax rate was 24.3% in 2020. But as we look ahead to 2021, we are projecting a 25% effective tax rate. At this time, we are estimated 54.5 million fully diluted shares for the full year, down from 55.4 million shares in 2020. Adjusted EBITDA for 2020 came in at $132.1 million or 13.7% of revenue, a 9.6% increase from the prior year, and we expect to further improve that margin in '21.

We are projecting total revenue growth in 2021 within a range of 5% to 8%. With the 5% to 8% revenue growth expectation, we are looking to increase earnings per share within a range of 8% to 12% over the $1.42 recorded for 2020.

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On a companywide basis, we achieved an all-time EBITDAR record of $292.6 million. While this is up considerably from the prior year, we also exceeded our first quarter 2019 performance by more than 30% and surpassed our previous record by over 20%. Companywide margins for the quarter were 38.8%. This is nearly 1,200 basis points better than the first quarter of 2019 and 220 basis points higher than the previous record we set in the third quarter of 2020. In the Las Vegas Locals segment EBITDAR exceeded our previous record by 11% and was up 22% over 2019. And when excluding The Orleans, which is heavily reliant on destination business, our same-store locals EBITDAR was up 46% from 2019 levels. Operating margins in our Las Vegas Locals segment were nearly 50% for the quarter, 360 basis points higher than the record we set just two quarters ago. In our Midwest and South region, EBITDAR grew nearly 40% over 2019 beating the previous record by almost 20%. Segment margins were nearly 40% this quarter and overall gaming revenues were up more than 2% from 2019 levels. Most important, this operating segment -- this operating strength was broad-based as 15 of our 17 properties in this segment grew EBITDAR at a double-digit pace over their 2019 performance. From February to March, daily rated play increased over 18% across all age and worth segments and was up nearly 25% in our 65 and up segment. We also experienced an impressive increase in unrated play, which grew more than 33% on a comparable basis from February to March, a reflection of a strengthening consumer confidence across the country. In the first quarter, new player sign-ups rose 35% over the fourth quarter. On an overall basis, the worth of our first quarter sign-ups was over 50% higher than the first quarter of 2019. As COVID vaccinations continue to roll out and restrictions lift, we expect visitation among our rated destination customers to improve. Compared to 2019, revenues were down nearly 11% during the February year-to-date period, while companywide EBITDAR after corporate expense rose 34% and margins improved nearly 1,200 basis points. In March revenues were down just 6% from 2019 levels, while companywide EBITDAR margins after corporate expense approached 44%. In terms of gaming revenues, our Midwest and South segment rose more than 2% from 2019. While on the Las Vegas Locals segment, gaming revenues were up approximately 4% from 2019. We generated over $200 million in cash during the quarter, resulting in approximately $730 million of cash on the balance sheet at quarter end. And we currently have no borrowings outstanding under our $1 billion revolving credit facility. As we previously indicated we expect to generate over $20 million in EBITDAR from online this year. And as more states legalize sports betting and FanDuel leads the way as one of the long-term winners in this space, our 5% equity stake will only continue to grow in value for our shareholders.

As COVID vaccinations continue to roll out and restrictions lift, we expect visitation among our rated destination customers to improve.

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We generated record first quarter total revenues of $2.8 billion, up 21% on a year-over-year basis and record first quarter earnings per share of $1.23 per share, tripling our adjusted earnings per share of $0.40 per share in the first quarter of last year. Given these trends in our progress to date, we are confident we can attain our goal of more than doubling total revenues to $25 billion by 2025. In our core franchise dealership segment, first quarter revenues were $2.3 billion, a 15% increase from last year. Total franchise pre-tax income was $70.5 million, an increase of $47.9 million or 211% compared to last year. On a two-year comparison compared to the first quarter of 2019, same-store franchise dealership revenues increased 14% and pre-tax income increased by $49.8 million, which is a 240% increase, reflecting the impact of our lower expense structure as a result of strategic actions that was taken last year. We continue to experience rapid growth during the first quarter, achieving all time record quarterly revenues of $507 million, which is up 53% compared to the same period last year. We also achieved record quarterly retail sales volume of nearly 19,700 units, which is up 41% year-over-year and ahead of 18,000 to 19,000 units we guided to on our February call. In addition to top line growth, we have to -- build of our EchoPark model that currently use vehicle pricing environment during the total gross profit per unit of $2,339 and above our target of $2,150. Our first active part delivery center in Greenville, South Carolina continues to outperform our model selling 160 vehicles in March at nearly $1,750 in total gross profit per unit. Generally $100,000 and store level profit for the month. With our Phoenix hub selling 228 vehicles in its full month in March, driving $125,000 of store level profit. The unit ratio of December's used car acquisition is already ramping up nicely selling 300 plus in total gross profit per unit. We remain committed to opening 25 new EchoPark locations in 2021 and we're on track for our 140 plus point nationwide distribution network by 2025, which we expect to retail over 0.5 million pre-owned vehicles annually by that time. With our progress to-date and the continuing development of our omnichannel retailing platform, we are confident that we can reach $14 billion in EchoPark revenue by 2025. In the first quarter of 2021, total SG&A expenses as a percentage of gross profit were 72.2% representing a 830 basis point improvement compared to the first quarter of last year and 790 basis points better than the first quarter of 2019 which in dollar terms, while same store franchise gross profit increased 34.5 [Phonetic] last year, same-store franchise SG&A expenses decreased $7.5 million, demonstrating the permanent expense reductions we had previously [Technical Issues]. Turning now to our balance sheet, we ended the first quarter with $435 million in available liquidity and set an all time high liquidity mark in April at $570 million which included over $300 million in cash on hand. More recently, the Company closed a new four-year $1.8 billion credit facility. Reflecting our current business momentum, expansion of liquidity resources, I'm very pleased to report that our Board of Directors recently approved 20% increase to the Company's quarterly cash dividend to $0.12 per share payable on July 15, 2021 to all shareholders of record on June 15, 2021. Additionally, the Board increased our share repurchase authorization by $250 million, bringing our total remaining authorization to $277 million.

We generated record first quarter total revenues of $2.8 billion, up 21% on a year-over-year basis and record first quarter earnings per share of $1.23 per share, tripling our adjusted earnings per share of $0.40 per share in the first quarter of last year. Reflecting our current business momentum, expansion of liquidity resources, I'm very pleased to report that our Board of Directors recently approved 20% increase to the Company's quarterly cash dividend to $0.12 per share payable on July 15, 2021 to all shareholders of record on June 15, 2021.

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Q2 net sales of $191 million were down 4% from the prior quarter and were within our guidance range. Second quarter gross margin of 36.6% and adjusted earnings per share of $1.13 per share exceeded our guidance. The 23% increase in adjusted earnings per share from the prior quarter was due to the gross margin performance and our timely actions to manage operating expenses. We generated robust free cash flow of $39 million in the second quarter, and our balance sheet remains strong, enabling us to navigate the current macro environment, while also investing in our future growth. One market we typically don't highlight, but it is certainly a strength is aerospace and defense, where recent defense design wins drove sequential sales growth of more than 25%. Also, as highlighted, advanced mobility and advanced connectivity continue to comprise nearly 50% of total revenue. First, in the PES segment, we are well-positioned to take advantage of the 35% plus CAGR expected in this market over the next five years. As a general reference point, although our content opportunity per vehicle can vary based on vehicle type and power levels, our substrate content ranges from $5 in a 48-volt mild hybrid to around $40 in a full electric vehicle. However, as an example, Rogers' content opportunity in battery pressure pads for plug-in HEVs and EVs can be greater than $30 per vehicle. Although the near-term outlook for auto sales is challenging, only around 35% of vehicles manufactured today contain ADAS features. As these safety features increasingly become more standard in new vehicles, the market is expected to grow at an 18% CAGR over the next several years. 5G content of high-frequency circuit materials varies based on OEM design and ranges from approximately $100 to $200 per base station for the combined antenna and power amp systems. Sales of 5G phones are expected to grow to around 15% of total units this year and then increase to roughly 30% of the market in 2021. Design changes incorporated in 5G handsets are creating greater content opportunity for Rogers' advanced materials in the range of 10% to 15% versus 4G phones. ACS net sales for the second quarter were $71 million, an increase of 10% sequentially. In ADAS, although there are near-term challenges, as discussed earlier, the medium to long-term growth projections for this market remain robust with a 5-year CAGR of 16%. PES net sales in the second quarter were $45 million, a decrease of 3% as compared to Q1. Q2 EMS net sales were $72 million, a sequential decrease of 14%, primarily due to the economic impact of COVID-19. Second quarter revenues, as previously noted, were $191.2 million, 4% lower than Q1, but within our guidance range of $190 million to $205 million. Our gross margin for the second quarter was 36.6%, an increase of 360 basis points compared to the Q1 margin and well above the top end of our guidance range of 32.5% to 33.5%. This tariff refund of $3.3 million, which we did not anticipate, more than offsets the $3 million for COVID-19-related expenses incurred in the second quarter. GAAP operating income for Q2 of $21.1 million included $3.9 million of accelerated amortization for certain intangible assets acquired in the DSP acquisition in 2017. Accelerated amortization for these intangibles will be $11.7 million in both Q3 and Q4. The incremental amortization of $27.4 million through December 31, 2020, will be excluded from our adjusted results, consistent with all amortization for intangible assets acquired in acquisitions. Adjusted operating income for Q2 2020 was $29.5 million or 15.4% of revenues, a meaningful increase from Q1 of $22.6 million and 11.3% of revenues. GAAP net income for the second quarter of $14.5 million is $1.2 million higher compared to Q1. The effective tax rate for the second quarter of 30.6% was significantly higher than the first quarter effective tax rate of 20.6% due primarily to an increase in the reserve for uncertain tax positions in the quarter, resulting from routine audits in foreign jurisdictions. GAAP earnings per share for the second quarter was $0.78 per fully diluted share at the top end of our guidance range of $0.58 to $0.78. On an adjusted basis, the company delivered earnings per share of $1.13 per fully diluted share in the second quarter, above the top end of our guidance range of $0.80 to $1 per share. Our Q2 revenues of $191.2 million decreased $7.6 million compared to the first quarter of 2020. As Bruce mentioned, EMS revenues decreased 14%, PES revenues decreased 3%, while ACS revenues increased 10% sequentially. Currency exchange rates unfavorably impacted second quarter revenues by $1.1 million compared to the first quarter. The sequential ACS revenue increase resulted primarily from a 28% increase in wireless infrastructure revenues and a 27% increase in aerospace and defense revenues. Revenues in our EMS segment decreased in Q2 compared to Q1 in all applications with a lone bright spot being EV/HEV battery pad applications, which grew 38%. We continue to be encouraged by our engagement in the development and design process and adoption of our materials into new design wins with battery makers for significant OEMs. Revenues for portable electronics, which comprise approximately 25% of the segment revenues, declined 7% in the quarter due to consumer demand softness for handheld devices, exacerbated by the coronavirus pandemic. Revenues for general industrial applications, covering many diverse markets, comprise over 45% of the segment revenues. These revenues declined 16% sequentially due to lower demand in areas such as oil and gas and general manufacturing and industrial applications. Vehicle electrification applications decreased 35% in Q2 due to soft consumer demand for and automaker shutdowns, as discussed earlier. The semiconductor substrate revenues for EV/HEV, which account for approximately 25% of the segment revenues, decreased 12% compared to the first quarter; and the laminated busbar revenues for EV/HEVs, which account for less than 10% of the segment revenues, decreased 65% sequentially. Revenues for power semiconductor substrates for general industrial applications, which comprise over 30% of the segment revenues, were up close to 6% compared to Q1. Our gross margin for the second quarter was $70 million or 36.6% of revenues. In the quarter, the company spent approximately $3 million associated with the coronavirus pandemic and accrued a benefit of $3.3 million for a refund of increased tariff costs in China. The second quarter progress resulted in a 400 basis point improvement in gross margin for PES in the second quarter. Over the past three quarters, through focus on operational execution, we have improved the PES gross margin by over 800 basis points. We are encouraged and confident we will capture an incremental 200 to 400 basis points of improvements in the business, subject, however, to increased volumes. As evidence of the improvement the company has made over the past year, in the second quarter of 2019, the company generated a gross margin of 35.3% on revenues of $243 million. In the second quarter of 2020, we generated a gross margin that is 130 basis points higher on $52 million less revenue. The improvement is equivalent to approximately 450 basis points of gross margin conversion on equivalent product mix. slide 16 details the changes to adjusted net income for Q2 of $21.1 million compared to adjusted net income for Q1 of $17.2 million. As discussed earlier, the adjusted operating income for Q2 of $29.5 million and 15.4% of revenues was meaningfully higher than Q1's adjusted operating income. Adjusted operating expenses for Q2 of $40.4 million or 21.2% of revenues were $2.7 million lower than Q1 operating expenses of $43.1 million. As previously mentioned, Rogers' effective tax rate for the second quarter increased to 30.6%, as a result of recording significantly higher reserves for uncertain tax positions accrued to address certain routine audit findings in foreign jurisdictions. We now expect our effective tax rate for 2020 will be 26% higher than our previously communicated expected tax rate of 24% to 25%. In the second quarter, the company generated strong free cash flow of $39.3 million and ended the second quarter with a cash position of $298.7 million. In the quarter, we generated $46.3 million from operating activities, including a $22.3 million reduction in working capital and repaid $50 million on our revolving credit facility. We ended the second quarter with a net cash position defined as cash and equivalent balances in excess of the amounts owed under our revolving credit facility of $75.7 million. In Q2, the company spent $7 million on capital expenditures. We spent $18.2 million year-to-date through June. We communicated a capex spending range of $40 million to $45 million for 2020 and expect to come in at the lower end of the range, while continuing to invest to fund growth opportunities in EV/HEV applications. We paid down an additional $125 million on our revolving credit facility on July 29. The paydown resulted in an outstanding balance on our revolver of $98 million. Therefore, revenues for Q3 are estimated to be in the range of $175 million to $190 million. As a result, we are guiding gross margin in the range of 35% to 36%. We guide GAAP Q3 earnings in the range of $0.19 to $0.39 per fully diluted share. On an adjusted basis, we guide fully diluted earnings in the range of $0.90 to $1.10 per share for the third quarter.

Second quarter gross margin of 36.6% and adjusted earnings per share of $1.13 per share exceeded our guidance. GAAP earnings per share for the second quarter was $0.78 per fully diluted share at the top end of our guidance range of $0.58 to $0.78. On an adjusted basis, the company delivered earnings per share of $1.13 per fully diluted share in the second quarter, above the top end of our guidance range of $0.80 to $1 per share. Our Q2 revenues of $191.2 million decreased $7.6 million compared to the first quarter of 2020. We communicated a capex spending range of $40 million to $45 million for 2020 and expect to come in at the lower end of the range, while continuing to invest to fund growth opportunities in EV/HEV applications. Therefore, revenues for Q3 are estimated to be in the range of $175 million to $190 million. We guide GAAP Q3 earnings in the range of $0.19 to $0.39 per fully diluted share. On an adjusted basis, we guide fully diluted earnings in the range of $0.90 to $1.10 per share for the third quarter.

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Third quarter core earnings per share of $0.24 was consistent with last quarter, even as we further increased loan loss reserves. The core efficiency ratio improved to a record low of 54.45% and the core pre-tax pre-provision ROAA strengthened to 1.74%. Core pre-tax pre-provision net income was $41.1 million, up some 14% over the second quarter. The Company achieved record quarterly fee income of $26.7 million, an increase of $4.9 million from the previous quarter. This more than offset a $4.4 million increase in provision expense to $11.2 million. Excluding PPP balances, the allowance for loan losses as a percentage of total loans increased 10 basis points to 1.38%. Including previously disclosed day one CECL adjustment, the coverage ratio excluding PPP loans would increase to 1.59%, as seen on Page 10 of the earnings supplement. Our non-performing loans fell from $56 million at the end of the second quarter to $49.7 million at the end of the third quarter. On Page 13 of the earnings supplement, COVID-19 deferrals totaled 2.68%, as of July 24th. Those deferrals fell to 17 basis points as of October 23rd or last Friday. Similarly, on Page 12 of the earnings supplement, deferrals on the commercial portfolios most impacted by COVID declined again from 3.4% on July 24th to 14 basis points as of last Friday. Next, third quarter fee income as a percentage of revenue was 28.8%. First, interchange income was $6.4 million, up roughly $500,000 over the second quarter. Mortgage gain on sale income was $6.4 million with a record quarter of $240 million in production. As an aside, 40% of these loans were not sold and remain on our balance sheet. Despite a lackluster industrywide small business demand, SBA gain on sale income was $1.4 million, which also contributed to fee income. Also on the fee income front, trust revenue totaled a record $2.6 million as well. Loans grew $33 million or 2% on a linked-quarter basis, as the consumer lending business led the way. In commercial lending, however, utilization of lines credit fell some $55 million from 38% at the end of June to 34% at the end of September, as business' investment and working capital utilization has stalled. Fourth, the net interest margin contracted about 18 basis points to 3.11% in the third quarter, despite respectable loan growth and resilient loan spreads, particularly on the consumer side. Net interest income, however, was virtually unchanged, falling only $300,000 to $66.7 million. Fifth, core non-interest expenses were down $63,000 for the quarter to $52.3 million even -- $52.3 million, even as we continue to invest in our digital platform and tools for our client. These launches impacted well over 200,000 consumers and small businesses and by all accounts went smoothly. Core earnings per share matched last quarter's results even with $6.9 million of reserve build. While our provision expense of $11.2 million came remarkably close to the consensus expectation of $11.1 million, our spread income came in roughly $3.5 million lower than consensus expectations and yet we still hit consensus. Our core earnings figures excluded two non-recurring expense items from our results; $3.3 million of expense associated with a voluntary early retirement program and $2.5 million of expense associated with the branch consolidation effort, both of which have been previously disclosed. First, our stated NIM was 3.11%, but was affected by negative replacement yields; a shift in mix toward consumer loans; and most importantly, an average excess cash position during the quarter of approximately $343.3 million or about 4% of average earning assets. Consistent with prior disclosure, we calculate a core NIM, excluding the impact of PPP loans and excess liquidity of 3.28% in Q3. Over the course of next year, however, we currently expect the core NIM, ex-PPP to continue a path of modest contraction in the 3.20% to 3.30% range. Second, Mike mentioned that our fee income of $26.9 million was very strong in Q3, up by nearly $5 million from last quarter. Because much of this was driven by mortgage, fee income is expected to seasonally adjust to approximately $24 million to $25 million in the fourth quarter. And finally, I know Mike already mentioned this, but if you look at Page 10 of the supplement, you will see graphically what we have verbally explained in prior quarters, that even though we delayed the adoption of CECL, the addition of our day one CECL number to our current incurred ALLL results in a reserve of $101.2 million and a reserve coverage ratio of 1.59%. Net charge-offs for Q3 were $4.3 million, which includes approximately $1.2 million in consumer charge-offs. Net charge-offs annualized were 0.27%. Our NPLs improved approximately $6.3 million to $49.7 million, improving to 0.78% from 0.88% of total loans excluding PPP loans. Reserve coverage of NPLs rose to 177% from 145%, again excluding PPP loans. Similarly, our NPAs improved $6.7 million to 0.80% of total loan assets from 0.91%. Our proactive approach to risk ratings resulted in criticized loans increasing approximately $60 million, while classified loans increased modestly. As shown in the slide deck, the provision for the quarter totaled $11.2 million, which resulted in a reserve build of $6.9 million under our incurred loss model. The allowance for loan loss as of September 30th totaled $88.3 million as compared to $81.4 million at June 30th. The reserve balance grew to 1.38% excluding PPP loans from 1.28%. Net charge-offs were $4.3 million. We have a slight increase in specific reserves of approximately $500,000. Our standard qualitative reserves increased approximately $900,000 quarter-over-quarter, reflecting a mix of economic conditions. Our COVID qualitative overlying reserve increased by $4.7 million for Q3 to $14.6 million. We released approximately $1.9 million in consumer reserves due to improving deferral experience as well as improved economic conditions. We increased our high-risk portfolio reserves by approximately $6.6 million, largely due to increases in the overlay reserves for our hospitality and retail portfolios.

Core pre-tax pre-provision net income was $41.1 million, up some 14% over the second quarter.

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We had many notable accomplishments during the year, we earned $470 million of adjusted operating income, 84% more than in 2020. We more than doubled adjusted operating income per share to $6.32 per share. Over the year, shareholder's equity per share grew 9% to $93.19. Adjusted operating shareholder's equity per share increased 13% to $88.73, and adjusted book value per share rose 14% to $130.67. We repurchased $10.5 million common shares, or approximately 14% of our shares outstanding at December 31, 2020, at an average price of $47.19. Those repurchases totaled $496 million, with the addition of $66 million of dividends, we returned a total of $562 million to shareholders. Through strong new business production in each of our financial guarantee markets, U.S. public finance, international infrastructure finance and global structure finance, we generated a total of $361 million of PVP in 2021. Direct PVP exceeded $350 million for the third consecutive year, compared with an average annual direct PVP of $210 million from 2012 to 2018, making the last three years our best in more than a decade for direct new business production. With a more than 60% share of new issue insured par sold, we led the U.S. public finance bond insurance industry to its highest penetration, market penetration in a dozen years. And taking advantage of exceptionally low interest rates are U.S. holding company issued a total of $900 million, a 3.15% 10-year and 3.60% 30-year senior debt to refinance $600 million of debt with higher coupons ranging from 5% to almost 7%. As a result, annual debt service savings will be $5.2 million through the next maturity date. U.S public finance PVP of $235 million included in its second best direct production in at least a decade, surpassed only by the previous year's result, or $79 million of international infrastructure PVP marks the fourth year out of the last five that we have exceeded 75 million of direct PVP in that sector. Global structure finance PVP at $47 million was the second best and direct production since 2012. Our markets and economic environment offered both opportunities and challenges during 2021, issuance of U.S. municipal bonds reached a record par amount of $457 billion in 2021. Total insured market volume increased to 8.2% of par issued, the highest annual rate over the past 12 years, and up from 7.6% during 2020 and 5.9% during 2019. The $37.5 billion of insured par in 2021 represented a 10% annual increase, on the heels of a 43% increase the prior year, resulting in a 57% growth of the insured market in just two years since 2019. Assured Guaranty's production was a leading force behind this growth, as we enjoyed over 58% of new issue insured par sold in 2020, and more than 60% in 2021. Our highest annual market share since 2013, Our $23 billion of insured new issue volume in 2021 was almost $3 billion more par than we insured in 2020, and was generated by more than 8,000 individual transaction. We guaranteed $100 million or more on each of 48 large issues launched in 2021, up from 39 transactions in 2020 and 22 in 2019. Significantly, we continue to add value on credits with underlying ratings in the double aid category from one or both of S&P and Moody's, ensuring a 109 such AA transactions totaling more than $3.5 billion of insured par. The below investment grade portion of our insured portfolio declined to barely more than 3% as of December 31, 2021. Almost half of our below investment grade net par exposure is to Puerto Rico, and we expect that with the court approved settlements pertaining to the GO and certain other credit scheduled to occur on March 15th of this year, that figure should drop below 2.5%, and continue to fall as more of our Puerto Rico settlements are executed. Our overall investment performance was strong as one of the top 25 collateralized loan obligation managers by assets under management. During 2021, we launched six new CLOs representing $2.5 billion of assets under management, more than double what we issued in 2020, and we converted non-fee earning AUM to fee earning at AUM by selling substantially all this CLO equity still held by a Assured IM legacy funds, where we had been rebating management fees. Through these efforts, we increased CLO management fees in 2021 to $48 million from $23 million in 2020. Additionally, we reset a refinance 10 CLOs in the United States and Europe. I am very pleased to report that our fourth quarter 2021 adjusted operating income was $273 million, or $3.88 per share, a significant increase over the adjusted operating income of the fourth quarter of 2020, which was $56 million, or $0.69 per share. The primary driver of the increase in fourth quarter 2021 total adjusted operating income was the insurance segment where adjusted operating income increased 134% over fourth quarter 2020 from $109 million to $277 million. After many years of negotiation and other loss mitigation efforts, we are close to resolving $1.4 billion in gross par associated with our Puerto Rico GO, PBA, CCDA and PREPA exposures. The increased certainty of the settlement and Puerto Rico's improved economic outlook, combined with the increased value of our actual and expected recoveries under the settlement agreements, were the primary drivers of the $186 million economic benefit in the fourth quarter of 2021. During the fourth quarter of 2021, we sold a portion of our salvage and subrogation recovered bulls associated with certain matured Puerto Rico GO and PREPA exposures, resulting in proceeds of $383 million, thereby realigning some of our expected recoveries early. In 2022, we continued to sell portions of our GO, PBA and PREPA salvage and subrogation recoverable, resulting in an additional proceeds of $133 million. Total income from investments, which consists of net investment income on the fixed maturity portfolio and equity in earnings on short Im funds and other alternative investments, was $111 million, an increase from $94 million in the fourth quarter of 2020. Collectively, the investments in Assured IM funds and alternative investments generated $44 million in equity in earnings of investees in the fourth quarter of 2021, compared with $24 million in the fourth quarter 2020. Our fixed maturity and short-term investments account for the largest portion of the portfolio, generating net investment income of $67 million in the fourth quarter of 2021, compared with $70 million in the fourth quarter of 2020. As we shift fixed maturity assets into alternative investments, net investment income from fixed maturities may decline, however, over the long-term, we are targeting enhanced returns on the alternative investment portfolio of over 10%, which exceeds our projected returns on a fixed maturity portfolio. In terms of premiums, scheduled net earned premiums decreased slightly in the fourth quarter of 2021 to $91 million, compared with fourth quarter 2020 of $94 million. Premium earnings due to refundings and terminations were $20 million in fourth quarter 2021, compared with $65 million in the fourth quarter of 2020, when two large transactions refunded. The asset management segment adjusted operating loss was $3 million in the fourth quarter of 2021, compared with $20 million in the fourth quarter of 2020. The improvement in asset management segment results is primarily attributable to increased management fees in the strategies we launched since the 2019 Blue Mountain acquisition, and a non-recurring impairment of a lease right of use asset of $13 million in 2020. Asset management fees on a segment basis were $21 million in the fourth quarter of 2021, compared with $20 million in the fourth quarter of 2020. As of December 31, 2021, AUM of the wind down funds was $582 million, compared with $1.6 million as of December 31, 2020. In the fourth quarter of 2021, the effective tax rate was 15.1%, compared with 12.7% in fourth quarter 2020, which included the release of a reserve for uncertain tax positions. These achievements are reflected in our 2021 full year adjusted operating income of $470 million, which includes a loss on extinguishment of debt of $175 million pre-tax, or $138 million after tax. Despite the debt extinguishment charge, full year 2021 adjusted operating income represents an 84% increase compared with 2020 adjusted operating income of $256 million. The primary driver of this increase was the insurance segment, with 722 adjusted operating income in 2021, compared with $421 million in 2020. Economic loss development, which excludes the effects of deferred premium revenue, was a benefit of $287 million in 2021. Across the whole portfolio, loss expense in 2020 was $204 million, and was primarily attributable to Puerto Rico. On a full year basis, total income from the investment portfolio was $424 million in 2021, compared with $371 million in 2020. Assured IM funds in which the insurance subsidiaries invest generated gains of $80 million in 2021, compared with gains of $42 million in 2020. The gains were across all strategies, particularly healthcare, CLOs, and asset based, and generated a year-to-date return of 20.8%. The third party alternative investments also generated gains of $64 million in 2021, compared with $19 million in 2020. These gains more than offset reduced net investment income on the available -- sale fixed maturity portfolio, which was $280 million in 2021, down from $310 million in 2020. Total net earned premiums in credit driven revenues were $438 million in 2021, compared with $540 million in 2020, including premium accelerations of $66 million and $130 million, respectively. We increased for earning for CLO AUM to the issuance of $2.8 billion in CLOs and the sale of CLO equity out of the legacy funds, and we continue to liquidate assets in the wind down funds. The improvement in the asset management segment operating loss from $50 million in 2020 to $90 million in 2021, was primarily attributable to an increase in management fees from $59 million in 2020 to $76 million in 2021. The corporate division had adjusted operating loss of $253 million in 2021, including a loss on debt extinguishment of $175 million, or $138 million on an after tax basis. Which resulted from a $600 million in debt redemptions that Dominic mentioned earlier, this charge is simply an acceleration of expenses that would have occurred over time. In the prior year, corporate division adjusted operating loss was $111 million. The debt redemptions were financed with the proceeds from the issuance of $900 million in new 10-year and 30-year debt, which resulted in a reduced average coupon and redeemed debt from 5.89% to 3.35%, and $170 million -- reduction in our 2024 debt refinancing needs. In addition to debt refinancing has generated annual debt service savings of $5.2 million until the next maturity date and provided flexibility to continue share repurchases. We were able to accomplish all of this without significantly affecting our debt leverage or interest coverage ratios, the additional $300 million of proceeds from the debt issuances were used primarily for share repurchases. In the fourth quarter 2021, where we purchased $3.7 million shares for $192 million at an average price of $51.47 per share. This brings full year 2021 purchases to $10.5 million shares, or $496 million, which represents 14% of the total shares outstanding at the beginning of the year. Subsequent to the quarter close, we repurchased an additional $1.7 million shares for $91 million. Since the beginning of our repurchase program in January 2013, we have returned $4.2 billion to shareholders under this program, resulting in a 69% reduction in total shares outstanding. The cumulative effect of these purchases was a benefit of over $37 an adjusted operating shareholder's equity per share and $65 in adjusted book value per share, which helped drive these metrics to new record highs. From a liquidity standpoint, the holding companies currently have cash and investments of approximately $274 million dollars, of which $124 million resides in AGL. This week, the Board of Directors authorized the repurchase of an additional $350 million of common shares. Under this and previous authorizations, the company is now authorized to purchase $364 million of its common shares. In addition, we declared a dividend of $0.27 per share, which represents an increase of 13.6% over the previous dividend of $0.22 per share.

I am very pleased to report that our fourth quarter 2021 adjusted operating income was $273 million, or $3.88 per share, a significant increase over the adjusted operating income of the fourth quarter of 2020, which was $56 million, or $0.69 per share.

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So we reported Q1 revenue of $609 million, really kind of spot on our expectations. Reported cash earnings per share of $2.82. Against the prior year, we reported a revenue decline of 8% and organic revenue decline of 6%. Same-store sales or what we call client softness really stuck at approximately minus 6%. We reported 93% overall retention. Credit losses, very low for the quarter, $2 million. That was helped by a $6 million recovery and again, lower sales rolling into this year. Consolidated sales finished 7% ahead of last year. Yes, 7% ahead of last year, so finally growing again. If you rewind sales over the last four quarters, so sales versus prior year, 55%, 81%, 92% and now 107%. So for Q1, we signed 35,000 new business clients worldwide, 35,000. Included in our Q1 earnings supplement on page 12, you'll see our updated guidance for the year. So full year '21 revenue expectations at the midpoint, $2,650,000,000. Reasons that we're staying put are: one, Q1 revenue, again, coming in kind of on plan; two, we've built in significant sequential revenue step-up in the forward quarters, probably in the range of $100 million up from Q1 to Q4. On the cash earnings per share front, we will flow through our $0.12 Q1 beat. We'll raise full year '21 cash earnings per share guidance at the midpoint to $12.42, so $12.42 for the base business. So as a result of the one month delay, we're going to take the expected in-year AFEX accretion at the midpoint to $0.18 versus $0.20 previously. If you combine the base business and AFEX, our consolidated earnings per share outlook at the midpoint would be $12.60, $12.60 for the full year. Leverage ratio 2.5 times, liquidity approaching $2 billion. Again, our plan is to generate $1 billion-plus of annual free cash flow. We had the ability to lever up to three times target, which would produce circa $8 billion in capital to invest in either M&A or buybacks over the forecast period. Rest of year, again, we're raising rest of year cash earnings per share at the midpoint to $12.42. That's excluding acquisitions, and the $12.60 at the midpoint, that's including AFEX, so tracking to deliver that, although again, fully aware of the uncertainties. For Q1 of 2021, we reported revenue of $609 million, down 8%; GAAP net income up 25% to $184 million, and GAAP net income per diluted share up 29% to $2.15. Included in our Q1 2020 results was the impact of the $90 million onetime loss related to a customer receivable in our cross-border payments business, which equated to $0.74 per diluted share, as reported last year. Adjusted net income for the quarter decreased 8% to $242 million, and adjusted net income per diluted share decreased 6% to $2.82 as we continue to feel the effects of COVID on our businesses. Organic revenue growth improved two points sequentially to down 6% on a year-over-year basis. Our fuel category was down organically about 6% year-over-year, which was a 4-point improvement from Q4. The corporate payments category was down 5% in the first quarter, one point better than Q4, as improvements in virtual card and full AP were offset by FX, which was lapping a very strong Q1 last year. Full AP growth accelerated 14 points sequentially to 21% growth year-over-year, powered by continued strong new sales. Tolls was up 3% compared with last year but down four points from Q4 of 2020 due to the aforementioned shutdowns in Brazil. Looking longer term, compared with Q1 of 2019, revenue was up 13% organically. The lodging category was down 14%, which was an improvement from down 25% last quarter, with domestic airline activity recovering faster than we expected. Gift showed organic growth of 2% year-over-year as that business felt the effects of COVID earlier in Q1 of 2020 than most of our other businesses. Total operating expenses were down 7% to $343 million, excluding the impact of the onetime loss in our cross-border payments business last year. As a percentage of total revenues, operating expenses excluding the onetime loss were stable compared with Q1 of 2020 at approximately 56%. In the quarter, bad debt was only $2.5 million or one basis point, as it included the benefit of a $6 million recovery for credit loss recorded in the first quarter of last year. Interest expense decreased 20% to $29 million due to lower borrowings on our revolver and decreases in LIBOR related to the unhedged portion of our debt. Our effective tax rate for the first quarter was 21.8%. Excluding the impact of the onetime loss in our cross-border payments business last year, our effective tax rate in Q1 of 2020 was 18.9%. We ended the quarter with $958 million of unrestricted cash, and we also had approximately $1 billion of undrawn availability on our revolver. In total, we had $3.5 billion outstanding on our credit facilities and $915 million borrowed on our securitization facility. As of March 31, our leverage ratio was 2.48 times trailing 12-month adjusted EBITDA, as calculated in accordance with our credit agreement. Recall that our normal three year term expired last fall when credit markets were unfavorable, so we entered into a one year note at LIBOR plus 125 basis points with a 37.5 basis point floor, expecting to refinance again when conditions improve. Our new securitization has a duration of three years at LIBOR plus 100 basis points with a floor of 0, so our effective all-in rate is approximately 50 basis points better, given the current level of LIBOR. We've also just completed a refinance of our Term B credit facility, upsizing it to $1.15 billion for a new term of seven years and maintaining the rate of LIBOR plus 175 basis points. We repurchased approximately 640,000 shares during the quarter for $170 million at an average price of $266 per share, and we have approximately $836 million in repurchase capacity remaining under our current authorization. We are maintaining our full year revenue guidance of between $2.6 billion and $2.7 billion as improvements in some businesses such as domestic airline lodging are being offset by other places like Brazil and Europe. As we explained last quarter, our full year guidance assumes we recover about 1/3 of our Q4 exit revenue softness during calendar 2021. We are raising the midpoint of our adjusted net income per diluted share guidance $0.12 to $12.42 to reflect our first quarter results compared to our expectations. Looking ahead, we are expecting Q2 2021 adjusted net income per diluted share to be in the range of $2.80 to $3 per share.

Reported cash earnings per share of $2.82. Against the prior year, we reported a revenue decline of 8% and organic revenue decline of 6%. For Q1 of 2021, we reported revenue of $609 million, down 8%; GAAP net income up 25% to $184 million, and GAAP net income per diluted share up 29% to $2.15. Adjusted net income for the quarter decreased 8% to $242 million, and adjusted net income per diluted share decreased 6% to $2.82 as we continue to feel the effects of COVID on our businesses. We are maintaining our full year revenue guidance of between $2.6 billion and $2.7 billion as improvements in some businesses such as domestic airline lodging are being offset by other places like Brazil and Europe. Looking ahead, we are expecting Q2 2021 adjusted net income per diluted share to be in the range of $2.80 to $3 per share.

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We already have 15 analysts in the queue right now. Instead of 1,000-yard stare, team Camden showed up every day with the eye of the tiger, reminding us of what we know is true, you're simply the best. Our markets have lost fewer high paying jobs than other markets in the U.S. As a matter of fact, it's 5% losses for Camden markets versus 15% for the U.S. Overall, year-over-year employment losses through September have been less in our markets. Job losses in most of our markets have been in the range of down 2.5% to down 5%, the best being Austin, Dallas, Phoenix, Tampa, Atlanta and Houston. Toughest markets have been Orlando, Los Angeles and Orange County with job losses between 9.5% and 9.7%. Another key employment trend our other key employment trends are that are supporting our residents' ability to stay in their apartments and pay rent is that when you think about the job losses that we lost at the beginning of the pandemic, there were 22 million jobs lost, 11 million had been added back. Of the jobs that have not been added back, 5.8 million are low-income workers making less than $46,000 a year. And another group 4.1 million folks have not been added back that make between $46,000 and $71,000 a year. So the lion's share of the 11 million jobs that haven't been that have not been added back are really not our residents. A few signs that conditions of stabilizing our markets, occupancy for the third quarter was 95.6%, up from 95.2% in the second quarter. Turnover continues to be a tailwind at 48% for the third quarter and only 42% year-to-date. In our portfolio, we had 13.8% move-outs to purchase homes in the first quarter of this year that moved up to 14.7% in the second quarter. And in the third quarter, it moved up again to 15.8%. But if you take the average, the average year-to-date move-outs to purchase homes, it was 14.8% versus a full year 2019 of 14.6%. We did see a little uptick in October to 18%, but Q4 is always a little bit elevated. During the third quarter of 2020, we stabilized Camden North End I, a 441 unit $99 million new development in Phoenix, Arizona, generating over a 7% stabilized yield. We completed construction on Camden Downtown, a 271 unit $131 million new development in Houston. We recommenced construction on Camden Atlantic, a 269 unit $100 million new development in Plantation, Florida. And we began construction on both Camden Tempe II, a 397 unit $115 million new development in Tempe, Arizona, and Camden NoDa, a 387 unit $105 million new development in Charlotte. For the third quarter of 2020 effective new leases were down 2.4% and effective renewals were up 0.6% for a blended decline of 0.9%. Our October effective lease results indicate a 3.5% decline for new leases and a 2.1% growth for renewals for a blended decrease of 1%. Occupancy averaged 95.6% during the third quarter of 2020 and this was up from the 95.2% where both experienced in the second quarter of 2020 and that we anticipated for the third quarter of 2020 leading in part to our third quarter operating outperformance, which I will discuss later. In the third quarter, we averaged 3,227 signed leases monthly in our same property portfolio, slightly ahead of the third quarter of 2019 where we averaged 3,104 signed leases. As we collected 99.4% of our scheduled rents with only 0.6% delinquent. This compares favorably to both the third quarter of 2019, when we collected 98.3% of our scheduled rents with a higher 1.7% delinquency and in the second quarter of 2020, when we collected 97.7% of our scheduled rents with 1.1% of our residents in a deferred rent arrangement and 1.2% delinquent. The fourth quarter is off to a good start with 98.1% of our October, 2020 scheduled rents collected. When a resident moves out owing us money, we typically have previously reserved 100% of the amount owed as bad debt and there'll be no future impacts to the income statement. Last night, we reported funds from operations for the third quarter of 2020 of $126.6 million or $1.25 per share, exceeding the midpoint of our prior guidance range by $0.08 per share. This $0.08 per share outperformance for the third quarter resulted primarily from approximately $0.055 in higher same store revenue comprised of $0.025 from lower than anticipated net bad debt due to the previously mentioned higher than anticipated collection levels and higher net reletting income, $0.01 from the higher than anticipated levels of occupancy and $0.02 from higher than anticipated other income driven primarily from our higher than anticipated levels of leasing activity. Approximately $0.005 in better than anticipated revenue results from our non-same store and development communities. Approximately $0.005 in lower overhead due to general cost control measures and an approximately $0.015 gain related to the sale of our Chirp technology investment to a third-party, this gain is recorded in other incomes. At the midpoint, we now anticipate full year 2020 same-store revenue to increase 1% and expenses to increase 3.4% resulting in an anticipated 2020 same store net operating income decline of 0.3%. The difference between our anticipated 3.4% full year total expense growth and our year-to-date total expense growth of 2.4% is primarily driven by the timing of current and prior year tax refunds and accruals. The increase to our original full year expense growth assumption of 3% is almost entirely driven by higher than anticipated property tax valuations in Houston. We now anticipate total same-store property taxes will increase by 4.7% in 2020 as compared to our original budget of 3%. We expect FFO per share for the fourth quarter to be within the range of a $1.21 to $1.27. The midpoint of $1.24 is in line with our third quarter results after excluding the previously mentioned third quarter gain on sale of technology. As of today, we have just under $1.4 billion of liquidity comprised of approximately $450 million in cash and cash equivalents. And no amounts outstanding underneath our $900 million unsecured credit facility. At quarter end, we had $384 million left to spend over the next three years under our existing development pipeline. Our current excess cash is invested with various banks earning approximately 30 basis points.

Last night, we reported funds from operations for the third quarter of 2020 of $126.6 million or $1.25 per share, exceeding the midpoint of our prior guidance range by $0.08 per share.

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Consolidated revenues increased 11.1% year-over-year in our first full quarter as a stand-alone public company. The revenue increase included same-store revenue growth of 14.8% and we reported adjusted EBITDA margin that improved to 15.4% of revenues. We have enhanced digital payment platforms that are enabling over 75% of monthly customer payments to be made outside of our stores. We have an industry-leading, fully transactional e-commerce platform that is attracting a new and younger customer, and we have a portfolio of 51 GenNext stores that is currently outperforming our expectations with many more store openings in the pipeline. We are encouraged by the continuing improvement and the quality and size of our same-store lease portfolio, which ended the quarter up 6.2% compared to the end of the first quarter of 2020. Today, nearly 70% of our portfolio is made up of lease agreements that were originated using this technology. Another contributor to our strong performance in the quarter was our e-commerce channel, which represented more than 14% of lease revenues. Our e-commerce team has really delivered, driving traffic growth to aarons.com by 12.8% and increasing revenues by 42% in the first quarter as compared to the prior-year quarter. In addition, e-commerce write-offs improved by more than 50% compared to last year's quarter, primarily as a result of ongoing decisioning optimization, operational enhancements, and strong customer payment activity. To date, we have opened 51 new GenNext stores and have generated results that are meeting or exceeding our targeted internal rate of return equally as encouraging, monthly lease originations in the first quarter. For the first quarter of 2021, revenues were $481.1 million compared to $432.8 million for the first quarter of 2020, an increase of 11.1%. The increase in revenues was primarily due to the improving quality and increased size of our lease portfolio and strong customer payment activity during the quarter, aided in part by government stimulus and partially offset by the net reduction of 166 Company-operated and franchised stores compared to the prior year. As Douglas called out earlier, e-commerce revenues were up 42% compared to the first quarter of the prior year and represented 14.2% of overall lease revenues compared to 11.3% in 2020. On a same-store revenue basis, revenues increased 14.8% in the first quarter compared to the prior-year quarter, the first double-digit, same-store revenue growth since 2009, and our fourth consecutive positive quarter. Additionally, the company ended the first quarter of 2021 with a lease portfolio size for all company operated stores of $128.8 million, an increase of 3.6% compared to the lease portfolio size as of March 31, 2020. Operating expenses excluding restructuring expenses, spin-related transaction costs and the impairment of goodwill and other expenses, which were both recorded in the first quarter of 2020 were down $1.5 million as compared to the first quarter of last year. Adjusted EBITDA was $73.9 million for the first quarter of 2021 compared with $34.7 million for the same period in 2020, an increase of $39.2 million or 112.9%. As a percentage of total revenues, adjusted EBITDA was 15.4% in the first quarter of 2021 compared with 8% for the same period last year, an improvement of 740 basis points. The improvement in adjusted EBITDA margin was primarily due to the items that drove the total revenues increase and a 310 basis point reduction in overall write-offs to 3.1% of lease revenues, including both improvement in the e-commerce and store origination channels compared to the prior year. On a non-GAAP basis, diluted earnings per share were $1.24 in the first quarter of 2021 compared to non-GAAP diluted earnings per share of $0.30 for the same quarter in 2020, an increase of $0.94 or 313.3%. Cash generated from operating activities was $20.2 million for the first quarter of 2021, a decline of $36.6 million compared to the first quarter of 2020, primarily due to higher inventory purchases, partially offset by higher customer payments and other changes in working capital. During the quarter, the company purchased 252,200 shares of Aaron's common stock for a total purchase price of approximately $6.3 million. As of the end of the quarter, we had approximately $143.7 million remaining under the company's share repurchase authorization that was approved by our Board on March 3rd of this year. The Company's Board of Directors also declared our first quarterly cash dividend of $0.10 per share last month and we paid the dividend on April 6. As of March 31, 2021 the company had a cash balance of $61.1 million, less than $500,000 of debt and total available liquidity of $295.5 million. For the full year, we expect consolidated revenues of between $1.725 billion and $1.775 billion representing an increase in our revenue outlook of $75 million. We also expect adjusted EBITDA of between $190 and $205 million, representing an increase in our adjusted EBITDA outlook of $35 million. We have also increased our full-year same-store revenue outlook from a range of 0% to 2% to a range of 4% to 6%.

For the first quarter of 2021, revenues were $481.1 million compared to $432.8 million for the first quarter of 2020, an increase of 11.1%. On a non-GAAP basis, diluted earnings per share were $1.24 in the first quarter of 2021 compared to non-GAAP diluted earnings per share of $0.30 for the same quarter in 2020, an increase of $0.94 or 313.3%. For the full year, we expect consolidated revenues of between $1.725 billion and $1.775 billion representing an increase in our revenue outlook of $75 million.

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destination, mountain resorts and regional ski areas for the third quarter was only a down 3% compared to the third quarter of fiscal 2019. Whistler Blackcomb's total visitation for the third quarter declined nearly 60% to the third quarter of fiscal 2019. Net income attributable to Vail Resorts was $274.6 million or $6.72 per diluted share for the third quarter of fiscal 2021, compared to net income attributable to Vail Resorts of $152.5 million or $3.74 per diluted share in the prior year. Resort reported EBITDA was $462.2 million in the third fiscal quarter, which compares to resort reported EBITDA of $304.4 million in the same period in the prior year. Resort-reported EBITDA margin for the third quarter was 52%, exceeding both the prior-year period of 43.9% and fiscal 2019 third quarter of 50.2%. Now, turning to our outlook for fiscal 2021. Net income attributable to Vail Resorts, Inc. is expected to be between $93 million and $139 million for fiscal 2021. We expect the resort-reported EBITDA for fiscal 2021 will be between $530 million and $570 million, and we expect the resort-reported EBITDA margin for fiscal 2021 will be approximately 28.9% using the midpoint of the guidance range. Our total cash and revolver availability as of April 30, 2021, was approximately $2 billion, with $1.3 billion of cash on hand, $419 million of U.S. revolver availability under the Vail Holdings credit agreement, and $203 million of revolver availability under the Whistler Credit Agreement. As of April 30, 2021, our net debt was 2.8 times trailing 12 months total reported EBITDA. We're very pleased with the results for our season pass sales to date with guests showing strong enthusiasm for the enhanced value proposition of our pass products, driven in part by the 20% reduction in all pass prices for the upcoming season. Compared to sales for the 2019-2020 North American ski season through June 4, 2019, pass product sales for the 2021-2022 season to June 1, 2021, increased approximately 50% in units and 33% in sales dollars. Pass product sales are adjusted to include Peak Resorts' pass sales in both periods and eliminate the impact of foreign currency by applying an exchange rate of $0.83 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb. As a reminder, pass product sales for the full selling season through December 6, 2020, as compared to the full selling season through December 8, 2019, increased approximately 20% in units and approximately 19% in sales dollars. Compared to the period ended June 4, 2019, effective pass price decreased 10% as compared to the 20% price decrease we implemented this year. The pass results exceeded our original expectations to the impact of the 20% price reduction. In addition, we are very pleased that ongoing sales of the Epic Australia pass, which ends on June 15, 2021, are up approximately 43% in units through June 1, 2021, as compared to the comparable period through June 4, 2019, representing significant growth following the acquisition of Falls Creek and Hotham in April 2019. We also plan to add a new four-person high-speed lift at Breckenridge to serve the popular peak 7, replace the Peru lift at Keystone with a six-person high-speed chairlift and replace the Peachtree lift at Crested Butte with a new three-person fixed-grip lift. These investments will greatly improve uplift capacity, further enhance the guest experience, and complete our $35 million capital plan for the season. And we have announced that we will be raising our minimum entry wages in Colorado, Utah, Washington, and California to $15 per hour while also making material increases in the entry wages of our Eastern resorts, which will be set based upon their local market dynamics.

Net income attributable to Vail Resorts was $274.6 million or $6.72 per diluted share for the third quarter of fiscal 2021, compared to net income attributable to Vail Resorts of $152.5 million or $3.74 per diluted share in the prior year. Now, turning to our outlook for fiscal 2021. Net income attributable to Vail Resorts, Inc. is expected to be between $93 million and $139 million for fiscal 2021. We expect the resort-reported EBITDA for fiscal 2021 will be between $530 million and $570 million, and we expect the resort-reported EBITDA margin for fiscal 2021 will be approximately 28.9% using the midpoint of the guidance range.

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Our global components business capitalized and continued strong demand in all regions, with sales up 40% year-over-year. As a result, global component sales reached $6.6 billion, which is an all-time record in the company's history. Finally, I'm happy to report that we increased our share repurchase authorization by an additional $600 million. This comes approximately one year after our last $600 million authorization and shows our continued commitment to returning cash to the shareholders at unmatched levels in our industry. Second quarter sales increased 25% year-over-year on a non-GAAP basis. The average euro-dollar exchange rate for the quarter was $1.21 to EUR one compared to the rate of $1.18 we had used for forecasting. The slightly stronger euro benefited sales growth by approximately $69 million more than we anticipated. For the full year 2021, we continue to expect our effective tax rate to be near the low end of our long-term range of 23% to 25%. Second quarter operating cash flow was $281 million despite substantial inventory demand to fund growth. Over the last five-, 10- and 15-year period, cash flow from operations has consistently averaged 90% of non-GAAP net income. Our cash cycle of approximately 50 days improved by six days compared to last year. Leverage, as measured by debt-to-EBITDA is the lowest level in nearly 10 years. We returned approximately $250 million to shareholders during the second quarter through our share repurchase plan and this was the largest single quarter of share repurchases in our history and was enabled by our strong profits and proactive working capital management. We remain committed to returning cash to shareholders and recently expanded the operation by $600 million. The total authorization under our plan is approximately $663 million and we're confident that we're purchasing shares below their intrinsic value based on the increasing return on invested capital and return on working capital that we're showing in the business.

Finally, I'm happy to report that we increased our share repurchase authorization by an additional $600 million. This comes approximately one year after our last $600 million authorization and shows our continued commitment to returning cash to the shareholders at unmatched levels in our industry. We remain committed to returning cash to shareholders and recently expanded the operation by $600 million.

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Consumers remained loyal to our brands as we maintained the 1 million net new households gained in the prior year, while dollars per buyer increased 10%. Over the past year, we increased our marketing investment by nearly $40 million or 8%. Most importantly, we significantly improved our market share performance, where today, 55% of the brands in our portfolio are growing market share versus 26% 18 months ago. Full implementation of these initiatives will deliver $50 million of incremental cost savings in each of the next three fiscal years. This led to operational efficiencies and incremental capacity for our coffee production, which supported 21% sales growth for the brand this year. These four priorities are critical to ensuring we maintain our momentum and we're critical to our record fiscal 2021 results with full-year net sales increasing 3%. Net sales grew 5% when excluding the prior-year sales for divested businesses and foreign currency exchange. Fiscal '21 adjusted earnings per share was $9.12, an increase of 4%, exceeding our most recent guidance range of $8.70 to $8.90. Free cash flow was $1.26 billion, above our most recent expectations of $1.1 billion. We returned $1.1 billion of capital to shareholders this year in the form of dividends and share repurchases. We increased our dividend for the 19th consecutive year and through share repurchases, reduced our shares outstanding by approximately 5% on a full-year basis. And we repaid over $860 million of debt during the fiscal year, strengthening our balance sheet to provide flexibility for a balanced approach to reinvesting in the business and returning cash to shareholders. Net sales declined 8% versus the prior year. Excluding the non-comparable net sales from divestitures and foreign exchange, net sales decreased 3% due to lapping the initial stock upsurge related to the COVID-19 pandemic. Adjusting for divestitures, net sales grew at a two-year CAGR of 4%, demonstrating growth across all three of our U.S. retail segments. Fourth-quarter adjusted earnings per share declined 26%, primarily driven by the decreased sales, $40 million of incremental marketing investments, and higher costs, partially offset by higher pricing. Net sales, excluding sales for the divested Natural Balance business, decreased 6% and demonstrated growth on a two-year basis. Consumer adoption of K-Cups continues to grow with 3 million incremental households purchasing a Keurig machine last year. In the last 52 weeks, retail sales of our brands grew 17%. Over the last 52 weeks, Cafe Bustelo retail sales grew 21% and Dunkin' grew 16%. The Dunkin' brand, representing $1 billion in all-channel retail sales dollars was a top share gainer in the coffee category growing nearly triple the total at-home coffee category rate in measured channels over the last 52 weeks. The Folgers brand gained 3 million new households at the height of the pandemic and has the highest repeat rate of any brand for new households gained during the pandemic. In our consumer foods business, net sales decreased due to the Crisco divestiture and increased 1% on a comparable basis and reflected strong growth on a two-year basis. Smucker's Uncrustables frozen sandwiches continue to deliver exceptional growth with net sales and household penetration each increasing 16% in the quarter. For our combined U.S. retail and away-from-home segments, the Uncrustables brand delivered nearly $130 million of net sales this quarter, recording its 28th consecutive quarter of growth. The brand delivered over $400 million of net sales this year and is on track to exceed our $500 million target in fiscal year 2023. Net sales decreased 8%. Excluding the impact of divestitures and foreign exchange, net sales decreased 3%. Higher net price realization was a 1 percentage point benefit, primarily driven by peanut butter and our pet business. Adjusted gross profit decreased $79 million or 10% from the prior year. Adjusted operating income decreased $120 million, or 28%, reflecting the decreased gross profit and higher SG&A expenses. Below operating income, interest expense decreased $3 million, and the adjusted effective income tax rate was 23.3% compared to 23.4% in the prior year. Factoring all this in, along with share repurchases that resulted in a weighted average shares outstanding of 108.9 million, fourth-quarter adjusted earnings per share was $1.89. Net sales decreased 12% versus the prior year. Excluding the noncomparable net sales for the divested Natural Balance business, net sales decreased 6% versus the prior year. Net sales grew at a 2% CAGR on a two-year basis excluding the divestiture. Dog snacks continue to perform well, decreasing just 1% in the fourth quarter after growth of 12% in the prior year. Cat food decreased 4%, following an 18% growth in the prior year. Dog food net sales decreased 15%, reflecting anticipated declines versus the prior year. Pet food segment profit declined 32%, primarily reflecting lower volume mix, increased marketing investments, and increased freight and transportation costs, partially offset by higher net pricing. Net sales were comparable to the prior year and increased 5% on a two-year CAGR basis. The Dunkin' and Cafe Bustelo brands grew 10% and 18%, respectively, offset by a 7% decline for the Folgers brand, which benefited the most from consumers stocking up on coffee in the prior year. For our K-Cup portfolio, net sales increased 14% and accounted for over 30% of the segment's net sales with growth across each brand in the portfolio. Coffee segment profit decreased 9%, primarily driven by increased marketing expense. In consumer foods, net sales decreased 13%. Excluding the prior-year noncomparable net sales for the divested Crisco business, net sales increased 1%. On a two-year CAGR basis, net sales, excluding the divestiture, grew at a 9% rate. The fourth-quarter comparable net sales increase relative to the prior year was driven by higher net pricing of 4%, primarily due to a list price increase for peanut butter in the second quarter, partially offset by unfavorable volume mix of 3%. Growth was led by the Smucker's Uncrustables frozen sandwiches, which grew 16%. Consumer foods segment profit decreased 29%, primarily reflecting the noncomparable profit from the divested Crisco business, higher costs, and increased marketing expense, partially offset by the higher net pricing. Lastly, in international and away-from-home, net sales declined 7%. , net sales declined 5%. The away-from-home business increased 7% on a comparable net sales basis, primarily driven by increases in portion control products. International declines of 15% on a comparable net sales basis were primarily driven by declines in baking, partially offset by pet food and snacks. On a comparable two-year CGAR basis, net sales for the combined businesses declined at a rate of 2%. Overall, international and away-from-home segment profit decreased 30%, primarily driven by lower volume mix, partially offset by a net benefit of price and costs and favorable foreign currency exchange. Fourth-quarter free cash flow was $183 million, an increase in cash provided by operating activities was more than offset by a $31.6 million increase in capital expenditures. Capital expenditures for the fourth quarter were $108 million, with the increase over the prior year, primarily related to the capacity expansion for Uncrustables frozen sandwiches. On a full-year basis, free cash flow was $1.26 billion, with capital expenditures of $307 million, representing 3.8% of net sales. In the fourth quarter, repurchases of 1.5 million common shares settled for $174 million. Over the course of the fiscal year, we repurchased 5.8 million shares for $678 million, reducing our outstanding share count by approximately 5%. We finished the year with cash and cash equivalent balances of $334 million, compared to the prior year-end of $391 million. We paid down $84 million of debt during the quarter and $866 million for the full year, ending the year with a gross debt balance of $4.8 billion. Based on a trailing 12-month EBITDA of approximately $1.8 billion, our leverage ratio stands at 2.6 times. Net sales are expected to decrease 2% to 3% compared to the prior year, including lapping of sales from the divested Crisco and Natural Balance businesses. On a comparable basis, net sales are expected to increase approximately 2% at the midpoint of the sales guidance range. We anticipate full-year gross profit margin of 37% to 37.5%, which reflects an 85-basis-point decline at the midpoint versus the prior year. SG&A expenses are projected to be favorable by approximately 4%, reflecting savings generated by cost management, and organizational restructuring programs, a reset of incentive compensation, and total marketing spend of 6% to 6.5% of net sales, which reflects a stepdown from fiscal year 2021, partially driven by programs that were pulled forward into the fourth quarter. We anticipate net interest expense of approximately $170 million and an adjusted effective income tax rate of approximately 24%, along with a full-year weighted average share count of 108.3 million. Taking all these factors into consideration, we anticipate full-year adjusted earnings per share to be in the range of $8.70 to $9.10. At the midpoint of our guidance range, year-over-year adjusted earnings per share is anticipated to decline 2%, mostly attributable to around a $0.20 net impact of divested earnings and the timing of benefits from shares repurchased. Given the timing of cost increases and recovery through higher net pricing, as well as a shift in timing of marketing expenses, earnings are anticipated to decline in the first half of the fiscal year, most notably in the first quarter with an anticipated decrease of over 20%. We project free cash flow of approximately $900 million, with capital expenditures of $380 million for the year. Other key assumptions affecting cash flow include depreciation expense of $230 million, amortization expense of $220 million, share-based compensation expense of $35 million, and restructuring costs of $25 million, which includes $15 million of noncash charges. On a two-year basis, our full-year guidance reflects net sales, excluding divestitures to grow at a 3% to 4% CAGR, and modest adjusted earnings-per-share growth at the midpoint of the guidance range.

Net sales decreased 8%. Factoring all this in, along with share repurchases that resulted in a weighted average shares outstanding of 108.9 million, fourth-quarter adjusted earnings per share was $1.89. Net sales decreased 12% versus the prior year. In consumer foods, net sales decreased 13%. Net sales are expected to decrease 2% to 3% compared to the prior year, including lapping of sales from the divested Crisco and Natural Balance businesses. Taking all these factors into consideration, we anticipate full-year adjusted earnings per share to be in the range of $8.70 to $9.10. We project free cash flow of approximately $900 million, with capital expenditures of $380 million for the year.

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And we believe we are well positioned to continue supporting our customers through our unique combination of value and convenience, including our expansive network of more than 17,000 stores located within 5 miles of approximately 75% of the US population. In total, we expect to execute 2,900 real estate projects next year, as we continue to lay and strengthen the foundation for future growth. Overall, third quarter net sales increased 17.3% to $8.2 billion, driven by comp sales growth of 12.2%. We're particularly pleased with the -- and how we delivered significant operating margin expansion, which contributed to third quarter diluted earnings per share of $2.31, an increase of 63% over the prior year. Gross profit as a percentage of sales was 31.3% in the third quarter, an increase of 178 basis points and represents our sixth consecutive quarter of year-over-year gross margin rate expansion. SG&A as a percentage of sales was 21.9%, a decrease of 62 basis points. Moving down the income statement, operating profit for the third quarter increased 57.3% to $773 million, compared to $491 million in the third quarter of 2019. As a percentage of sales, operating profit was 9.4%, an increase of 240 basis points. The benefit from higher sales was partially offset by approximately $38 million of incremental investments that we made in response to the pandemic, including additional measures taken to further protect our employees and customers, and approximately $25 million in appreciation bonuses for eligible frontline employees. Year-to-date to the third quarter, we have invested approximately $153 million in COVID-19 related expenses including about $99 million in appreciation bonuses for our frontline employees. Our effective tax rate for the quarter was 21.6% and compares to 21.7% in the third quarter last year. Finally, as Todd noted earlier, earnings per share for the third quarter increased 62.7% to $2.31. We finished the quarter with $2.2 billion of cash and cash equivalents, a decrease of $760 million compared to Q2 and an increase of $1.9 billion over the prior year. Merchandise inventories were $5 billion at the end of the third quarter, an increase of 11.8% overall and 5.9% on a per store basis. Year-to-date to Q3, we generated significant cash flow from operations totaling $3.4 billion, an increase of 103.7%. Total capital expenditures through the first three quarters were $698 million and included our planned investments in remodels and relocations, new stores and spending related to our strategic initiatives. During the quarter, we repurchased 4.4 million shares of our common stock for $902 million and paid a quarterly dividend of $0.36 per common share outstanding at a total cost of $88 million. At the end of Q3, the remaining share repurchase authorization was $1.6 billion. We also remain committed to returning significant cash to shareholders through anticipated share repurchases and quarterly dividend payments, all while maintaining our current investment grade credit rating and managing to a leverage ratio of approximately 3 times adjusted debt-to-EBITDAR. From the end of Q3 through December 1, comp sales accelerated increasing approximately 14% during this timeframe, reflecting increased demand in our consumables business. Also please keep in mind that the fourth quarter represents our most challenging lap of the year from a gross margin perspective filing 60 basis points of rate improvement in Q4 2019. Finally, we expect to make additional investments in the fourth quarter as a result of COVID-19, including up to $75 million in employee appreciation bonuses, which includes our recent announcement to award approximately $50 million in additional bonuses, bringing our full year investment in appreciation bonuses to approximately $173 million, as well as continued investments in health and safety measures. During the first three quarters, we added approximately 49,000 cooler doors across our store base. In total, we expect to install more than 60,000 cooler doors this year. During the quarter, we completed our initial rollout of this convenient customer package pick-up and drop-off service, which is now available in more than 8,500 stores. As previously announced, we recently celebrated a significant milestone with the opening of our 17,000th store. For 2020, we remain on track to open 1,000 new stores, remodel 1,670 stores and relocate 110 stores. Through the first three quarters, we opened 780 new stores, remodeled 1,425 stores, including more than 1,000 in the higher cooler count, DGTP or DGP formats, and we relocated 76 stores. We also added produce in more than 140 stores, bringing the total number of stores which carry produce to more than 1,000. As Todd noted for fiscal 2021, we plan to execute 2,900 real estate projects in total including 1,050 new stores, 1,750 remodels and 100 store relocations. Additionally, we plan to add produce in approximately 600 stores. Notably, we expect approximately 50% of our new unit openings and about 75% of our remodels to be in the DGTP or DGP formats. Our plans also include having approximately 30 stores in our new pOpshelf concept, which Todd will discuss in more detail by the end of fiscal 2021 up from two locations today. In fact, more than 12,000 of our current store managers are internal promotes and we continue to innovate on the development opportunities we can offer our teams. The NCI offering was available in 5,200 stores at the end of Q3, and given our strong execution to date, we now expect to expand the offering to more than 5,600 stores by the end of 2020. Including approximately 400 stores in our NCI lite [Phonetic] version. This compares to our prior expectation of more than 5,400 stores at year end. And third, exceptional value with approximately 95% of our items priced at $5 or less. We're proud of all of the incredible work the team has done in standing up this concept and with the initial work now behind us, we look forward to welcoming additional customers to pOpshelf, as we move forward, our goal of approximately 30 stores by the end of 2021. We're pleased with the success we are already seeing on this front, driven by higher overall in-stock levels and the introduction of more than 55 additional items, including both national and private brands in select stores being serviced by DG Fresh. In total, we were self-distributing to more than 13,000 stores from eight DG Fresh facilities at the end of Q3. We expect to capture benefits from this initiative in more than 14,000 stores from 10 facilities by the end of this year and are well on track to complete our initial rollout across the chain in 2021. More specifically, I'm pleased to note that during the quarter, we expanded DG Pickup, our buy online, pickup in the store offering to nearly 17,000 stores compared to more than 2,500 stores at the end of Q2, providing another convenient access point for those seeking a more contactless customer experience. During the quarter, we accelerated the rollout of self checkout to more than 900 stores, compared to approximately 400 stores at the end of Q2, with plans for further expansion as we move forward.

And we believe we are well positioned to continue supporting our customers through our unique combination of value and convenience, including our expansive network of more than 17,000 stores located within 5 miles of approximately 75% of the US population. In total, we expect to execute 2,900 real estate projects next year, as we continue to lay and strengthen the foundation for future growth. Overall, third quarter net sales increased 17.3% to $8.2 billion, driven by comp sales growth of 12.2%. We're particularly pleased with the -- and how we delivered significant operating margin expansion, which contributed to third quarter diluted earnings per share of $2.31, an increase of 63% over the prior year. Finally, as Todd noted earlier, earnings per share for the third quarter increased 62.7% to $2.31. During the quarter, we repurchased 4.4 million shares of our common stock for $902 million and paid a quarterly dividend of $0.36 per common share outstanding at a total cost of $88 million. From the end of Q3 through December 1, comp sales accelerated increasing approximately 14% during this timeframe, reflecting increased demand in our consumables business. Finally, we expect to make additional investments in the fourth quarter as a result of COVID-19, including up to $75 million in employee appreciation bonuses, which includes our recent announcement to award approximately $50 million in additional bonuses, bringing our full year investment in appreciation bonuses to approximately $173 million, as well as continued investments in health and safety measures. As Todd noted for fiscal 2021, we plan to execute 2,900 real estate projects in total including 1,050 new stores, 1,750 remodels and 100 store relocations. Notably, we expect approximately 50% of our new unit openings and about 75% of our remodels to be in the DGTP or DGP formats.

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For the quarter, sales increased 25%. Excluding acquisitions and currency, sales increased 19%. Operating profit increased 61% to $366 million, principally due to strong volume leverage and reduced spending in the form of lower travel, entertainment, and marketing expenses across our segments. Earnings per share increased an outstanding 89%. Turning to our plumbing segment, sales grew 27% excluding currency, driven by strong volume growth at Hansgrohe, Delta, and Watkins. Our two recent plumbing acquisitions performed well in the quarter and contributed 5% to Plumbing's growth. North American Plumbing grew 28% led by our wellness business which continue to experience strong demand and begin to comp their March shutdown of 2020. International Plumbing grew 37% in the quarter as many of our markets returned to strong growth with particular strength in Central Europe and China. And our Decorative Architectural segment sales grew 15% against a healthy 9% comp from Q1 of 2020. Acquisitions contributed 2% to our Decorative growth. Lastly, we actively continued our share repurchases during the quarter by repurchasing 5.5 million shares for $303 million. We anticipate deploying approximately $800 million toward share repurchases or acquisitions for the full year as we guided on our 4th quarter call. In addition, we anticipate receiving approximately $160 million for our preferred stock in Cabinetworks, resulting from their recently announced transaction, assuming it closes as expected. We intend to deploy these funds toward share repurchases or acquisitions, which would be in addition to the $800 million that I just mentioned. With our strong [Technical Issues] performance, the actions we have taken and will take to offset persistent inflation, the interest savings from our recent bond transaction and the continued strong demand for our products and innovative -- and products brands, products and brands, excuse me, we are increasing our full year expectations of earnings per share to be in the range of $3.50 to $3.70 per share. This is up from our previous expectations of $3.25 to $3.45. Turning to slide 7, we delivered a very strong start to the year as first quarter sales increased 25%, currency increased sales by 2% in the quarter and the 3 recently completed acquisitions contributed an additional 4% to growth. In local currency, North American sales increased 21% or 17% excluding acquisitions. In local currency, international sales increased 27% or 23% excluding acquisitions. Gross margin was 35.6% in the quarter, up 80 basis points as we leveraged the increased volume. Our SG&A as a percentage of sales improved 340 basis points to 17% in the quarter. We expect SG&A as a percent of sales to increase throughout the year to a more normalized 18%, a certain cost come back along with additional investments in our brands, service, and innovation to fuel future growth. We delivered outstanding first quarter operating profit of $366 million, up $138 million or 61% from last year with operating margins expanding 420 basis points to 18.6%. Our earnings per share was $0.89 in the quarter, an increase of 89% compared to the first quarter of 2020. Turning to slide 8, Plumbing grew 31% in the quarter. Currency contributed 4% to this growth and acquisitions contributed another 5%. North American sales increased 27% in local currency or 22% excluding acquisitions. International Plumbing sales increased 27% in local currency or 23% excluding acquisitions. Operating profit was $253 million in the quarter, up $94 million or 59% with operating margins expanding 370 basis points to 28.3%. Given our first quarter results and the current demand trends, we now expect plumbing segment sales growth for 2021 to be in the 15% to 18% range with 10% to 13% organic growth, another 3% net growth from the recent acquisitions and then divestiture of Huppe. And given current exchange rates, we anticipate foreign currency to favorably benefit plumbing revenue by approximately 2% or $70 million. We continue to anticipate full year margins will be approximately 18%. Turning to slide 9, Decorative Architectural grew 15% for the first quarter or 13% excluding acquisitions. Operating profit in the quarter was $142 million, up $46 million or 48%. For 2021, we are raising our outlook and now expect architectural segment sales growth will be in the range of 4% to 9% with 3% to 7% organic growth and another 1.5% from acquisitions. We continue to expect segment operating margins of approximately 19%. Turning to slide 10, our balance sheet remains strong with net debt to EBITDA at 1.3 times and we ended the quarter with approximately $1.8 billion of balance sheet liquidity which includes full availability of our $1 billion revolver. Working capital as a percent of sales including our recent acquisitions is 17.5%. During the first quarter, we continued our focus on shareholder value creation by deploying approximately $303 million to repurchase 5.5 million shares. In this transaction, we called our 2022, our 2025 and our 2026 debt maturities which aggregated $1.3 billion and refinanced these with a combination of new 7 year, 10 year, and 30 year notes totaling $1.5 billion [Technical Issues]. From an interest perspective, the net effect is a $35 million annualized interest savings. Due to the timing of this transaction, interest expense will be approximately $110 million compared to our previous guidance of $135 million for 2021 and will be approximately $100 million in 2022. And two reminders for everyone; first, we will be terminating and annuitizing our US defined benefit plans in the second quarter and we will have an approximate $140 million final cash contribution to these plans to complete this activity. And second, our Board previously announced its intention to increase our annual dividend by 68% to $0.94 per share starting in the second quarter of 2021. This will increase our targeted dividend payout ratio from 20% to 30%. Based on Q1 performance and current robust demand for our products, now anticipate overall sales growth of 10% to 14% up from 7% to 11% with operating margins of approximately 17%. Lastly, as Keith mentioned earlier, our updated 2021 earnings per share estimate of $3.50 to $3.70 represents 15% earnings per share growth at the midpoint of the range. This assumes a 254 million average diluted share count for the year. Year-over-year home price appreciation increased over 17% in March and existing home sales were up over 12%. Furthermore, the US consumer is healthy with estimated built up savings of nearly $2 trillion even before the new stimulus money and consumers continue to invest in their homes.

Our earnings per share was $0.89 in the quarter, an increase of 89% compared to the first quarter of 2020. Lastly, as Keith mentioned earlier, our updated 2021 earnings per share estimate of $3.50 to $3.70 represents 15% earnings per share growth at the midpoint of the range.

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It will also be available by telephone through August 12, 2021. We also successfully navigated through an early summer heatwave that resulted in six consecutive days of at least 115 degrees and three days approaching our all-time peak demand. In a five-day period during mid-July, our teams restored power to more than 120,000 customers affected by storm-related outages and we effectively communicated with our customers regarding outage status and expected service restoration times. From that you can see that the administrative law judge recommended a $3.6 million revenue increase or a non-fuel $29 million revenue decrease at 9.16% return on equity and implied 0.05% return on fair value. On the ESG front, in May, the commission voted to preliminarily approve new clean energy rules that would provide for a final standard of 100% clean energy by 2070 with interim standards, the first of which requires a 50% reduction in carbon emissions by December of 2032. We think we're well-aligned with the commission on the interim goals and expect to continue our current path to achieve 100% clean energy by 2050. We've executed a contract for an additional 60 megawatts of utility-owned energy storage to be located in our APS solar sites. In addition, we're working through our current all-source RFP for 600 megawatts to 800 megawatts of additional resources with decisions from that RFP expected in the third quarter of this year. Our performance in the second quarter remains strong earning $1.91 per share compared to $1.71 per share in the second quarter of 2020. We experienced 2.3% customer growth and 5.7% weather normalized sales growth during the second quarter compared to the same period in 2020. Residential sales increased 1.3% and commercial and industrial sales increased 10.3% compared to the second quarter of 2020. Given the strong rebound in C&I sales and continued residential strength, we are increasing our 2021 sales estimate to 1% to 2% growth from our previous estimate of 0.5% to 1.5% growth. For 2021 through the end of May employment in Metro Phoenix increased 1% compared to 2.2% increase in the entire US. To be clear, that's 1% Metro Phoenix compared to 0.2% increase in the entire US. As a result of this continued strong population growth, Arizona reached the highest level of residential housing permits since 2006 last year. This year, through May, Maricopa County has already reached 21,000 housing permits, which puts housing permits on pace to exceed last year. For perspective, the general rule of thumb is that every 50 basis point reduction in ROE equates to approximately $32 million in revenue requirement. Regarding the potential impact from the recommendation to deny Four Corners of the -- to deny recovery of Four Corners SCR investment and deferral, as of June 30, 2021, the SCR deferral balance was approximately $75 million and the net book value of the asset was approximately $320 million net of accumulated deferred income taxes. If the commission denies recovery of the deferral, it would likely result in a write-off of approximately $75 million, which is net of accumulated deferred income tax. In summary, we estimate the ROO, if approved, could decrease annual net income up to about $90 million, which includes the non-fuel decrease as well as the effects of incremental costs we incur once rates become effective. Regarding our financing plans, we expect to issue up to $500 million of long-term debt at APS during the remainder of 2020 to fund capital investments.

Our performance in the second quarter remains strong earning $1.91 per share compared to $1.71 per share in the second quarter of 2020. To be clear, that's 1% Metro Phoenix compared to 0.2% increase in the entire US.

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He has been with Lindsay for 12 years and most recently was the President of our Irrigation business. At that time, we announced that through the efforts of the foundation for growth initiatives, we would achieve 11% to 12% operating margins in fiscal year '20. I'm very proud of the Lindsay team to say that we achieved our fiscal year '20 goal reaching 11.4% operating margin, especially given the challenging environment in which we were operating in. Our goal was to achieve first quartile status in the comparison against approximately 2,000 companies that are used in their benchmarking exercise. In addition, the Infrastructure business in fiscal year '20 achieved the highest revenue, operating income and operating margin, since Lindsay acquired this business in 2006. And Brazil achieved its highest revenue in local currency in fiscal year '20, since this business was established in 2002. This year storm volume was down slightly from prior year, but more than 10% below the five-year average for the quarter. Government support in the US was visible for the 2019 harvested crop with the $16 billion Coronavirus Food Assistance Program or CFAP announced earlier this year. That was addressed with the announcement of the second round of CFAP payments in mid-September, when a further $14 billion in government aid was announced. New subscription volume for the 2020 season, inclusive of the Net Irrigate acquisition was up 174% versus prior year. We've also seen renewal rates approaching 97%, so we're successfully retaining customers in addition to attracting new ones. We continue to see adoption of the MASH compliant product line where sales were up more than 120% versus prior year. In addition to the extension the Highway Trust Fund was infused with $13.6 billion to continue funding for important road infrastructure projects. Total revenues for the fourth quarter of fiscal 2020 increased 26% to $128.4 million, compared to $101.9 million in the same quarter last year. Net earnings for the quarter were $14.7 million, or $1.35 per diluted share compared to net earnings of $5.8 million or $0.54 per diluted share in the prior year. Total revenues for the full year of fiscal 2020 increased 7% to $474.7 million, compared to $444.1 million in the prior fiscal year. Net earnings for fiscal 2020 were $38.6 million, or $3.50-$3.56 per diluted share compared to net earnings of $15.6 million, or $1.45 per diluted share in the prior fiscal year. Irrigation segment revenues for the fourth quarter increased 9% to $75.6 million, compared to $69.5 million in the same quarter last year. North America irrigation revenues were $39.8 million, compared to $41.5 million in the same quarter last year. In the international irrigation markets, revenues of $35.8 million increased $7.8 million, or 28% compared to last year's fourth quarter. Higher sales volumes in Brazil, Australia and the Middle East were partially offset by the effect of differences in foreign currency translation rates compared to the prior year of approximately $3.4 million. Total irrigation segment operating income for the fourth quarter was $5.8 million, compared to $6.3 million in the same quarter last year. And operating margin was 7.7% of sales, compared to 9% of sales in the prior year. Operating margin in the current quarter was negatively impacted by expenses of approximately $1.6 million related to an increase in the environmental remediation liability, as well as severance costs. Environmental remediation liability was increased by $1 million in connection with a revised plan to remediate environmental contamination at our Lindsay Nebraska site that was submitted to the EPA in August. Excluding the effect of the increase in the environmental remediation liability and severance costs, operating income for the quarter was $7.4 million and operating margin was 9.8% of sales. For the full fiscal year, total irrigation segment revenues were $343.5 million, compared to $351.5 million in the prior fiscal year. North America irrigation revenues of $219 million were essentially flat compared to the prior year. International irrigation revenues for the year were $124.6 million, compared to $132.9 million in the prior fiscal year. After considering the unfavorable effect of differences in foreign currency translation rates of approximately $8.6 million, international irrigation revenues were also assessed-essentially flat compared to the prior fiscal year. Irrigation operating income for the full fiscal year was $40.2 million, or 11.7% of sales, compared to $33.3 million, or 9.5% of sales in the prior fiscal year. Infrastructure segment revenues for the fourth quarter increased 63% to $52.8 million, compared to $32.4 million in the same quarter last year. Infrastructure segment operating income for the fourth quarter was $20.1 million, an increase of 115% compared to $9.3 million in the same quarter last year. Infrastructure operating margin for the quarter was 38% of sales, compared to 28.8% of sales in the prior year. For the full fiscal year, infrastructure segment revenues increased 42% to $131.2 million, compared to $92.6 million in the prior fiscal year. Infrastructure operating income for the full fiscal year was $43.8 million, compared to $16.8 million in the prior fiscal year. Operating margin for the year was 33.4% of sales, compared to 18.1% of sales in the prior fiscal year. We are also well positioned to invest in growth opportunities that we identify. Our total available liquidity at the end of the fiscal year was $190.9 million, with $140.9 million in cash, cash equivalents and marketable securities, and $50 million available under our revolving credit facility. Our total debt was $115.9 million at the end of the fiscal year, of which $115 million matures in 2030. At the end of the fiscal year, we were well within the financial covenants of our borrowing facilities, including a funded debt to EBITDA leverage ratio of 1.5 compared to a covenant limit of 3.0.

Total revenues for the fourth quarter of fiscal 2020 increased 26% to $128.4 million, compared to $101.9 million in the same quarter last year. Net earnings for the quarter were $14.7 million, or $1.35 per diluted share compared to net earnings of $5.8 million or $0.54 per diluted share in the prior year. We are also well positioned to invest in growth opportunities that we identify.

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Their perseverance through the past 19 months of COVID-19 turmoil has allowed AZZ to obtain the results we are now reporting. Overall sales of $216 million improved 6.4% versus the prior year, or 8% when adjusted for the divestiture of SMS. Metal Coatings turned in another excellent quarter with sales up 10.7%, almost $130 million, and Infrastructure Solutions flat at about $87 million. We generated net income of $18.9 million and earnings per share of $0.76 per diluted share, reflecting the resiliency of our businesses and the dedication of our people. We also benefited from lower interest expense while incurring a 20.4% tax rate for the quarter. In line with our strategic commitment to value creation, we've repurchased over 290,000 shares for $15 million and distributed $4.2 million in dividends. In Metal Coatings, which represented 60% of our sales in the second quarter, we achieved 24.4% operating margins on sales of $130 million. This resulted in operating income being up over 17% from the previous year. We were up about 4.3% when considering the impact of the SMS divestiture. The team delivered operating income of $7 million or 130%, up dramatically versus the prior year. We anticipate sales to be in the range of $865 million to $925 million and earnings per share at $2.90 to $3.20. Bookings or incoming orders in the second quarter were $231.8 million, a $23.2 million or a 11.1% increase over the second quarter of the prior year. Our bookings to sales ratio increased to 107% as we saw improving market conditions across both the Metal Coatings and Infrastructure Solutions segments. As Tom previously mentioned, second quarter fiscal year 2022 sales of $216.4 million were $13.1 million or 6.4% higher than the prior year second quarter sales of $203.4 million. We generated gross profit of $55.1 million compared with gross profit of $46.1 million in the second quarter of the prior year. Our gross margin was 25.5% for the quarter, which was a 280-basis-point improvement compared with a gross margin of 22.7% in the second quarter of last year, as business in both segments continues to recover from the pandemic lows witnessed this time last year. Operating income for the quarter was $26.5 million compared with $652,000 in the second quarter of the prior year. During the prior year second quarter, we recorded restructuring and impairment charges of $18.7 million. Our earnings per share of $0.76 was $0.26 higher than last year's second quarter adjusted earnings per share of $0.50 and $0.83 above the reported loss of $0.07. Second quarter EBITDA for fiscal year 2022 was $36.6 million compared with adjusted EBITDA reported in the second quarter of fiscal year 2021 of $30.7 million, an increase of $5.9 million or 19.1%. Year-to-date sales through the second quarter of fiscal year 2022 were $446.3 million, a 7.1% increase from last year's second quarter year-to-date sales of $416.7 million. Excluding the impact of the SMS divestiture, sales would have increased 11% year-over-year. Fiscal year 2022 year-to-date net income of $41.3 million was $22.8 million or 122.8% above the prior year-to-date adjusted net income of $18.5 million. Prior year-to-date net income as reported was $3.8 million. Year-to-date earnings per share of $1.64 was 131% higher than the prior year-to-date adjusted earnings per share of $0.71. The following are our capital allocation highlights: During the quarter, we renegotiated and renewed our five-year credit facility, retaining our facility at $600 million in borrowing capacity, supported by a strong group of banks. Gross outstanding debt as of the second quarter is $183 million, $4 million above the $179 million in outstanding debt at the end of the second quarter of the prior year, which reflects increased share purchase activity as we have purchased nearly 70 million in outstanding shares during the last year. Year-to-date, we have deployed $13.1 million in capital investments and we anticipate to still make capital investments of roughly $35 million this year. As Tom noted, we repurchased $15 million in outstanding stock during the quarter and $21.2 million on a year-to-date basis. For the first half of the year, cash flow from operations was $37.8 million, up $5.6 million or 17.4% from prior year as a result of strong sales and solid net income generated by the business. Free cash flow was $23.2 million, $10.3 million or 79.8% above the $12.9 million realized in the prior year. We remain committed to our growth strategy around Metal Coatings and achieving 21% to 23% operating margins with galvanizing performance being quite steady, while we continue to improve Surface Technologies.

We generated net income of $18.9 million and earnings per share of $0.76 per diluted share, reflecting the resiliency of our businesses and the dedication of our people. We anticipate sales to be in the range of $865 million to $925 million and earnings per share at $2.90 to $3.20. As Tom previously mentioned, second quarter fiscal year 2022 sales of $216.4 million were $13.1 million or 6.4% higher than the prior year second quarter sales of $203.4 million. Our earnings per share of $0.76 was $0.26 higher than last year's second quarter adjusted earnings per share of $0.50 and $0.83 above the reported loss of $0.07.

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And again, we just -- this agreement is really awesome for our WWE fans, our W Universe, as we call it, it's just gives them more -- more value, not just the WWE 999, which is a great value for what we do. And that is something that, sure, OK, we have live events, but live events make any money, you're going to get 20% capacity, 30%, 50%, whereas you breakeven, and so best to be determined by anyone who's in the live event business and hardly anyone has a handle on exactly when that's going to happen. Additionally, WWE Network will be available for $4.99 a month on the ad supported Peacock tier, which is half the price that Vince just mentioned, of $9.99 a month. 499 price is the all in price for our great library and pay per view in ring action. The event, which premiered across Sony's platforms on India's Republic Day was available on Sony TEN one, Sony TEN three and Sony MAX, which have a combined reach of 50 million households, as well as on Sony's streaming platform SonyLIV. An internationally acclaimed recording artist, Bad Bunny's songs were streamed on Spotify more than 8.3 billion times in 2020, helping to make him the most streamed artist in the world that year. As of this past Wednesday, this collaboration has led to over 35 million total video views and 2.5 million engagements across YouTube, Facebook, Twitter and Instagram. Total media impressions to date are nearly 170 million, and it was reported on by the top sports and entertainment properties ranging from ESPN to Rolling Stone to Telemundo to TMZ. And within 24 hours, the co-branded Bad Bunny WWE merchandise became the hottest selling drop we've had on record on our e-commerce platform, WWE Shop. When research showed our audience was 5 times more likely to consume online video, we cannibalized our pay-per-view business and launched the first live SVOD service of its kind, WWE network. And we get to do it with a trusted partner we have had for over 30 years, NBCU. It also allows us to deliver our most premium content to a significantly larger audience, including the 33 million people who have already signed up for the service. In fact, over the period from August 21 through year-end, which covers our move to the Amway Center and subsequently to Tropicana Field, Raw viewership is essentially unchanged and SmackDown viewership has increased 8% compared to the prior three-month period. During the fourth quarter, digital views increased an estimated 25% and hours consumed increased 44%, excluding the impact of geographical restrictions in India. In 2020 as a whole, we saw a record 38 billion views and 1.4 billion hours consumed across our AVOD platforms, both representing a 10% increase year-over-year and an 11% increase in revenue. The quarter was highlighted by an increase in gaming partner activations, including Wargaming World of Tanks, Cyberpunk 2077, 2K Battlegrounds and Microsoft Gears. Rey also posted to a 3.6 million followers on Instagram in Spanish about how proud he was to partner with a brand as authentic to the Latino fan base as Victoria. WWE's adjusted OIBDA of $286.2 million was at the high end of our rescinded guidance and reflected nearly a 60% increase of more than $100 million. We estimate that WWE lost more than $90 million in revenue as a result of COVID-19 restrictions, primarily from the loss of ticket sales and the postponement of large-scale international events. In the fourth quarter, the absence of a large-scale international event contributed to a 50% or $56.4 million reduction in fourth quarter adjusted OIBDA, which also reflected lower advertising revenue and higher TV production costs. Looking at the WWE's Media segment, adjusted OIBDA decreased 37% or approximately $44 million to $73 million, primarily due to the aforementioned event loss and, to a lesser extent, decreased advertising sales and higher production costs. In that stadium setting, we bring nearly 1,000 live virtual fans back to our show and surround them with pyrotechnics, laser displays, augmented reality and drone cameras. This staging increases production costs by approximately 25% per episode. More than 700 hours of programming in the quarter and more than 2,300 hours for the year across television, streaming and social and digital platforms. In the fourth quarter, 2.2 million total viewers watched content across all tiers, representing a 40% increase and those viewers watched 35 million hours of content, which was 14% higher. Perhaps most importantly, average paid subscribers to the network increased 6% to 1.5 million. Adjusted OIBDA from Live Events declined by $4.9 million to a loss of $6.7 million due to a $26.7 million decline in Live Events revenue. As of year-end, WWE had 140 million installs across its games portfolio. Demonstrating our commitment to product innovation, WWE released 2,000 new products on its e-commerce platform including 18 new championship title cells, which generated category growth of more than 100% for the year. In 2020, we generated approximately $292 million in free cash flow, an increase of $240 million. As of December 31, 2020, WWE held $593 million in cash and short-term investments. This included $100 million borrowed under WWE's revolving credit facility which was repaid just in January 2021. Additionally, we anticipate a significant year-over-year increase in expense due to continued higher TV production expenses at WWE's ThunderDome as well as the return of employees from furlough. We estimate that WWE can achieve 2021 adjusted OIBDA of $270 million to $305 million as revenue growth driven by the Peacock transaction, the gradual ramp-up of ticketed live events, including large-scale international events, and the escalation of core content rights fees is offset by the increase in production and personnel expenses. In our view, the stated 2021 adjusted OIBDA guidance range will be approximately 15% to 20% higher without the ongoing impact of COVID-19, which includes the loss of ticket and merchandise sales of live events and the increased investment in production to further fan engagement. Given increasing visibility regarding WWE's projected performance and liquidity, we are planning to restart this project in the second half of '21. For 2021, we estimate total capital expenditures of $65 million to $85 million, including funds to begin construction as well as funds to enhance WWE's technology infrastructure. The timing and rate of returning ticketed audiences to WWE's Live Events remains subject to significant uncertainty. And as such, we are not reinstating more specific quarterly guidance at this time. Certainly, the contractual escalation of WWE's core content rights fees will continue to be an important source of growth.

As of December 31, 2020, WWE held $593 million in cash and short-term investments. Additionally, we anticipate a significant year-over-year increase in expense due to continued higher TV production expenses at WWE's ThunderDome as well as the return of employees from furlough. We estimate that WWE can achieve 2021 adjusted OIBDA of $270 million to $305 million as revenue growth driven by the Peacock transaction, the gradual ramp-up of ticketed live events, including large-scale international events, and the escalation of core content rights fees is offset by the increase in production and personnel expenses. In our view, the stated 2021 adjusted OIBDA guidance range will be approximately 15% to 20% higher without the ongoing impact of COVID-19, which includes the loss of ticket and merchandise sales of live events and the increased investment in production to further fan engagement. Given increasing visibility regarding WWE's projected performance and liquidity, we are planning to restart this project in the second half of '21. The timing and rate of returning ticketed audiences to WWE's Live Events remains subject to significant uncertainty. And as such, we are not reinstating more specific quarterly guidance at this time. Certainly, the contractual escalation of WWE's core content rights fees will continue to be an important source of growth.

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Specifically, as you can see in Slide 3, in the first quarter revenue was strong driven particularly by the strength and growth of All Access Pass and related sales, gross margins increased by 359 basis points compared to those in last year's strong first quarter, operating SG&A declined by $4.4 million, adjusted EBITDA was $3.7 million versus an expectation of between $2 million and $2.5 million, our net cash provided by operating activities increased 60% [Phonetic] or $4.1 million to $10.9 million, substantially exceeding even the $6.8 million of net cash provided by operating activities in last year's first quarter and we ended the quarter with approximately $49 million of liquidity, up from $42 million at the end of the fiscal year in August and up from $39 million at the start of the pandemic. In our year-end conference call a little over two months ago, we reported that in our Enterprise Division in North America, which accounts for approximately 70% [Phonetic] of total enterprise sales and where all Access Pass and related sales account for 84% of total sales on the way to 90%, we reported first, as you can see on Slide 4, chart 1A on Slide 4 in the far left hand corner, we expect All Access Pass subscription sale -- that we as expected reported All Access Pass subscription sales had remained strong throughout the pandemic to date, growing 18% in North America for the period March through August and as indicated, we said that we expected All Access Pass subscription sales to continue to be strong through this year's fiscal first quarter and on an ongoing basis thereafter. And finally, as indicated in 1D, we said that in our education division, which accounts for just under 20% of total sales, we had achieved very high Leader in Me subscription school retention in last fiscal year and that remarkably in the middle of the pandemic, we had also added 300-plus new schools, almost all of which came on during the pandemic. First, as shown in chart 1A in Slide 6, total company All Access Pass subscription sales grew 16% in the first quarter to $17 million and grew 17% to $65 million for the latest 12 months. In addition, as also shown in chart 1B in Slide 6, total company All Access Pass amounts invoiced which are added to the balance sheet and which form the basis for accelerated future growth in sales -- oops, we got some paper shuffling in the back here sorry somewhere, increased -- seeing our invoiced amounts increased an extremely strong 55% in the first quarter and even excluding a large government All Access Pass contract, growth was still very -- growth in invoice sales was still a very strong 32%. Importantly, All Access Pass performance was strong across all of the key elements that we look at for All Access Pass, including sales to new logos, which increased substantially both in the first quarter and for the latest 12 months, nine of those 12 months of course took place during the pandemic and still had new logos increase every quarter. Annual revenue retention, which continued to exceed 90% both for the quarter and for the latest 12 months as you can see in 1C and the sale of multi-year contracts, which as shown in 1D were unbilled deferred revenue related to multi-year contracts grew 19% in Q1 compared to Q1 '20 to $40.5 million. As you can see in the chart one of Slide 7 with the beginning of the pandemic in March, bookings of live on-site services were [Phonetic] necessarily canceled, the stay-at-home restrictions and the year-over-year volume of services followed down with delivered engagements down 6.9 million in North America in the third quarter. As a result, instead of being off $6.9 million as in the third quarter, the dollar volume of services delivered in the fourth quarter was off only $1.1 million. This same positive trend continued in the first quarter with total bookings were up year-over-year and invoice of sales which followed were only off $200,000 compared even to last year's very strong first quarter and when you add in December results for the first four months of fiscal 2021, September through December, actual sales of services delivered exceeded those achieved for the same four-month period last year, which was a very strong period for us last year pre-pandemic. As shown in chart 1B in Slide 7, it's important that 87% of our clients have now shifted to live online delivery of services. This is important, with 87% of our clients now having shifted to live online, our susceptibility to the future cancellations has been reduced substantially. At the start of the pandemic, we had to reschedule substantially all live on-site training engagements in these countries and since these countries were just starting to sell All Access Pass and therefore did not have a strong base of durable subscription revenue to cushion them, sales in these countries declined to only $4.1 million in the third quarter compared to $12.7 million in the third quarter of fiscal '19. However, in last year's fourth quarter, while still operating well below the levels achieved in last year's fourth quarter, sequential sales in these countries increased 70% to $7 million from the $4.1 million in sales in this year's third quarter -- in last year's third quarter and we had said we'd expect that our international operation would continue to strengthen in the first quarter and we were pleased that they did. As shown in the first quarter, international sales were $9.9 million, ahead of our expectation of $9 million and while still below the level achieved last year, this represented an increase of $2.9 million or 41% compared to the $7 million achieved in the fourth quarter and was 2.4 times the amount -- the $4.1 million amount achieved in the third quarter. Finally, as shown in Slide 9, in the Education Division, despite an environment that continues to be very challenging, as we all know, we've seen some strengthening in trends in the first quarter, including one that the number of Leader in Me schools which have renewed or ready to renew their Leader in Me membership contracts has increased to 615 compared to 450 schools at the same time last year. Our adjusted EBITDA for the first quarter was $3.7 million, exceeding our expectation of achieving adjusted EBITDA between $2 million and $2.5 million. As shown on Slide 11, our net cash generated for the quarter of $532,000 in our -- one of our lowest quarters, was $4.9 million higher than in last year's first quarter. This reflects almost entirely that our significant growth in new All Access Pass contracts invoiced resulted in our net deferred revenue position not going down as much -- we're pulling stuff off the balance sheet versus what you added on actually improved by $6 million versus the prior year. As you can see in Slide 12, also our cash flow from operating activities for the first quarter was $10.9 million, which was $4.1 million or 60% [Phonetic] higher than last year's $6.8 million. As a result, we ended our fiscal year in August with more than $40 million in total liquidity comprised of $27 million of cash and our $15 million revolving credit facility undrawn, an amount that was even higher than we had at the start of the pandemic and we're pleased that we added further to this liquidity during the first quarter and in the first quarter was $49 million of total liquidity comprised of $34 million of cash, which means no net debt and with our $15 million revolving credit facility still undrawn and available. This strong performance was driven by, you can see on Slide 13, strong growth -- our revenue growth, our revenue was $48.3 million, was strong and a little bit stronger than we would have thought, driven by -- particularly by our North American operations, which in turn was driven by the performance of All Access Pass. As you can see in Slide 1A of Slide 14, companywide All Access Pass subscription sales grew 16% in the first quarter and in addition to the All Access Pass subscription revenue actually recognized in the quarter as we talked about and as shown in chart 1B of Slide 14, we also achieved an extremely strong 55% growth in All Access Pass amounts invoiced and as I mentioned, even excluding a large government contract, growth in All Access Pass amounts invoiced was still a very strong 32%. And as noted previously, also these new invoiced amounts included strong sales to new logos, a continued quarterly and latest 12-month revenue retention rate of greater than 19% [Phonetic] as you can see in 1C, the largest number of All Access Pass expansions and shown in 1D, a large volume of multi-year All Access Passes, which increased our unbilled deferred revenue, which of course will flow into sales in future quarters. This is resulting in a strong booking pace that's resulted also then in strong actual delivered revenue where worldwide these services increased to $9 million, which was a bit above actually even that achieved pre-pandemic in last year's very strong first quarter where we actually saw very significant growth of add-on sales compared to the prior year. The gross margin percent was 75.3%, it's up 359 basis points from the 71.7% achieved in the first quarter of fiscal 2020 and up 275 basis points for the latest 12 months. As a result, our gross margin percentage for the Enterprise Division in the first quarter increased to 80.6% compared to 75.3% in last year's first quarter, an increase of 530 basis points. You can see our SG&A was lower than last year, it came in at $32.7 million, which was $4.4 million lower than last year's first quarter and finally, the combination of these factors is in adjusted EBITDA as we mentioned before coming in at $3.7 million in the first quarter compared to an expectation of between $2 million and $2.5 million and just $1.3 million lower than in last year's very strong quarter despite the slower recovery in our international operations. We mentioned again that we had strong invoice in multi-year sales in the first quarter and because most of these sales were not recognized, it built up our balance of deferred revenue, which as you can see in Slide 16, our total balance of billed and unbilled deferred revenue increased to $97.4 million, reflecting growth of $14.7 million or 18% compared to our balance of $82.7 million at the end of last year's first quarter. As noted, last quarter, I'll just note again, approaching $100 million of deferred revenue -- billed and unbilled deferred revenue is a big landmark for subscription businesses. As you can see in Slide 17, you've seen this before, we expect to generate adjusted EBITDA of between $20 million and $22 million in fiscal 2021 and we're pleased to be off to a strong start toward this objective. Achieving $20 million to $22 million in adjusted EBITDA would represent approximately 50% increase in adjusted EBITDA compared to the $14.4 million we achieved in 2020. Our target is to see adjusted EBITDA then increase by approximately $10 million per year each year thereafter to approximately $30 million in 2022 to approximately $40 million in 2023. These targets reflect our expectation that we will achieve at least high-single digit revenue growth each year, growth that's approximately $20 million per year of revenue growth. Then on average approximately 50% of that amount of growth in revenue will flow through to increases in adjusted EBITDA and cash flow reflecting our high gross margins -- strong gross margins and variable selling costs. We fully expect to achieve an adjusted EBITDA to sales margin of 20% in the coming years and really to become a $1 billion market cap company in the coming years even at an adjusted EBITDA multiple that's conservative relative to our adjusted EBITDA growth rate and without relying on multiples of revenue, which we should increasingly be able to garner. On move navigation Slide in 18, those three points are the three drivers. You can see since 2015, annual All Access Pass and related sales have grown from really nothing to more than $90 million through fiscal year 2020 reflecting a huge compounded average growth rate and average absolute All Access Pass and related revenue growth of between $10 million and $20 million each year. This growth in All Access Pass and related sales has generated the vast majority of the total revenue growth for the company overall during these years and in almost every individual year more than offsetting the early run-off of our legacy facilitator and onsite businesses which are now largely behind us with 84% of our revenue now in Enterprise Division in North America coming from All Access Pass and related. Second, as you can see in Slide 21, in the first quarter, companywide All Access Pass subscription sales grew $2.3 million or 16% compared to the same period and for the latest 12 months, including nine months of the pandemic from March to November, All Access Pass subscription sales still grew 17% compared to the same nine-month period a year ago or latest 12 months a year ago. Again, as shown in chart 1A of Slide 22, we've noted this that All Access Pass sales grew, the add-on services grew and that importantly our amounts invoiced of new sales that are put on the books grew 55%, including a large government All Access Pass contract but even excluding that, still grew 32% or $3.4 million. That's giving us a high flow through with a combination of strong gross margins and declining operating costs as a percentage of sales, it is expected to allow approximately 50% of incremental revenue growth to flow through the increases in adjusted EBITDA and cash flow and then in terms of the visibility and predictability, the large and growing balance of billed and unbilled deferred revenue, which is approaching $100 million as we talked about and then also the predictability of the All Access Pass is key operating metrics including annual revenue retention of where the 90%. The fact that more than a third of All Access Passes are entering into -- holders are entering into multi-year contracts and that our add-on services, which we've now proven to be extremely durable average 45%. I just say that All Access Pass is not just another typical as we say all-you-can-eat subscription service providing unlimited access to large amounts of undifferentiated skills content, rather All Access Pass is a subscription service I'd say with a punch or as illustrated in 25 really four powerful strategic punches. And of course, these are in addition to our historical strong things -- solutions like Leader in Me in Education, and 7 Habits of Highly Effective people, both of which continue to set all-time usage records, even though they're now a minority of our offerings. We now got flexibility across a wide variety of modalities including digital, microlearning, live online, live on site, coaching, or any combination of thereof in almost any segment of time, which you see on Slide 27, on any device in more than 20 languages worldwide. And as a result, again, as shown on Slide 30 -- Slide 30, All Access Pass related sales jumped as a result they've increased from zero to more than $90 million, latest 12 months, some of the revenue retention has been high, at more than 90%. More than 35% of Pass holding clients are signing multi-year contracts. Our average Pass size has grown from 29,800 to 40,000 in the latest 12 months. Maybe looking at Slide 31, which is the third puzzle piece, you can see in Slide 32, Franklin Covey has built a direct sales force of 247 client partners or sales associates in the US and Canada and in China, Japan, Australia, and in the UK, Ireland, Germany, Austria and Switzerland. In addition, we expect to add 20 net new client partners this fiscal year to the 247 client partners we had at the end of Q1. If you -- as you look there on slide -- if we go to Slide 33, in addition to a growing number of client partners who continue to ramp at/or above our expectations, which they themselves represent a great revenue driver for us as company, but on Slide 33, we've also built a network of approximately 80 international licensee partner offices, which cover most of the countries in the world. These partner offices generate gross revenues of approximately $50 million and they pay Franklin Covey a royalty that's equal to about 15% of these revenues. And to date we've sold more than 50 million copies of books worldwide in more than 50 -- in over 50 languages. And to put that 50 million number in perspective, the number of books that we've sold as part of our thought leadership strategy is greater than the amount sold by a large number of our top competitors combined. To achieve best seller status, a book typically needs to sell a little over 250,000 copies and so to reach 50 million copies sold and still counting is unprecedented in the industry. Yeah, see the navigation slide there, 36. As to our leaders being highly trusted, in our recent Annual Employee Engagement and Culture survey all of Franklin Covey associate where asked to rate on a zero to 10 scale, with 10 being the highest, how likely they would be to recommend their Leader or manager as someone to work for. And you can see on Slide 37, 94% rated their leader 7 or above and 83% rated their Leader at 9 or a 10 on that question. In the first quarter, 12 of our 15 Managing Director, so each country has a Managing Director and in United States, we have 10 -- United in Canada, we have in hand and they lead our great sales teams, but each -- 12 of our 15 Managing Directors met or exceeded their quarterly revenue objective in Q1. And the other three leaders who missed their goal, missed by an aggregate of only 1.3% of the total direct office sales goal. And collectively, the group, all 15 exceeded their revenue goal. In addition, as you can see there on the right of this slide 14 of the 15 Managing Directors met their EBITDA goal, with the one who missed missing by only $50,000 and collectively of course, this group exceeded -- they actually exceeded EBITDA by about $1 million collectively. Franklin Covey associates were asked to rate on a zero to 10, with 10 being the highest again, how likely they would be to recommend Franklin Covey has a great place to work. And we're pleased that 92% of employees gave a rating of 7 or higher and 69% gave a rating of a 9 or a 10. So our guidance for FY '21 as discussed last quarter is that we expect to generate adjusted EBITDA of between $20 million and $22 million. This result would be approximately 50% increase in adjusted EBITDA compared to the $14.3 million of adjusted EBITDA achieved last year. First, the recognition to sales during FY '21 of more than $60.6 million of deferred revenue already on the balance sheet at the end of last year and the recognition of a portion of the $39.6 million of unbilled deferred revenue which we had contracted. For our second quarter of this year, we expect that adjusted EBITDA will be between $1 million and $1.5 million compared to $4.1 million in adjusted EBITDA in last years very strong second quarter and still reflecting the expected strong performance of All Access Pass in the US, Canada and government and the same general expectations just outlined for international operations and education. And please also remember that even $1 million of adjusted EBITDA in Q2 would be more than the second quarter result in FY '18 or the second quarter results in FY '19. So that's guidance now. Just a couple of thoughts related to general targets for the coming years and repeating a lot of what Bob said, building on our $20 million to $22 million of adjusted EBITDA, we expect to achieve this year and driven substantially by the expected continued growth in All Access Pass, our target is to have adjusted EBITDA increase by around $10 million per year to around $30 million in FY '22 and around $40 million in FY '23. These targets reflect our expectation of being able to achieve as Bob talked about high-single digit revenue growth of around $20 million, 50% [Phonetic] revenue to adjusted EBITDA.

This strong performance was driven by, you can see on Slide 13, strong growth -- our revenue growth, our revenue was $48.3 million, was strong and a little bit stronger than we would have thought, driven by -- particularly by our North American operations, which in turn was driven by the performance of All Access Pass. So that's guidance now.

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We generated $20.8 million of net income or $2.04 of diluted EPS, along with attractive returns of 6% ROA and 29.5% ROE due to quality growth in our loan portfolio, a strong credit profile, disciplined expense management and low funding costs. For the third straight quarter, we logged double-digit year-over-year growth in our net finance receivables and quarterly revenue, which were up 26% and 23%, respectively. These annual growth rates far exceeded our 2019 prepandemic portfolio and revenue growth rates of 19% and 16%, respectively. We originated a record $434 million of loans in the fourth quarter, up 19% over both the prior year and 2019 levels. In the fourth quarter, our portfolio also grew sequentially by $112 million, exceeding our guidance and driving our ending net receivables to an all-time high of more than $1.4 billion, which in turn produced record quarterly revenue of $119 million. Our 30-plus day delinquency rate ended just below 6%, which was 70 basis points above the prior year end but still 100 basis points below December 31, 2019. Our net credit loss rate during the quarter was 6.4%, a 50 basis point improvement from the prior year period and 260 basis points better than the fourth quarter of 2019. Our net credit loss rate for the full year 2021 was 6.6% or 230 basis points lower than 2020 and 290 basis points lower than 2019. In 2021, we refinanced approximately 41,000 of our customers' small loans into large loans, representing $237 million in finance receivables at origination and reducing these customers' average APR from 42.8% to 30.7%. For our team members, we established a $15 per hour minimum wage, rolled out additional compensation increases for hourly employees in amounts well ahead of the current inflationary environment, provided an additional week of paid time off and access to bereavement leave, held health and welfare insurance premiums flat, improved our overall benefit offerings and introduced new training and development programs. We finished 2021 with a record $88.7 million of net income, $8.33 of diluted EPS, 7.2% ROA, 31.6% ROE. These results are far and away the best in our company's history, with net income exceeding the high end of our most recent guidance by nearly $2 million. These investments led to a strong portfolio and revenue growth, up 26% and 20%, respectively, in 2021 compared to prepandemic results in 2019. In addition to growing our portfolio and investing in our future, we returned capital to our shareholders in the form of dividends totaling $10 million and share repurchases totaling $67 million in 2021. Since the outset of the pandemic in 2020, we have returned a total of $92 million of capital, comprised of $80 million of share repurchases or 17.2% of shares outstanding at the beginning of 2020 and $12 million of dividends. In recognition of our exceptional results, our strong capital position and the long-term earnings power and resiliency of our business, I am pleased to announce that our board of directors has approved a 20% increase in our quarterly dividend to $0.30 per share and has authorized a new $20 million stock repurchase program. We originated $49 million of digitally sourced loans in the fourth quarter, up 135% from the prior year period and 226% from the fourth quarter of 2019. New digital volumes represented 28.2% of our total new borrower volume in the quarter, with 59.8% originated as large loans. Total digitally sourced originations in 2021 were $149 million, up 239% from 2020 and 199% from 2019. We also plan to enter at least five additional new states and open approximately 25 de novo branches later this year as we continue our national expansion. As of the end of 2021, we had more than $550 million of unused borrowing capacity and available liquidity of $210 million to fund our growth. We are positioned well for rising interest rates with 78% of our $1.1 billion in outstanding debt carrying a fixed rate interest rate with a weighted average coupon of 2.7% and an average revolving duration of 3.1 years. In the fourth quarter, we added two forward interest rate caps totaling $100 million at strike rates of 50 basis points, a timely purchase in light of increasing rates at the outset of 2022. As of December 31, inclusive of the new caps, we had a total of $450 million of interest rate caps with strike rates at 25 to 50 basis points, covering $244 million in existing variable debt and creating protection for future growth. Consistent with our strong portfolio growth in the fourth quarter, we built our allowance for credit losses by $9.2 million, resulting in an allowance for credit losses reserve rate at the end of the year of 11.2%. Our allowance includes a $14.4 million reserve related to the expected economic impact of the COVID-19 pandemic. We released only $1.1 million of these COVID-related reserves in the fourth quarter as we continue to maintain a conservative stance while monitoring the impact of the Omicron variant, the pace of the economic recovery and the financial health of the consumer. We've also derisked our business by investing heavily in our custom underwriting models and shifting 83% of our portfolio to higher quality loans at or below 36% APR, enabling us to maintain stable credit profile as we grow. We generated net income of $20.8 million and diluted earnings per share of $2.04, up 45% and 59%, respectively, over the prior-year period. The business produced strong returns with 6% ROA and 29.5% ROE this quarter, and 7.2% ROA and 31.6% ROE for the full year 2021. As illustrated on Page 4, branch originations increased year over year as we originated $287 million of branch loans in the fourth quarter, 7% higher than the prior year period. Meanwhile, direct mail and digital originations were 55% above the prior year period, rising to $148 million of originations. Our total originations were a record $434 million, up 19% from the prior year period. Notably, our new growth initiatives drove $128 million of fourth-quarter originations and continue to be a significant factor in our accelerating expansion. Page 5 displays our portfolio growth and mix trends through the end of 2021. Our core loan portfolio grew $112 million or 8.6% sequentially in the quarter and $296 million or 26.5% from the prior year period as we continued to capture market share. Large loans and small loans grew 10% and 6% on a sequential basis. Our first quarter ending net receivables should be approximately $1.4 billion, and consistent with prior years, the portfolio will return to growth in the second quarter. On Page 6, we show our digitally sourced originations, which were 28% of our new borrower volume in the fourth quarter as we continue to meet the needs of our customers through our omnichannel strategy. During the fourth quarter, large loans were nearly 60% of our new digitally sourced origination. Turning to Page 7. Total revenue grew by 23% to a record $119.5 million. Interest and fee yield declined 50 basis points year over year as expected primarily due to the continued mix shift toward larger loans and the impact of nonaccrual loans as credit continues to normalize. Sequentially, interest and fee yield was lower by 60 basis points and total revenue yield was lower by 80 basis points, reflecting normal seasonal increases in 90-plus day delinquencies. In the first quarter, we expect total revenue yield to be approximately 110 basis points lower than the fourth quarter and our interest in fee yield to be approximately 120 basis points lower due to the continued mix shift to large loans, seasonally higher net credit losses and credit normalization. Moving to Page 8. Our net credit loss rate was 6.4% for the fourth quarter, a 50 basis point improvement year over year and 260 basis points better than the fourth quarter of 2019. Despite the combination of typical first quarter seasonality and this year's credit normalization, we anticipate that our net credit loss rate will remain 130 basis points better than first quarter 2020 prepandemic level. For the full year 2022, we expect that our loss rate will be approximately 8.5% or 100 basis points below full year 2019 levels. Our 30-plus day delinquency level as of December 31 was 6%, an increase of 130 basis points versus September 30, and up 70 basis points versus the prior year-end. However, we remain 100 basis points below year-end 2019 level. As of December 31, 68% of our portfolio was comprised of large loans, and 83% of our portfolio had an APR at or below 36%. As expected, our 30-plus day delinquency on our small loan portfolio is normalizing more quickly than on our large loan portfolio, with our small loan delinquency rate up 200 basis points year over year compared to only 20 basis points on the large loan portfolio. Turning to Page 9. We ended the third quarter with an allowance for credit losses of $150.1 million or 11.4% of net finance receivables. During the fourth quarter, the allowance increased by $9.2 million sequentially to $159.3 million to support our strong portfolio growth, but the allowance as a percentage of net finance receivables decreased to 11.2%. The allowance increase in the quarter consisted of a base reserve build of $10.3 million to support our portfolio growth and a COVID-related reserve release of $1.1 million due to improving economic conditions. We continue to maintain a reserve of $14.4 million related to the expected economic impact of the ongoing COVID-19 pandemic. We estimate that our reserve rate will remain at approximately 11.2% at the end of the first quarter and gradually decline to prepandemic levels of approximately 10.8% by the middle to the end of the year, depending upon the continued impact of COVID-19 and how quickly cases subside. Our $159.3 million allowance for credit losses as of December 31 continues to compare very favorably to our 30-plus-day contractual delinquencies of $84.9 million. Flipping to Page 10. G&A expenses for the fourth quarter were $55.5 million, up $11 million or 24% from the prior year period, a bit higher than we previously guided. G&A expenses for the fourth quarter also included $0.9 million of expenses related to the consolidation of 31 branches as a part of the company's branch optimization plan. Overall, we expect G&A expenses for the first quarter to be approximately $55 million or $0.5 million lower than the fourth quarter as we continue to invest in our digital capabilities, geographic expansion and personnel to drive additional sustainable growth and improved operating leverage over the longer term. Turning to Page 11. Interest expense was $7.6 million in the fourth quarter or 2.3% of our average net finance receivables on an annualized basis. This was a $1.7 million or 100 basis point improvement year over year. The improved cost of funds was driven by the lower interest rate environment, improved costs from our recent securitization transactions and a mark-to-market adjustment of $2.2 million on our interest rate cap. We currently have $550 million of interest rate caps to protect us against rising rates on our variable rate debt, which as of the end of fourth quarter totaled $244 million. $450 million of the interest rate caps have a one-month LIBOR strike price between 25 and 50 basis points and a weighted average duration of two years. Looking ahead, we expect interest expense in the first quarter to be approximately $10.5 million, excluding any mark-to-market impact on interest rate caps with the sequential increase in expense attributable to the growth in our average net receivables. Page 12 is the reminder of our strong funding profile. Our fourth-quarter funded debt-to-equity ratio remained at a conservative 3.9:1. We continue to maintain a very strong balance sheet with low leverage and $159 million in loan loss reserves. As of December 31, we had $557 million of unused capacity on our credit facilities and $210 million of available liquidity, consisting of unrestricted cash and immediate availability to draw down our credit facilities. Our fixed rate debt as a percentage of total debt was 78% with a weighted average coupon of 2.7% and an average revolving duration of 3.1 years. Our effective tax rate during the fourth quarter was 18% compared to 23% in the prior year period, primarily due to tax benefits from share-based awards. For the first quarter, we expect an effective tax rate of approximately 25%, excluding discrete items such as tax impacts associated with equity compensation. During the fourth quarter, we repurchased nearly 200,000 shares of our common stock at a weighted average price of $57.38 per share under our $50 million stock repurchase program. We completed the stock repurchase program in January of 2022, having repurchased in total 945,089 shares at a weighted average price of $52.91 per share. As Rob noted earlier, our board of directors has declared a dividend of $0.30 per common share for the first quarter of 2022, a 20% increase over the prior quarter's dividend. In addition, as Rob mentioned earlier, we are also pleased to announce that our board of directors has authorized a new $20 million stock repurchase program.

We generated $20.8 million of net income or $2.04 of diluted EPS, along with attractive returns of 6% ROA and 29.5% ROE due to quality growth in our loan portfolio, a strong credit profile, disciplined expense management and low funding costs. We generated net income of $20.8 million and diluted earnings per share of $2.04, up 45% and 59%, respectively, over the prior-year period. Total revenue grew by 23% to a record $119.5 million.

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Reported sales growth was 10.6%. Gross margin expanded by 220 basis points, and adjusted earnings per share was $0.77. Organic sales grew 8.4%, driven by higher consumption, restocking of retailer inventories and lower couponing. Our online sales increased by 75% in Q2 as all retailer.coms have grown. We began the year targeting 9% online sales. In Q1, 10% of our sales were online. In Q2, it was 13%, and we expect second half online sales to be equally strong. Year-to-date shipment and consumption patterns are back in balance for our brands in the 15 categories that we compete. July consumption for the U.S. business is tracking to be over 10%, led by our gummy vitamin brands, OXICLEAN additives and baking soda. 1/3 of our July consumption growth is attributed to our gummy business. In July, and I think this is important, only two of our 15 brands, that would be BATISTE and TROJAN, showed negative consumption. In contrast, in the month of May, eight of our 15 key product lines showed negative consumption. Consumption for May, June and July has been averaging up over 40%. The laundry pantry loading appears to be absorbed as our consumption improved from being down low single digits in the quarter to up approximately 10% in July year-over-year. Similarly, ARM & HAMMER litter improved from negative consumption in Q2 to up approximately 5% in July. In the water flosser category, WATERPIK is starting to recover from the steep decline in April when consumption was down 55%. The most recent surveys indicate that 95% of dental offices are now open, although most are at a reduced capacity. In Q2, we launched a new ARM & HAMMER laundry detergent called CLEAN & SIMPLE, which has only six ingredients plus water and this compares to 15 to 30 ingredients for the typical liquid detergent, and has the cleaning power comparable to our best-selling consumer favorite, which is ARM & HAMMER with OXICLEAN. ABSORBx is 15% lighter than our existing lightweight, and it's 55% lighter than our regular clumping litter. We reinstated our earnings per share outlook with 13% growth, which is far above our evergreen target of 8% annual earnings per share growth. You may recall that just last year, we had this exact same opportunity to invest, and our earnings per share was down 4% in Q4 2019 as a result. Second quarter adjusted EPS, which excludes an acquisition-related earn-out adjustment, grew 35% to $0.77 compared to $0.57 in 2019. Reported revenue was up 10.6%, reflecting a significant increase in consumer demand for our products due to COVID. Organic sales were up 8.4%, driven by a volume increase of 4.9% and positive product mix and pricing of 3.5%. Organic sales increased by 10.7% due to higher volume and positive price mix. 6% is consumption growth, reflecting strong, tracked and untracked in e-commerce growth, 1% from lower couponing, and then approximately 3.5% from improving retail and stock levels. Consumer International delivered 0.6% organic growth due to positive price and product mix offset by lower volume. For our SPD business, organic sales increased 3% due to higher volume, offset by lower pricing. Our second quarter gross margin was 46.8%, a 220 basis point increase from a year ago due to a reduction in trade, couponing and improved productivity. In terms of the gross margin bridge versus year ago, positive price and volume and mix contributed 220 basis points. Productivity added 140 basis points, offset by higher manufacturing costs of 110 basis points which was driven by 110 basis points related to COVID supply chain costs and then improved commodity costs were offset by higher manufacturing costs. Finally, a drag of 20 basis points from the prior year FLAWLESS accounting impact and a 10 basis point drag from FX is how we get to 220 up for the quarter. Marketing was down $6.8 million year-over-year. Marketing expense as a percentage of net sales decreased 180 basis points to 10.2%. For SG&A, Q2 adjusted SG&A increased 30 basis points year-over-year, primarily due to higher incentive comp, intangible costs related to acquisitions and investments in R&D and IT. And for net operating profit, the adjusted operating margin for the quarter was 21.5%. Other expense all in was $14.7 million, a slight decline due to lower interest expense resulting from lower interest rates. And for income tax, our effective rate for the quarter was 19.6% compared to 18.7% in 2019, an increase of 90 basis points, primarily driven by lower stock option exercises. For the first six months of 2020, cash from operating activities increased 70% to $599 million due to higher cash earnings and a decrease in working capital. This includes deferring an $81 million income tax payment in line with the CARES Act. As of June 30, cash on hand, was $452 million. Our full year capex plan has gone from $80 million to $100 million as we begin to expand manufacturing and distribution capacity, primarily focused on laundry, litter and vitamins. We now expect approximately 9% to 10% full year 2020 sales growth and approximately 7% to 8% organic sales growth. Adjusted earnings per share growth is expected to be 13% above the high end of our original 7% to 9% outlook. The first half gross margin expanded 150 basis points. As you heard from Matt, we intend to make incremental investments in the back half of 2020.

Gross margin expanded by 220 basis points, and adjusted earnings per share was $0.77. In Q2, it was 13%, and we expect second half online sales to be equally strong. We reinstated our earnings per share outlook with 13% growth, which is far above our evergreen target of 8% annual earnings per share growth. Second quarter adjusted EPS, which excludes an acquisition-related earn-out adjustment, grew 35% to $0.77 compared to $0.57 in 2019. We now expect approximately 9% to 10% full year 2020 sales growth and approximately 7% to 8% organic sales growth. Adjusted earnings per share growth is expected to be 13% above the high end of our original 7% to 9% outlook. As you heard from Matt, we intend to make incremental investments in the back half of 2020.

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Reported sales in a quarter of $1,108.3 million were up 3.2%, including $12.2 million from acquisitions being offset by $3 million of unfavorable foreign currency exchange. Organically, our sales grew by 2.3%. Sales in this past quarter were up 16% as reported and 13% organically continuing an ongoing trend of accelerating expansion, increasing higher and higher over pre-COVID levels. Opco, operating income of $232.2 million was up $16.6 million from last year and the 0I margin was 21%. An all-time high, up 90 basis points from last year and 310 basis points from 2019 all achieved by overcoming the challenges of this day. For financial services, operating income of $67.2 million was down from the $68.5 million of last year, but delinquencies in the quarter were below both 2020 and those of 2019. And the combination of the results from opco and financial services offered an overall consolidated operating margin of 25.1%, up from the 24.4% of last year, and the 22.5% recorded in 2019. Our quarterly earnings per share was $4.10 well over the $3.82 of a year ago, which included a $0.2 charge for restructuring, and that's $4.10 was up 33.1% over 2019. In 2021, we had more hit $1 million projects than ever before. Sales of $4,252 million, up 18.4%, including an organic increase of 15.1% compared to last year and a 14.14% organic gain over 2019, strong numbers. The as-reported opco OI margin for the year was 20%, a new high, up from the 17.6% of 2020, exceeding the 19.2% of pre-pandemic 2019. As-reported earnings per share for the year were $14.92, up 30.4%, or 28.3% as adjusted for the nonrecurring restructuring and the restructuring in 2020, and up 21.7% as adjusted from 2019. Let's start with C&I, fourth quarter sales at $358.7 million for the group were down $5.7 million, including $4.1 million of unfavorable currency versus 2019 sales group $5.8 million, reflecting primarily acquisition volume and currency impact. C&I operating income was $50.1 million, down $6.1 million, including $1.2 million of unfavorable currency. Great offerings like our recently released QB4R [Inaudible] of three quarter inch drive break-over torque wrenches, capable of -- this wrench is capable of accurately fastening from 450 to 750-pound feet. Sales of $504.8 million, up $9.9 million, including favorable currency and a $7.9 million organic rise from continued expansion in the US, a positive that was somewhat attenuated this quarter by a low single-digit decline in international networks. But versus 2019, a more comparable base, the Tools Group rose 21.5% and has been up now from prepandemic levels for 6 straight quarters. And the operating margin was 21.9%, easily one of the highest ever, up 300 basis points from last year, all despite the ongoing challenges of this day. This quarter, we were once again ranked among the top franchise organization, both in the US and abroad recognized by the franchise business view, which in its latest ranking for franchisee satisfaction, was a Snap-on the top as a top 50 franchise for the 15th consecutive year. 2 in Elite Franchise Magazine's top UK franchises. The judges in that ranking state that the durability and innovation showed in the face of unimaginable circumstances are what is decided in this year's top 10, and the panel was right on. Our innovative 30, LS, DM, core half-inch drive impact suckets were a significant contributor. Born out of customer connection, observing the work in automotive shops, the special sockets, they range from 17 to 22 millimeters, come with an extra deep hex, up to three-quarter inch deeper, accommodating the lug nuts with a decorative cap that are becoming so common on the latest models. Volume for the fourth quarter was $392.5 million, up 8.7%, including acquisitions and 5.5% of organic growth with gains in sales of modern car equipment, increased volume of handheld diagnostics, and the rise of information and data subscriptions being partially offset by a decrease in our business focused on vehicle OEMs and dealerships. RS&I operating margins of $97.2 million rose $7.2 million or 8% versus 2020. And that number in 2020 included $1 million of restructuring costs. Compared with the pre-pandemic levels of 2019, sales grew $57.5 million, 17.2%, including a $43.7 million or 13% organic gain. And the RS&I gross OI margin of 24.8% compared with a 24.9% and a 26% registered in 2020 and 2010, respectively. Along those lines, our Mitchell 1 division, providing software to independent shops, continues to succeed, pursuing customer connection and innovation, launching great new products to improve shop efficiency. RS&I just added more powerful and exclusive features to its award-winning Mitchell 1 pro demand auto repair information software. You see, as auto electronics have expanded, wiring diagrams have become of rising importance in-vehicle diagnosis and repair, and the new pro demand significantly advances what is already a clear lead for Mitchell 1 in diagram navigation, offering new features that provide interactive dropdowns, display, and connection data allow easy movement to the next diagram on the diagnostic trail and enable the seamless recall of previously, viewed circuits should a look-back be needed in the repair process. A continuing rise versus the pre-pandemic levels up more each quarter now for several straight periods gauged forged through our Snap-on value creation processes, strengthening our business and driving to a 21% optimal operating margin up 90 basis points, a new record. EPS $4.10 a considerable rise to new heights. Net sales of $1,108.3 million in the quarter increased 3.2% from 2020 levels, reflecting a 2.3% organic sales gain and $12.2 million of acquisition-related sales, partially offset by $3 million of unfavorable foreign currency translation. Additionally, net sales in the period increased 16% from $955.2 million in the fourth quarter of 2019, including a 13% organic gain, $20.9 million of acquisition-related sales, and $7.1 million of favorable foreign currency translation. Consolidated gross margin of 48.1% improved 10 basis points from 48% last year, the gross margin contributions from the higher sales volumes. Pricing actions 30 basis points of favorable foreign currency effects and benefits from the company's RCI initiatives offset higher material and other costs. Operating expenses as a percentage of net sales of 27.1% improved 80 basis points from 27.9% last year, which included 10 basis points of cost from restructuring actions. The improvement is primarily due to higher sales volumes, partially offset by 40 basis points of unfavorable acquisition effect. Operating earnings before financial services of $232.2 million, compared to $216.2 million in 2020 and $171.4 million in 2019, reflecting an improvement of 7.4% and 35.5%, respectively. As a percentage of net sales, operating margin before financial services of 21% improved 90 basis points from last year and 310 basis points from 2019. The operating company margin of 21% represents the highest quarterly level of profitability and Snap-on's modern-day history. Financial services revenue of $86.9 million in the fourth quarter of 2021, compared to $93.4 million last year, which included an extra week of interest income associated with the 53rd week 2020 fiscal calendar. Operating earnings of $67.2 million decreased $1.3 million from 2020 levels, reflecting the lower revenue partially offset by lower provisions for credit losses. Consolidated operating earnings of $299.4 million increased 5.2% from $284.7 million last year and 28.2% from $233.6 million in 2019. As a percentage of revenues, the operating earnings margin of 25.1% compared to 24.4% in 2020 and 22.5% in 2019. Our fourth quarter effective income tax rate of 22.3% compared to 21.8% last year, which includes a 10 basis point increase related to the restructuring actions. Net earnings of $223.7 million or $4.10 per diluted share increased $14.8 million, or $0.28 per share from last year's levels, representing a 7.3% increase in diluted earnings per share. As compared to the fourth quarter of 2019, net earnings increased by $53.1 million, or $1.02 per share, representing a 33.1% increase and diluted earnings per share. Sales of $358.7 million decreased from $364.4 million last year, reflecting a $1.6 million organic sales decline and $4.1 million of unfavorable foreign currency translation. As a further comparison net sales in the period increased 1.6% from 2016 levels, reflecting $8.7 million of acquisition-related sales and $3.8 million of favorable foreign currency translation, partially offset by a $6.7 billion organic sales decline. Gross margin of 36.5% declined 130 basis points from 37.8% in the fourth quarter of 2020, primarily due to the higher material and other costs, partially offset by benefits from RCI industries. Operating expenses as a percentage of sales of 22.5% in the quarter, compared to 22.4% last year. Operating earnings for the CNI segment of $50.1 million, compared to $56.2 million last year. The operating margin of 14%, compared to 15.4% a year ago. Sales in the Snap-on Tools Group of $504.8 million increased 2% from $494.9 million in 2020, reflecting a 1.6% organic sales gain and $2 million of favorable foreign currency translation. Net sales in the period increased 22.6% from $411.7 million in the fourth quarter of 2019, reflecting a 21.5% organic sales gain and $3.9 million of favorable foreign currency translation. Gross margin of 43.9% in the quarter improved 100 basis points from last year, primarily due to the higher sales volumes. Pricing actions and 60 basis points from favorable foreign currency effects, which offset higher material and other costs. Operating expenses as a percentage of sales of 22% improved from 24% last year, primarily reflecting the higher sales and benefits from ongoing RCI and cost containment efforts. Operating earnings for the Snap-on tools group of $110.5 million, compared to $93.6 million last year. The operating margin of 21.9% improved 300 basis points from 18.9% last year. Sales of $392.5 million compared to $361.1 million a year ago, reflecting a 5.5% organic sales gain and $12.2 million of acquisition-related sales, partially offset by $500,000 of unfavorable foreign currency translation. As compared to 2019 levels, net sales increased $57.5 million from $335 million, reflecting a 13% organic sales gain, $12.2 of acquisition-related sales, and $1.6 million of favorable foreign currency translation. Gross margin of 46.1% was unchanged from last year as benefits from pricing actions and 60 basis points from acquisitions were offset by higher material and other costs. Operating expenses as a percentage of sales with 21.3% compared to 21.2% last year, primarily due to150 basis points of unfavorable acquisition effects, partially offset by the impact of higher sales and 30 basis points from lower expenses related to $1 million of restructuring costs that were recorded in the fourth quarter of 2020. Operating earnings for the RS&I Group of $97.2 million compared to $90 million last year. The operating margin of 24.8% compared to 24.9% a year ago. Revenue from financial services of $86.9 million decreased by $6.5 million from $93.4 million last year, primarily as a result of an additional week of interest income occurring in the 53rd 2020 fiscal year. Financial services operating earnings of $67.2 million compared to $68.5 million in 2020. As a percentage of the average portfolio, financial services expenses were nine-tenths of 1% and 1.1% in the fourth quarter of 2021 and 2020, respectively. In the fourth quarter of 2021, in 2020, the average yield on finance receivables was 17.7% and the average yield on contract receivables was 8.5%. Total loan originations of $256.3 million in the fourth quarter decreased $16.1, or 5.9% from 2020 levels, reflecting a 3.6% decrease in originations of finance receivables and a 16.6% decrease in originations of contract receivables. Last year's extra week in the quarter contributed approximately $10 million of finance receivable originations. Our quarter-end balance sheet includes approximately $2.2 billion of gross financing receivables, including $1.9 billion from our US operation. The 60-day plus delinquency rate of 1.6% for the US extended credit compared to 1.8% in the fourth quarter of 2020. On a sequential basis, the rate is up 20 basis points, reflecting the typical seasonal increase we experienced between the third and fourth quarters. As relates to extending credit or finance receivables, trailing 12-month net losses of $41.1 million represented 2.38% of outstanding at quarter-end, down 24 basis points as compared to the same period last year. Now turning to Slide 12, cash provided by operating activities of $222.7 million in the quarter reflects 97.2% of net earnings and compared to $317.6 million last year. The decrease from the fourth quarter of 2020 primarily reflects higher cash payments for income and other taxes and an $85 million increase in working investment, partially offset by higher net earnings. Net cash used by investing activities of $23.8 billion included net additions to finance receivables of $9.7 million and $16.3 million of capital expenditures. Net cash used by financing activities, $154.1 million included cash dividends of 76.1 million and the repurchase of 355,000 shares of common stock for $75.5 million under our existing share repurchase programs, as of year-end, we have to remain available to repurchase up to an additional $454.9 million of common stock under existing authorizations. The 2021 full-year free cash flow generation of $872.6 million represented about 104% of net earnings. Turning to Slide 13, trade and other accounts receivable increased $41.6 million from the 2020 year-end. Days sales outstanding of 58 days compared to 64 days at 2020 year-end. Inventories increased $57.3 million from 2020 year-end and trailings 12-month basis inventory turns of 2.8 times, compared to 2.4 times at year-end 2020. Our year-end cash position of $780 million, compared to $923.4 million at year-end 2020. Our net debt to capital ratio of 9.1% compared to 12.1% at year-end 2020. In addition to cash, and expected cash flow from operations, we have more than $800 million available under our credit facilities. We anticipate the capital expenditures will be in a range of $90 million to $100 million. In addition, we currently anticipate absenting any changes to US tax legislation that our full-year 2022 effective income tax rate will be in the range of 23%, 24%. Sales rising organically over pre-pandemic levels by 13%, with the last four periods up organically 8%, 9%, 11%, and 13% expanding the gain over 2019, demonstrating a positive second derivative in the rising sales quarter by quarter. Opco OI margins of 21%, a record high in the midst of multiple challenges, up 90 basis points from last year and up substantially more from 2019. And it all came together for an earnings per share of $4.10, up 7.2% from last year and 33% from the pre-pandemic period, leading to a full-year earnings per share of $14.92, new heights despite the storm.

Organically, our sales grew by 2.3%. Our quarterly earnings per share was $4.10 well over the $3.82 of a year ago, which included a $0.2 charge for restructuring, and that's $4.10 was up 33.1% over 2019. EPS $4.10 a considerable rise to new heights. Net sales of $1,108.3 million in the quarter increased 3.2% from 2020 levels, reflecting a 2.3% organic sales gain and $12.2 million of acquisition-related sales, partially offset by $3 million of unfavorable foreign currency translation. Net earnings of $223.7 million or $4.10 per diluted share increased $14.8 million, or $0.28 per share from last year's levels, representing a 7.3% increase in diluted earnings per share. We anticipate the capital expenditures will be in a range of $90 million to $100 million. In addition, we currently anticipate absenting any changes to US tax legislation that our full-year 2022 effective income tax rate will be in the range of 23%, 24%. And it all came together for an earnings per share of $4.10, up 7.2% from last year and 33% from the pre-pandemic period, leading to a full-year earnings per share of $14.92, new heights despite the storm.

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We will continue to face revenue challenges until the economic recovery from COVID-19 gains greater momentum and clients are more fully back on their feet. Turning to our second quarter results, we experienced a significant decline in the demand for our services during the quarter. Total revenue was down 39% and we posted a net loss of $8 million or $0.23 per share. We saw moderate demand improvement toward the end of the quarter, which continued into July. PeopleReady's revenue was down 43% during the quarter and we saw modest intra-quarter improvement with revenue down 39% in June versus down 46% in April. Revenue for PeopleManagement was down 23% during the quarter and snapped back well as the quarter progressed with the top line down 16% in June versus down 30% in April. Second is an outsourced versus supplemental dynamic. Revenue was down 53% during the quarter. Since the start of the crisis, we've distributed approximately 120,000 masks across our staffing brands. Second, we have symptom checks before entering the building at all of our on-site locations and we've distributed over 600 infrared thermometers for branch offices and job sites that requested or required them. We filled 551,000 shifts via JobStack in Q2 2020, representing an all-time high digital fill rate of 53%. Our client user count ended the quarter at 24,300, up 38% versus Q2 2019. This new technology has been deployed in all 50 states and early results are favorable. Total revenue for Q2 2020 was $359 million representing a decline of 39%. We posted a net loss of $8 million or $0.23 per share and adjusted net loss of $4 million or $0.12 per share. Adjusted EBITDA was a loss of $5 million, down from a profit of $34 million in Q2 2019, primarily due to lower revenue and gross margin. Gross margin of 23.2% was down 340 basis points. PeopleScout contributed 240 basis points of compression with 80 basis points from severance and 160 basis points from client mix and lower volume. Our staffing businesses contributed another 100 basis points of compression from unfavorable mix and from pricing. The quick actions we took in March reduced expense by $29 million or by 23% compared to Q2 2019. We had an income tax benefit this quarter of $13 million, which equates to a 62% effective rate on our pre-tax loss of $22 million. Given our losses this year, we expect our income tax benefit rate to stay elevated this year due to the semi-fixed nature of work opportunity tax credits and the CARES Act, which allows us to carry back pre-tax losses to periods when the federal income tax rate was 35%. PeopleReady, our largest segment representing 62% of trailing 12-month revenue and 71% of segment profit saw a 43% decline in revenue and segment profit was down 97%. We did see modest intra-quarter improvement with June revenue down 39% compared to 46% in April. For the first three weeks in July, PeopleReady was down 31% or 33% excluding the benefit from fourth of July falling on Saturday this year versus Thursday last year. PeopleManagement representing 28% of trailing 12-month revenue and 9% of segment profit saw a 23% decline in revenue and segment profit was down 56%. PeopleManagement experienced encouraging intra-quarter improvement with June revenue down 15% compared to 30% in April. Month-to-date or July, PeopleManagement was down 11% or 12% excluding the timing benefit from the fourth of July. PeopleScout representing 10% of trailing 12-month revenue and 20% of segment profit saw a 53% decline in revenue and segment profit was down 125%. As Patrick noted, PeopleScout results were adversely impacted by exposure to travel and leisure clients, which made up roughly 30% of the prior year mix and revenue for this vertical was down 80% year-over-year. Cash flow from operations was $103 million, which was higher than Q2 last year of $37 million due to the deleveraging of accounts receivable. At the end of Q2 2020, our cash exceeded our debt by $47 million compared to our debt exceeding our cash by $29 million at the end of Q1 this year. For Q2, our total debt-to-capital ratio was 10% and our total debt to trailing 12-month adjusted EBITDA multiple stood at 0.8. With an adequate supply of liquidity in the banking system and our covenant negotiations behind us, we plan to run the company with about $30 million of cash and apply any excess cash toward debt. Also, as a reminder, we executed $52 million of share repurchases in Q1 prior to the COVID-19 impact. Our cost management strategies are on track and we expect expense to be down $90 million to $100 million in comparison with 2019. All-in, this would produce a decrease in SG&A expense of about 20% in 2020. Turning to fiscal year 2020 gross margin, we expect a contraction of 200 basis points to 140 basis points. For capital expenditures, we expect about $22 million for the full year, which is net of $4 million in build-out costs for our Chicago headquarters that are to be reimbursed by our landlord in 2020. Our outlook for weighted average shares outstanding for fiscal year 2020 on an anti-dilutive basis is 35.3 million.

We will continue to face revenue challenges until the economic recovery from COVID-19 gains greater momentum and clients are more fully back on their feet. Turning to our second quarter results, we experienced a significant decline in the demand for our services during the quarter. Total revenue was down 39% and we posted a net loss of $8 million or $0.23 per share. We saw moderate demand improvement toward the end of the quarter, which continued into July. Second is an outsourced versus supplemental dynamic. Total revenue for Q2 2020 was $359 million representing a decline of 39%. We posted a net loss of $8 million or $0.23 per share and adjusted net loss of $4 million or $0.12 per share.

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PMT produced another strong quarter of financial results with net income attributable to common shareholders of $65.4 million or diluted earnings per share of $0.67. PMT paid a common dividend of $0.47 per share. Book value per share increased 3% to $20.90 from $20.30 at the end of the prior quarter, partially due to strong earnings and partially due to the issuance of senior exchangeable notes. Our high-quality loan production in the quarter resulted in the creation of more than $400 million in new, low‐rate mortgage servicing rights, and PMT ended the quarter with approximately $2.4 billion in fair value of MSRs, which we expect will perform well in a rising rate environment. We issued $659 million of three‐year term notes associated with PMT's sixth CRT transaction and the entirety of PMT's CRT investments is now financed with term notes that do not contain margin call provisions, providing stable financing throughout much of the expected life of the asset. We also issued $350 million in five-year Fannie Mae MSR term notes to support the growing MSR portfolio. And finally, we issued $345 million of five‐year senior exchangeable notes, upsized from an initial $200 million offered with strong support from institutional investors. This issuance with an initial conversion price of $21.69 represents an attractive premium to PMT's book value per share at issuance. The origination market continues to be historically strong as mortgage rates remain near record lows despite the increases in the 10‐year treasury yield since the start of the year. Recent economic forecasts for 2021 originations range from $3.3 trillion to $4 trillion, while average forecasts for 2022 originations remain strong at $2.6 trillion. It is worth noting that in each of 2021 and 2022, purchase originations are expected to total $1.7 trillion, almost 40% higher than 2019 levels. Additionally, we expect the $1.5 billion annual limit per client on cash window deliveries into each of the GSEs to drive more volume into the correspondent channel. In total, we expect a quarterly run‐rate return for PMT's strategies of $0.50 per share or a 9.5% annualized return on equity. Total correspondent acquisition volume in the quarter was $51.2 billion in UPB, down 10% from the prior quarter and up 72% year over year. PMT ended the quarter with 727 correspondent seller relationships, up from 714 at December 31. Conventional lock volume in the quarter was $34 billion in UPB, down 14% from the prior quarter and up 78% year over year. Margins in the channel have normalized and PMT's correspondent production segment pre-tax income as a percentage of interest rate lock commitments was 10 basis points, down from 13 basis points in the prior quarter. Acquisition volumes remained strong in April, with $18.5 billion in UPB of total acquisitions and $15.6 billion in UPB of total locks. The fair value of PMT's MSR asset at the end of the first quarter was $2.4 billion, up from $1.8 billion at the end of the prior quarter. The total UPB of loans underlying our CRT investments as of March 31 was $48 billion, down significantly quarter over quarter as a result of elevated prepayments. Fair value of our CRT investments at the end of the quarter was $2.58 billion, down slightly from $2.62 billion at December 31 as fair value gains largely offset the decline in asset value that resulted from prepayments. PFSI's position as the manager and servicer of loans underlying PMT's CRT investments gives PMT a strategic advantage given we can work directly with borrowers who have loans underlying PMT's investments and have experienced hardships related to COVID‐19. PFSI uses a variety of loss mitigation strategies to assist delinquent borrowers, and because of the scheduled loss transactions, notably PMTT1‐3 and L Street Securities 2017‐PM1, trigger a loss if a borrower becomes 180 days or more delinquent, we have deployed additional loss mitigation resources and continue to assist those borrowers at risk. With respect to PMTT1‐3, which comprises 6% of the fair value of PMT's overall CRT investment, if all presently delinquent loans proceeded unmitigated to 180 days or more delinquent, additional losses would be approximately $34 million. Through the end of the quarter, losses to date totaled $7 million. As a reminder, mortgage obligations underlying PMTT1‐3 become credit events at 180 days or more delinquent regardless of any grant of forbearance. Moving on to L Street Securities 2017‐PM1, which comprises 18% of the total fair value of PMT's CRT investment, such losses will become reversed credit events if the payment status is reported as current after a forbearance period due to COVID‐19. PMT recorded $14 million in net losses reversed in the first quarter as $43 million of losses reversed more than offset the $29 million in additional realized losses. We estimate that an additional $32 million of these losses were eligible for reversal as of March 31 subject to review by Fannie Mae and we expect this amount to increase as additional borrowers exit forbearance and reperform. We estimate that only $6 million of the losses outstanding had no potential for reversal. This market expectation of significant future loss reversals resulted in the fair value of L Street Securities 2017‐PM1 exceeding its face amount by $46 million at the end of the quarter. The most common method for borrowers to exit forbearance to date has been a COVID‐19 payment deferral. PMT reports results through four segments: credit-sensitive strategies, which contributed $134.3 million in pre-tax income; interest rate sensitive strategies, which contributed $64.6 million in pre-tax loss; correspondent production, which contributed $35.6 million in pre-tax income; and the corporate segment, which had a pre-tax loss of $14.2 million. The contribution from PMT's CRT investments totaled $135.7 million. This amount included $98.1 million in market‐driven value gains, reflecting the impact of credit spread tightening and elevated prepayment speeds. Net gain on CRT investments also included $42.7 million in realized gains and carry, $13.3 million in net losses reversed, primarily related to L Street Securities 2017‐PM1, which Vandy discussed earlier, $200,000 in interest income on cash deposits, $15.9 million of financing expenses, and $2.5 million of expenses to assist certain borrowers in mitigating loan delinquencies they incurred as a result of dislocations arising from the COVID‐19 pandemic. PMT's interest rate sensitive strategies contributed a loss of $64.6 million in the quarter. MSR fair value increased $338 million during the quarter. $380 million in fair value gains as a result of lower expectations for prepayment activity in the future driven by higher mortgage rates was partially offset by $42 million in other valuation losses, primarily driven by elevated levels of prepayment activity. Fair value declines on Agency MBS and interest rate hedges totaled $448 million and included $29 million in hedge costs driven by market volatility that also impacted hedge effectiveness in the quarter. PMT's Correspondent Production segment contributed $35.6 million to pre-tax income for the quarter, down from $52.7 million in the prior quarter as gain on sale margins normalized. The segment's contribution for the quarter was a pre-tax loss of $14.2 million. Finally, we recognized a provision for tax expense of $19.4 million in the first quarter, compared to a tax benefit of $9 million in the prior quarter.

PMT produced another strong quarter of financial results with net income attributable to common shareholders of $65.4 million or diluted earnings per share of $0.67.

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North America water treatment grew 14% organically, driven by continued consumer demand for products promoting a safe home. We believe industry shipments of U.S. residential water heaters, including tankless surge to a record, exceeding 10 million units or 8% growth over the prior year. Due to construction project delays and postponements in North America as well as pandemic-related weakness in restaurant and hospitality, new construction and replacement demand, we saw commercial water heater and boiler industry volumes declined by 8% to 10%. In North America, aside from the voluntary closure of our Mexican facility for several weeks in the second quarter, we remained operational throughout 2020 with no significant disruptions within our plants and our supply chain. North America water treatment grew 14% organically, driven by continued consumer demand for products promoting a safe home. We believe industry shipments of U.S. residential water heaters, including tankless, surge to a record, exceeding 10 million units or 8% growth over the prior year. Due to construction project delays and postponements in North America as well as pandemic-related weakness in restaurant and hospitality, new construction and replacement demand, we saw commercial water heater and boiler industry volumes declined by 8% to 10%. To align our business with current global market conditions, we reduced headcount and incurred other restructuring costs, totaling approximately $6 million after tax in 2020. We published our second Corporate Responsibility and Sustainability Report in January and great proud of our accomplishments since our first report, particularly in employee engagement, safety, research reduction in our facilities and a product portfolio that both some of the most efficient products in their respective categories. We strive to reduce GHG emissions by 10% by 2025. Full year sales of $2.9 billion declined 3% compared with 2019, largely due to significant weakness in the China business in the first half of 2020. As a result of lower sales, adjusted earnings declined 3% to $351 million or $2.16 per share compared with $370 million or $2.22 per share in 2019. Sales in our North America segment of $2.1 billion increased 2% compared with 2019. Rest of the world segment sales of $800 million declined 14% from 2019. Currency translation of China sales favorably impacted sales by approximately $9 million. Indian sales were also negatively impacted by the pandemic-related economic disruption and declined to $31 million compared with $39 million in 2019. On Slide 7, North America segment adjusted earnings of $506 million increased 4% compared to 2019. The impact to earnings from lower volumes of boilers and commercial water heaters and the mix skew to electric water heaters partially offset these factors. Adjusted segment earnings exclude $2.7 million in pre-tax severance costs. As a result, adjusted operating margin of 23% is slightly higher than in 2019. Rest of the world adjusted segment earnings of $5 million declined significantly compared with 2019. As a result of these factors, adjusted segment operating margin of 0.6% decline from 4.3% in 2019. Our corporate expenses of $52 million were higher than in 2019, primarily driven by lower interest income. Record fourth quarter sales of $835 million increased 11% compared with the fourth quarter of 2019. As a result of higher sales and cost reduction initiatives earlier this year, fourth quarter earnings of $120 million or $0.74 per share increased significantly compared with 2019. Record fourth quarter sales in North America segment of $561 million increased 7% compared with the same period in 2019, primarily driven by higher residential water heater volumes. Rest of the world fourth quarter segment sales of $279 million improved 19% compared with the fourth quarter of 2019. Currency translation of China sales favorably impacted sales by approximately $14 million. Constant currency China sales improved 15% driven by mid single-digit growth in end market demand led by water treatment, replacement water treatment filters and gas tankless water heaters and a favorable mix between product categories compared with the fourth quarter of 2019. On Slide 10, record fourth quarter North America segment earnings of $138 million increased 7% from the same period in 2019. As a result, fourth quarter segment margin of 24.6% was slightly higher than 24.5% in 2019. Rest of the World segment earnings of $31 million improved significantly from $1.5 million in the same quarter in 2019. As a result of these factors, fourth quarter segment margin improved to 11.2% compared with 0.6% in 2019. Our corporate expenses of $16 million in the fourth quarter were higher than the same period of 2019, primarily due to an increase in long-term incentives and lower interest income in the 2020 fourth quarter. Cash provided by operations of $562 million during 2020 was higher than 2019. Our cash balances totaled $690 million at the end of 2020 and our net cash position was $576 million. At the end of 2020, our leverage ratio was 6% as measured by total debt to total capital. We are in the process of refinancing our $500 million revolving credit facility, which expires at the end of the year. We expect to repurchase $400 million worth of share in 2021 through a combination of 10b5-1 program and open market purchases. Recently, our Board increased the authorized shares on our share repurchase authority by 7 million shares. The midpoint of our range represents an increase of 13% compared with our 2020 results. We expect cash flow from operations in 2021 to be between $450 million and $475 million compared with $560 million in 2020, primarily due to higher earnings offset by higher investments in working capital than in prior year. In 2021, capital spending plans are between $85 million and $90 million and our depreciation and amortization expense is expected to be approximately $80 million. Our corporate and other expenses are expected to be approximately $51 million, slightly lower than in 2020. Our effective tax rate is assumed to be between 22.5% and 23% in 2021. Average outstanding diluted shares of 160 million assumes $400 million worth of shares are repurchased in 2021. We project U.S. residential water heater industry volumes will be down 2% or 200,000 units in 2021. Steel has increased nearly 50% since we announced our February 1 water heater price increase of 5% to 9%. We announced a second price increase last week on water heaters effective April 1st, also between 5% to 9% depending on the type of water heater. We expect commercial industry water heater volumes will further decline approximately 4% as pandemic impacted business delay, order for new construction and discretionary replacement installations. Those accomplishments include closing of 1,000 stores in Tier 1 and 2 cities, while efficiently expanding in Tier 4 through 6 cities, implementing programs to save $30 million in SG&A, which will carry over into 2021. We expect year-over-year increases in local currency sales between 14% and 15%. We assume China currency rates remain at current levels, adding approximately $45 million and $3 million to sales and profits over the prior year respectively. First, industry growth of 3% to 4%. The CAGR for commercial condensing boilers, which is over 50% of the boiler revenue, was 5% to 6% prior to 2020. We believe replacement demand is still 85%. In 2020, condensing boilers were 39% of the commercial boiler industry that represents our addressable market, which provides continued opportunity for our leading market share commercial condensing boilers. New product launches including improvements to our flagship CREST commercial condensing boiler with a market differentiating oxygen sensor which continuing measures and optimizes boiler performance and the introduction of be 1 million BTU light duty commercial night FTXL boiler. We project 13% to 14% sales growth in our North America water treatment products. We believe the mega trends of health and safe drinking water as well as a reduction of single use plastic bottles will continue to drive consumer demand for our point of use and our point of entry water treatment systems. We believe margins in this business could grow by 100 to 200 basis points, higher than the nearly 10% margin achieved in 2020. We project 2021 full year sales to increase over 20% compared with 2020 and to incur a small loss of $1 million to $2 million. We project revenue will increase by approximately 10% in 2021 as strong North America water treatment and China sales enhanced by growth in boiler sales more than offset expected weaker North America water heater volumes. Our 10% growth rate projection includes approximately $45 million of benefit from China currency translation. We expect North America segment margins to be between 23% and 23.5% and Rest of World segment margins to be between 7% and 8%. We estimate replacement demand represents approximately 80% to 85% of U.S. water heater and boiler volumes.

In North America, aside from the voluntary closure of our Mexican facility for several weeks in the second quarter, we remained operational throughout 2020 with no significant disruptions within our plants and our supply chain. We published our second Corporate Responsibility and Sustainability Report in January and great proud of our accomplishments since our first report, particularly in employee engagement, safety, research reduction in our facilities and a product portfolio that both some of the most efficient products in their respective categories. The impact to earnings from lower volumes of boilers and commercial water heaters and the mix skew to electric water heaters partially offset these factors. As a result of higher sales and cost reduction initiatives earlier this year, fourth quarter earnings of $120 million or $0.74 per share increased significantly compared with 2019. We believe the mega trends of health and safe drinking water as well as a reduction of single use plastic bottles will continue to drive consumer demand for our point of use and our point of entry water treatment systems.

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The announced duration for the short-term cuts totaling 10 million barrels per day, extend for two months through May and June. This is the single largest coordinated output cut in history, but nonetheless, it falls far short of the estimated 25 million to 30 million barrels per day of demand destruction. During the first quarter, our Completion Services revenues were modestly up sequentially with margins improving 370 basis points. In our Downhole Technologies segment, revenues improved 7% sequentially and margins increased 420 basis points. Segment backlog at March 31, 2020, totaled $267 million, a decrease of 4% sequentially. During the first quarter, we generated revenues of $220 million, while reporting a loss of $405 million or $6.79 per share. Our first quarter results were reduced by significant noncash impairment charges, including the following: a $406 million or $6.48 per share of goodwill written off; a $25 million or $0.34 per share inventory impairment; and a $5 million or $0.07 per share fixed asset impairment, driven by the expected duration of this unprecedented market downturn. Our first quarter EBITDA totaled $22 million with an EBITDA margin of 10%. In addition, given the negative market outlook, our estimated weighted average cost of capital increased approximately 500 basis points compared to year-end 2019. We remained essentially cash flow neutral during the quarter with $5 million in cash flow from operations, offset by $6 million in capital expenditures. In the first quarter, we collected $4 million in proceeds from the sale of equipment and repurchased $6 million in principal amount of our convertible senior notes at a 17% discount to par value. For the first quarter 2020, our net interest expense totaled $4 million, of which $2 million was noncash amortization of debt discount and issuance costs. At March 31, our net debt-to-book capitalization ratio was 23%, which increased from year-end 2019 due to the noncash asset impairments recorded during the first quarter. At March 31, our liquidity totaled $132 million, and we were in compliance with our debt covenants. It is important to fully understand our leverage position, which, at March 31, consisted of $72 million of senior secured revolving credit facility borrowings and $217 million of other debt, consisting primarily of our 1.5% convertible senior notes due in February 2023. While the amount of the borrowing base has not yet been finalized, we expect the amended facility size to range from $175 million to $200 million, and it will not contain similar leverage covenants. At March 31, 2020, our net working capital, excluding cash and the current portion of debt and lease obligations, totaled $348 million compared to borrowings outstanding under our revolver totaling $72 million, which yielded a 4.8 times coverage level. In terms of our second quarter 2020 consolidated guidance, we expect depreciation and amortization expense to total approximately $25 million, net interest expense to total approximately $4 million, of which $2 million is noncash, and our corporate expenses are projected to total $8.5 million. We are reducing our capex spending during 2020 to a range of $15 million to $20 million, which at the midpoint is roughly 70% less than our 2019 capital expenditures. In our Offshore/Manufactured Products segment, we generated revenues of $91 million and segment EBITDA of $13 million during the first quarter. Revenues decreased 16% sequentially due primarily to delays in our project-driven revenues due to global disruptions in our operations and in our supply chain. Segment EBITDA margin was 14% in the first quarter of 2020 compared to 15% in the prior quarter. Orders booked in the first quarter totaled $87 million, resulting in a quarterly book-to-bill ratio of approximately one times. At March 31, our backlog totaled $267 million, a 4% sequential decrease, but it, nonetheless, reflected a 14% increase from the $234 million of backlog that existed at March 31, 2019. For 75 years, our Offshore/Manufactured Products segment has endeavored to develop leading-edge technologies while cultivating the specific expertise required for working in highly technical deepwater and offshore environments. In our Well Site Services segment, we generated $88 million of revenue, $12 million of segment EBITDA and a segment EBITDA margin of 14% compared to 10% reported in the preceding quarter. International and Gulf of Mexico market activity comprised 20% of our first quarter Completion Services revenues. As announced last year, we have discontinued our drilling operations in the Permian, reducing our marketed fleet from 34 rigs to nine rigs with the remaining assets serving customers in the Rocky Mountain region. We recorded an additional $5 million noncash fixed asset impairment charge in the first quarter, given the negative outlook for the vertical rig market for the remainder of 2020. While focusing on value-added services in 2019, we closed or consolidated eight North American operating districts or 19% of our locations and reduced headcount in our Completion Services business by 20%. In our Downhole Technologies segment, we generated revenues of $41 million and segment EBITDA of $5 million in the first quarter. Segment EBITDA margin averaged 13% in the first quarter compared to 9% in the preceding quarter. The first quarter 2020 U.S. rig count average was 785 rigs, which was down 4% sequentially. The U.S. rig count totaled 465 rigs on April 24, 2020, down 41% from the first quarter 2020 average rig count. Current analyst estimates are calling for a 40% to 70% sequential decline in Completions activity, which will negatively impact all of our segments with short-cycle U.S. shale-driven exposure. We project our second quarter revenues in this segment to range between $96 million and $104 million with segment EBITDA margins expected to average 10% to 12%, depending on product and service mix, along with absorption levels. As Lloyd mentioned, capex will be reduced by approximately 70% year-over-year. Headcount has already been reduced approximately 30% in our Well Site Services and Downhole Technologies segments since the beginning of this year. SG&A headcount has been reduced by approximately 15% since the beginning of the year as well. Our 401(k) and deferred compensation plan matches have been suspended for the immediate future. When we summarize the impact of our actions taken, we estimate that we will reduce 2020 cost by $225 million when compared to 2019. Of that total, 87% is estimated at cost of goods sold and 13% relates to SG&A. We believe that 20% to 25% of the cost reductions are fixed in nature.

During the first quarter, we generated revenues of $220 million, while reporting a loss of $405 million or $6.79 per share. We are reducing our capex spending during 2020 to a range of $15 million to $20 million, which at the midpoint is roughly 70% less than our 2019 capital expenditures. In our Downhole Technologies segment, we generated revenues of $41 million and segment EBITDA of $5 million in the first quarter. The U.S. rig count totaled 465 rigs on April 24, 2020, down 41% from the first quarter 2020 average rig count. Current analyst estimates are calling for a 40% to 70% sequential decline in Completions activity, which will negatively impact all of our segments with short-cycle U.S. shale-driven exposure. As Lloyd mentioned, capex will be reduced by approximately 70% year-over-year.

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The quarter was highlighted by net sales growth of 16% in our combined nonconsumable categories, a 208 basis point increase in gross margin rate and double-digit growth in diluted EPS. And we believe we are uniquely positioned to continue supporting our customers through our unique combination of value and convenience, including our network of more than 17,000 stores located within 5 miles of approximately 75% of the US population. As we lapped our most difficult quarterly comp sales comparison of the year, net sales decreased 0.6% to $8.4 billion, driven by a comp sales decline of 4.6%. Notably, comp sales on a 2-year stack basis increased a robust 17.1%, which compares to the 15.9% 2-year stack we delivered last quarter. From a monthly cadence perspective, comp sales increased 5.7% in February despite a headwind from inclement weather across the country. For the month of March, which represents our most difficult monthly sales comparison of the year, comp sales declined 11.2%. Comp sales declined 4.3% in April, and while year-over-year growth in nonconsumable sales moderated in comparison to March, they were positive overall despite a more challenging lap. Of note, comp sales growth of 11.3% in our combined nonconsumable categories and 29.8% on a comparable 2-year stack basis significantly exceeded our expectation and speaks to the continued strength and sustained momentum in these product categories, enhanced by the benefit from stimulus. As Todd already discussed sales, I will start with gross profit, which we believe was positively impacted in the quarter by a significant benefit to sales, particularly in our nonconsumables categories from the most recent round of government stimulus payments. Gross profit as a percentage of sales was 32.8% in the first quarter. As Todd noted, this was an increase of 208 basis points and represents our eighth consecutive quarter of year-over-year gross margin rate expansion. SG&A as a percentage of sales was 22%, an increase of 152 basis points. Operating profit for the first quarter increased 4.9% to $908.9 million. As a percentage of sales, operating profit was 10.8%, an increase of 56 basis points. Our effective tax rate for the quarter was 22% and compares to 22.2% in the first quarter last year. Finally, earnings per share for the first quarter increased 10.2% to $2.82, which reflects a compound annual growth rate of 38% over a 2-year period. Merchandise inventories were $5.1 billion at the end of the first quarter, an increase of 24.2% overall and a 17.6% increase on a per store basis as we cycled a 5.5% decline in inventory on a per store basis, driven by extremely strong sales volumes in Q1 2020. The business generated significant cash flow from operations during the quarter totaling $703 million, a decrease of 60% but which reflects a compound annual growth rate of 11% over a 2-year period. Total capital expenditures for the quarter were $278 million and included: our planned investments in new stores, remodels and relocations; distribution and transportation projects and spending related to our strategic initiatives. During the quarter, we repurchased 5 million shares of our common stock for $1 billion and paid a quarterly cash dividend of $0.42 per common share outstanding at a total cost of $100 million. At the end of Q1, the remaining share repurchase authorization was $1.7 billion. We also remain committed to returning significant cash to shareholders through anticipated share repurchases and quarterly dividend payments, all while maintaining our current investment-grade credit rating and managing to a leverage ratio of approximately 3 times adjusted-debt-to-EBITDA. Moving to an update on our financial outlook for fiscal 2021. For 2021, we now expect the following: net sales in the range of a 1% decline to an increase of 1%; a same-store sales decline of 5% to 3% but which reflects growth of approximately 11% to 13% on a 2-year stack basis and earnings per share in the range of $9.50 to $10.20, which reflects a compound annual growth rate in the range of approximately 20% to 24% or in the range of approximately 19% to 23% compared to the 2019 adjusted diluted earnings per share over a 2-year period, which is well above our long-term goal of delivering at least 10% annual earnings per share growth on an adjusted basis. Our earnings per share guidance continues to assume an effective tax rate in the range of 22% to 23%. With regards to share repurchases, we now expect to repurchase approximately $2.2 billion of our common stock this year compared to our previous expectation of about $1.8 billion. From the end of Q1 through May 23, comp sales declined by approximately 7% as we continue to cycle extremely difficult prior year comparisons. As a reminder, comp sales growth for the month of May in 2020 was 21.5%. Also, please keep in mind the second and third quarters represent our most challenging laps of the year from a gross margin rate perspective, following improvements of 167 basis points in Q2 2020 and 178 basis points in Q3 2020. Additionally, we continue to expect about $60 million to $70 million incremental year-over-year investments in our strategic initiatives this year as we further their rollouts. This amount includes approximately $23 million in incremental investments made during the first quarter. The NCI offering was available in over 7,300 stores at the end of Q1, and we remain on track to expand this offering to a total of more than 11,000 stores by year end, including over 2,100 stores in our light version, which incorporates a vast majority of the NCI assortment but through a more streamlined approach. Notably, this performance is contributing to an incremental comp sales increase in nonconsumable sales of 8% in our NCI stores and 3% in our NCI Lite stores as compared to stores without the NCI offering. pOpshelf aims to engage customers by offering a fun, affordable and differentiated treasure hunt experience delivered through continually refreshed merchandise, a differentiated in-store experience and exceptional value with the vast majority of our items priced at $5 or less. In fact, year one annualized sales volumes for our first eight locations are trending between $1.7 million and $2 million per store, with an average gross margin rate of about 40%, which we expect will climb as we continue to scale this exciting initiative. As a reminder, this compares to year one sales volumes of about $1.4 million for a traditional Dollar General store and a gross margin rate of about 32% for the overall chain in 2020. For 2021, we remain on track to have a total of up to 50 pOpshelf locations by year-end as well as up to an additional 25 store-within-a-store concepts, which incorporates a smaller footprint pOpshelf shop into one of our larger-format Dollar General market stores. Importantly, we currently estimate there are about 3,000 pOpshelf store opportunities potentially available in the Continental United States. In total, at the end of Q1, we were delivering to more than 17,000 stores from 10 facilities and now expect to complete our initial rollout across the chain by the end of Q2, which is ahead of our previous expectation of year-end as communicated on our Q4 call. During the quarter, we added nearly 18,000 cooler doors across our store base and are on track to install approximately 65,000 cooler doors this year. In the first quarter, we completed a total of 836 real estate projects, including 260 new stores, 543 remodels and 33 relocations. In addition, we now have produce in more than 1,300 stores. For 2021, we remain on track to open 1,050 new stores, remodel 1,750 stores and relocate 100 stores, representing 2,900 real estate projects in total. We also now plan to add produce in more than 1,000 stores, which compares to our previous expectation of approximately 700 stores. As a reminder, we recently made key changes to our development strategy, including establishing two of our larger footprint formats, which each comprise about 8,500 square feet of selling space as our base prototypes for nearly all new stores going forward. With about 1,200 square feet of additional selling space compared to a traditional store, these larger formats allow for expanded high-capacity cooler counts, an extended queue line and a broader product assortment, including NCI, a larger health and beauty section with about 30% more feet of selling space and produce in select stores. We are especially pleased with the sales productivity of these larger formats as average sales per square foot are currently trending about 15% above an average traditional store, which bodes well for the future as we look to grow these unit counts in the years ahead. In total, we expect more than 550 of our real estate projects this year will be in these formats as we look to further enhance our value and convenience proposition while driving additional growth. Self-checkout was available in more than 3,400 stores at the end of Q1, which represents more than double the store count at the end of Q4. In fact, more than 12,000 of our current store managers are internal promotes, and we continue to pursue innovative opportunities to further develop our teams, including our recent announcement to partner with a leading training provider to deliver more personalized training solutions to our employees.

As we lapped our most difficult quarterly comp sales comparison of the year, net sales decreased 0.6% to $8.4 billion, driven by a comp sales decline of 4.6%. As Todd already discussed sales, I will start with gross profit, which we believe was positively impacted in the quarter by a significant benefit to sales, particularly in our nonconsumables categories from the most recent round of government stimulus payments. Finally, earnings per share for the first quarter increased 10.2% to $2.82, which reflects a compound annual growth rate of 38% over a 2-year period. Merchandise inventories were $5.1 billion at the end of the first quarter, an increase of 24.2% overall and a 17.6% increase on a per store basis as we cycled a 5.5% decline in inventory on a per store basis, driven by extremely strong sales volumes in Q1 2020. During the quarter, we repurchased 5 million shares of our common stock for $1 billion and paid a quarterly cash dividend of $0.42 per common share outstanding at a total cost of $100 million. Moving to an update on our financial outlook for fiscal 2021. For 2021, we now expect the following: net sales in the range of a 1% decline to an increase of 1%; a same-store sales decline of 5% to 3% but which reflects growth of approximately 11% to 13% on a 2-year stack basis and earnings per share in the range of $9.50 to $10.20, which reflects a compound annual growth rate in the range of approximately 20% to 24% or in the range of approximately 19% to 23% compared to the 2019 adjusted diluted earnings per share over a 2-year period, which is well above our long-term goal of delivering at least 10% annual earnings per share growth on an adjusted basis. With regards to share repurchases, we now expect to repurchase approximately $2.2 billion of our common stock this year compared to our previous expectation of about $1.8 billion. For 2021, we remain on track to open 1,050 new stores, remodel 1,750 stores and relocate 100 stores, representing 2,900 real estate projects in total.

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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. Yesterday, we reported the second quarter consolidated net loss of $2 million and a loss per share of $0.06. Adjusted EBITDA for the quarter was $66 million. However, once again, rising RIN prices were considerable headwinds to our results, including a $58 million non-cash mark-to-market on our estimated outstanding RIN obligation. In May, our Board of Directors approved a special dividend totaling $492 million, comprised of a combination of cash and our interest in Delek US Holdings. In addition to providing shareholders with nearly $5 per share of cash and Delek stock, this structure also allowed us to recognize a net gain of $87 million that we made on our Delek investment, while providing us with an efficient exit. For our petroleum segment, the combined total throughput for the second quarter of 2021 was approximately 217,000 barrels per day, as compared to 156,000 barrels per day in the second quarter of 2020, which was impacted by a planned turnaround at Coffeyville. The Group three 2-1-1 crack averaged $19.15 per barrel in the second quarter as compared to $8.75 in the second quarter of 2020. On a 2020 RVO basis, RIN prices averaged approximately $8.15 per barrel in the second quarter a 267% increase, from the second quarter of 2020. The Brent-TI differential averaged $2.91 per barrel in the second quarter as compared to $5.39 in the prior year period. The Midland Cushing differential was $0.24 over WTI in the quarter as compared to $0.40 per barrel over WTI in the second quarter of 2020. And the WCS to WTI differential was $12.84 compared to $9.45 in the same period last year. Light product yield for the quarter was 99% on crude processed. In total we gathered approximately 118,000 barrels a day of crude oil during the second quarter of 2021 compared to 82,000 barrels per day in the same period last year, when production levels were disrupted by low crude oil prices at the onset of the COVID pandemic. In the Fertilizer segment both plants ran well during the quarter with consolidated ammonia utilization of 98%. USDA estimates for corn planting and yields continues to imply one of the lowest inventory carryouts in the last 10 years. For the second quarter of 2021, our consolidated net loss was $2 million loss per diluted share was $0.06 and EBITDA was $102 million. Our second quarter results include a negative mark-to-market impact on our estimated outstanding rent obligation of $58 million, unrealized derivative gains of $37 million, favorable inventory valuation impacts of $36 million and a mark-to-market gain of $21 million related to our investment in Delek. Excluding these items, adjusted EBITDA for the quarter was $66 million. The Petroleum segment's adjusted EBITDA for the second quarter of 2021 was $18 million compared to negative $1 million in the second quarter of 2020. In the second quarter of 2021 our Petroleum segment's reported refining margin was $6.72 per barrel. Excluding favorable inventory impacts of $1.81 per barrel, unrealized derivative gains of $1.87 per barrel and the mark-to-market impact of our estimated outstanding RIN obligation of $2.92 per barrel, our refining margin would have been approximately $5.99 per barrel. On this basis capture rate for the second quarter of 2021 was 31% compared to 75% in the second quarter of 2020. RINs expense excluding mark-to-market impact reduced our second quarter capture rate by approximately 30%. Derivative losses for the second quarter of 2021 totaled $2 million, which includes unrealized gains of $37 million primarily associated with crack spread derivatives. In the second quarter of 2020, we had total derivative gains of $20 million, which included unrealized gains of less than $0.5 million. In total RINs expense in the second quarter of 2021 was $173 million or $8.77 per barrel of total throughput compared to $16 million or $1.12 per barrel for the same period last year, an increase of over 680%. Our second quarter RINs expense was inflated by $58 million from the mark-to-market impact on our estimated RFS obligation, which was mark-to-market at an average RIN price of $1.67 at quarter end. For the full year 2021, we forecast an obligation based on the 2020 RVO levels of approximately 255 million RINs. This includes RINs generated from internal blending and approximately 19 million RINs we could generate from renewable diesel production later this year, but does not include the impact of expected waivers. The petroleum segment's direct operating expenses were $4.23 per barrel in the second quarter of 2021 as compared to $5.52 per barrel in the prior year period. For the second quarter of 2021, the fertilizer segment reported operating income of $30 million, net income of $7 million or $0.66 per common unit and adjusted EBITDA of $51 million. This is compared to second quarter 2020 operating losses of $26 million, a net loss of $42 million or $3.68 per common unit and adjusted EBITDA of $39 million. The partnership declared a distribution of $1.72 per common unit for the second quarter of 2021. As CVR Energy owns approximately 36% of CVR Partners' common units, we will receive a proportionate cash distribution of approximately $7 million. Total consolidated capital spending for the second quarter of 2021 was $83 million, which included $9 million from the petroleum segment, $4 million from the fertilizer segment and $69 million on the renewable diesel unit. Environmental and maintenance capital spending comprised $12 million, including $8 million in the petroleum segment and $3 million in the fertilizer segment. We estimate total consolidated capital spending for 2021 to be approximately $226 million to $242 million, of which approximately $83 million to $91 million is expected to be environmental and maintenance capital. Our consolidated capital spending plan excludes planned turnaround spending, which we estimate will be approximately $7 million for the year in preparation for the planned turnaround at Wynnewood in 2022 and Coffeyville in 2023. Cash provided by operations for the second quarter of 2021 was $147 million and free cash flow was $54 million. Working capital was a source of approximately $100 million in the quarter due primarily to an increase in our estimated RINs obligation, partially offset by a decrease in derivative liabilities and increased crude oil and refined products inventory valuation. Subsequent to quarter end, we received an income tax refund of $32 million related to the NOL carryback provisions of the CARES Act. At June 30th, we ended the quarter with approximately $519 million of cash. As a reminder the cash portion of the second quarter special dividend paid on June 10 was $242 million. Our consolidated cash balance includes $43 million in the fertilizer segment. As of June 30th, excluding CVR Partners, we had approximately $652 million of liquidity, which was comprised of approximately $483 million of cash and availability under the ABL of approximately $364 million less cash included in the borrowing base of $195 million. Looking ahead to the third quarter of 2021 for our petroleum segment, we estimate total throughput to be approximately 190,000 to 210,000 barrels per day. We expect total direct operating expenses to range between $75 million and $85 million and total capital spending to be between $18 million and $24 million. For the fertilizer segment, we estimate our third quarter 2021 ammonia utilization rate to be greater than 95%, direct operating expenses to be approximately $38 million to $43 million, excluding inventory impacts and total capital spending to be between $9 million and $12 million. While benchmark cracks increased nearly $3 per barrel during the second quarter, RIN prices increased by nearly the same amount, leaving the underlying margin available to refineries mostly unchanged. As we near the completion of Phase one of our renewable diesel strategy, we continue to develop Phase 2, which involves adding pretreatment capabilities for low-cost and lower-CI feedstocks. The Group 3 2-1-1 cracks have averaged $18.75 per barrel with RINs averaging $7.77 on a 2020 RVO basis; the Brent-TI spread has averaged $1.72, with the Midland Cushing differential at $0.14 under WTI and the WTL differential at $0.68 under Cushing WTI, and the WCS differential at $13.04 per barrel under WTI; ammonia prices have increased to around $600 a ton, while UAN prices are over $300 a ton. As of yesterday, Group 3 2-1-1 cracks were $20.84 per barrel Brent-TI was $1.63 and the WCS differential was $14.45 under WTI. On the 2020 RVO basis RINs were approximately $8.40 per barrel. It should also implement a 95 octane standard for all new ICE engines internal combustion engines.

Yesterday, we reported the second quarter consolidated net loss of $2 million and a loss per share of $0.06. For the second quarter of 2021, our consolidated net loss was $2 million loss per diluted share was $0.06 and EBITDA was $102 million.

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Last quarter, we reiterated our commitment to ALLETE's long-term five-year objective of achieving consolidated average annual earnings-per-share growth of 5% to 7%. As Bob will discuss in more detail later in the call, we're very pleased to report that we are now projecting growth within our average annual 5% to 7% earnings per share objective range. A significant step forward in this commitment is Minnesota Power's recently announced vision to deliver 100% carbon-free energy to customers by 2050. We're proud that Minnesota Power is already the first Minnesota utility to provide 50% renewable energy. In the IRP, we identified plans to increase Minnesota Power's renewable energy supply to 70% by 2030 and to achieve a coal-free energy supply and 80% less carbon by 2035. These steps include adding an estimated 400 megawatts of additional wind and solar energy; retiring Boswell Energy Center Unit 3 by 2030; transforming Minnesota Power's Boswell Unit 4 to be coal-free by 2035; and investing in a modern, flexible transmission and distribution grid. This plan and our 2050 vision allow time for advances in technology and for our communities and our employees to transition to a secure and carbon-free energy future. As highlighted in our third-quarter conference call, ALLETE Clean Energy's growth has exceeded our original expectations from when we founded the company just 10 years ago. Today, ALLETE reported 2020 earnings of $3.35 per share, a net income of $174.2 million. Earnings for 2019 were $3.59 per share on net income of $185.6 million. Net income in 2020 also included reserves for interim rates of $8.3 million or $0.16 per share due to the resolution of Minnesota Power 2020 General Rate Case. ALLETE's regulated operations segment, which includes Minnesota Power, Superior Water, Light and Power, and the company's investment in the American transmission company, recorded net income of $136.3 million, compared to $154.4 million in 2019. Overall, we estimate that the COVID-19 pandemic negatively affected revenues by approximately $0.25 per share for the year ended 2020 from our expectations. ALLETE Clean Energy recorded 2020 net income of $29.9 million, compared to $12.4 million in 2019. Our corporate and other businesses, which includes BNI Energy, our investment in Nobles 2, and ALLETE properties, recorded net income of $8 million in 2020, compared to net income of $19.9 million in 2019. Net income in 2020 included earnings from the company's investment in the Nobles 2 wind energy facility, which commenced operations in December of 2020. Net income in 2019 included the gain on the sale of U.S. Water Services of $13.2 million. Today, we initiated 2021 earnings guidance of $3 to $3.30 per share on net income of $160 million to $175 million. This guidance range is comprised of our regulated operations within a range of $2.30 to $2.50 per share and ALLETE Clean Energy and corporate and other businesses within a range of $0.70 to $0.80 per share. Minnesota Power's 2021 Industrial sales are expected to range between 6 million to 6.5 million megawatt hours, which reflects anticipated production from our taconite customers of approximately 35 million tons. However, steel production rates remain nearly 10% below pre-pandemic level. We expect slightly higher operating and maintenance expense of approximately 3% as compared to 2020 and higher depreciation and property tax expenses due to additional plant in service. ALLETE Clean Energy expects approximately 3.2 million megawatt hours in total wind generation in 2021, with the expectation of normal wind resources compared to 2.1 million megawatt hours in 2020. Looking forward to 2022, ALLETE also provided its preliminary 2022 estimated earnings guidance range of $3.70 to $4 per share, which ALLETE anticipates formally initiating in early 2022. Indeed, 2020 represented one of the largest capital programs in our history with more than $650 million being invested, including the completion of approximately 500 megawatts of new wind farms in the Great Northern Transmission Line. We entered 2021 with a strong balance sheet, conservative capital structure at approximately 39% total debt and now generate in excess of $300 million in total operating cash flow. A notable achievement on the financing side was our ability to secure approximately $400 million in tax equity financing under very competitive terms. These key financings were related to the South Peak, Nobles 2, and Diamond Spring wind projects, which came online at the end of the year. Toward that end, several years ago, we established an average annual long-term earnings per share growth objective of 5% to 7%, which, when combined with a competitive dividend, would provide an attractive total return proposition to investors. Consistent with last year, this growth target is comprised of 4% to 5% from the regulated utility businesses and at least 15% for the nonregulated businesses. In full transparency, I indicated that the five-year average annual earnings per share growth outlook for our consolidated operations, using 2019 as a base year, was currently below the 5% to 7% range at approximately 4%, with the regulated utility growth closer to approximately 3% versus the 4% to 5% targeted rate. At positive note, I also indicated at that time that our nonregulated business segment, which is comprised primarily of ALLETE Clean Energy, was expected to continue to significantly exceed our 15% growth objective. And we committed to you, we will be providing investors an update in early 2021 and upon conclusion of our strategy development work. Before I dive into the details, however, I'm pleased to report that our consolidated company 5-year outlook using 2019 as a base year, is projecting growth, which is now back within the average annual 5% to 7% targeted range. Though our regulated operations are still projected to grow approximately 3% on average, our ALLETE Clean and corporate and other businesses are now projecting average annual growth in the 30% to 40% range, well above the 15% target originally established. Despite our best efforts to manage our costs and improve efficiencies, COVID-19 has had a material impact on our business and our ability to earn our authorized 9.25% rate of return at Minnesota Power. This provided an important relief in the form of an interim rate refund of approximately $12 million in 2020. Moreover, we are confident it will result in even higher annual rates of growth beyond the 30% projection inherent in our wind-only strategy. Hence, we are expanding our average annual earnings per share growth outlook to as high as 40% growth over the next five years. Our execution of the new strategy is in full swing already as evidenced by yesterday's announcement of an agreement with a subsidiary of Xcel Energy to sell 120-megawatt wind energy facility for approximately $210 million. In closing, we were pleased in our ability to increase our annual dividend to $2.52 per share from $2.47 per share, even despite the challenges we see in 2021. The 300-megawatt Diamond Spring project became operational in the fourth quarter of last year and is already serving three new Fortune 500 customers: Walmart, Starbucks, and Smithfield Fluids. Diamond Spring is projected to generate more than 1 million-megawatt hours of energy annually and provide great diversity to our northern tier projects that is currently operating and expands coast to coast.

Today, ALLETE reported 2020 earnings of $3.35 per share, a net income of $174.2 million. And we committed to you, we will be providing investors an update in early 2021 and upon conclusion of our strategy development work.

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Q4 was a strong finish to the year, including revenue up 4.6% on an organic basis. Our e-comm business grew over 60% in the quarter as we benefited from consumers shifting to online purchasing. Notably, our consumption growth was about 7%, driven by these factors for the quarter after previously trending at about 2% prior to March, which was consistent with our expectations for the year. Adjusted gross margin of 59.4% was up 200 basis points versus the prior year, primarily as a result of higher volume and geographic mix. For Q1, we expect margins similar to prior quarters of about 58% as we expect a more normalized mix. Adjusted earnings per share of $0.82 per share was also up meaningfully, increasing approximately 14% versus the prior year as we benefited from higher sales growth, gross margin favorability and a reduction in interest expense and share count. Free cash flow was $52.5 million in the quarter and continued to benefit from our industry-leading EBITDA margins, efficient capital spending and low cash tax rate. For the full year fiscal 2020, our organic net revenues increased 1.3% versus the prior year, which excludes the impact of foreign currency and the divestiture of our Household Cleaning segment in the prior year. Similar to Q4, our full year benefited from strong international segment growth, which was up over 15% versus the prior year when excluding foreign exchange. E-commerce also grew rapidly, increasing approximately 50% for the full fiscal year and now accounts for approximately 5% of our net sales. Adjusted earnings per share of $2.96 per share increased 6.5%, benefiting from our continued efforts to delever and opportunistically execute share buybacks. Full year fiscal 2020 net revenues decreased slightly to $963 million but as mentioned on the prior slide, increased 1.3% on an organic basis after excluding foreign currency and the divestiture of Household Cleaning. Adjusted gross margin, which excludes transition costs associated with our new logistics provider, was 58.3% for the full year, up 130 basis points versus the prior year, primarily driven by mix associated with strong international growth and the divestiture of Household Cleaning. In terms of A&P, we came in at 16% of revenue in Q4 and 15.3% for the fiscal year. For Q1, we would expect A&P to be below the fiscal 20% of sales as marketing plans are being adjusted in response to the current situation, resulting in A&P spending moving to future quarters. Our G&A spending was just over 9% for the year, up slightly in dollars year-over-year. In Q1, we would expect G&A to be about $22 million. Finally, we reported adjusted earnings per share in fiscal 2020 of $2.96, representing an increase of 6.5% versus the prior year, primarily driven by the effects of debt paydown and share repurchases. We expect to continue to reduce debt outstanding, and as a result, we anticipate approximately $22 million of interest expense in Q1. In Q4, we generated $52.5 million in adjusted free cash flow, which resulted in a full year adjusted free cash flow of $206.8 million. This represents 2% growth versus the prior year despite the sale of the Household Cleaning business. We continue to maintain industry-leading free cash flow with fiscal 2020 free cash flow conversion coming in at 136%. At March 31, we finished the year with approximately $1.6 billion in net debt and a leverage ratio of 4.7 times. During the year, we continued our focus on debt reduction and reduced net debt by $135 million. We also repurchased approximately $57 million in shares opportunistically during the year, enabled by our strong cash generation. In addition, we proactively built our liquidity position to strengthen our balance sheet, ending the year with approximately $95 million in cash. As Chris highlighted, we generated $207 million in free cash flow, driven by strong EBITDA margin and low cash taxes. Importantly, we continued to focus on debt reduction, reducing our leverage to within our long-term targeted range of 3.5 to five times. We also used roughly 1/4 of our free cash flow to opportunistically repurchase our stock. Our number one brands represent over 2/3 of our sales, as you can see on the right-hand side of the slide and is a strength in the current environment. We launched this tribute by donating 100,000 bottles of Clear Eyes to hard-hit hospitals New York City. As an example, in the month of March alone, we saw an increase of 186% in new visitors browsing Prestige products in certain e-commerce retailers. Moving ahead, we could see this channel representing as much as 8% or more of our total sales in fiscal 2021. We finished the year with over $205 million in cash flow and a mid-30s EBITDA margin. This is applicable as we think about fiscal 2021 but in a very different way compared to prior years. But as of today, we anticipate Q1 revenues of $220 million or more. We also anticipate earnings per share of $0.70 or more for Q1 as our proactive expense management and cost timing are expected to more than offset the anticipated revenue decline as compared to the prior year.

Adjusted earnings per share of $0.82 per share was also up meaningfully, increasing approximately 14% versus the prior year as we benefited from higher sales growth, gross margin favorability and a reduction in interest expense and share count. This is applicable as we think about fiscal 2021 but in a very different way compared to prior years. But as of today, we anticipate Q1 revenues of $220 million or more. We also anticipate earnings per share of $0.70 or more for Q1 as our proactive expense management and cost timing are expected to more than offset the anticipated revenue decline as compared to the prior year.

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Consistent with prior calls, we're going to be just 1 question per caller. Tools generated 13% organic growth in what we believe to be the strongest demand environment in our history, resulting from positive secular trends, robust professional activity and strong global markets. Industrial grew 1% organically, driven by continued double-digit growth and share gains in our general industrial and attachment tool businesses. Security delivered another strong quarter with 8% organic growth. The overall company adjusted operating margin rate was 12.2%, down from the prior year as growth investments and higher supply chain costs that accelerated in the quarter more than offset volume leverage, price mix benefits and margin resiliency. Adjusted earnings per share for the quarter was $2.77, down 4% year-over-year. The combination of these two high-quality complementary companies with our existing outdoor business creates a powerful growth engine with approximately $4 billion of revenue across all categories the $4 billion, we expect approximately $3 million of that in -- of the $4 billion to be a direct result of closing the two transactions in the coming weeks. Excel focuses on zero-turn mowers and offers a range of premier commercial grade and prosumer equipment, with Tier 1 niche pro brands such as Hustler and Big Dog. MTD has a strong presence in the retail channel with approximately 1,500 dealer locations. Excel exclusively distributes through its 1,400 outlet dealer channel, which is largely geographically complementary to MTD's dealers. And finally, on one more outdoor growth front, we have an opportunity in the $4 billion high-margin parts service segment as we build our presence and serve our customers. It is 1 of our 3 strategic pillars: performance, innovation and social responsibility. Over the last 12 months, we have added approximately 1,300 new employees with deep domain expertise and technical knowledge in critical areas, including sales, engineering, product management, brand, industrial design, e-commerce and end-user insights. We have approximately $200 million of new innovation and growth investment projects in process which are included in our second half 2021 run rate. The POWERSTACK battery is 25% smaller, 15% lighter than our comparable DEWALT 20-volt 2 amp-hour battery and it delivers 5 0% more power with 2x the charge cycles, making this revolutionary design the lightest and most powerful and longest-lasting compact battery from DEWALT. And it is compatible with our DEWALT 20-volt system. This line of consumer DIY tools features 5 0% post-consumer recycled content in the enclosures, which reduces virgin plastic use and supports closing the loop in a circular economy. For example, in 2021, we are opening two new power tool plants and 1 new hand tool facility in North America. We have made progress in 2021 and are on our way to securing the chips and the throughput to support at least 25% growth in our electronic component supply for 2022. Finally, we are leveraging our Industry 4.0 capabilities to drive manufacturing automation throughout many of our factories. This resulted in 14% revenue growth with volume up 11%, price up 2% and currency contributing an additional point. The operating margin rate for the segment was 15.7%, down from 21.5% in the third quarter of last year as volume, price, productivity and benefits from innovation were more than offset by accelerating transit costs incurred to meet the strong market demand. All regions delivered organic growth, with North America up 9%, Europe up 20% and emerging markets up 28%. This performance was supported across all markets as the secular The strong professional-driven demand was also demonstrated in the commercial and industrial channels posting 15% growth versus the prior year. The region grew 17% organically with a standout e-commerce outperformance, up 43% versus the prior year. In addition to a notable DEWALT brand strength performance, which achieved 27% growth. All markets are consistently contributing to share gains, including 36% organic growth in Latin America and 22% organic growth in Asia. Finally, our enterprisewide e-commerce strategic growth initiative continues to deliver strong results with third quarter global e-commerce revenue up nearly 20% versus 2020. Power Tools delivered 11% organic growth, which was supported by the new and innovative product launches across CRAFTSMAN, DEWALT and Stanley FatMax. All regions contributed to an 11% organic growth performance. Notably, global sales were up over 50% year-to-date as compared to 2020. Finally, hand tools, accessories and storage grew 16% organically, fueled by a robust market demand and new product introductions across our key construction, auto and industrial markets. Also during the quarter, the Tools & Storage team was awarded 46 Pro Tool Innovation Awards, representing best-in-class products in the construction industry. Segment revenue expanded by 1%, as two points of price and 1 point of currency was partially offset by one point of volume and one point from an oil and gas product line divestiture. Operating margin was 7.9%, down versus 12.3% in the third quarter of last year as the benefits from price and productivity were more than offset by commodity inflation, growth investments and volume declines in higher-margin automotive and aerospace fasteners. Looking further within this segment, Engineered Fastening organic revenues were down 1% as strong general industrial growth of 23% was offset by market-driven aerospace declines and lower automotive OEM production, resulting from the global semiconductor shortage. Our auto fastener growth outperformed light vehicle production by approximately 15 points for the quarter and year-to-date periods. Infrastructure organic revenues were up 7%, as 16% growth in attachment tools was partially offset by lower pipeline project activity in oil and gas. Total revenue was up 5%, with 7% volume and 1 point contributions from price, currency and acquisitions, which was partially offset by a five point decline related to the international divestitures completed in the third quarter of last year. North America was up 12% organically, driven by strong backlog conversion in commercial electronic security and solid growth within automatic doors and healthcare. Order rates globally grew 14% in the third quarter, resulting in the third consecutive record quarter end backlog. Overall Security segment profit rate, excluding charges, was 9.2%, down versus the prior year rate of 11% as price and volume gains were more than offset by costs, pandemic-related inefficiencies and growth investments such as SaaS solutions, touchless door technology and other health and safety options. Third quarter free cash flow was a use of cash of $125 million, which brings our year-to-date results to a use of cash of $31 million. Let's now move to page 12 and dive into the supply chain. Compared to our July guidance, key commodity inputs such as steel, resins and purchase components accelerated throughout the third quarter, contributing an incremental $100 million in costs. Average transit time from Asian suppliers to the North American manufacturing facilities and distribution centers have increased more than twofold from approximately 40 days to 85. Combined, these container and transit cost impacts added an additional $130 million of cost pressure. These underlying assumptions raise our full year commodity and supply chain headwinds to an estimate of approximately $690 million. Assuming the known impacts continue, we also are forecasting approximately $600 million to $650 million of carryover cost headwinds for 2022. We've also completed the price increases that we discussed with you in July and have recently taken further actions, which include communicating a new 5% surcharge in our North America Tools and Outdoor business, and further price increases across all of our businesses and regions during the fourth quarter. And then finally, we continue to advance our margin resiliency initiatives and anticipate $100 million to $150 million of opportunity in 2022, which we can leverage to offset incremental headwinds, further invest in the business or contribute to margin outperformance. Our updated full year 2021 guidance calls for organic revenue growth of 16% to 17%. And at the midpoint, adjusted earnings per share expansion of 22% versus the prior year and 31% versus 2019. On a GAAP basis, we expect the earnings per share range to be $10.20 up to $10.45, inclusive of various onetime charges related to facility moves, deal and integration costs and functional transformation initiatives. On an adjusted basis, we are moderating the earnings per share outlook to $10.90 up to $11.10 from the previous range of $11.35 to $11.65. The key assumption changes to the company's prior earnings per share outlook includes the following 4 items: one, an incremental $230 million in commodity, transit and labor inflation, which is approximately $1.25 reduction to EPS; two, recent currency movements have resulted in a $0. 15 negative earnings per share for 2021; three, these pressures will be partially mitigated by our incremental pricing actions and other actions, which add an incremental $0.30 to EPS; and then four, the benefit of a lower full year tax rate and other below-the-line assumption will contribute approximately $0.6 0 of improvement to EPS. Lastly, the company expects free cash flow to be approximately $1.1 billion to $1.3 billion, which contemplates capex investment levels to be between 3% to 3.5% of revenue. So in summary, our revised guidance calls for consistent revenue expectations, generating organic growth of 16% to 17% and approximately 22% adjusted earnings per share expansion for the company in 2021. We are also actively addressing the inflationary environment with pricing actions that should result in 3.5 to 4 points of price next year and will allow us to move -- to more than fully recover the carryover impacts from inflation experienced in the second half of 2021. We believe this price and inflation dynamic can be a positive carryover benefit of approximately $0.20 of earnings per share in 2022. These factors added together should generate approximately $0.90 to $1. 10 of earnings per share accretion. Additionally, MTD and Excel is expected to generate $0.50 of earnings per share and combined with the prior factors can result in significant double-digit earnings per share growth from operations. Below the line, we are assuming a $0.50 headwind, primarily from the tax benefit in 2021 which will not repeat next year. So to summarize, with the current inflation and demand environment, we are programming the business to deliver $1 of earnings per share growth versus our 2021 guidance. When we deliver the organic growth in 2022 that Don discussed and when we closed the outdoor transactions, in combination, we will have added $6 billion of growth in the 2021, 2022 time period against a 2020 base of $14 billion. That is over 40% growth.

Adjusted earnings per share for the quarter was $2.77, down 4% year-over-year. This resulted in 14% revenue growth with volume up 11%, price up 2% and currency contributing an additional point. On a GAAP basis, we expect the earnings per share range to be $10.20 up to $10.45, inclusive of various onetime charges related to facility moves, deal and integration costs and functional transformation initiatives. On an adjusted basis, we are moderating the earnings per share outlook to $10.90 up to $11.10 from the previous range of $11.35 to $11.65.

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You'll recall, last quarter we increased our three year post merger cost synergy target from $200 million to $250 million. Now moving to page 5. Sales were up 4% sequentially in Q4 on a workday adjusted basis when typically our sales declined sequentially in the fourth quarter. We generated $586 million of free cash flow last year, close to the $600 million target that we set for three years out, and more than 250% of our adjusted net income. This enabled us to reduce net debt by almost $400 million and leverage by 0.4 times in just the first six months since the Anixter closed. And last month, we completed a debt refinancing of our 2021 notes that reduces our interest expense by $20 million per year, which will further enhance cash flow and support achieving our 2023 debt reduction and debt repayment target. In the first six months post close, we have realized $39 million of cost synergies, $15 million in Q3 and $24 million in Q4. In 2021, we expect to realize an additional $90 million of synergies, bringing our total to $130 million by the end of the year. Consistent with the expectation we provided on our last earnings call, we still anticipate realizing $100 million of cost synergies in the first 12 months of the merger through June of 2021, with a cumulative cost synergies of $130 million by December. As you can see, we have spent $37 million in one-time operating costs in the first six months, and expect to spend an incremental $78 million on one-time operating expenses to generate the incremental $90 million of synergies in 2021. By June of 2023, we expect to generate $250 million of realized cost synergies on a trailing 12 month basis. In total, this $250 million target is comprised of initiatives that are approximately 20% related to cost of goods sold and approximately 80% related to reducing operating expenses. In Q4, we delivered another quarter of strong free cash flow that represented more than 160% of net income. For the full year, free cash flow was $586 million or more than 250% of adjusted net income. This resilient model, coupled with our execution on the integration with Anixter gives us very high confidence that we will successfully reduce leverage below 3.5 times adjusted EBITDA over the next two and a half years, consistent with our commitment when we announced the merger. We made substantial progress on this goal in 2020 as we reduced net debt by $389 million and leverage by 0.4 times trailing 12-months adjusted EBITDA since closing the Anixter acquisition in June. Net debt was reduced by $109 million [Technical Issues] 2028 notes. Liquidity, which is comprised of invested cash and borrowing availability on our bank credit facilities, is exceptionally strong and totalled $1.1 billion at the end of the fourth quarter. In early January, we increased the size of two bank credit facilities by a combined $275 million. We utilized this higher capacity and existing availability to retire our $500 million 2021 notes. Turning to page 9. When adjusting the results to a comparable workday basis, sales were up more than 4%. Adjusted gross margin, which excludes the effect of merger related fair value adjustments to inventory and an out of period adjustment related to inventory absorption accounting was 19.6%, in line with the prior quarter and up 10 basis points versus the prior year. Adjusted income from operations was $172 million in the quarter, after adjusting to remove the effect of merger related costs of $40 million, merger related fair value adjustments on inventory of $16 million and the out of period adjustment of $23 million related to inventory absorption accounting. Adjusted income from operations was $28 million lower than the third quarter, which primarily reflects an increase in SG&A related to the discontinuance of temporary cost reduction measures we had taken in response to COVID-19. These measures, along with certain other actions, had generated more than $50 [Phonetic] million of savings during the second and third quarters of 2020 relative to WESCO's Q1 SG&A run rate before the merger. In total, adjusted income from operations was $13 million lower than prior year pro forma, on sales that were $223 million lower, representing a decremental margin of approximately 6%. Adjusted EBITDA, which excludes the effect of the adjustments I just mentioned, as well as stock based compensation and other net adjustments was $216 million or 5.2% of sales, lower than the third quarter due to the higher SG&A I just discussed and approximately in line with the prior year. Adjusted diluted earnings per share for the quarter was $1.22. First, electrical and electronic systems, or EES, which is approximately 40% of our Company's total business. And then third, utility and broadband solutions or UBS, which represents the remaining 27% of the overall sales across the enterprise. Reported sales in our EES segment were up 1% versus the third quarter on a reported basis and up 6% on a comparable workday basis. Adjusted EBITDA of $94 million represented 5.6% of sales, about $14 million lower than the third quarter. On a reported basis, sales were 1% lower than the prior quarter, but were up 3% on a comparable workday basis. Adjusted EBITDA was $112 million or 8.2% of sales. This was 50 basis points higher than the prior year, but down sequentially from the third quarter, primarily reflecting the reinstatement of temporary cost reductions. Sales in our UBS segment were down slightly versus the third quarter on a reported basis, but up 4% on a comparable workday basis. Adjusted EBITDA of $79 million was in line with the prior year and up 10 basis points as a percentage of sales. On a pro forma basis, sales were $16 billion in 2020. In 2021, we estimate market growth of roughly 3% to 5%. On top of that, we expect that the combination of the continued outperformance and our cross-sell programs will grow sales 1% to 2% above the market. [Technical Issues] are approximately $125 million. The impact of these will be a headwind of approximately 1%. So in total, we expect sales to grow 3% to 6%. On the right-hand side of the page, we have provided a bridge for our 2020 pro forma adjusted EBITDA margin of 5.3% to our outlook for adjusted EBITDA margin of 5.4% to 5.7%. We expect to benefit from improving mix, market outperformance and operating leverage, which we expect to collectively drive about 50 to 80 basis points of margin expansion. In addition, as you saw on the prior page, we expect to generate an incremental $90 million of realized cost synergies in 2021, which will contribute approximately 55 basis points of additional EBITDA margin. Partially offsetting these two margin drivers will be the restoration of the employee compensation benefit costs discussed previously and the restoration of a full accrual for incentive compensation, the aggregate amount of which is approximately 90 basis points. Continuing down the income statement, we expect our effective tax rate to be approximately 23% and adjusted diluted earnings per share in the range of $5.50 to $6. We assume a diluted share count of approximately 51.5 million shares. We expect to spend between $100 million to $120 million on capital expenditures in 2021, much of which will be invested in the early stages of aligning our systems and investing in digital tools. We expect to continue generating substantial free cash flow, which we're forecasting to be at least 100% of adjusted net income. As we look at the drivers of the first quarter of 2021, we expect to benefit from $28 million of realized cost synergies in the quarter.

Adjusted diluted earnings per share for the quarter was $1.22.

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Third quarter adjusted earnings were $2.45 per share. With good visibility into the rest of the year, we are narrowing our 2021 guidance range and $5.90 through $6.10 per share and expect to achieve 2022 and 2023 results in line with our outlooks. And despite $65 million of nonfuel revenue losses in the third quarter due to Hurricane Ida, we are maintaining our financial commitments. We gathered a restoration force of 27,000, our largest ever, representing Entergy employees, contractors and mutual assistance crews from 41 states across the country. Metro areas like New Orleans and Baton Rouge saw restoration essentially completed by day 10. Within three weeks, more than 98% of all affected customers were restored. Entergy also helped our customers and communities throughout the recovery process by developing -- or deploying 165 commercial scale generators to power critical community infrastructure like medical facilities, gas stations, grocery stores, municipal water systems and community cooling centers in advance of power being restored. In addition to restoration work, Entergy's employees contributed countless hours to their communities and Entergy shareholders committed $1.25 million to help affected communities rebuild and recover. Entergy has made significant transmission and distribution investments, nearly $10 billion over the last five years, which made our system more resilient. Hurricane Laura made landfall as the strongest storm to hit the Louisiana Coast since 1856. Then exactly 12 months later, Hurricane Ida hit with almost equal force. Even prior to Ida, we are actively deploying multiple options along the resiliency scale, particularly for our service areas south of I-10 and I-12, which has the greatest exposure to hurricane-strength winds and flooding. We've announced five gigawatts of solar in our supply plan through 2030 with a goal of doing more. While many have expressed long-term goals like net-zero by 2050, even more have developed shorter-term interim goals that will require action by the end of the decade. Over the next three years, we have a $12 billion capital plan that is designed to deliver reliability, resilience and improve customer experience and environmental and cost efficiency benefits to our customers. Summarized on Slide five, our adjusted earnings per share was $2.45, slightly higher than a year ago. In fact, with three quarters of the year behind us, we are narrowing our guidance range to $5.90 to $6.10. Industrial billed sales were 10% stronger than a year ago. Overall, across all classes, we estimate that third quarter revenues were approximately $65 million lower as a result of Ida. The quarter's result is about $300 million higher than last year. Over the past several weeks, we've refined our cost estimates, and we've shaved $100 million off the upper end of the range. The total cost is now expected to be $2.1 billion to $2.5 billion. We've also updated our estimate of the nonfuel revenue loss to $75 million to $80 million, the lower half of our previous range. While our net liquidity, including storm reserves remained strong at $4 billion, we are also working to ensure timely storm cost recovery. First, Entergy Louisiana amended its 2020 storm filing to request an additional $1 billion to provide early liquidity for Hurricane Ida costs. Combined with our ATM transactions, our future equity need is more than 50% lower than the $2.5 billion communicated at Analyst Day last year. In this case, for 2021 to $5.90 to $6.10. Our Board of Directors recently declared a $0.06 increase in our quarterly common dividend, which is now $1.01 per share.

Third quarter adjusted earnings were $2.45 per share. With good visibility into the rest of the year, we are narrowing our 2021 guidance range and $5.90 through $6.10 per share and expect to achieve 2022 and 2023 results in line with our outlooks. Summarized on Slide five, our adjusted earnings per share was $2.45, slightly higher than a year ago. In fact, with three quarters of the year behind us, we are narrowing our guidance range to $5.90 to $6.10. In this case, for 2021 to $5.90 to $6.10.

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And following that, I will provide an update on the progress we're making on AIG 200 and the operational separation of Life and Retirement from AIG. Life and Retirement's adjusted pre-tax income increased 26% year over year and the business delivered a return on adjusted segment common equity of 16.4%. We continue to advance the AIG 200 with transformation remaining on track to deliver $1 billion in run rate savings across our company by the end of 2022 against a cost to achieve of $1.3 billion. Net premiums written increased 24% year over year to $6.9 billion or approximately 20%, excluding foreign exchange. Our Global Commercial net premiums written increased 13%, excluding foreign exchange, reflecting growth in areas with attractive risk-adjusted returns, improving renewal retentions and really more than that 25% increase in the new business compared to the prior-year quarter and overall rate increases of 13%. North America Commercial net premiums written increased 15%, excluding foreign exchange, including our strong growth in Excess Casualty, Financial Lines, Retail Property, AIG Re and Lexington. New business increased 25% from the prior year quarter, led by Financial Lines and Lexington wholesale. Renewal retentions also improved in 300 basis points over this same period. Net premiums written grew 10%, excluding foreign exchange, and primarily driven by Financial Lines across the U.K., EMEA and Asia Pacific, global specialty, particularly marine and energy, and Talbot, our Lloyd's syndicate. New business increased 26% from the prior year period, led by Financial Lines, marine, energy and Talbot. And renewal retentions increased by 500 basis points over this same period. And in addition to strong retention, growth is being driven by exceptional new business, which in Global Commercial was $1 billion in the second quarter. Momentum continued with overall Global Commercial rate increases of 13%. North America Commercial rate have increased 13% with the most notable improvements in Excess Casualty, which was up 20%; Lexington Casualty, which was up 19%; and Lexington wholesale property, which was up 15%. International Commercial rate also increased 13%, driven by Financial Lines, which was up 21%; property, which was up 18%; and energy, which was up 16%. Across the global portfolio, the largest rate increases were in cyber, where rates were up almost 40% and the strongest rate increases in North America. The General Insurance accident year combined ratio ex CAT improved for the 12th consecutive quarter coming in at 91.1%, an improvement of 380 basis points for the second quarter of 2020 and an improvement of 990 basis points from the second-quarter 2018. This improvement was comprised of 160-basis-point improvement in accident year loss ratio ex CAT and a 220-basis-point improvement in our expense ratio at AIG 200 and the benefits of premium growth continued to contribute to profitability. Global Commercial achieved an accident year combined ratio ex CAT of 89.3%, an improvement of 500 basis points year over year. This is the best result Commercial has reported in the last 15 years. In Personal Insurance, the accident year combined ratio ex CAT was 95.1%, a 70-basis-point improvement over the prior-year quarter. And in the second quarter, we were very active in the market with 25 specific layers on a variety of treaties placed. Lastly, on General Insurance, we remain confident we will achieve a sub-90% accident year combined ratio ex CAT by the end of 2022. Based on the progress that I've now seen in our underwriting, the ongoing efforts in optimizing our portfolio, the terrific execution of AIG 200 and the significant momentum we've developed, I'm optimistic we'll get there sooner. And as we move through second half of the year and get further into AIG 200 in separation execution, we will provide you further comments on our combined ratio expectations. Net premiums written across all lines increased more than 30% of -- the second quarter compared to the prior-year period. property CAT, we saw rate improvements across all U.S. property business sectors; increases range from the mid-single digits to upwards of 25%, and depending on geography and loss-affected accounts; in Florida, Validus Re net limits at June 2021 were reduced by more than 40% in coordination with AlphaCat. Since the acquisition of Validus Re in 2018, we reduced the overall limit in Florida of more than 65% or approximately $400 million of annual limit, demonstrating that Validus Re's continued discipline and focus on volatility reduction. Further, Florida-specific firms represent less than 2% of Validus Re's total premiums written. And in addition to 2020 and through the second quarter of 2021, less than 25% of AIG Re's net premiums written came from property lines. Building on our retrocessional purchase on 1-1 of worldwide aggregate protection, Validus Re secured further retrocessional protections in June. Second-quarter 2021's new planned participant enrollments also increased 20% year over year, as demonstrated regularly in recent quarters. Now let me turn to AIG 200 in our global multiyear effort to position AIG for the long term. AIG 200 is continuing with a sense of urgency for all 10 of the operational programs deep into execution mode. We're 18 months into this transformation and we have a clear execution path to $1 billion in run rate cost savings of $550 million already executed or contracted, $355 million of which has been recognized already to date in the income statement. AIG 200 continues to build a strong foundation across the company and instill a culture of operational excellence. Separation management office has identified day 1 requirements for Life and Retirement to become a stand-alone company and multiple work streams are underway. With the speed with which our colleagues have moved -- would not have been possible without the foundational work that's been done as part of AIG 200. And as I've discussed on prior calls, our IPO of up to 19.9% of Life and Retirement was our base case since we announced our intention to separate this business from AIG last October. Following the 9.9% equity investment by Blackstone, this IPO will likely be the first in the quarter of 2022 event, subject to required regulatory approvals and market conditions. Additionally, the gain on sale of Affordable Housing, coupled with other factors, provides us with great flexibility to sell beyond the 19.9% as we now expect to fully utilize our foreign tax credits in 2022. Blackstone will acquire a 9.9% cornerstone equity stake in the holding company for AIG's Life and Retirement business for $2.2 billion in an all-cash transaction. The purchase price is equivalent to a multiple of 1.1x target pro forma adjusted book value in $20.2 billion. Life and Retirement will also enter into separately managed account agreements, or SMAs, with Blackstone -- whereby we at Blackstone will manage $50 billion of specific asset classes with that amount growing to $92.5 billion over a six-year period. Lastly, and as I alluded to earlier, we sold some -- certain of Affordable Housing assets to Blackstone Real Estate Income Trust for $5.1 billion in an all-cash transaction, which is expected to close by year-end 2021. Turning to capital management, we ended the second quarter with $7.2 billion of parent liquidity. The net proceeds from the Blackstone transactions resulted in an additional liquidity of $6.2 billion to AIG by year-end 2021. Through the remainder of this year, we plan to pay down the $2.5 billion AIG debt and buy back about -- at least $2 billion of the common stock. For the second quarter of 2021, AIG reported adjusted pre-tax income, or APTI, of $1.7 billion and adjusted after-tax income of $1.3 billion. We produced an annualized return on adjusted common equity of 10.5% for AIG, 12.3% for General Insurance and 16.4% for Life and Retirement. The annualized return on adjusted tangible common equity was 11.6% to the quarter. On a GAAP basis, AIG reported $91 million of net income with principal difference between GAAP and adjusted after-tax income of $1.3 billion being the accounting treatment of Fortitude, net investment income, and associated realized gains and losses. The fee structure is 30 basis points on the initial $50 billion of AUM, increasing to 45 basis points for the annual new AUM of $8.5 billion, starting four quarters later as well as for the reinvested run-off AUM. Therefore, fee should rise from 30 basis points initially toward 43 basis points by the end of the initial six-year contractor for Blackstone's share of the assets. Before leaving the Blackstone transaction, I want to note that a GAAP loss on sale is anticipated with a 9.9% equity purchase by Blackstone as well as with subsequent IPO sell-downs due to the inclusion of OCI and GAAP book value. As respects Affordable Housing, note that the $5.1 billion purchase price translates to an approximate $3 billion after-tax gain on sale, which will benefit book value and provides approximately $4 billion of cash to parent with the minority proportion held back in a regulated Life and Retirement entity to further strengthen an already historically strong RBC level. Moving to General Insurance, second-quarter adjusted pre-tax income was $1.2 billion, up $1 billion even year over year, primarily reflecting increased pre-tax underwriting income of over $800 million, along with $200 million and change of increased pre-tax net investment income, driven primarily by equity returns. Catastrophe losses of $118 million were significantly lower this quarter, compared to $674 million in the prior-year quarter. Prior-year development was $51 million favorable this quarter, compared to the favorable development of $74 million in the prior year quarter. This included $58 million of net favorable development in North America and $7 million of net unfavorable development in International, both of which reflect some marginal changes in the underlying operations. As usual, there is net favorable amortization from the adverse development cover, which amounted to $49 million this quarter. The International Commercial segment has continued to improve profitability with 370 basis points improvement compared to the prior-year quarter. And this level of Global Commercial improvement is also noteworthy Global Commercial made of 71% of worldwide net premiums written through the first half of 2021. Global Personal Lines net premiums written grew by approximately 45% or 41% on a constant dollar basis, aided by the Syndicate 2019 comparison. Our outlook for net premiums written for the next six months in North America Personal Insurance is between the $450 million and $500 million per quarter. Based on the Consumer Price Index and the Producer Price Index, headline inflation that indicates an annualized runrate of about 5.5% to 7.5%, which has accelerated in March. Some components of the indices have become worrisome, such as used cars and trucks being up about 45% and energy commodities being north of 40%. But medical care services, whose impact now stretches across most casualty, auto, workers' compensation and excess placements, although higher, are much more tame than the headline inflation that would indicate with physician services up about 4% recently and hospital services up about 2.5%. For example, our Excess Casualty average attachment points for national and corporate U.S. accounts have also increased approximately 3.5 times and 5.5 times, respectively, since 2018. view toward the total inflation rate of 4% to 5% is arguably reasonable for the near to medium term. We estimate our exposure to the population is approximately $65 million to $75 million per 100,000 population deaths. Within Individual Retirement, excluding the Retail Mutual Fund business, net flows were positive for the quarter and favorable by over $1.2 billion when compared within second-quarter 2020, led by the Index Annuities rebounding to be higher by approximately $700 million with Variable Annuity net flow of about $365 million stronger year over year. The adjusted pre-tax loss was $610 million, inclusive of $94 million from consolidation and elimination entries, which principally reflect adjustments offsetting investment returns in the subsidiaries, which are in alignment at Other Operations. Before consolidations and eliminations, the adjusted pre-tax loss was $516 million, $184 million worse than the second quarter of 2020. But that quarter included two months of Fortitude Re results of $96 million. And in addition, during the second quarter of 2021, we also increased prior-year legacy loss reserves by a net $65 million that's driven mostly by Blackboard exposures. Shifting to investments, our overall net investment income on APTI basis was $3.2 billion. That's virtually flat from the second quarter of 2020 but again, adjusting the second quarter of 2020 for Fortitude net investment income of over that two-month period, this quarter's net investment income was $362 million higher than the prior year, reflecting our strong private equity returns at an annualized 27% return rate for the quarter. And hedge fund results at a 21% annualized return rate for the quarter, along with stable interest and dividend income. Turning to the balance sheet, at June 30th, book value per common share was $76.73, up 7% from one year ago. Adjusted book value per common share was $60.07 per share, up 7.5% from one year ago, driven primarily by strong operating performance. Adjusted tangible book value per common share was $54.24, up 8.1% from a year ago. As Peter noted, at quarter end, AIG parent liquidity was $7.2 billion. Treasury in connection with some certain tax settlement agreements emanating from pre-2007 as well as completed debt tenders for an aggregate purchase price of $359 million. Our debt leverage at June 30 was 27% even, down 140 basis points from the end of 2020 and down 360 basis points from June 30th of one year ago. pool fleet risk-based capital ratio for the second quarter to be between 460% and 470% and Life and Retirement is estimated to be between 440% and 450%, both in -- above the target range. As of June 30, that portion of the DTA totaled $6.3 billion and is available to offset up to $30 billion of taxable income. So upon tax deconsolidation, what we'll see is the ability to utilize up to 35% of Life Insurance company income against NOLs or any remaining FTCs.

Net premiums written increased 24% year over year to $6.9 billion or approximately 20%, excluding foreign exchange. The General Insurance accident year combined ratio ex CAT improved for the 12th consecutive quarter coming in at 91.1%, an improvement of 380 basis points for the second quarter of 2020 and an improvement of 990 basis points from the second-quarter 2018. Through the remainder of this year, we plan to pay down the $2.5 billion AIG debt and buy back about -- at least $2 billion of the common stock. Turning to the balance sheet, at June 30th, book value per common share was $76.73, up 7% from one year ago. Adjusted book value per common share was $60.07 per share, up 7.5% from one year ago, driven primarily by strong operating performance.

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Net income for the third quarter of 2020 included a net after-tax realized investment gain of $3.8 million and after-tax cost related to an organizational design update of $18.6 million. Net income in the third quarter of 2019 included a net after-tax realized investment loss of $20.8 million and after-tax debt extinguishment costs of $19.9 million. So excluding these items, after-tax adjusted operating income in the third quarter of 2020 was $245.9 million or $1.21 per diluted common share compared to $282.7 million or $1.36 per diluted common share in the year ago quarter. Our average death claim is around $50,000. And finally, our capital position remains with very good RBC at approximately 380% and holding company cash at $1.2 billion at quarter end, both nicely above our targeted levels. The $18.6 million of organizational design update cost we recorded this quarter was part of an ongoing effort and continue to manage our operations with an eye toward the future. As Tom outlined in his opening, after-tax adjusted operating income in the third quarter was $245.9 million or $1.21 per common share. By comparison, in the second quarter of this year, excluding the lease impairment costs and net realized investment gain, after-tax adjusted operating income was $250.1 million or $1.23 per common share. The tax rate was impacted this quarter by an increase in the U.K. corporate tax rate to 19% from 17% adding $9.3 million in additional tax expense. So we believe a good starting point for analyzing our results this quarter on a sequential basis is to look at before tax adjusted operating income, which showed a slight increase to $318.5 million in the third quarter compared to $316.5 million in the second quarter. Excess deaths in the U.S. from COVID totaled an estimated 80,000 in the third quarter. The unemployment rate is rebounding to 7.9% for September compared to the peak level in April of 14.7%, but by comparison remained significantly higher than 3.5% % at September 30, 2019 and a strong monthly employment reports leading up to the spike in April. Adjusted operating income for the third quarter was $73 million, down slightly from $76 million in the second quarter. Second, pressure on expenses from a continued high level of leave volumes, which increased over the second quarter and were approximately 60% above year ago volumes. As Rick said, we continue to be very pleased with the consistency of the results in LTD as demonstrated by group disability benefit ratio of 74.1% this quarter, which is consistent with the ratio a year ago of 74.2%. Adjusted operating income for Unum U.S. group life and AD&D remain depressed at $13.9 million for the third quarter compared to $19.4 million in the second quarter. Shifting back to the COVID impact on the group life business in the quarter, we experienced slightly more than 900 excess life claims or about 12% higher than expected, benchmarked against a base of approximately 80,000 COVID-related deaths nationwide as reported by Johns Hopkins. This compares to our second quarter reporting, which showed approximately 1,100 total excess death or about 14% higher than expected relative to reported base of 120,000 COVID-related deaths. As we stated before, our rough estimate is that we expect to see approximately 1% at the U.S. mortality by count given our market share of life insurance in the country. I'll add that so far in the fourth quarter, these trends are matching our third quarter results with a slightly higher average claim size, which is now in the low $50,000 range. The Unum U.S. supplemental and voluntary lines experienced a more significant decline in the third quarter from the very favorable second quarter with adjusted operating income of $101.3 million in the third quarter compared to $136.5 million in the second quarter. This resulted in the benefit ratio increasing to 76.8% from 36% in the second quarter. Beyond these benefit and trends, premium income in the supplemental voluntary lines declined 2.8% on a sequential quarter basis due to lower new sales in recent quarters, slightly lower persistency and the effects of weaker employment trends by natural growth. Sales for Unum U.S. declined 18.5% in the third quarter compared to the year ago quarter. The group lines, which are LTD, STD and group life combined, increased by 1.5% as we continue to see good traction from our HR Connect platform that links customer HCM systems directly to Unum. Voluntary benefits sales declined 35.8% year-over-year. Dental and vision sales declined 33.1%, largely due to the disruption we are seeing in group sales activity as in-force providers are offering discounts and other incentives in response to the unusually favorable claim trends the industry experienced in the second quarter. We are pleased to see improvement in adjusted operating income to $21.4 million in the third quarter compared to $15.1 million in the second quarter. While Unum Poland, continue to be a strong performer overall, the bulk of the sequential quarter improvement came from Unum U.K., which produced adjusted operating income of GBP15.2 million in the third quarter compared to GBP10.1 million in the second quarter. Colonial Life continued to report favorable results with adjusted operating income of $92.2 million in the third quarter compared to $90.9 million in the second quarter and $87.2 million in the year ago quarter. Premium income for the third quarter declined 4.3% from the second quarter driven by the decline in sales this year and the negative impacts from individual lapses with in-force cases. The benefit ratio was slightly elevated in the third quarter at 52.2% compared to 50.7% in the second quarter, largely reflecting the continued higher life and STD claims related to COVID with less offset from favorable accident and cancer lines. Sales for Colonial Life declined 27.6% year-over-year in the third quarter, an improvement over the second quarter when sales showed a decline of 43% year-over-year. In addition, agent recruiting remained strong with an 8% increase year-over-year. And then in the Closed Block segment, adjusted operating earnings increased to $70.8 million in the third quarter compared to $36.7 million in the second quarter, largely driven by the continued favorable impact on high claimant mortality on the LTC block and a return to more normal positive marks on the alternative investment portfolio from the significant decline in value as of the end of the second quarter. The positive mark on the holds was $11.3 million this quarter compared to a loss of $31.3 million in the second quarter, which we've reflected the negative market conditions at the end of the first quarter. For the LTC block, the interest-adjusted loss ratio was 67.4% in the third quarter compared to 67% in the second quarter, and over the past four quarters is now 75.6% compared to our long-term expected range of 85% to 90%. Our claimant mortality was a major factor again this quarter as mortality was approximately 15% higher than expected. This impact was less than the second quarter, which was approximately 30% higher than normal. For the closed disability block the, interest-adjusted loss ratio was 86.6% in the third quarter compared to 89.5% in the second quarter with slight improvement in underlying claims experience. Coming back to LTC, we are pleased to have another successful quarter of in-force premium rate increase approvals, which gets us to $1 billion of the $1.4 billion of margin in our reserve assumptions. So then wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $77.4 million in the third quarter. Included in this are expenses related to the organizational design update that Rick referenced in his comments of $23.3 million before taxes or $18.6 million after taxes. Excluding these costs, the adjusted operating loss of $54.1 million was consistent with our expectations and was largely driven by interest expense on our outstanding debt, which totaled $49 million in the third quarter. With the maturity in September of a $400 million debt issue, our interest expense is expected to decline to approximately $45 million in the fourth quarter. For the corporate segment, in total, we continue to expect quarterly losses in the mid $15 million range. A few points to highlight are; first, net after-tax realized investment losses from sales and credit losses totaled $7.3 million this quarter compared to $7.7 million in the second quarter and $44.4 million in the first quarter. In the third quarter, we saw $141 million of these downgrades compared to $193 million for the second quarter and $336 million in the first quarter. Third, the net unrealized gain position on the fixed maturity securities portfolio improved to just over $8 billion from $7.4 billion in the second quarter and $4.3 billion at the end of the first quarter. Then looking to our capital position, we finished the quarter in very good shape with the risk-based capital ratio for our traditional U.S. insurance companies at approximately 380% and holding company cash at $1.2 billion, both comfortably above our targeted levels. Again, the cash balance at September 30 reflects the $40 million debt maturity in September and our next maturity is not until 2024.

So excluding these items, after-tax adjusted operating income in the third quarter of 2020 was $245.9 million or $1.21 per diluted common share compared to $282.7 million or $1.36 per diluted common share in the year ago quarter. As Tom outlined in his opening, after-tax adjusted operating income in the third quarter was $245.9 million or $1.21 per common share.

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And this has enabled us to deliver 11 straight quarters with organic sales growth in line with or above our long-term target of 3% to 5%. Our net sales grew 6.5% in the quarter, driven by 4.5% organic sales growth and a 2% benefit from foreign exchange. We grew volume 1.5% in the quarter. Pricing grew 3% in the quarter, up sequentially from Q2, despite a more difficult 4.5% comparison as we continued to layer in new pricing to try to offset accelerating raw materials costs. Our gross margin was down 180 basis points in the quarter. Pricing was a 110 basis point benefit to gross margin, while raw materials were a 510 basis point headwind, despite a slight benefit from transactional foreign exchange. Productivity was favorable by 220 basis points. On a GAAP and Base Business basis, our SG&A was up 50 basis points on a percent of sales, driven by significant increase in logistics costs as advertising was up on a dollar basis, but flat on a percent of sales basis. For the third quarter, on a GAAP basis, our operating profit was down 5% year-over-year, while it was down 3% on a Base Business basis. Our earnings per share was down 7% on a GAAP basis and up 3% on a Base Business basis. Net sales in North America grew 1% in the third quarter with organic sales growth of 0.5% and 50 basis points of favorable foreign exchange. Volumes were flat in the quarter, despite a negative nearly 400 basis point impact from lower liquid hand soap volumes, while pricing was slightly favorable. Latin America net sales were up 11% with 8% organic sales growth and a 300 basis point benefit from foreign exchange. Volume was plus-2.5% in the quarter, while pricing was up 5.5%. Europe net sales grew 1% in the quarter with organic sales minus-1% and foreign exchange adding 2%. Volume was down 1% and pricing was flat. Asia-Pacific net sales grew 1% and organic sales declined 0.5% in the quarter, with volume down slightly and pricing and foreign exchange, both slightly positive. Africa/Eurasia net sales grew 1% in the quarter with organic -- with an organic sales decline of 1% lapping double-digit organic growth in the year-ago period, more than offset by a 2% positive impact from foreign exchange. Volumes were minus-4.5% while pricing was plus-3.5%. Hill's strong growth continued in the third quarter with 20% net sales growth and 19% organic sales growth with strong growth in both emerging and developed markets. We still expect organic sales growth for the year to be within our 3% to 5% long-term target range. All in, we still expect net sales to be up 4% to 7%. Our tax rate is now expected to be between 22% and 23% for the year on both a GAAP and Base Business basis. While lapping our most difficult comparisons in over a decade, we delivered organic sales growth at the high end of our long-term target range of 3% to 5%. Pet Nutrition organic sales growth was up 19% in the quarter against an 11% comparison and is now up 14% year-to-date through quarter three. Hill's goal of ending pet obesity, where a study show over 50% of pets are overweight, is the impetus for our Hill's master brand campaign. We've implemented new media buying strategy to drive efficiencies, both online and offline, and launched a 4-tier training program to enable 14,000 of our employees to help drive our digital strategy. Our Innovation calendar for 2022 will show an increase in the percentage of innovation that is breakthrough and transformational. We've announced our new sustainability and social impact strategy this year, which includes 11 new targets and actions in areas like zero-waste, climate change, using less plastic, as well as Bright Smiles, Bright Futures and our diversity, equity and inclusion efforts.

Our net sales grew 6.5% in the quarter, driven by 4.5% organic sales growth and a 2% benefit from foreign exchange. Our Innovation calendar for 2022 will show an increase in the percentage of innovation that is breakthrough and transformational.

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MDC delivered strong results in the fourth quarter of 2020, highlighted by fully diluted earnings per share of $2.19, representing a 54% increase over the fourth quarter of 2019. Home sales revenues increased 10% year-over-year, and home sales gross margin expanded 350 basis points to 22%. We continue to experience robust demand across our homebuilding operations as the dollar value of our net new orders increased 92% for the quarter on a sales pace of 4.7 homes per community per month. The strong order activity resulted in backlog value of $3.26 billion, our largest year-end backlog ever. In December, we successfully increased the size of our unsecured revolving credit facility from $1 billion to $1.2 billion. Shortly thereafter, we issued $350 million of senior notes due in 2031 with a coupon of 2.5%, the lowest rate ever achieved by a non-investment grade company for 10-year issuance. In summary, the fourth quarter of 2020 capped a remarkable year for our company, culminating in a 54% increase in our annual net income as compared to 2019. We ended 2020 with another strong quarter as pre-tax income from our homebuilding operations increased $48.9 million or 52% from the prior year quarter to $142.3 million. To a lesser extent, our homebuilding profits also benefited from improved home sale revenues, which increased by 10% to $1.18 billion. Our financial services pre-tax income increased $10.2 million or 54% to $29 million. As a result, overall net income increased 59% to $147.5 million or $2.19 per diluted share for the fourth quarter of 2020. Our tax rate decreased from 17.5% to 13.9% for the 2020 fourth quarter. For 2021, I would roughly estimate an effective tax rate of 24%, excluding any discrete items, and not accounting for any potential changes in tax rates or policy. Homes delivered increased 7% year-over-year to 2,564, driven by an increase in the number of homes, we had in backlog to start the quarter. The average selling price of homes delivered during the quarter increased 2% to about $461,000 and 61% of the units we closed were a part of our more affordable collections. We are anticipating home deliveries for the first quarter of 2021 to reach between 2,200 and 2,400 units. We expect the average selling price for 2021 first quarter deliveries to be between $470,000 and $480,000. Gross margin for home sales improved by 350 basis points year-over-year to 22%, which is our best gross margin in over a decade. We experienced improved gross margin from home sales across each of our segments on both build-to-order and spec home deliveries, driven by price increases implemented across nearly all of our communities over the past 12 months. As a result, the gross margin for home sales for the 2021 first quarter is expected to be approximately 21.5% assuming no impairments and no warranty adjustments. This would still be 150 [Phonetic] basis points higher than the prior year. Additionally, we currently expect that gross margin for the remainder of the year will improve from our 21.5% estimate for Q1. Our total dollar SG&A expense for the 2020 fourth quarter increased $12.8 million from the 2019 fourth quarter. General and administrative expenses increased $7.1 million due to an increase in stock-based compensation expense related to performance-based awards, consulting fees related to energy tax credits recognized during the quarter, and a $2.2 million charitable contribution approved by our Board of Directors during the quarter. The increase in marketing and commission expenses was due to variable selling and marketing expenses that increased in line with the 10% increase in home sale revenues during the period. Looking forward to the first quarter of 2021, we currently estimate our general and administrative expense to be approximately $55 million, which is a slight increase from what we just recognized in the fourth quarter. In the fourth quarter alone, we saw a 5% increase in our headcount. The dollar value of our net orders increased 92% year-over-year to $1.32 billion and unit net orders increased by 72%, driven by a 67% increase in our monthly absorption rate to 4.7. The average selling price of our net orders increased by 12% year-over-year, driven by price increases implemented over the past 12 months. As a result of the strong sales we just discussed, we ended the quarter with an estimated sales value for our homes in backlog of $3.26 billion, which was up 87% year-over-year and, as Larry mentioned, was our highest year-end backlog dollar value ever. The average selling price of homes in backlog increased 7% due to price increases implemented over the past 12 months, decreased incentives and a shift in mix to California. Only 38% of homes in backlog at December 31, 2020 had reached the frame stage of construction compared to 52% of homes in backlog at December 31, 2019. We ended 2020 with 194 active subdivisions, up 5% from 185 at the end of 2019. For 2021, we are currently targeting an active subdivision increase of at least 10% year-over-year. We acquired 4,976 lots during the quarter, a 51% increase from the prior year, reflecting our confidence in market conditions and our focus on continued growth for our company. We spent $359 million on land acquisition and $124 million on land development during the period, making our total land spend $483 million. As a result of our recent land acquisitions, our total lot supply to end the year was 8% higher than at the end of 2020, nearly reaching the 30,000 lot mark. To that end, our current target for home deliveries in 2021 is between 10,000 and 11,000 units. As previously mentioned, we are targeting a 10% increase in active subdivisions during the year, and we are expanding our geographic footprint with the addition of the Boise market. In anticipation of this growth, we increased our liquidity to roughly $1.7 billion at the end of the year and further enhanced that liquidity with our $350 million senior note issuance in January. Last week, we were pleased to announce that our Board of Directors declared a $0.40 per share cash dividend and a special 8% stock dividend.

MDC delivered strong results in the fourth quarter of 2020, highlighted by fully diluted earnings per share of $2.19, representing a 54% increase over the fourth quarter of 2019. To a lesser extent, our homebuilding profits also benefited from improved home sale revenues, which increased by 10% to $1.18 billion. As a result, overall net income increased 59% to $147.5 million or $2.19 per diluted share for the fourth quarter of 2020. The average selling price of homes delivered during the quarter increased 2% to about $461,000 and 61% of the units we closed were a part of our more affordable collections. We are anticipating home deliveries for the first quarter of 2021 to reach between 2,200 and 2,400 units. The dollar value of our net orders increased 92% year-over-year to $1.32 billion and unit net orders increased by 72%, driven by a 67% increase in our monthly absorption rate to 4.7. As a result of the strong sales we just discussed, we ended the quarter with an estimated sales value for our homes in backlog of $3.26 billion, which was up 87% year-over-year and, as Larry mentioned, was our highest year-end backlog dollar value ever. To that end, our current target for home deliveries in 2021 is between 10,000 and 11,000 units.

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These discussions will be followed by a Q&A session and we expect the call to last about 60 minutes. Revenue was $1.6 billion for the fourth quarter. Fourth quarter adjusted EBITDA was $262 million, and fourth quarter adjusted earnings per share was $1.75. For the full year, 2020 revenue was $6.3 billion, 2020 adjusted EBITDA was $810 million, and 2020 full year adjusted earnings per share was $5.11. And finally, cash flow from operations for the year was $937 million a record level. Considering the impacts of the pandemic on the oil and gas industries, we laid out a path to achieving an annual revenue target of $10 billion with double-digit margins. One of our key highlights of 2020 and was our ability to grow non-oil and gas revenues by almost 12% and non-oil and gas adjusted EBITDA by over 40% despite the pandemic. Our guidance that we provided today reflects continued diversification, as we expect our non-oil and gas business to grow approximately 20% in revenues and approximately 45% in EBITDA in 2021. While we didn't lay out a time line for our $10 billion revenue target in the third quarter, the visibility within our end markets has continued to improve. Included in today's 2021 guidance, revenue contribution for these two companies is about $300 million. Our communication revenue for the quarter was $569 million. EBITDA margins came in better-than-expected at 11.1% and were up 300 basis points year-over-year. For the year, revenues were $2.5 billion and margins were 10.7%, a 270 basis point improvement over last year. Comcast became MasTec's third largest customer in 2020 growing over 100% from 2019 and our T-Mobile business also grew significantly in 2020 with sequential growth in the fourth quarter of approximately 60%. The rural digital opportunity fund or RDOF which is a follow-up to the Connect America Fund will provide $20 billion of funding over the next 10 years to build and connect gigabit broadband speeds in unserved rural areas. Additionally in October of 2020, the FCC established 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. We entered the rural telecom space in 1997 through an acquisition and have been serving this customer base for nearly 25 years. Moving to our Electrical transmission segment, revenue was $126 million versus $116 million in last year's fourth quarter. Moving to our oil and gas pipeline segment, revenue was $600 million. On our third quarter call, we forecasted a longer-term recurring revenue target of $1.5 million to $2 billion a year, assuming a continued depressed oil and gas market. As a reminder, over the last three years, less than 10% of our revenues have come from oil pipelines with the majority of our business being tied to natural gas. Moving to our Clean Energy and Infrastructure segment, revenue was $1.5 billion for the full year versus $1 billion in the prior year, a roughly 50% year-over-year increase. More importantly, EBITDA margins for the year were 5.3%, a 140 basis point improvement over last year. While George will cover 2021 guidance in detail, I'd like to highlight that our 2021 guidance reflects strong 24% revenue growth. In summary, while fourth quarter 2020 revenue was slightly below our expectation at $1.63 billion, earnings margin exceeded our expectation with fourth quarter 2020 adjusted EBITDA at $262 million or 16% of revenue, a 370 basis point increase when compared to the fourth quarter of last year. This capped a strong year for MasTec, despite the negative impact of the COVID-19 pandemic with annual 2020 adjusted EBITDA of $810 million and strong adjusted EBITDA margin rate of 12.8%, a 110 basis point improvement over last year. With 2020 revenue growing approximately $470 million or 12% and, 2020 adjusted EBITDA for these segments increasing $90 million or 43% when compared to 2019. We ended 2020 with a new record level of cash flow from operations of $937 million this allowed us to reduce our net debt levels during 2020 by $481 million to approximately $880 million which equates to a book leverage ratio of just over one. Fourth quarter 2020 Communications segment revenue of $568 million decreased 16%, compared to the same period last year. Fourth quarter 2020 Communications segment adjusted EBITDA margin rate exceeded our expectation at 11.1% of revenue, a strong 310 basis point improvement compared to the same period last year. Annual 2020 Communications segment revenue was approximately $2.5 billion with an adjusted EBITDA, at $270 million or 10.7% of revenue. Annual 2020 adjusted EBITDA for this segment increased $61 million or 29%. And adjusted EBITDA margin rate grew 270 basis points, when compared to 2019. Looking forward to 2021, we expect that annual Communications segment revenue will grow approaching a double-digit range and approximate $2.8 billion with continued 2021 adjusted EBITDA margin rate improvement approximating 75 basis points to 100 basis points over 2020 levels. Fourth quarter 2020 clean energy and infrastructure or clean energy segment revenue was $345 million, generally in line with our expectation. Annual 2020 clean energy revenue was $1.53 billion, an increase of $492 million or 48% compared to 2019. Fourth quarter 2020 clean energy adjusted EBITDA was $11 million, or 3.2% of revenue and annual 2020 clean energy adjusted EBITDA was $80 million or 5.3% of revenue, generally in line with our expectation. Fourth quarter 2020 adjusted EBITDA rate fell slightly below the annual 2020 rate of 5.3%, primarily due to fixed costs on seasonally lower fourth quarter revenue. At 5.3% of revenue annual, 2020 Clean Energy adjusted EBITDA margin rate increased 140 basis points compared to 2019. We anticipate that 2021 Clean Energy revenue will grow in the high 30% range and approach $2.1 billion in 2021, with continued 2021 adjusted EBITDA margin rate improvement of approximately 125 to 150 basis points over 2020 levels. Fourth quarter 2020 oil and gas segment revenue was $600 million, a 30% sequential growth over the third quarter, representing the first 2020 quarterly period in which this segment exhibited revenue growth over 2019, as we initiated project activity on selected large projects that will extend into 2021. Annual 2020 oil and gas segment revenue was approximately $1.8 billion, a decrease of $1.3 billion when compared to 2019, again due to regulatory delays in large project activity, as previously discussed. Fourth quarter 2020 oil and gas adjusted EBITDA was $196 million or 33% of revenue and annual 2020 oil and gas adjusted EBITDA was $511 million, a $123 million decrease when compared to 2019. We estimate that annual 2021 oil and gas segment revenue will grow in the 30% range and approach $2.4 billion, with virtually all this activity in backlog as of year-end 2020. Fourth quarter 2020 electrical transmission segment revenue was $126 million, generally in line with our expectation. And annual 2020 electrical transmission revenue was $506 million, a 22% increase over 2019. Fourth quarter 2020 electrical transmission segment adjusted EBITDA margin rate was below our expectation at 0.6% of revenue, due to inefficiencies and delays on a project that is approximately 85% complete as of year-end 2020. This project also impacted our annual 2020 electrical transmission segment adjusted EBITDA margin rate, which was 2.9% as compared to 7.1% in 2019. Looking forward to 2021, we expect annual 2021 electrical transmission segment will show strong revenue growth, somewhere in the high-teens to low 20% range. Now I will discuss a summary of our top 10 largest customers for the annual 2020 period as a percentage of revenue. AT&T revenue derived from wireless and wireline fiber services was approximately 14% and installed to the home services was approximately 4%. On a combined basis, these three separate service offerings totaled approximately 18% of our total revenue. Comcast, NextEra Energy, Crimean Highway pipeline and energy transfer affiliates were each at 5% of revenue. Verizon, Xcel Energy, Duke Energy, Iberdrola Group and Enbridge were each at 4% of revenue. Individual construction projects comprised 64% of our annual revenue with master service agreements comprising 36% and highlighting that we have a significant portion of our revenue derived on a recurring basis. At year end 2020, our backlog was approximately $7.9 billion, a slight sequential increase compared to $7.7 billion as of the 2020 third quarter and a slight decrease compared to $8 billion as of year end 2019. For the year ended 2020, we generated a record level $937 million in cash flow from operations and ended the year with net debt of $880 million, which equates to a book leverage ratio of 1.1 times. We ended 2020 with $423 million in cash on hand as well as record liquidity defined as cash plus borrowing availability of approximately $1.6 billion. During 2020, we reduced our net debt levels by approximately $481 million while still investing approximately $170 million in share repurchases and strategic investments. We ended 2020 with DSOs at 86 days down four days compared to 90 days last year and generally in line with our expected DSO range in the mid to high-80s. Regarding our spending on equipment, annual 2020 net cash capex, defined as cash capex net of equipment disposals, was approximately $177 million and we incurred an additional $114 million in equipment purchase under finance leases. We anticipate lower levels of capex spending in 2021 at approximately $100 million in net cash capex, with an additional $120 million to $140 million to be incurred under finance leases. We are projecting annual 2021 revenue of $7.8 billion with adjusted EBITDA of $875 million or 11.2% of revenue and adjusted diluted earnings of $5 per share. We expect annual 2021 interest expense levels to approximate $58 million with this level including approximately $110 million of first quarter 2021 acquisitions, while excluding any potential additional M&A, strategic investments or share repurchase activity that may occur over the balance of 2021. We expect to maintain a strong cash flow profile in 2021 with free cash flow once again exceeding 2021 adjusted net income despite expected working capital requirements related to our planned 24% revenue growth in 2021. For modeling purposes, our estimate for 2021 share count is 74 million shares. We expect annual 2021 depreciation expense to approximate 4.2% of revenue inclusive of first quarter 2021 M&A activity and capital additions. We expect annual 2021 corporate segment adjusted EBITDA to be a net cost of approximately 1.1% of overall revenue. And lastly, we expect that annual 2021 adjusted income tax rate will approximate 25%. Our first quarter 2021 revenue expectation is $1.65 billion with adjusted EBITDA of $172 million or 10.4% of revenue and earnings guidance at $0.80 per adjusted diluted share. Notable first quarter 2021 expectations include segment revenue levels expected to generally approximate fourth quarter 2020 levels with first quarter 2021 oil and gas segment revenue expected to significantly grow and approximate $600 million due to expanded cost plus project activity. In terms of some additional color on the expected timing of 2021 consolidated revenue performance, we expect first half 2021 consolidated revenue to grow at a mid-teens growth rate with second half 2021 consolidated revenue growth rate accelerating to the high 20% to low 30% range and our annual 2021 revenue growth expectation is 24% over the prior year. Regarding our expected timing of 2021 consolidated adjusted EBITDA margin rate performance, we expect first half 2021 adjusted EBITDA margin rate will be in the high 10% range with second half 2021 adjusted EBIT margin rate in the high 11% range, with our annual adjusted EBITDA guidance at 11.2% of 2021 revenue.

Revenue was $1.6 billion for the fourth quarter. Fourth quarter adjusted EBITDA was $262 million, and fourth quarter adjusted earnings per share was $1.75. We ended 2020 with $423 million in cash on hand as well as record liquidity defined as cash plus borrowing availability of approximately $1.6 billion. We are projecting annual 2021 revenue of $7.8 billion with adjusted EBITDA of $875 million or 11.2% of revenue and adjusted diluted earnings of $5 per share. Our first quarter 2021 revenue expectation is $1.65 billion with adjusted EBITDA of $172 million or 10.4% of revenue and earnings guidance at $0.80 per adjusted diluted share.

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Only 86 other U.S. public companies, including only two other REITs, can offer that impressive track record of consistent dividend growth to investors. We're also issuing guidance for 2022 core FFO per share of $2.90 to $2.97, reflecting approximately 4% growth over 2021 from midpoint to midpoint. Our portfolio of 3,195 freestanding single-tenant retail properties continues to perform exceedingly well. Occupancy ticked up slightly from the prior quarter to 98.6% and remains above our long-term average of 98%. We also announced collection of 99% of rents due for the third quarter. During the third quarter, we invested $247 million in 49 new properties at an initial cash cap rate of 6.4% and with an average lease duration of 19 years. Year-to-date, we've invested $455 million in 107 new properties at an initial cash cap rate of 6.5% and an average lease duration of 18 years. We've increased our 2021 acquisition guidance to a range of $550 million to $600 million. And we've issued initial guidance for 2022 acquisitions in the range of $550 million to $650 million as we anticipate returning to our typical pre-pandemic run rate of acquisition volume. During the third quarter, we also sold 27 properties, raising $30 million of proceeds to be reinvested into new acquisitions. Year-to-date, we've now raised over $70 million from the sale of 53 properties, divided roughly equally between leased properties and vacant properties. Our balance sheet remains one of the strongest in our sector, highlight by -- highlighted by our issuance of $450 million of 3% interest-only 30-year notes in September. With over $200 million of cash remaining after redemption of our 5.2% preferred in October, a zero balance on our $1.1 billion line of credit, no material debt maturities until 2024 and a weighted average debt duration of almost 15 years, we have one of the strongest balance sheets in our sector and remain well positioned to fund future acquisitions and take advantage of opportunities that may present themselves. That's up $0.01 from the preceding second quarter $0.70 per share and up $0.09 from the prior year's $0.62 per share. Today, we also reported that AFFO was $0.75 per share for the third quarter. That's down $0.02 from the preceding second quarter $0.77, and that's largely a result of scheduled deferral repayments beginning to taper off from the peak levels in the first half of 2021. We did footnote this AFO -- this AFFO amount included $4.3 million of deferred rent payment in our accrued rental income adjustment for the third quarter, without which would have produced AFFO of $0.73 per share. Excluding all deferral repayments, our AFFO dividend payout ratio for the first nine months was 73.5%, and that's fairly consistent with prior year levels. As Jay noted, occupancy was 98.6% at quarter end. G&A expense was $11.1 million for the third quarter, and that increase for the quarter and the nine months is really largely driven by incentive compensation. We ended the quarter with $706 million of annual base rent in place for all leases as of September 30, 2021. As Jay mentioned, rent collections continue to remain strong in the third quarter with rent collections of approximately 99% for the third quarter. Collections from our cash-basis tenants, which represent about $50 million or 7.1% of our total annual base rent, improved to approximately 94% for the third quarter. That's up from 92% in the second quarter and 80% previously reported in the first quarter of 2021. We -- today, we did increase our 2021 core FFO per share guidance to a range of $2.75 to $2.80 per share, and that's up from a range -- I'm sorry, we increased it from a range of $2.75 to $2.80 to a new range of $2.80 to $2.84 per share and similarly increased the AFFO guidance to a range of $3 to $3.04 per share. Notably, this guidance exceeds our 2019 results by approximately 2% to 2.5% despite the headwinds and reduced acquisition levels in 2020. And they're largely unchanged from last quarter's guidance with the exception of the increased acquisition guidance of $550 million to $600 million of acquisitions versus the previous guidance of $400 million to $500 million. We expect to continue the high level of rent collection rates but have assumed a total of 1.5%, 1.5% of potential rent loss. In time, we're optimistic that will drift back toward our usual 1% rent loss assumption in our guidance. Today, we also initiated 2022 core FFO per share guidance of $2.90 to $2.97 per share. That represents a 4.1% increase over 2021 results using the guidance midpoint for both years. We've assumed rent collections remain at high levels and have assumed potential rent loss of 1.5% of annual base rent. Largely as a result of the $450 million, 30-year 3% debt offering we completed in September, we ended the third quarter with $543.5 million of cash on hand. However, $345 million of that cash was used shortly after quarter end on October 15 to redeem our 5.2% preferred stock. So that would have left us with approximately $200 million of cash on a pro forma basis and no amounts outstanding on our $1.1 billion bank credit facility at quarter end. Weighted average debt maturity is now approximately 14.9 years with a 3.7% weighted average fixed interest rate. Our next debt maturity is $350 million of 3.9% coupon debt that's due in mid-2024. A couple of leverage debt -- net debt to gross book assets was 39.8%. Net debt-to-EBITDA was 5.4 times, and that's at September 30. Interest coverage was 4.8 times and fixed charge coverage was 4.2 times for the third quarter of 2021.

Today, we also reported that AFFO was $0.75 per share for the third quarter. We -- today, we did increase our 2021 core FFO per share guidance to a range of $2.75 to $2.80 per share, and that's up from a range -- I'm sorry, we increased it from a range of $2.75 to $2.80 to a new range of $2.80 to $2.84 per share and similarly increased the AFFO guidance to a range of $3 to $3.04 per share. Today, we also initiated 2022 core FFO per share guidance of $2.90 to $2.97 per share.

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Net effective market rents are now 6.4% above pre-COVID levels and it's notable that we've exceeded pre-COVID market rents despite having recovered only about 63% of the jobs lost during the pandemic. As a result of improving market conditions, we reported quarterly core FFO of $3.12 per share, $0.08 per share above both our sequential results and guidance provided last quarter. Southern California continues to deliver the strongest growth with net effective rents up 17.2% compared to pre-COVID while Northern California is still down 5.2%. Overall, September job growth in the Essex markets was 5.2%, substantially above the U.S. average of 4%. We published our initial market rent estimates on page S-17 of our supplemental package. We are expecting 7.7% net effective rent growth on average in 2022 with Northern California the notable laggard in 2021 forecasted to lead the portfolio average in market rent growth next year. Median for-sale home prices are up 17% in California and almost 16% in Seattle, making for-sale housing more costly relative to rental housing and often impeding the transition from renter to homeowner. Finally, despite large increases in for-sale housing prices, our expectation for the production of for-sale housing in 2022 remains very muted at only 0.4% of the single-family housing stock. Page S-17.1 of our supplemental highlights recent investments by large tech companies which have continued throughout the pandemic and include Apple's 550,000 square foot recent expansion in Culver City, their new 490,000 square foot tech campus that will soon begin construction in North San Jose and a recent acquisition of five office buildings with a total of 458,000 square feet in Cupertino. Google last quarter received needed approvals for its planned 80-acre campus near Downtown San Jose and YouTube's 2.5 million square foot campus in San Bruno was just approved by the city last week. Our most recent survey of open positions indicates 38,000 job openings in the Essex markets for the 10 largest tech companies, up 9,000 jobs or 26% as compared to the first quarter of 2020. Strong economic growth on the West Coast is further supported by venture capital investments which achieved new highs in Q3 '21 of $72 billion, of which 44% was directed to organizations in the Essex markets. Turning to our supply outlook for 2022, we are expecting 0.6% housing supply growth for the full year, including 0.9% growth for the multifamily stock which is manageable relative to our expectations for job growth of 4.1% in 2022. Longer term, residential building permits in Essex markets saw a modest 3.5% increase on a trailing 12-month basis, which is favorable compared to the U.S. where permits have increased 13.6% compared to one year ago. We continue to see strong demand from institutional capital to invest in the multifamily sector along the West Coast as evidenced by increasing transaction volume and cap rates in the mid-3% range. Apartment values across our markets are up approximately 15% on average compared to pre-COVID valuations. The company has recently seen more development opportunities, and we were able to purchase two commercial properties in the third quarter, one located in South San Francisco that we expect to become a near-term apartment development opportunity and another in Seattle that we will begin to entitle for apartments while earning an attractive 6% going-in yield with a high-quality tenant. In the third quarter, same-property revenue -- same-property revenues grew by 2.7%, which is primarily attributable to a reduction in concessions compared to the previous period. By primarily utilizing concessions last year, we were able to limit the in-place rent decline to only 1.1% in the third quarter. The benefit of this strategy is also coming through our sequential revenue growth, which increased 3.2% this quarter from the second quarter. From a portfoliowide perspective, market conditions remain strong compared to a year ago as demonstrated by the 12.6% blended net effective rent growth in the quarter. Rents and jobs in the Seattle region have had a strong recovery with net effective rents up 8.3% compared to pre-COVID levels and year-over-year job growth of 5.5% in September. New supply continues to be largely concentrated in the CBD, which is less impactful to Essex because 85% of our Seattle portfolio is located outside of CBD. Looking forward to 2022, as outlined in our S-17 of the supplemental, total housing supply deliveries for the region is expected to decline compared to 2021, and we anticipate job recovery to continue, led by Amazon, which recently announced plans to hire over 12,000 corporate and tech employees in Seattle. As such, we are forecasting market rent growth of 7.2% in 2022. In addition, the job recovery in Northern California has been at a slower pace than our other regions, with only 4.4% year-over-year improvement compared to a 5.2% for the entire Essex portfolio as of September. On the other hand, we anticipate that Northern California will be our best-performing region in 2022, with market rent growth forecast of 8.7% on our S-17. Rent growth has continued to improve in the third quarter, and net effective rents in September are 17.2% above pre-COVID levels. In June, L.A. rents were still below pre-COVID levels, but as of September, they are now 6.8% above. While Orange County, San Diego and Ventura have achieved rents between 17% to 30% above pre-COVID levels. Job growth in Southern California continues to progress well, up 5.9% in September as the region's economy continues to reopen and recover. As you can see on our S-17 market rent growth for Southern California of 7.1%, we anticipate this region to perform at a comparable level as Seattle. I'm pleased to report core FFO for the third quarter exceeded the midpoint of our guidance range by $0.08 per share. During the quarter, we saw an improvement in our delinquency rate, which declined to 1.4% of scheduled rent on a cash basis compared to 2.6% in the second quarter. Year-to-date through September, we have received $11.6 million from the various tenant relief programs, of which $9.5 million was received in the third quarter. As a result of the strong third quarter results, we are raising the full year midpoint for same-property revenues by 20 basis points to minus 1.2%. As it relates to full year core FFO, we are raising our midpoint by $0.11 per share to $12.44. Year-to-date, we have raised core FFO by $0.28 or 2.3% at the midpoint. The new venture will have approximately $660 million of buying power, a portion of which is expected to be invested by year-end. For the year, we expect redemptions to be around $290 million. Roughly 40% of these redemptions are expected to occur in the fourth quarter. Year-to-date, we have closed on approximately $110 million of new commitments. In the third quarter, our net debt-to-EBITDA ratio declined from 6.6 times last quarter to 6.4 times.

As a result of improving market conditions, we reported quarterly core FFO of $3.12 per share, $0.08 per share above both our sequential results and guidance provided last quarter.

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We entered the new year, with 94 rigs running in U.S. land that's double the number we had in August, and the upward trend continues. Around this time last year VTI prices were trading in the low-50s there were approximately 800 rigs operating in the U.S. land market and H&P was operating in a 194 of those rigs. Contrast that with today, where oil prices are up over 10%, up into the upper 50s and the industry rig count is approximately 415 rigs and H&P is running 103 FlexRigs. However, if market expectations for U.S. production levels continue to drop that should have a positive impact on oil prices, which further supports consensus of expectations for approximately 500 active rigs in the U.S. at year-end. Taking this a step further, by our count, there are approximately 630 super-spec rigs available in the U.S. market. Looking forward, we believe the vast majority of all working rigs drilling horizontal wells will continue to trend toward the super-spec classification and if activity does reach 500 rigs, the industry rig count would begin to approach utilization levels that have historically provided pricing power. We also expect private E&Ps to add rigs, however, we don't expect an outsized increase in fiscal '21 rig count, even if oil prices reach $60 per barrel. To-date our autonomous AutoSlide technology is deployed on 25% to 30% of our FlexRig fleet and we currently have similar percentages for performance-based contracts. I'm very pleased with our people's service attitude and the ability to quickly respond to customer demand and improve activity by roughly 35% during the first fiscal quarter. We believe there is an opportunity to grow our market share above 25%. If you look at previous downturns we have faced since the 2008 Financial Crisis, we have emerged stronger with greater capability as we differentiated our offerings and grew market share in the premium part of the market. Relative to the 800 rig drilling a year ago, many idle SCR and less-capable AC rigs may be permanently sidelined. In the super-spec classification segment, we have approximately 37% of the U.S. capacity with 234 super-spec FlexRigs that are unique with their digital technology capability across our uniform fleet. The company generated quarterly revenues of $246 million versus $208 million in the previous quarter. Total direct operating costs incurred were $200 million for the first quarter versus $164 million for the previous quarter. General and administrative expenses totaled $39 million for the first quarter, higher than our previous quarter due to the resumption of short-term incentive accruals for fiscal 2021, but within our guidance for full fiscal year '21. The sale closed for consideration of $12 million paid out over two years. The rig had an aggregate net book value of $2.8 million and the resulting gain of $9.2 million as reported as a part of the sale of assets on our consolidated statement of operations. Our Q1 effective tax rate was approximately 19%, which is on the lower end of our guided range due to a discrete tax expense. To summarize this quarter's results, H&P incurred a loss of $0.66 per diluted share versus a loss of $0.55 in the previous quarter. Absent these select items, adjusted diluted loss per share was $0.82 in the first fiscal quarter versus an adjusted $0.74 loss during the fourth fiscal quarter. Capital expenditures for the first quarter of fiscal '21 were $14 million below our previous implied guidance. We averaged 81 contracted rigs during the first quarter, up from an average of 65 rigs in fiscal Q4. I will note here that at the end of fiscal Q1, all idle but contracted rigs, which I will refer to as IBC rigs thereafter have returned to work compared to an average of approximately 15 IBC rigs in the previous quarter. During the first quarter, we doubled our rig activity from the prior quarter low of 47 active rigs. We exited the first fiscal quarter with 94 contracted rigs, which was slightly above our guidance expectations as demand for rigs continue to expand from the low, reached midway through the end of the previous quarter. Revenues were sequentially higher by $53 million due to the previously mentioned activity increase included in this quarter's revenues were roughly $4 million of unexpected early termination revenue from the cancellation of one rig contract. North America Solutions operating expenses increased $47 million sequentially in the first quarter, primarily due to adding 25 rigs, a 35% increase in North America activity as well as reactivating 10 idle but contracted rigs, both of which resulting in one-time reactivation expenses of approximately $10.6 million. The activity level has continued to grow, albeit at a more moderate pace than the prior quarter as operators add rigs to maintain production levels with oil above $50 per barrel. As of today's call, we have 103 rigs contracted with no IBC rigs remaining. We expect to end the second fiscal quarter of '21 with between 105 and 110 contracted rigs. As John discussed, our performance contracts are gaining customer acceptance and of the approximately 34 rigs that we have added to the active H&P rig count after September 30th through today, more than a quarter, are working under such performance contracts. In the North America Solutions segment, we expect gross margins to range between $60 million to $70 million with new early termination revenue expected. As we continue to add rigs, we will also incur related one-time reactivation expenses, such expenses are expected to be approximately $6 million in the second quarter. Historical experience indicates that rig stacked for nine months or longer will incur cost of $400,000 to $500,000 to reactivate. Our current revenue backlog from our North America Solutions fleet is roughly $448 million for rigs under term contract, but importantly this figure does not include additional margin that H&P can earn is performance contract criteria are met. In the second quarter, we expect to have a loss of between $1 million to $3 million, apart from any foreign exchange impacts, as the legacy structural cost in Argentina continue to hamper International margins. Offshore generated a gross margin of $6 million during the quarter, which was at the lower end of our estimates. We expect that Offshore will generate between $6 million to $9 million of operating gross margin. Capital expenditures for the full fiscal of '21 year are still expected to range between $85 million to 180 -- a 105 -- $85 million to $105 million, with remaining's been distributed over the last three fiscal quarters. Our expectations for general and administrative expenses for the full fiscal 2021 year, have not changed and remain at approximately $160 million. We also remain comfortable with the 19% to 24% range for estimated annual effective tax rate and do not anticipate incurring any significant cash tax in fiscal 2021. Helmerich & Payne had cash and short-term investments of approximately $524 million at December 31, 2020 versus $577 million at September 30. Including our revolving credit facility availability, our liquidity was approximately $1.3 billion, not included in the previously mentioned the cash balance is approximately $35 million of income taxes receivable and related interest that we collected after the end of the first fiscal quarter. Our debt-to-capital at quarter end was about 13% and our net cash position exceeds our outstanding bond. Our trade accounts receivable at fiscal year-end of $150 million grew by $38 million to approximately $188 million, due to the added rig activity, as previously mentioned. The preponderance of our AR continues to be less than 60 days outstanding from billing day. Also included in AR, there is another approximately $10 million of tax refund receivables. Our inventory balances have declined approximately $5 million sequentially from June -- from September 30th to $99 million and we continue to leverage consumables across the entirety of U.S. basins to use and reduce inventory on hand. As mentioned earlier in my comments we arrived at a 100 rig count level, during this second quarter. Based on our updated forecast, we expect to end fiscal 2021 with cash and short-term investments at or above the $500 million.

To summarize this quarter's results, H&P incurred a loss of $0.66 per diluted share versus a loss of $0.55 in the previous quarter. Absent these select items, adjusted diluted loss per share was $0.82 in the first fiscal quarter versus an adjusted $0.74 loss during the fourth fiscal quarter. In the North America Solutions segment, we expect gross margins to range between $60 million to $70 million with new early termination revenue expected. Capital expenditures for the full fiscal of '21 year are still expected to range between $85 million to 180 -- a 105 -- $85 million to $105 million, with remaining's been distributed over the last three fiscal quarters. Helmerich & Payne had cash and short-term investments of approximately $524 million at December 31, 2020 versus $577 million at September 30.

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Since this COVID-19 pandemic began in January, ResMed has produced hundreds of thousands of ventilators, providing the gift of breath to people in need in 140 countries worldwide. We have seen a steady sequential, what we would call U-shape recovery of patient flow to primary care physicians as well as then to specialist physicians across the 140 countries that we serve. This is just as we forecast 90 days ago on our Q4 earnings call. During the first quarter of fiscal year 2021, we generated over $144 million of cash, allowing us to return $57 million of cash as dividends to our shareholders. We have a very full pipeline of innovative solutions that will generate both medium and long-term value for customers with an industry-leading intellectual property portfolio of over 6,000 patents and designs. We now have over 7 billion nights of respiratory medical data in our cloud-based Air Solutions platform. We've provided over 12.5 million 100% cloud-connectable medical devices to customers. And we have over 14 million patients enrolled in our AirView software solution. These three trends: one, the increased importance of respiratory medicine; two, the increased importance of digital health; and three, the increased importance of out-of-hospital healthcare, will all help ResMed meet and beat our goal of growing volume at double digits from 2020 through 2025 and improving over 250 million lives by 2025. Group revenue for the September quarter was $752 million, an increase of 10% over the prior-year quarter. In constant currency terms, revenue increased by 9% compared to the prior year quarter. We estimate that the incremental revenue benefit from ventilator devices and related accessories derived from COVID-19 demand was approximately $40 million in the first quarter. Taking a closer look at our geographic distribution, and excluding revenue from our Software as a Service business, our sales in U.S., Canada, and Latin America countries were $403 million, an increase of 9% over the prior-year quarter. Sales in Europe, Asia and other markets totaled $257 million, an increase of 15% over the prior-year quarter or an increase of 10% in constant currency terms. By product segment, U.S., Canada, and Latin America device sales were $197 million, an increase of 6% over the prior-year quarter. Masks and other sales were $206 million, an increase of 12% over the prior-year quarter. In Europe, Asia and other markets, device sales totaled $176 million, an increase of 16% over the prior-year quarter or in constant currency terms, an 11% increase. Masks and other sales in Europe, Asia, and other markets were $81 million, an increase of 12% over the prior-year quarter or in constant currency terms, an increase of 8%. Globally, in constant currency terms, device sales increased by 8%, while masks and other sales increased by 11% over the prior-year quarter. Software as a Service revenue for the first quarter was $92 million, an increase of 6% over the prior-year quarter. On a non-GAAP basis, SaaS revenue increased by 4%. Our non-GAAP gross margin improved by 30 basis points to 59.9% in the September quarter compared to 59.6% in the same quarter last year. Our SG&A expenses for the first quarter were $159 million, a decrease of 5% over the prior-year quarter, or in constant currency terms, SG&A expenses decreased by 7% compared to the prior year period. SG&A expenses as a percentage of revenue improved to 21.1% compared to 24.6% we reported in the prior-year quarter, benefiting from cost management and reduced travel as we work through the uncertain COVID-19 environment. R&D expenses for the quarter were $55 million, an increase of 14% over the prior-year quarter, or on a constant currency basis, an increase of 12%. R&D expenses as a percentage of revenue was 7.3% compared to 7.1% in the prior year. Total amortization of acquired intangibles was $20 million for the quarter, and stock-based compensation expense for the quarter was $16 million. Non-GAAP operating profit for the quarter was $237 million, an increase of 24% over the prior-year quarter, reflecting strong top-line growth, expansion of gross margin, and well-managed operating expenses. On a GAAP basis, our effective tax rate for the September quarter was 17.4%, while on a non-GAAP basis, our effective tax rate for the quarter was 18.5%. Looking forward, we estimate our effective tax rate for the full fiscal year 2021 will be in the range of 17% to 19%. Non-GAAP net income for the quarter was $185 million, an increase of 37% over the prior-year quarter. Non-GAAP diluted earnings per share for the quarter were $1.27, an increase of 37% over the prior-year quarter. Our GAAP diluted earnings per share for the quarter were $1.22. Cash flow from operations for the quarter was $144 million, reflecting robust underlying earnings, partially offset by increases in working capital. Capital expenditure for the quarter was $14 million. Depreciation and amortization for the September quarter totaled $39 million. During the quarter, we paid dividends of $57 million. We recorded equity losses of $2.3 million in our income statement in the September quarter associated with the Verily joint venture. We expect to record equity losses of approximately $3 million in Q2 and approximately $5 million per quarter in the second half of FY '21 associated with the joint venture operation. We ended the first quarter with a cash balance of $421 million. At September 30, we had $1.1 billion in gross debt and $635 million in net debt. And at September 30, we had a further $1.2 billion available for drawdown under our existing revolver facility. Today, our board of directors declared a quarterly dividend of $0.39 per share, reflecting the board's confidence in our strong liquidity position and operating performance.

Non-GAAP diluted earnings per share for the quarter were $1.27, an increase of 37% over the prior-year quarter. Our GAAP diluted earnings per share for the quarter were $1.22.

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Our beer business posted depletion growth of more than 80% in the third quarter, outpacing the high end of the US beer category. Modelo Especial continues to be our most significant growth driver, with depletions increasing over 13%. That is more than 5 million cases relative to the same quarter last year. 1 high-end beer brand. 1 chelada in the US beer market and maintained its explosive growth, posting 35% depletion growth in the third quarter. 3 high-end brand in IRI channels with 11% depletion growth versus prior year. Similarly, Corona Premier continued its strong performance with 8% depletion growth, which accelerated through distribution gains as supply conditions improved. Overall, our outstanding performance gives us confidence to increase guidance for our beer business as we now expect to achieve 10% to 11% net sales growth and 6% to 7% operating income growth in fiscal '22. In fact, Meiomi sales in the three-tier e-commerce channels increased 27% versus the prior year. Currently, about 10% of Meiomi's sales come from three-tier e-commerce, which is the highest level among leading US line brands in IRI e-commerce channels. Throughout the year, we've experienced out of stocks and other operational challenges related to our SAP implementation, a difficult domestic and international logistics environment and our route-to-market transition of 70% of our distribution to Southern Glazer's Wine and spirits. Based on our year-to-date performance, we are raising organic net sales guidance from 2% to 4% to 4% to 6% for fiscal '22. However, we continue to believe that the cannabis market represents a significant growth opportunity in the CPG space over the next decade given the predicted US market size of roughly 100 billion post-legalization, which is double the size of the spirits market and approaching the size of the beer category. We're encouraged by Canopy's innovation agenda with more than 40 new SKUs launched globally during their recently reported second quarter. 1 share of the gummy market in Canada, with more than 40% market share and the largest multi-market presence in the US gummy market. The gummies category is one of the fastest-growing segments in both the US and Canadian cannabis markets, accounting for over 70% of all edibles purchased. Its growth remains ahead of the high end of the US beer market in IRI channels, and we now expect to achieve 10% to 11% net sales growth and 6% to 7% operating income growth for fiscal '22. This continued strength, coupled with tax favorability, enabled us to deliver 8% comparable basis diluted earnings per share growth for the quarter, excluding Canopy. As a result, we have increased and narrowed our full year fiscal 2022 comparable basis diluted earnings per share target to a range of $10.50 to $10.65 versus our previous guidance of $10.15 to $10.45. Net sales increased 4% driven by shipment growth of 3% and favorable price, partially offset by unfavorable mix. As a reminder, we are lapping a significant inventory rebuild in Q3 of the prior year, which generated 28% shipment growth. Depletion growth for the quarter came in above 8% driven by the continued strength of Modelo Especial and explosive growth of Corona Extra as well as the continued return to growth in the on-premise channel. Again, keep in mind the difficult volume overlap we encountered during the quarter as we faced a 12% depletion growth comparison driven by robust inventory replenishment at the retailer in the prior year. On-premise volumes account for approximately 12% of the total beer depletions during the quarter and grew strong double digits versus last year. As a reminder, the on-premise accounted for approximately 15% of our beer depletion volume pre-COVID and was only 8% of our depletion volume in Q3 fiscal 2021 as a result of on-premise shutdowns and restrictions due to COVID-19. Beer operating margin decreased 130 basis points versus prior year to 41.3%. And third, a step-up in depreciation expense, largely due to the incremental 5 million hectoliters at Obregon completed earlier this fiscal year. Marketing as a percent of net sales decreased 130 basis points to 8% versus prior year as we have returned to our typical spending cadence, which is weighted more heavily toward the first half of the fiscal year. Additionally, we continue to expect full-year spend as a percent of net sales to land in the 9% to 10% range, which is in line with fiscal 2021 spend of 9.7% of net sales. For full year fiscal 2022, we now expect net sales growth to land in the 10% to 11% range and operating income growth to land in the 6% to 7% range, reflecting the continued strength of our core beer portfolio. As previously communicated, we expect price increases within our beer portfolio to land slightly above our typical 1% to 2% range. However, due to a persistent and tough inflationary environment and incremental depreciation driven by our capital expansion plans, operating margins could land below our stated 39% to 40% range in fiscal 2023. Q3 fiscal 2022 net sales declined 25% as shipments declined approximately 39%. Excluding the impact of the Wine and spirits divestitures, organic net sales increased 3%, driven by shipment growth of approximately 3%, favorable price, incremental sales to Opus One and smoke-tainted bulk wine sales, all partially offset by unfavorable mix. Depletions declined approximately 7% during the quarter and continue to be challenged by port delays for our international brands and distributor route-to-market changes in transition markets. Operating margin increased 140 basis points to 25.4% as decreased COGS, mix benefits from divestitures and favorable price were partially offset by increased marketing and SG&A as a percent of net sales and unfavorable mix from the existing portfolio. The net favorable fixed cost absorption resulted from lapping the unfavorable impact of $20 million in the prior year, which was a result of decreased production levels due to the 2020 US wildfires. For the full year, we expect marketing as a percent of net sales to be in the 10% range. For full year fiscal 2022, we now expect net sales and operating income to decline 21% to 22% and 23% to 25%, respectively. Excluding the impact of the Wine and spirits divestitures, organic net sales is now expected to grow in the 4% to 6% range versus our previous guidance of 2% to 4%. As such, going forward, we remain confident in our medium-term top-line growth algorithm for the Wine and spirits business 2% to 4%. Fiscal year-to-date corporate expenses came in at approximately $162 million, down 6% versus Q3 year to date last fiscal year. We now expect full-year corporate expenses to approximate $230 million, reflecting the year-to-date compensation and benefits favorability. Comparable basis interest expense for the quarter decreased 8% to $88 million versus prior year primarily due to lower average borrowings. We expect fiscal 2022 interest expenses to land toward the midpoint of our previous guidance range of $355 million to $365 million. Our Q3 comparable basis effective tax rate, excluding Canopy equity earnings, came in at 14% versus 17.7% in Q3 last year, primarily driven by the timing and magnitude of stock-based compensation benefits, partially offset by higher effective tax rates on our foreign businesses. We now expect our full year fiscal 2022 comparable tax rate, excluding Canopy equity earnings, to approximate 19.5% versus our previous guidance of 20%. Additionally, stock-based compensation tax benefits were weighted toward Q3 versus our previous expectation of Q4, resulting in a sequential rate increase to our implied Q4 tax rate, which is now expected to approximate 23%. We generated free cash flow of $1.8 billion for the first nine months of fiscal 2022, reflecting a 3% increase in operating cash flow, offset by an increase in capex spend. Capex spend totaled approximately $600 million, which included approximately $500 million of beer capex primarily driven by expansion initiatives at our Mexico facilities. Our full year capex guidance of $1 billion to $1.1 billion, which includes approximately $900 million targeted for Mexico beer operations expansions, remains unchanged. Furthermore, we continue to expect fiscal 2022 free cash flow to be in the range of $1.4 billion to $1.5 billion. This reflects operating cash flow in the range of $2.4 billion to $2.6 billion and the capex spend previously on, as Bill mentioned, our beer business continues to significantly outperform the US beer industry driven by robust consumer demand, and it is essential that we invest appropriately to support the expected ongoing growth momentum for our exceptional beer brands. As such, we have updated and increased our brewery expansion investment plans in Mexico. Total capital expenditures for the beer business are now expected to be $5 billion to $5.5 billion over the fiscal 2023 to fiscal 2026 time frame with the majority of spend expected to occur in the first three years. In total, this investment will support an incremental 25 million to 30 million hectoliters of additional capacity and includes construction of a new brewery in Southeast Mexico in the state of Veracruz as well as continued expansion and optimization of our existing sites in Nava and Obregon. Please note that this investment includes the previously disclosed beer capex guidance of $700 million to $900 million annually during the fiscal 2023 to fiscal 2025 time line to support a 15 million hectoliter build-out between our Nava and Obregon facilities. As a reminder, our existing brewery footprint currently supports 39 million hectoliters between Nava and Obregon. As Bill and I outlined, we expect continued momentum, and thus, continue to target top-line growth in the 7% to 9% range over the next three to five years, which includes one to two points of price and implied volume growth in the mid to high single-digit range.

Overall, our outstanding performance gives us confidence to increase guidance for our beer business as we now expect to achieve 10% to 11% net sales growth and 6% to 7% operating income growth in fiscal '22. Its growth remains ahead of the high end of the US beer market in IRI channels, and we now expect to achieve 10% to 11% net sales growth and 6% to 7% operating income growth for fiscal '22. As a result, we have increased and narrowed our full year fiscal 2022 comparable basis diluted earnings per share target to a range of $10.50 to $10.65 versus our previous guidance of $10.15 to $10.45. For full year fiscal 2022, we now expect net sales growth to land in the 10% to 11% range and operating income growth to land in the 6% to 7% range, reflecting the continued strength of our core beer portfolio. For full year fiscal 2022, we now expect net sales and operating income to decline 21% to 22% and 23% to 25%, respectively. Furthermore, we continue to expect fiscal 2022 free cash flow to be in the range of $1.4 billion to $1.5 billion. As such, we have updated and increased our brewery expansion investment plans in Mexico. Total capital expenditures for the beer business are now expected to be $5 billion to $5.5 billion over the fiscal 2023 to fiscal 2026 time frame with the majority of spend expected to occur in the first three years.

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Meanwhile, our development of La Jolla Commons III into an 11 story, approximately 210,000 square foot Class A office tower remains on time and on budget for Q2 or Q3 2023 delivery. Additionally, I'm happy to inform you that our Board of Directors has approved the quarterly dividend of $0.30 a share for the third quarter, which we believe is supported by our expectations for operations to continue trending positively. Meanwhile, we are encouraged by our approximately 97% collection percentage in Q3, increased leasing activity across all asset classes, fewer tenant failures and bankruptcies than we expected and many modified leases hitting percentage rent thresholds sooner than expected and are collecting of approximately 96% of deferred rents due during the third quarter, all validating the strategies we implemented during COVID to support our struggling retailers through the government-mandated closures as we are fortunate to have the financial ability to do so. On the multifamily front as of quarter end, we were 96% leased at Hassalo in Portland, and 98% leased in San Diego multifamily portfolio. Last night we reported third quarter 2021 FFO per share of $0.57, and third quarter 2021 net income attributable to common stockholders per share of $0.17. Third quarter results are primarily comprised of the following: actual FFO increased in the third quarter by approximately 11.4% on a FFO per share basis to $0.57 per FFO share compared to the second quarter of 2021, primarily from the following four items: first, the acquisitions of Eastgate Office Park in Corporate Campus East III in Bellevue, Washington, on July seven and September 10, respectively, added approximately $0.023 of FFO per share in Q3. Second, Alamo Quarry in San Antonio added approximately $0.017 of FFO per share in Q3, resulting from 2019 and 2020 real estate tax refunds received during the third quarter of 2021, which reduced Alamo Quarry's real estate tax expense. Third, decrease of bad debt expense at Carmel Mountain Plaza added approximately $0.005 per FFO share in Q3. And fourth, the Embassy Suites and Waikiki Beach Walk added approximately $0.012 of FFO per share in Q3 due to the seasonality over the summer months. On our Q2 earnings call, I mentioned that Japan, who was then approximately 9% fully vaccinated, is now over 65% fully vaccinated and is expected to hit 80% by November. Now as we look at our consolidated statement of operations for the three months ended September 30, 2021, our total revenue increased approximately $6.5 million over Q2 '21, which is approximately a 7% increase. Approximately 43% of that was from the two new office acquisitions. Same-store cash NOI overall was strong at 14% year-over-year, with office consistently strong before, during and post-COVID and retail showing strong signs of recovery. Multifamily was flat primarily year-over-year as a result of higher bad debt expense at our Hassalo on eight departments in Portland, but it was still approximately 5% higher than Q2 2021. As previously disclosed, we acquired Corpus Campus East III on September 10, comprised of an approximately 161,000 square foot multi-tenant office campus located just off Interstate 405 and 520 freeway interchange, less than five minutes away from downtown Bellevue, Washington. The four building campus is currently 86% leased to a diversified tenant base, which we saw as an opportunity when in-place rents were compared to what we were seeing in the marketplace. The purchase price of approximately $84 million was paid with cash on the balance sheet. The going-in cap rate was north of 3% as a result of the existing vacancy. Our expectation based on our underwriting is that this asset will produce a five year average cap rate over 6% and a strong unlevered IRR of 7%. At the end of the third quarter, we had liquidity of approximately $522 million, comprised of approximately $172 million in cash and cash equivalents and $350 million of availability on our line of credit. Our leverage, which we measure in terms of net debt-to-EBITDA was 6.4 times. Our focus is to maintain our net debt-to-EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 3.9 times. The full year range of 2021 is $1.91 to $1.93 per FFO share with a midpoint of $1.92 per FFO share. With that midpoint, we would expect Q4 2021 to be approximately $0.46 per FFO share. The $0.11 estimated difference in Q4 FFO per share would be attributable to the following: approximately a negative $0.025 of FFO per share relating to nonrecurring collection of prior rents at one of our theaters in Q3 that will not occur in Q4 2021. Secondly, our mixed-use properties are expected to be down approximately $0.037 of FFO per share relating to the normal seasonality of the Embassy Suites hotel and the related parking. Third, Alamo Quarry is expected to be down approximately $0.02 of FFO per share relating to the nonrecurring property tax refund that was received in Q3 2021 for 2019 and 2020. And we expect G&A and interest expense to increase and therefore, decrease FFO by approximately $0.02 per FFO share. Our office portfolio grew by approximately 440,000 square feet or nearly 13% in Q3 with the two new office acquisitions. We brought up these assets on board at approximately 92% leased with approximately 20% rolling through 2022, which provides us with the opportunity to deliver start rates from approximately 10% to 30% over ending rents. At the end of the third quarter at One Beach, which remains under redevelopment, our office portfolio is approximately 93% leased with 1.5% expiring through the end of 2021, approximately 9% expiring in 2022 with tour and proposed activity that has increased significantly. In the second and third quarters, we executed 57,000 annual square feet of comparable new and renewal leases with increases over prior rent of 9.2% and 14.5% on a cash and straight-line basis respectively. New start rates for the 2021 rollover are estimated to be approximately 17% above the ending rates. In fact, we are at least documentation for over half of the space rolling in 2021 as start rates nearly 28% over ending rates. New start rates for the 2022 rollovers are estimated to be approximately 18% above the ending rates. Those two buildings represent 80% of the total project vacancy. In addition to One Beach Street and La Jolla Commons previously mentioned by Ernest, construction is nearly complete on the redevelopment of seven Tower Square in the, on our market at Portland, which will add another 32,000 rentable square feet to the office portfolio.

Last night we reported third quarter 2021 FFO per share of $0.57, and third quarter 2021 net income attributable to common stockholders per share of $0.17. Third quarter results are primarily comprised of the following: actual FFO increased in the third quarter by approximately 11.4% on a FFO per share basis to $0.57 per FFO share compared to the second quarter of 2021, primarily from the following four items: first, the acquisitions of Eastgate Office Park in Corporate Campus East III in Bellevue, Washington, on July seven and September 10, respectively, added approximately $0.023 of FFO per share in Q3. The full year range of 2021 is $1.91 to $1.93 per FFO share with a midpoint of $1.92 per FFO share.

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Today, we reported organic revenue decline of 14% in the fourth quarter and 13% for fiscal '21; and adjusted earnings per share of $0.46, down 33% in the quarter, and down 29% to $2.35 for the year. Plasma revenues declined 28% in the fourth quarter and 26% in fiscal '21, as the pandemic continued to have a pronounced effect on the US-sourced plasma donor pool. North America disposables declined by 31% in the fourth quarter, primarily driven by declines in volume and a negative impact from the expiration of pricing on a historical technology enhancement with one of our customers. Sequentially, plasma collection volumes declined by 13% compared with historical average seasonal declines of about 7%, as additional economic stimulus hindered recovery. Despite the environment, we advanced our innovation agenda with the FDA clearance of Persona, which safely yields an additional 9% to 12% of plasma on average per collection. Beyond stimulus, we expect a return to the long-term 8% to 10% growth of the US-sourced plasma collections market, and we see potential to grow in excess of that as customers strive to replenish depleted plasma inventories. Hospital revenue increased 12% in the fourth quarter and 4% in fiscal '21. Hemostasis Management revenue was up 19% in the fourth quarter and 9% in fiscal '21. Transfusion Management was up 9% in the fourth quarter and fiscal '21, primarily driven by strong growth in BloodTrack through new accounts and geographic expansion of SafeTrace Tx. Cell Salvage revenue grew 2% in the fourth quarter and declined 8% in fiscal '21. Our Cell Salvage results in the quarter benefited from the easy comparison with the prior year quarter in China and 80% growth in capital sales as we continue to upgrade our customers to the latest technology. Although excluded from our organic revenue results, Cardiva added close to $8 million of revenue in March, as our teams continue to drive penetration in the top hospital accounts for interventional procedures in the US. Blood Center revenue declined 10% in the fourth quarter and 4% in fiscal '21. Apheresis revenue declined 3% in the fourth quarter and grew nearly 1% in fiscal '21. These benefits were partially offset by the previously disclosed competitive loss that had a $17 million impact on our full year results. Whole blood revenue declined 24% in the fourth quarter and 14% in fiscal '21, driven by lower collection volumes due to COVID-19 and discontinued customer contracts in North America. Chris has already discussed revenue, so I will start with adjusted gross margin, which was 50% in the fourth quarter, a decline of 30 basis points compared with the fourth quarter of the prior year. Adjusted gross margin year-to-date was 50.3%, a decline of 130 basis points compared with the prior year. These inventory-related charges, which relate to CSL's intent not to renew the US plasma disposables supply agreement, had about 220 basis points impact on our fourth quarter and about 60 basis points impact on our fiscal '21 results. The combination of our recent divestitures and our strategic decision to exit the liquid solution business resulted in a net negative impact of 70 basis points on our fourth quarter and about neutral impact on our fiscal '21 adjusted gross margin. Adjusted operating expenses in the fourth quarter were $81.9 million, an increase of $9.2 million or 13% compared with the fourth quarter of the prior year. Adjusted operating expenses for fiscal '21 were $283 million, a decrease of $9.8 million or 3% compared with the prior year. As a result of the performance in adjusted gross margin and adjusted operating expenses, fourth quarter adjusted operating income was $30.5 million, a decrease of $16.8 million or 35%, and adjusted operating income for fiscal '21 was $154.6 million, a decrease of $63.4 million or 29% compared with the prior year. Adjusted operating margin was 13.5% in the fourth quarter and 17.8% in fiscal '21, down 630 basis points and 420 basis points respectively compared with the same periods in fiscal '20. These inventory-related charges and higher variable compensation put downward pressure on operating margins by approximately 500 basis points in the fourth quarter and approximately 100 basis points in fiscal '21. The adjusted income tax rate was 12% in the fourth quarter and 14% in fiscal '21 compared with 18% and 15% respectively for the same periods of the prior year. Fourth quarter adjusted net income was $23.9 million, down $11.5 million or 33%, and adjusted earnings per diluted share was $0.46, down 33% when compared with the fourth quarter of fiscal '20. Adjusted net income for fiscal '21 was $120.7 million, down $50.6 million or 30%, and adjusted earnings per diluted share was $2.35, down 29% when compared with the prior year. The inventory-related charges and higher variable compensation had a downward impact on adjusted earnings per diluted share of $0.18 in the fourth quarter and $0.12 in fiscal '21. During fiscal years '20 and '21, the program-to-date gross savings are approximately $34 million, with the majority of those savings dropping through to adjusted operating income. Cash on hand at the end of the fourth quarter was $192 million, an increase of $55 million since the beginning of the fiscal year. Free cash flow before restructuring and turnaround costs was $99 million in fiscal '21 compared with $139 million in the prior year. Fiscal '21 included a $54.3 million payment for a compensation-related liability as part of the Cardiva Medical acquisition. In addition to free cash flow, the fourth quarter ending cash balance benefited from the completion of a $500 million convertible debt offering, which resulted in a net cash inflow of $439 million. Offsetting the cash inflow during fiscal '21 was $390 million of net cash spent on recent portfolio moves and $82 million of debt repayments, including a $60 million repayment of the revolving credit line that was outstanding at the end of fiscal '20. Our current debt structure includes a $700 million credit facility that does not mature until the first quarter of fiscal '24 with the majority of the principal payments weighted toward the end of the term. At the end of the fourth quarter, total debt outstanding under the facility was $302 million. There were no borrowings outstanding under the $350 million revolving credit line at the end of fiscal '21. During the fourth quarter, we completed a $500 million convertible debt offering. Our EBITDA leverage ratio, as calculated in accordance with the terms set forth in the Company's existing credit agreement, is 3.4 at the end of fiscal '21. The existing $500 million share repurchase authorization will expire at the end of May 2021 with $325 million remaining on the authorization. Our fiscal '22 organic revenue growth is expected to be in the range of 8% to 12%. We remain confident in the continued market growth underlying the commercial plasma business and anticipate Plasma revenue growth of 15% to 25% in fiscal '22. Disposable revenue related to CSL collection volume is included in the guidance for 12 months. In fiscal '21, we recognized disposable revenue in the US from CSL of approximately $89 million. We expect 15% to 20% organic revenue growth in our Hospital business in fiscal '22. The Cardiva Medical acquisition is anticipated to deliver $65 million to $75 million of revenue and is excluded from organic revenue growth until the anniversary of the acquisition date. Our fiscal '22 guidance for Blood Center revenue is a year-over-year decline of 6% to 8%. We expect fiscal '22 adjusted operating margins in the range of 19% to 20% and adjusted earnings per diluted share in the range of $2.60 to $3.00. Our adjusted earnings per diluted share guidance includes an adjusted income tax rate of approximately 21%. In fiscal '22, we expect our Operational Excellence Program to deliver gross savings of approximately $22 million with less than half benefiting adjusted operating income due to inflationary pressures and investments in manufacturing. And by the end of fiscal '22, we anticipate achieving approximately $56 million of gross savings, with about 60% of those savings benefiting adjusted operating income. We also expect our free cash flow before restructuring and turnaround expenses in fiscal '22 to be $135 million to $155 million. We made significant progress to date, which has allowed us to offset some of the headwinds due to the pandemic, and we expect to have close to 60% to 70% of the program completed by the end of our fiscal '22 with the majority of those savings benefiting our adjusted operating income.

Today, we reported organic revenue decline of 14% in the fourth quarter and 13% for fiscal '21; and adjusted earnings per share of $0.46, down 33% in the quarter, and down 29% to $2.35 for the year. The adjusted income tax rate was 12% in the fourth quarter and 14% in fiscal '21 compared with 18% and 15% respectively for the same periods of the prior year. Fourth quarter adjusted net income was $23.9 million, down $11.5 million or 33%, and adjusted earnings per diluted share was $0.46, down 33% when compared with the fourth quarter of fiscal '20. We expect fiscal '22 adjusted operating margins in the range of 19% to 20% and adjusted earnings per diluted share in the range of $2.60 to $3.00.

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For the full year 2019 net income, again excluding investment gains and losses, was $1.84 per share, or $554.2 million, which is essentially flat with 2018. These earnings produced a 10.8% return on beginning equity for 2019 and you compare that to an 11.8% return for 2018. From a growth perspective, net premiums and fees earned, grew by 11.4% in the fourth quarter to $1.6 billion. Premiums and fees grew 5.1%, this was attributable to both our General Insurance as well as our Title operations, which more than offset the expected decline in mortgage guaranty run-off business. Net investment income grew by 2.3% and 4.4% for the fourth quarter and for the full year respectively, as a larger invested asset base and greater dividend income that was attributable to higher yielding equity portfolio, offset a slightly lower yields on our bond portfolio. From an underwriting perspective, this year's fourth quarter and full year consolidated composite ratio of 95.1% was substantially unchanged from 2018. Total cash and invested assets increased by 10.2% to $14.5 billion at the end of 2019. The change was driven by a combination of strong operating cash flow, which totaled $936 million for 2019, as well as substantial unrealized market appreciation for both the fixed income and equity portfolios. Composition of the portfolio remains relatively consistent compared to year-end 2018, whereby 72% is allocated to cash and bonds and the remaining 28% to equities. On a consolidated basis, claim reserves developed without significant favorable or unfavorable development for the 2019 period, and that's compared to favorable development for 2018's fourth quarter and full year of 2.4 percentage point and 1.4 percentage point respectively. Old Republic book value per share increased to $19.98, up 16% for the year. Inclusive of our regular quarterly dividends and the $1 per share special dividend that was paid in the third quarter of last year. The total return on beginning book value amounted to just a little bit above 26%. I will say with regulatory approval, we currently expect to receive a return of capital totaling $150 million from this run off business during the course of 2020. 95.1 composite ratio, the 10.8% return on equity, the 16% increase in book value per share and including dividends a total return on book value of 26%, all for the 2019 year. Quarter-over-quarter operating income was relatively flat while year-over-year operating income was up 1.7%. Net premiums earned in commercial auto rose by 6% year-over-year and this mostly reflects the positive effect of the rate increases that we've been achieving in this line that currently stand in the high teens for the 2019 year. As can be seen in the financial supplement, workers' compensation experienced a 1.9% drop in net premiums earned year-over-year. Quarter-over-quarter the Group's overall composite ratio rose slightly to 98.8 from 98.5, while year-over-year it stands at 97.5 for 2019 compared to 97.2 for 2018. The Group's fourth quarter expense ratio came in at 25.8%, while the full year 2019 expense ratio came in at 25.7% up from 25% in 2018. Turning to claim ratios, our fourth quarter commercial auto claim ratio came in at an elevated 91.3%, with the year-over-year ratio coming in at 84%. Turning to workers compensation, the fourth quarter claim ratio declined to 57.4% from 67.5% quarter-over-quarter. And year-over-year this claim ratio declined from 70.7% in 2018 to 63.2% in 2019. For commercial auto workers' comp and GL combined, given that we typically provide these coverages together to an account, the quarter-over-quarter claim ratio increased by 2.2 percentage points, while year-over-year this claim ratio held relatively steady. All of the claim ratios we report of course, we are inclusive of favorable and unfavorable development, and in the latest quarter we saw unfavorable development of 2.9 percentage points mostly resulting from commercial auto. While year-to-date, the development was unfavorable by 0.4 percentage points. In the fourth quarter, we set an all-time record for underwriting revenues $717 million. For the 5th consecutive year and six of the last seven, we surpassed the $2 billion mark for total revenues. Last year's 2019's $2.53 billion number is an all-time high of favorable prior year claim development continued during the year, albeit at a slower pace than we've seen in the past few years. We surpassed $200 million in pre-tax operating profitability for the fourth consecutive year. Looking at the market when the dust settles, residential mortgage originations are expected to be up about 23% in '19 over '18, exceeding $2 trillion for the year. Refinances accounted for almost 40% of that total or about 70% higher than in 2018. On the commercial side of the business, the MBA predicts that a new record of 628 billion will have been established in 2019 and their optimism actually rises in 2020 as our projections increase about 9% into a new high of $683 billion. Our market share indication, last was 15.1% and when the final numbers are tallied, I think that number will hold for the year. For 2019 our agency premiums were up about 5%, direct operating premiums and fees were up about 12%. Our commercial title operations continue to perform at a high level with title premiums from the source commercial accounting for almost 20% of our total premiums.

On the commercial side of the business, the MBA predicts that a new record of 628 billion will have been established in 2019 and their optimism actually rises in 2020 as our projections increase about 9% into a new high of $683 billion.

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I'm incredibly proud of ResMedians across our global teams, many of whom are working 24/7 to get our products and solutions into the hands of patients who need them most. 2 market share position, announced a recall mid-June that has created unprecedented dislocations in the market. 1 market share position and also trying to meet as much of the No. 2 market share position as possible around the world. We have an incredible Six Sigma Black Belt laden team of supply chain specialists working on these issues 24/7. 1 priority will always be patients, doing our best to help those who need treatment for sleep apnea, for COPD, for the asthma and for other chronic respiratory diseases as well as critical out-of-hospital care. We are still seeing a divergence in total patient flow and sleep lab capacity from 75% to 95% of pre-COVID levels in some countries, up to 100% plus of pre-COVID levels in others. In August, we launched our next-generation device platform that we call AirSense 11 into the United States market. We will be introducing the AirSense 11 into additional countries very soon. Globally, we continue to sell our market-leading legacy platform, the AirSense 10, to be able to maximize the total volume of CPAP, APAP, and bi-levels available for customers. Clearly, the ongoing adoption of both the AirSense 10 and the AirSense 11 platforms remains very, very strong. It's still early into the SirSense 11 launch but initial customer feedback, combined with the detailed responses to our controlled product launch, tells me that the AirSense 11 is also another success for ResMed. I was able to attend the California Sleep Society meeting in person actually during the quarter, and I was able to observe this firsthand the responses to the latest innovations on the AirSense 11, such as personal therapy assistant, care check-in, and the incredible rate of uptake of the patient-centric app called myAir, which has been upgraded for AirSense 11. And the uptake on that is almost double what it was for the myAir app than AirSense 10. What's clear to me is that this platform, the AirSense 11, benefits not only patients and their bed partners. As a two-way digital health comms platform with many technical features of -- that represent significant therapeutic advances, AirSense 11 is not only easy to set up and use, it also offers a very rich patient-centric experience. All AirSense 11 devices are 100% cloud connectable with upgraded digital health technology that is able to increase patient adherence to improve clinical outcomes and to deliver proven cost reductions within healthcare providers and physician's own health systems. With 936 million sleep apnea sufferers worldwide, this work is critical to our mission. Let me now turn to a discussion of our respiratory care business, focusing on our strategy to better serve the 380 million COPD patients and the 330 million asthma patients worldwide. With over 10 billion nights now, 10 billion nights of medical data in the cloud and over 15.5 million, 100% cloud connectable medical devices on bedside tables in 140 countries worldwide, we are unlocking value from these data to help patients, providers, physicians, payers, and entire healthcare systems. Our mission and goal to improve 250 million lives through better healthcare in 2025, drives and motivates me and ResMedians every day. You, our ResMed team, have helped save the lives of many hundreds if not thousands of people around the world with COVID-19 with those emergency needs these last 18 months. Group revenue for the September quarter was $904 million, an increase of 20%. In constant currency terms, revenue increased by 19%. In the September quarter, we estimate the incremental revenue from COVID-19-related demand was approximately $4 million, compared to $40 million estimated incremental revenue from the COVID-19-related demand in the prior year quarter. And excluding the impact of COVID-19-related revenue in both the September 2021 and September 2020 quarters, our global revenue increased by 25% on a constant currency basis. In relation to the impact of our competitors' recall, we estimate that we generated incremental device revenue in the range of $80 million to $90 million in the September quarter. So, taking a look at our geographic revenue distribution and excluding revenue from our Software-as-a-Service business, our sales in U.S., Canada and Latin America countries were $491 million, an increase of 22%. Sales in Europe, Asia, and other markets totaled $315 million, an increase of 23% and or an increase of 21% in constant currency terms. By product segment, U.S., Canada and Latin America device sales were $276 million, an increase of 40%. Masks and then other sales were $215 million, an increase of 5%. In Europe, Asia and other markets, device sales totaled $218 million, an increase of 24% or in constant currency terms, a 22% increase. Masks and other sales in Europe, Asia, and other markets were $97 million, an increase of 21%, or in constant currency terms, an 18% increase. Globally, in constant currency terms, device sales increased by 31% while masks and other sales increased by 8%. Excluding the impact of COVID-19-related sales in both the current quarter and the prior year quarter, global device sales increased by 44% in constant currency terms while masks and other sales increased by 10% in constant currency terms. Software-as-a-Service revenue for the September quarter was $98 million, an increase of 6% over the prior year quarter. For the balance of fiscal year '22, we expect several factors will drive demand, including the general recovery of the global sleep market from COVID-19 impacts, the ongoing launch of our next-generation AirSense 11 platform into markets and geographies, and share gains during our competitors' recall. Based on the latest information available, we continue to expect component supply constraints will limit the incremental device revenue resulting from competitor's recall to somewhere between $300 million and $350 million for fiscal year 2022. Our non-GAAP gross margin decreased by 270 basis points to 57.2% in the September quarter, compared to 59.9% here in the same quarter last year. Our SG&A expenses for the first quarter were $177 million, an increase of 11%, or in constant currency terms, SG&A expenses increased by 10% compared to the prior year period. SG&A expenses as a percentage of revenue have improved to 19.5%, compared to the 21.1% we reported in the prior year quarter. Looking forward and subject to currency movements, we expect SG&A as a percentage of revenue to be in the range of 20% to 22% for this balance of the fiscal year '22. R&D expenses for the quarter were $60 million, an increase of 10%, or on a constant currency basis, an increase of 9%. R&D expenses as a percentage of revenue was 6.6%, compared to 7.3% in the prior year quarter. Looking forward and subject to currency movements, we expect R&D expenses as a percentage of revenue to be in the vicinity of 7% for the balance of fiscal year '22. Total amortization of acquired intangibles was $19 million for the quarter, and stock-based compensation expense for the quarter was around $17 million. Our non-GAAP operating profit for the quarter was $281 million, an increase of 18%, underpinned by strong revenue growth. During the quarter, we finalized the deed of settlement with the Australian Taxation Office, or ATO, covering transit pricing audits for the years 2009 through 2018, and also agreed on transfer pricing principles for the future. And in anticipation of this settlement, we had previously estimated and recorded an accounting tax reserve of $249 million, net of credits and deductions in our FY '21 financial results. In relation to the conclusion of the settlement in the current quarter, we recorded an additional GAAP tax expense of $4 million associated with lower tax credits, which were driven by foreign currency movements. So, on a GAAP basis, our effective tax rate for the September quarter was 21.3% while on a non-GAAP basis, our effective tax rate for the quarter was 20%. Looking forward, we estimate our non-GAAP effective tax rate for the fiscal year '22 will be in the range of 19% to 20%. Non-GAAP net income for the quarter was $222 million, and an increase of 20%. Non-GAAP diluted earnings per share for the quarter were $1.51, an increase of 19%. Our GAAP net income for the quarter was $204 million, and our GAAP diluted earnings per share for the quarter was $1.39. We had negative cash flow from operations for the quarter of $66 million due to the payment of about $285 million to the Australian Taxation Office associated with the deed of settlement. After adjusting for this payment, our operating cash flow for the quarter was $219 million, reflecting robust underlying earnings, partially offset by increases in working capital. Capital expenditure for the quarter was $27 million. Depreciation and amortization for the quarter September totaled $39 million. During the quarter, we paid dividends of $61.2 million. We recorded equity losses of $1.4 million in our income statement in the September quarter associated with the Primasun joint venture with Verily. We expect to then report equity losses of approximately $2 million per quarter through the balance of fiscal year '22 associated with the joint venture operations. We ended the first quarter with a cash balance of $276 million. At September 30, we had $806 million of gross debt and $530 million in net debt. Our debt levels remained modest, and at September 30, we had almost $1.5 billion available for drawdown under our existing revolver facility. Our board of directors today declare our quarterly dividend of $0.42 per share, reflecting the board's confidence in our operating performance.

Group revenue for the September quarter was $904 million, an increase of 20%. Non-GAAP diluted earnings per share for the quarter were $1.51, an increase of 19%. Our GAAP net income for the quarter was $204 million, and our GAAP diluted earnings per share for the quarter was $1.39.

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This quarter, we executed 106,000 square feet of total new leasing volume, the highest level since the first quarter of 2019. As a result, our signed not open ABR of $3 million nearly doubled since last quarter. Today, we have an additional $1.5 million of ABR that is currently in lease negotiations with significantly more in advanced LOI stages. Along with our solid leasing activity, we achieved double-digit growth in our releasing spreads, including a 43% increase on new leases, the highest level since the second quarter of 2018. In fact, since mid-2018, after the new management team started, our new releasing spreads have averaged 30%, with an incremental return on capital of 12%, reflecting the mark-to-market opportunity embedded throughout the portfolio. Each reported impressive quarterly earnings and sales, while Aldi recently announced plans to open 70 new U.S. stores in 2020. Our collection rates in the third quarter showed noticeable improvement, with 87% of base rent and recovery income collected as of October 30. We have seen further improvements in October, with 90% collected thus far, which is ahead of the pace we experienced for September at the same point in time. As a result, our second quarter collections have increased to 76%, up from 65% as reported last quarter. We also continue to collect rent from our local mom-and-pop tenants at a very high rate of 94% in the third quarter. We also believe our relatively lower exposure to this category of just about 10% should provide some shelter from potential future fallout. With our percentage of open tenants by ABR at 94% and October collections sitting at 90%, absent any macro headwinds, we are cautiously optimistic that we will continue to drive collections higher. They recently launched same-day delivery to complement their BOPIS and curbside pickup services that fueled an 89% increase in digital channel sales and the first positive comparable sales growth quarter in almost four years. Today, 10 of our 13 Gap concepts are Old Navy and Athleta. On the tenant risk front, about 3% of our ABR is currently in bankruptcy proceedings, and we expect to retain about half of this amount. During the quarter, we recaptured eight of 15 ascena locations and we're actively working on backfills well before the bankruptcy filing. We have already released one location and are in various stages of negotiations on the remaining 7. In the fourth quarter, we expect to recapture two Stein Mart boxes, representing roughly 60,000 square feet. At just under $11.50 per square foot, we also see a sizable mark-to-market opportunity upon release of those spaces. In total, 4% of our ABR comes from theaters, 3% of which is with Regal, that recently announced that it would temporarily reclose due to a lack of studio releases. We have roughly $95 million of excess cash on our balance sheet that we could strategically and accretively deploy as opportunities arise. Our rent not probable of collection and abatements were roughly $4.5 million in the quarter, which included about $900,000 related to prior quarter billing, primarily our theaters. The clean rent not probable of collection for the quarter was $3.6 million. As detailed on page 33 of our supplemental, our third quarter rent, excluding prior period amounts, is down 7% or $3.7 million versus the pre-COVID first quarter level. The puts are items such as signed not open ABR backlog of $3 million, the $1.5 million of signed not open ABR associated with leases in negotiation and embedded annual contractual rent growth. Regarding third quarter uncollected rent, it's totaled about $6.4 million for the quarter, of which $3.6 million was reserved, as I noted earlier, and $2.6 million was deferred net of reserves, leaving about $200,000 unaddressed. For reference, this is detailed in our supplemental on page 33. During the third quarter, we signed 44 leases covering 279,000 square feet. Blended rent spreads were 10.7% driven by our 43% new lease spread, our highest since mid-2018. We ended the quarter with a leased rate of 93.3%, down 30 basis points sequentially as the effects of COVID-19 begin to impact our occupancy statistics. Given our solid leasing activity during the quarter, our anchor leased rate was actually up 10 basis points from last quarter, fueled by our Nike and Burlington deals at Front Range Village in Fort Collins, Colorado, where we are seeing excellent leasing demand. As Brian noted, our small shop leased rate was impacted this quarter as we recaptured eight ascena spaces, which unfavorably impacted our leased rate by 30 basis points. Bolstered by our rising rent collections of nearly 90% and as a result of liquidity measures we took earlier in the year, we ended the quarter with a healthy cash balance of $220 million, including $125 million of revolver borrowings and $95 million of cash. Our cash balance before debt repayments increased by about $20 million. With our strong third quarter cash flow generation and incremental confidence in our business, we paid off another $50 million of our revolver during the quarter. We entered the third quarter with trailing 12-month net debt to pro forma adjusted EBITDA of 7.2 times, up slightly from 7.0 times last quarter as another COVID-impacted quarter entered the calculation. We remain committed to bringing leverage into our long-term target range of 5.5 to 6.5 times as the impacts of the pandemic move behind us. As I alluded to earlier, and as part of our continuing effort to improve transparency into our business, we have provided a granular breakdown of our first and third quarter recurring revenue and a bridge between reported base rent and recoveries to build an unaddressed rent on page 33 of our supplemental.

Our collection rates in the third quarter showed noticeable improvement, with 87% of base rent and recovery income collected as of October 30. We also continue to collect rent from our local mom-and-pop tenants at a very high rate of 94% in the third quarter. With our percentage of open tenants by ABR at 94% and October collections sitting at 90%, absent any macro headwinds, we are cautiously optimistic that we will continue to drive collections higher.

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To summarize some of the reasons we believe this are about 90% of our net sales are generated by proprietary products and over three-quarters of our net sales come from products for which we believe we are the sole-source provider. We have a little over $4.5 billion as of this quarter -- as of the end of this quarter. Absent any capital market activity or other disruptions, we should have about $4.8 billion cash by the end of September fiscal year. On the divestiture front, during Q3, we completed the sale of three less proprietary businesses for about $240 million. For the first roughly 18 months, Kevin and his team successfully integrated Esterline Technologies, by far, the largest and most complicated acquisition in our history. For the second roughly 18 months, Kevin and his team dealt with the unprecedented COVID-19-generated downturn in our largest market, the commercial aerospace market. In our business, we saw another quarter of sequential improvement in commercial aftermarket revenues with total commercial aftermarket revenues up 6% over Q2. In the commercial market, which typically makes up 65% of our revenue, we will split our discussion into OEM and aftermarket. Our total commercial OEM revenue increased approximately 1% in Q3 compared with Q3 of the prior year. Sequentially, both Q3 revenue and bookings improved approximately 10% compared to Q2. Total commercial aftermarket revenues increased by approximately 33% in Q3 when compared to prior-year Q3. Sequentially, total commercial aftermarket revenues grew approximately 6% in Q3. Now, let me speak about our defense market, which traditionally is at or below 35% of our total revenue. The defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 12% in Q3 when compared with the prior-year period. EBITDA as defined of about $559 million for Q3 was up 32% versus prior Q3. EBITDA as defined margin in the quarter was approximately 45.9%. We are still not in a position to issue formal guidance for the remainder of fiscal 2021. We assume another steady increase in commercial aftermarket revenue in this last quarter of our fiscal year and expect full-year fiscal 2021 EBITDA margin roughly in the area of 44%, which could be higher or lower based on the rate of commercial aftermarket recovery. Organic growth was positive 15% on the quarter. We now anticipate a lower GAAP and cash tax rate in the range of 0% to 3%, revised downward from a previous range of 18% to 22% and an adjusted tax rate in the range of 18% to 20%. On interest expense, we still expect the full-year charge to be $1.06 billion. Free cash flow, which we traditionally define at TransDigm as EBITDA as defined less cash interest payments, capex and cash taxes, was roughly $305 million. And in line with our prior guidance on free cash flow, we still expect this metric to be in the $800 million to $900 million area for our fiscal '21 and likely at the high end of this range. We ended the third quarter with $4.5 billion of cash, up from $4.1 billion at last quarter end. And finally, our Q3 net debt to LTM EBITDA ratio was 7.6 times, down from 8.2 times at last quarter end.

We are still not in a position to issue formal guidance for the remainder of fiscal 2021.

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Most recently we voluntary closed the distribution and fresh-cut facility in Boston, Massachusetts for 10 days, due to team members being diagnosed with the COVID-19. While we did experience a number of challenges in the quarter that softed top line sales, we took several actions to fortify our business and conserve liquidity, including halting our share repurchase program, reducing our dividend by 50%, postponing non-critical capital investments for the second half of 2020 and establishing measures to reduce selling, general and administrative expenses going forward. As you're aware, we have a considerable variability in our $1.1 billion credit line. Our leverage ratio for the first quarter of 2020 was below 3.2 times EBITDA. Adjusted earnings per diluted share were $0.34 compared with adjusted earnings per diluted share of $0.46 in 2019. Net sales were $1,118 million compared with $1,154 million in first quarter 2019, with unfavorable exchange rates negatively impacting net sales by $8 million. We estimate that the COVID-19 pandemic impacted net sales during the first quarter of 2020 by approximately $27 million. Adjusted gross profit was $77 million compared with $95 million in 2019. Adjusted operating income for the quarter was $24 million compared with $41 million in the prior year and adjusted net income was $16 million compared with $23 million in the first quarter of 2019. In regards to the product lines for the first quarter of 2020, in our fresh and value-added business segment, net sales decreased $29 million to $661 million compared with $690 million in the prior year period. And gross profit decreased $19 million to $43 million compared with $62 million in the first quarter of 2019. As compared with our original expectations, the COVID-19 pandemic affected our net sales of fresh and value-added products by an estimated $21 million during the quarter. In our pineapple category, net sales were $102 million compared to $111 million in the prior year period, primarily due to lower sales volume in North America, Asia and Europe as a result of lower production in our Costa Rica and Philippines operations, primarily due to unfavorable growing conditions. Overall volume was 16% lower. Unit pricing was 9% higher and unit cost was 6% higher than the prior year period. In our fresh-cut fruit category, net sales were $118 million in line with the prior year period. Overall volume and unit pricing were in line with the prior year period and unit cost was 1% higher than the first quarter of 2019. In our fresh-cut vegetable category, net sales were $103 million compared with $119 million in the first quarter of 2019. Volume was 12% lower. Unit pricing was 2% lower and unit cost was 5% higher than the prior year period. In our avocado category, net sales increased to $94 million compared with $89 million in the first quarter of 2019, primarily due to higher selling prices in North America as a result of lower industry supplies from Chile. Pricing was 33% higher and unit cost was 44% higher than the prior year period, impacted by start-up costs from our new processing facility in Europe and Mexico. In our vegetables category, net sales decreased to $39 million compared with $42 million in the first quarter of 2019, primarily due to lower sales volume and selling prices as a result of Mann Packing voluntary product recall and lower sales as a result of the COVID-19 pandemic. Unit price was in line with the prior year period and unit cost was 9% higher. In our non-tropical category, which includes our grape, berry, apple, citrus pear, peach, plum, nectarine, cherry and kiwi product lines, net sales increased to $62 million compared with $61 million in the first quarter of 2019. Volume increased to 9%. Unit pricing decreased to 7% and unit cost was 8% lower. Gross profit was impacted by lower sales volume in our meals and snacks product line. In our banana business segment, net sales decreased to $5 million to $427 million compared with the $432 million in the first quarter of 2019, primarily due to lower net sales in Asia, Europe and North America, partially offset by higher net sales in the Middle East. As compared with our regional expectations the COVID-19 pandemic affected banana net sales by an estimated $6 million during the quarter. Overall volume was 1% higher than last year's first quarter. Worldwide pricing decreased 2% over the prior year period. Total worldwide banana unit cost was 1% higher and gross profit decreased to $25 million compared to $35 million in the first quarter of 2019. Selling, general, administrative expenses during the quarter were $53 million compared with $54 million in the first quarter of 2019, mainly due to lower advertising and administrative expenses. The foreign currency impact at the gross profit level for the first quarter was unfavorable by $6 million compared with an unfavorable effect of $3 million in the first quarter of previous year. Interest expense net for the first quarter was $5 million compared with $7 million in the first quarter of 2019 due to lower debt levels and interest rates. Income tax expense was $300,000 during the quarter compared with income tax expense of $9 million in the prior year. The tax provision for the first quarter of 2020 also includes a $2 million benefit related to net operating losses carry back provision allowed through the recently enacted Coronavirus Aid Relief and Economic Security Act, the CARES Act. For the first three months of 2020, our net cash provided by operating activities was $2 million compared with a net cash used in operating activities of $7 million in the same period of 2019. Our total debt increased from $587 million at the end of 2019 to $599 million at the end of the first quarter of 2020. As it relates to capital spending, we invested $17 million on capital expenditures in the first quarter of 2020 compared with $34 million in the same period of 2019.

Adjusted earnings per diluted share were $0.34 compared with adjusted earnings per diluted share of $0.46 in 2019. Gross profit was impacted by lower sales volume in our meals and snacks product line.

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These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The call will be available for replay for 30 days. In the study, 25% of Gen Z teens said they were more likely to attend a career and technical education school due to their pandemic experience. Last fall there was a 7% drop in enrollments in higher education. In a recent article in New York magazine, they make the following case, I quote, "People under the age of 40 are fed up. They have less than half of the economic security than their parents did at the same age" For the first time in our nation's history, a 30-year-old isn't doing as well as his or her parents at age 30. Year-to-date, our Stride career revenue enrollments are up over 120%. The ECMC study I mentioned above, also found that 61% of Gen Z teens believe a skill-based education makes sense in today's world and our Stride career programs offer a clear solution for these students. Tallo now boasts 1.5 million users on their platform. And as we said during our Investor Day in November, we expect this growth and the trends we are seeing in the market to lead to overall career learning revenues, a $650 million to $800 million by fiscal 2025. An approximately 2% to 3% of families were considering a fully online high school option. I just today received results of our most recent study that indicated that, that 2% to 3% had jumped to over 10%. Similarly consideration for online career programs jumped from 15% to 25%. In fact, less than 10% of our normal overall enrollment volume happens before the end of April. Recently a survey we conducted found that over 65% of parents agreed that their children need additional educational curriculum over the summer to make up for lost time due to the pandemic. Given the significant need, this summer we are going to offer free summer career experiences for students in Grade 7 through 12. Revenue for the quarter was $392.1 million, an increase of 52% from last year. Adjusted operating income was $54.9 million, an increase of 146% and capital expenditures were $11.3 million, an increase of $1.9 million versus Q3 last year. Revenue from our General Education business increased $89.2 million or 38% to $322.3 million. General Ed enrollments rose 43% year-over-year, while revenue per enrollment declined 4%. Career Learning revenue rose to $69.8 million, an increase of 191%. Gross margins were 35.5% in the quarter, up approximately 500 basis points from the same period last year. For the full fiscal year, we expect gross margins to be approximately 34% plus or minus 50 basis points. Last November, at Investor Day, I laid out a 2025 goal for gross margin percent of 36% to 39%, and I expect us to get there much faster. Selling, general and administrative expenses in the quarter were $100.5 million, up 58% in the year-ago period. We expect SG&A for the full fiscal year 2021 to be in the range of $420 million to $425 million. Our expectation for fiscal year '21 interest expense is that it will be between $17 million and $18 million including approximately $4 million in cash interest and $12 million in non-cash amortization of the discount on our convertible senior notes, and another $1 million of non-cash amortization of debt issuance costs. EBITDA for the third quarter was $62.2 million, up 89% from the third quarter of fiscal 2020. Adjusted EBITDA was $75 million, up 92% from the same period a year ago. Operating income was $38.6 million, adjusted operating income was $54.9 million, an increase of 146%. Additionally, we are raising our guidance for adjusted operating income to $156 million to $159 million for the full fiscal year 2021, and that's up from our previous guidance of $145 million to $155 million. We ended the quarter with cash and cash equivalent at $329 million, an increase of $70.9 million compared to the second quarter. Capital expenditures for the quarter totaled $11.3 million below the range of $12 million to $15 million we guided to last quarter. We expect full year capex to be in the range of $50 million to $55 million. Our effective tax rate for the quarter was 30.2% and we expect our full year tax rate to be in the 27% to 29% range. Revenue in the range of $1.525 billion to $1.530 billion. Adjusted operating income between $156 million and $159 million. Capital expenditures of $50 million to $55 million and a tax rate of 27% to 29%.

Revenue for the quarter was $392.1 million, an increase of 52% from last year. Career Learning revenue rose to $69.8 million, an increase of 191%. Additionally, we are raising our guidance for adjusted operating income to $156 million to $159 million for the full fiscal year 2021, and that's up from our previous guidance of $145 million to $155 million. We expect full year capex to be in the range of $50 million to $55 million. Revenue in the range of $1.525 billion to $1.530 billion. Adjusted operating income between $156 million and $159 million. Capital expenditures of $50 million to $55 million and a tax rate of 27% to 29%.

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And through our Signet Love Inspire's Foundation, we have donated $1 million to the Red Cross to help provide food, medical attention, and supplies within Ukraine as well as shelter for the millions of refugees fleeing the country. market share to 9.3%, a 270 basis points gain over prior year. This was true in well-established categories like bridal, where Signet is the clear U.S. retail leader with a roughly 30% share, and in lab-created diamonds, where we are widening the gap as the market leader in this new and fast-growing category. In fact, we have permanently reset our margins over the past four years by 200 basis points ahead of where we were before starting our Path to Brilliance journey. In fact, we repurchased more than $270 million in shares since mid-January, and still have over $400 million in authorization remaining. We plan to invest up to $250 million in capital during fiscal '23 to drive our strategies, further enhancing our stores, digital platform, and data analytics advantages. We expect more weddings this year than we've seen in nearly 40 years. More than 75% of American consumers say they are ready to travel and a majority of those are already planning trips for June and July despite the inflated cost of these trips versus pre-pandemic levels. This gives us real-time pricing on more than 450,000 cut and polished stones valued at more than $2 billion. While it's impossible to predict precisely how long it will take the industry to return to its historical average annual growth rate of 2%. In fiscal '22, we increased our advertising budget by more than $180 million, and we expect to continue investing again this year. We hold a 50% share of voice in targeted TV even as we've shifted significantly to a more targeted digital marketing plan. We see this most vividly in North America, where we drove average transaction values up more than 15% and in-store conversion, up nearly 20% versus two years ago. The launch of bantor.com, for example, has driven site traffic up more than 80% compared to last year. Outlets grew nearly 55% compared to last year. In fact, for the year, Jared's average transaction value increased more than 60% compared to the previous year. James Allen increased its fashion category sales more than 95% this year with an average transaction value that is more than eight times our North America average. We only have 22 locations today, and there is clear room for expansion. Accelerating services is the third pillar of our strategy, and our goal is to grow it into a $1 billion business. In FY '22, we advanced toward this goal, delivering $620 million in revenue, up 65% versus prior year. In the fourth quarter, after our relaunch, online attachment increased nearly 400 basis points, and the lifted total attachment 300 basis points versus prior year. That translated into more than 35% revenue growth in extended service agreements this quarter. 40% of customers who make a second purchase within nine months of their initial purchase will make a third purchase in the next six months, building a relationship that only grows stronger over time. In fiscal '22, for example, the average transaction value of a returning customer was 14% higher than a new customer. With over $1.5 billion in e-commerce sales, we are now the largest online specialty jewelry retailer in the U.S., and we are widening the gap. Last year, when the overall retail average NPS in digital declined by 17 points versus prior year to less than 50, Signet's digital NPS improved by eight points to nearly 70. Now 65% of all our customers visit our digital sites during their journey, much higher than pre-COVID. And fully 90% of our highest value customers, those who spend more than $500 with us, engage across our shopping channels, taking advantage of our connected commerce capabilities and services. This year, we acquired 32% more new customers than we did in fiscal '21 as we continue to sharpen our targeting. And we regained 37% more customers who had not shopped with us in more than two years. Over the past four years, we've trimmed over 20% of our fleet. We delivered nearly 500 basis points more in gross margin in fiscal '22 than we delivered four years ago by driving higher sales on lower occupancy costs. And our fiscal '22 annual campaign came to an end with an increased fundraising donation of over 85% versus prior year, a total of $7.6 million bringing our total to nearly $100 million in support over the past 25 years. It's one of the factors driving 90% of our team members to say they are proud of what they achieved every day at Signet. Now for the quarter, we delivered total sales of $2.8 billion, growth of nearly $625 million over last year. Fourth-quarter non-GAAP operating income of $411 million is up from $293.8 million last year. This represents a 14.6% operating margin, up 120 basis points to last year. Reflected in this improvement is 150 basis points of gross margin expansion, led by the continued leverage on fixed costs from our real estate optimization efforts. This was slightly offset by 30 basis points in SG&A from deliberate investments in our holiday advertising strategy and staffing initiatives, both of which, we believe, led to an acceleration of top-line results. This is an area of major progress, and net of cash, our working capital is better by the more than 40% to last year from the following improvements: We drove a 56% improvement in inventory turn versus last year, driven by continued progress of inventory life cycle management as well as the positive impact of fulfillment options like ship from store. To highlight the health of our inventory, clearance and sell-down penetration declined 10 points to last year. And further, we drove a 30% increase in our days payable outstanding. We ended the year with $1.4 billion in cash and overall liquidity of more than $2.6 billion to continue supporting our capital priorities as we look to the year ahead. To that end, we utilized $193 million of cash in fiscal '22 for capital expenditures, fueling our digital and technology advancements as well as differentiating our banners. Looking forward, we expect capital expenditures up to $250 million for fiscal 2023. We have achieved an adjusted debt-to-EBITDAR leverage ratio of 1.9 times this year, which is well within our stated goal of below three times leverage. As a reminder, we entered a $250 million accelerated share repurchase agreement during the fourth quarter, which was completed after the fiscal year end. Currently, $413 million remain under our authorization, and with our current valuation, we are focused on share repurchases. Additionally, we've increased our quarterly common dividend of $0.18 per share to $0.20 per share, a first step in becoming a consistent dividend growth retailer. These changes, expanding operating margins -- expanded operating margin by nearly 200 basis points and gives us the confidence to provide guidance that outpaces our expectation of industry growth and delivers a double-digit operating margin, all despite macro uncertainties. We've transformed our business model to do more with less through the following changes: First, we gained nearly 500 basis points resulting from our real estate optimization strategy. We've cut our fleet by over 20% and also shifted mall stores to more profitable off-mall formats. For example, Kay, our largest banner is now roughly 50% off-mall. Informed by our data analytics, we plan staffing store by store and hour by hour, contributing 300 basis points of margin expansion. And thirdly, we've also invested over 500 basis points of margin to better align Signet with our long-term strategy. With this context, we expect to deliver total revenue in the range of $8.03 billion to $8.25 billion. We expect operating income in the range of $921 million to $974 million. For FY '23, we expect earnings per share in the range of $12.28 to $13 per share. We expect revenue for the first quarter in the range of $1.78 billion to $1.82 billion, with operating income in the range of $177 million to $186 million.

Now for the quarter, we delivered total sales of $2.8 billion, growth of nearly $625 million over last year. With this context, we expect to deliver total revenue in the range of $8.03 billion to $8.25 billion. For FY '23, we expect earnings per share in the range of $12.28 to $13 per share. We expect revenue for the first quarter in the range of $1.78 billion to $1.82 billion, with operating income in the range of $177 million to $186 million.

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All told, we delivered sales growth of 8.2% versus 2019. We outperformed our fiscal 2022 growth goal of 1.2 times the market in the first quarter, delivering the strongest growth versus the market in the last 5-plus years. Gross margin for the quarter was impacted by a high rate of inflation, which increased to approximately 13%. We have improved from posting a loss in Q3 of 2021 to breaking even in Q4 to making more than $60 million of adjusted profit in our Q1 of fiscal 2022. The combination of these results delivered a strong adjusted operating income for the quarter of $685 million and adjusted earnings per share of $0.83. Topic 2, let's turn to our business transformation, which is highlighted on slide five. As shown on slide six, during our first quarter, we successfully closed on the Greco and Sons transaction, which we expect to deliver over $1 billion in incremental sales to Sysco in fiscal 2022, ahead of our deal model expectations. More importantly, we plan to leverage the Greco business model to build a nationwide Italian platform that is the best in the industry, which will further deliver incremental sales beyond the $1 billion just mentioned. Importantly, our first quarter results exceeded our 1.2 times market share growth target for fiscal 2022. As such, we remain committed to growing profitably 1.5 times the market as we exit our fiscal 2024. We leveraged extensive digital marketing and a streamlined hiring process to net more than 1,000 new supply chain associates to bolster our troops. Lastly, you may have seen the recent announcement regarding the Department of Labor's Occupational Safety and Health Administration's requirements for employers with 100 or more employees. The safety of our associates and our customers is our #1 priority, and we remain steadfast in protecting our team. We now have more than 10 consecutive months of gaining market share, and we are on track to deliver our stated goal for the year, growing 1.2 times the industry. And our Recipe for Growth strategy will enable us to accelerate, over the next three years, and grow at 1.5 times the industry by the end of our fiscal year 2024. Our strong first quarter fiscal 2022 financial headlines are: growing demand with sales exceeding Q1 fiscal 2019 by 8.2%; a profitable quarter, exceeding our plans with EBITDA comparable to pre-COVID 2019 levels; aggressive investment by Sysco against hiring a snapback, allowing Sysco to lead the industry in otherwise turbulent times; purposeful investments in working capital to continue to lead in product availability; a strong return to profitability by our international business; and great progress against our balanced capital allocation strategy, including continued investments against the five pillars of our Recipe for Growth and upgrade to BBB of our investment-grade rating by S&P the elimination of all debt covenant restrictions on our ability to repurchase shares or increase our dividend in the future; and a decision that we are announcing today, namely that we have satisfied our internal criteria to commence share repurchase. In the second quarter of fiscal 2022, we will begin our repurchase of up to $500 million of shares over the course of this fiscal year. First quarter sales were $16.5 billion, an increase of 39.7% from the same quarter in fiscal 2021 and an 8.2% increase from the same quarter in fiscal 2019. In the United States, sales in our largest segment, U.S. Foodservice, were up 46.5% versus the first quarter of fiscal 2021 and up 11.6% versus the same quarter in fiscal 2019. SYGMA was up 11.8% versus fiscal 2021 and up 5.1% versus the same quarter in fiscal 2019. Local case volume, within a subset of USFS, our U.S. Broadline operations, increased 23.8%, while total case volume within U.S. Broadline operations increased 28.1%. International sales were up 34% versus fiscal 2021 while also improving sequentially over prior quarters to down less than 1% versus fiscal 2019, indicating that we have more upside to come. Foreign exchange rates had a positive impact of 1.1% on Sysco's sales results. Inflation continued to be a factor during the quarter at approximately 13%. Gross profit for the enterprise was approximately $3 billion in the first quarter, increasing 33.9% versus the same quarter in fiscal 2021 and also exceeding gross profit in fiscal 2019 by 2%. While it is gross profit dollars that count, inflation did impact our gross margin rates for the enterprise during the quarter as it decreased 79 basis points versus the same period in fiscal 2021 and finished at a rate of 18.1%. Adjusted operating expense came in at $2.3 billion with expense increases from the prior year driven by three things: first, the variable costs associated with significantly increased volumes; second, more than $57 million of onetime and short-term transitory expenses associated with the snapback; and third, more than $24 million of operating expense investments for our Recipe for Growth. Together, the snapback investments and the transformation costs totaled approximately $81 million of operating expense this quarter and negatively impacted our adjusted earnings per share by $0.12. Even with those significant snapback and transformation operating expense investments, we leveraged our adjusted operating expense structure and delivered expense as a percentage of sales of 13.9%, an almost 200 basis point improvement from fiscal 2021 and a 64 basis [point] improvement from the same quarter in fiscal 2019. Doing the simple math, if we removed the transitory snapback investments and the transformation investments I referenced earlier, total opex would have been at 13.4% of sales. Finally, for the first fiscal quarter, adjusted operating income increased $320 million from last year to $685 million, putting us basically on par with adjusted operating income for fiscal 2019, even with the snapback investments and the transformation investments. This was primarily driven by a 58% improvement in U.S. Foodservice and strong profitability from international. Adjusted earnings per share increased $0.49 to $0.83 for the first quarter. Perhaps pointing out the obvious, if we extract the $51 million of incremental interest expense we are carrying in Q1 of fiscal 2022, resulting from the COVID-related precautionary bonds we issued in 2020, our adjusted earnings per share results for Q1 of fiscal 2022 would have been more in line with our pre-COVID adjusted earnings per share results for Q1 of fiscal 2019. If you go a step further and exclude both the interest expense and the $81 million of snapback and transformation costs, you really begin to see why we believe that in the long term, Sysco has significant earnings potential. Cash flow from operations was $111 million during the first quarter as we responded to rising sales and purposely invested in inventory in support of managing product availability during the snapback better than the industry. We also purposely invested in longer-lead inventory to support customers such as K-12 schools and healthcare facilities during the snapback, consistent with Sysco's purpose statement. Our net capex spend was $79.4 million and is ramping up as teams submit business cases for investments against the Recipe for Growth. Free cash flow for the first quarter was $31 million. At the end of the first quarter, after our investments in the business, payments of the acquisition price for Greco and our dividend payments, we had $2.1 billion of cash and cash equivalents on hand. In May, we committed to supporting a strong investment-grade credit rating with a targeted net debt to adjusted EBITDA leverage ratio of 2.5 times to 2.75 times, which we continue to expect to hit by the end of fiscal 2022. Later this year, we plan to pay off the $450 million of notes due in June of 2022 and may, should the circumstances warrant it, take further action against our debt portfolio. We also paid our increased dividend of $0.47 per share in July and again in October. As I mentioned earlier, we plan to commence share repurchase activity under the $5 billion share repurchase authority we announced in May at Investor Day beginning in the second quarter. As I stated a moment ago, that will take the form of the repurchase of up to $500 million of shares by the end of the fiscal year. As Kevin highlighted, we expect to continue to grow at or above 1.2 times the market in fiscal 2022. Fiscal 2022 earnings per share will be in the range of $3.33 to $3.53, reflecting the $0.10 increase that we called out last quarter.

Importantly, our first quarter results exceeded our 1.2 times market share growth target for fiscal 2022. First quarter sales were $16.5 billion, an increase of 39.7% from the same quarter in fiscal 2021 and an 8.2% increase from the same quarter in fiscal 2019.

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Our business thrives on in-person collaboration and teamwork, and while we have been quite effective and successful over the last seven-plus months, operating out of 1800 offices around the globe we certainly recognize that our business and our culture operate best when we are physically together. However, as you have seen, announced global M&A volumes nearly doubled in the third quarter compared to the second quarter and increased 38% compared to last year's third quarter in the US. In the US, announced M&A volumes increased more than three-fold versus the second quarter and increased 55% compared to last year's third quarter. Each of the three months of the third quarter both global and US announced M&A transaction volumes were higher than the monthly average of the last two years and in September, global announced monthly volume surpassed $450 billion for only the second time in the past few years. Third quarter adjusted net revenues of $408.5 million and year-to-date adjusted net revenues of $1.36 billion were both flat versus the prior year periods. Third quarter advisory fees of $271.2 million declined 16% year-over-year and year-to-date advisory fees of $966.8 million declined 11% compared to the prior year period. Based on the current consensus estimates and actual results, we expect our market share of advisory fees among all publicly reporting firms, on a trailing 12-month basis to be 8.3% compared to 8.1% at the end of June and 8.3% at year-end 2019. Third quarter underwriting fees of $66.5 million increased more than 275% year-over-year, and the year-to-date underwriting fees of $181.2 million nearly tripled versus the prior year period. Third quarter commissions and related fees of $43.9 million declined 6% year-over-year as the heightened volume and volatility of the first six months of the year subsided. Year-to-date commissions and related fees of $153.4 million increased 12% versus the prior year period. Asset management and administration fees were $16.6 million in the third quarter and $47.1 million for the year. To date, an increase of 11% for the nine months and 7% -- I'm sorry, 11% for the quarter and 7% for the 9 months. Turning to expenses, our adjusted comp ratio for the third quarter and the first nine months of 2020 is 63.6%, the 63.6% accrual for the first nine-months reflects, as it has in past years our estimate for the full year compensation ratio, which includes an estimate of 2020 incentive compensation. Third quarter non-compensation costs of $71 million declined 18% year-over-year and year-to-date non-compensation costs of $230.9 million declined 9% versus the prior period. Third quarter adjusted operating income and adjusted net income of $77.7 million and $52.6 million declined 8% and 13% respectively and adjusted earnings per share of $1.11 declined 12% versus the third quarter of 2019. Year-to-date, operating income and adjusted net income of $262.9 million and $182.2 million declined 18% and 25% respectively and adjusted earnings per share of $3.85 declined 23% versus the prior period. Consistent with that view, our Board declared a dividend of $0.61 a $0.03 per quarter increase which is a 5% increase from the prior quarter. Ed Hyman Evercore ISI's Founder and Chairman was awarded the number one position in economics, a recognition he has earned 40 times. Furthermore, Evercore ISI claimed a record 39 individual positions and tied its 2019 record of 36 team positions. The equity markets are strong for many sectors, access to financing and readily available credit remains, CEO confidence continues to improve and there appears to be greater stability in the markets. As announced, M&A activity increased during the quarter, we sustained our number one league table ranking for volume of announced M&A transactions over the last 12 months, both globally and in the US, among independent firms. Among all firms we were once again number four, in the US in announced volume over the last 12 months. Our US restructuring group has already completed more transactions year-to-date than in all of 2019 and has been involved in nine of the 15 largest bankruptcies by total liabilities year-to-date. We served as an active book runner or co-manager on six of the 11 largest US IPOs in the first nine months of 2020 and we played a key role in 30 underwriting transactions in the third quarter alone. We are very proud to have served as the sole book runner -- our first US book run mandate ever on Executive Network Partnering Corporation's $360 million CAPS IPO. Although it is still early days for us in the convertible space, we have served as an active book runner for Helix Energy Solutions Group's $200 million convertible bond offering during the quarter. For the third quarter of 2020 net revenues, net income and earnings per share on a GAAP basis were $402.5 million, $42.6 million and $1.01 respectively. For the first nine-months of 2020, net revenues, net income and earnings per share on a GAAP basis were $1.3 billion, $130.2 million and $3.09 respectively. Ultimately, we expect to incur separation and transition benefits and related costs of approximately $43 million which reflect a modest increase in the cost for our prior estimate. During the third quarter of 2020, we recorded $7.3 million as special charges, which are excluded from our adjusted results. Year-to-date we have recorded $37.6 million of special charges related to the realignment initiative. Our adjusted results in the third quarter and first nine months of 2020 also exclude special charges of $0.1 million and $2.1 million respectively related to accelerated depreciation expense. Turning to other revenues; in the third quarter other revenues increased compared to the prior-year period, primarily as a result of a gain of approximately $8 million on the investment funds portfolio which is used as an economic hedge against a portion of our deferred compensation program. Other revenues for the first nine months of 2020 decreased versus the prior-year period, primarily reflecting a net gain of $1 million from this portfolio compared to $9.2 million for the first nine months of 2020. Focusing on non-compensation costs, firmwide non-compensation costs per employee approximated $39,000 for the quarter, down 17% on a year-over-year basis. Our GAAP tax rate for the third quarter was 23.5% compared to 28% for the prior year period. On a GAAP basis, our share count was 42.3 million shares for the third quarter, our share count for adjusted earnings per share was 47.4 million shares. Wrapping up and looking at our financial position, we held $1.1 billion of cash and cash equivalents at approximately $100 million of investment securities or $1.2 million of liquid assets as of September 30, 2020. By comparison, at September 30, 2019 we held approximately $305 million at cash and cash equivalents and $620 million of investment securities or $920 million of liquid assets.

Third quarter adjusted operating income and adjusted net income of $77.7 million and $52.6 million declined 8% and 13% respectively and adjusted earnings per share of $1.11 declined 12% versus the third quarter of 2019. Consistent with that view, our Board declared a dividend of $0.61 a $0.03 per quarter increase which is a 5% increase from the prior quarter. The equity markets are strong for many sectors, access to financing and readily available credit remains, CEO confidence continues to improve and there appears to be greater stability in the markets. For the third quarter of 2020 net revenues, net income and earnings per share on a GAAP basis were $402.5 million, $42.6 million and $1.01 respectively.

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dicks.com for approximately 12 months. We are also investing in talent to elevate the in-store service model and are remodeling 18 stores this year. As a member of the outdoor industry, we have also joined forces with other retailers to advocate for conserving 30% of the U.S. lands and waters by 2030. Our Q1 consolidated same-store sales increased 115% as we anniversaried the majority of our temporary store closures from last year. Our strong comps were supported by sales growth of over 100% within each of our three primary categories; the hardlines, apparel and footwear as well as increases in both average ticket and transactions. These results combined translate to a 52% sales increase when combined -- sorry, when compared to the first quarter of 2019. From a channel standpoint, our brick and mortar stores generated significant triple-digit comps, and importantly, delivered an approximate 40% sales increase when compared to 2019 with roughly the same square footage. Our eCommerce sales increased 14%, which was on top of our 110% online sales increase in the same period last year when the vast majority of our stores were closed for over six weeks. This represented nearly a 140% increase when compared to 2019. Within eCommerce, in-store pickup and curbside continued to be a meaningful piece of our omnichannel offering, increasing approximately 500% when compared to BOPIS sales during the first quarter of 2019. These same-day services along with ship from store are fully enabled by our stores which are the hub of our industry-leading omnichannel experience, both serving our in-store athletes and providing over 800 forward points of distribution for digital fulfillment. During Q1, our stores enabled approximately 90% of our total sales and fulfilled approximately 70% of our online sales through either ship from store, in-store pickup or curbside. As a result, we expanded our merchandise margin rate by 787 basis points versus 2020 and 312 basis points versus 2019. In total, our first quarter non-GAAP earnings per diluted share of $3.79 not only represented a 511% increase over Q1 2019, but eclipse our full year 2019 non-GAAP earnings per diluted share of $3.59. During the first quarter last year, we recorded a net loss per share of $1.71 as we temporarily closed our stores to promote the safety of our teammates, athletes and communities. During the quarter, we added more than 30 soccer shops that provide a high level of service from in-store soccer experts who are especially trained to help athletes find the equipment and cleats they need to excel at the game. And during the quarter, we converted more than 40 additional stores to premium full service footwear. Over 50 more stores will be converted by the end of the year, taking this experience to approximately 60% of the DICK's chain. In 2021, we're investing over $20 million to transform our Golf Galaxy stores via combination of elevated experience, industry-leading technology and unmatched expertise through our certified PGA and LPGA professionals. As part of this, we've rolled out TrackMan technology to over 80% of the chain to enhance the fitting and lesson experience. We've also completely redesigned nearly 20 stores. During Q1, over 90% of curbside orders were ready within 15 minutes. And upon checking at the store, 50% were delivered to the athlete's car in under 2.5 minutes. Along with curbside, our ScoreCard program continues to be a key to our omnichannel offering with more than 20 million active members who drive over 70% of our sales. We're using data science to drive more personalized marketing and engagement with our athletes, which is resulting in strong retention of the 8.5 million new athletes we acquired last year. Speaking of new athletes, we acquired nearly 2 million new athletes this past quarter. Consolidated sales increased 119% to approximately $2.92 billion. Including the impact of last year's temporary store closures, consolidated same-store sales increased 115%. This increase was broad-based with each of our three primary categories of hardlines, apparel and footwear comping up over 100%. Transactions increased 90%, and average ticket increased 25%. Compared to 2019, consolidated sales increased 52%. Our brick and mortar stores comped up nearly 190% as we anniversaried last year's temporary store closures. And compared to 2019, increased approximately 40% with roughly the same square footage. Our eCommerce sales increased 14% over last year and increased 139% versus 2019. As a percent of total net sales, our online business was 20%. As expected, this decrease from the 39% of net sales in 2020 given last year's temporary store closures, but increased compared to the 13% we had in 2019. Gross profit in the first quarter was $1.09 billion or 37.3% of net sales and improved approximately 2,100 basis points compared to last year. This improvement was driven by leverage on fixed occupancy cost of approximately 1,000 basis points from the significant sales increase and merchandise margin rate expansion of 787 basis points, primarily driven by fewer promotions and a favorable sales mix. Additionally, last year included $28 million of inventory writedowns, resulting from our temporary store closures, which were subsequently recovered in the second quarter of 2020 due to better than anticipated sales and margin on merchandise nearing the end-of-life upon the reopening of our stores. Compared to 2019, gross profit as a percent of sales improved by 795 basis points, driven by leverage on fixed occupancy costs of 475 basis points due to the significant sales increase and merchandise margin rate expansion of 312 basis points, primarily driven by fewer promotions. SG&A expenses were $608.3 million or 20.84% of net sales and leveraged 940 basis points compared to last year due to the significant sales increase. SG&A dollars increased $205.1 million, of which $21 million is attributable to the expense recognition associated with changes in our deferred compensation plan investment values. The remaining $183 million is primarily due to normalization of expenses following our temporary store closures last year to support the increase in sales as well as higher incentive compensation expenses due to our strong first quarter results. SG&A expenses include $13 million of COVID-related safety costs, which in light of the latest CDC guidance, we expect these costs to decline significantly beginning in the second quarter. Compared to 2019's non-GAAP results, SG&A expenses as a percent of net sales, leveraged 446 basis points from the -- due to the significant sales increase. SG&A dollars increased $122.3 million due to increases in store payroll and operating expenses to support the increase in sales and hourly wage rate investments and COVID-related safety costs as well as higher incentive compensation expenses. Non-GAAP EBT was $477.1 million or 16.35% of net sales, and it increased $684.8 million or approximately 3,200 basis points from the same period last year. More relevantly, compared to 2019, non-GAAP EBT increased $396 million or approximately 1,200 basis points as a percent of net sales. In total, we delivered non-GAAP earnings per diluted share of $3.79. This is compared to a net loss per share of $1.71 last year and non-GAAP earnings per diluted share of $0.62 in 2019, a 511% increase. On a GAAP basis, our earnings per diluted share were $3.41. This includes $7.3 million in non-cash interest expense as well as 9.2 million additional shares that will be offset by our bond hedge at settlement, but are required in the GAAP diluted share calculation. Now looking to our balance sheet, we are in a strong financial position, ending Q1 with approximately $1.86 billion of cash and cash equivalents and no borrowings on our $1.85 billion revolving credit facility. While our quarter end inventory levels decreased 4% compared to the same period last year, our strong flow of products supported Q1 sales growth in excess of our expectations. Net capital expenditures were $57.2 million and we paid $33 million in quarterly dividends. During the quarter, we also repurchased just over 1 million shares of our stock for $76.8 million at an average price of $74.59 and we have approximately $954 million remaining under our share repurchase program, and our plan for 2021 continues to include a minimum of $200 million of share repurchases. As a result of our significant Q1 results, we are raising our consolidated same-store sales guidance and now expect full year comp sales to increase by 8% to 11% compared to our prior expectation of down 2% to up 2%. At the midpoint, our updated comp sales guidance represents a 22% sales increase versus 2019 compared to our prior expectation of up 11%. Non-GAAP EBT is now expected to be in the range of $1 billion to $1.1 billion compared to our prior outlook of $550 million to $650 million, which at the midpoint and on a non-GAAP basis, is up 142% versus 2019 and up 45% versus 2020. At the midpoint, non-GAAP EBT margin is expected to be approximately 10%. In total, we are raising our full year non-GAAP earnings per diluted share outlook to a range of $8 to $8.70 compared to our prior outlook of $4.40 to $5.20. At the midpoint and on a non-GAAP basis, our updated earnings per share guidance is up 126% versus 2019 and up 36% versus 2020.

Our Q1 consolidated same-store sales increased 115% as we anniversaried the majority of our temporary store closures from last year. In total, our first quarter non-GAAP earnings per diluted share of $3.79 not only represented a 511% increase over Q1 2019, but eclipse our full year 2019 non-GAAP earnings per diluted share of $3.59. Consolidated sales increased 119% to approximately $2.92 billion. Including the impact of last year's temporary store closures, consolidated same-store sales increased 115%. As expected, this decrease from the 39% of net sales in 2020 given last year's temporary store closures, but increased compared to the 13% we had in 2019. SG&A expenses include $13 million of COVID-related safety costs, which in light of the latest CDC guidance, we expect these costs to decline significantly beginning in the second quarter. In total, we delivered non-GAAP earnings per diluted share of $3.79. On a GAAP basis, our earnings per diluted share were $3.41. During the quarter, we also repurchased just over 1 million shares of our stock for $76.8 million at an average price of $74.59 and we have approximately $954 million remaining under our share repurchase program, and our plan for 2021 continues to include a minimum of $200 million of share repurchases. As a result of our significant Q1 results, we are raising our consolidated same-store sales guidance and now expect full year comp sales to increase by 8% to 11% compared to our prior expectation of down 2% to up 2%. At the midpoint, our updated comp sales guidance represents a 22% sales increase versus 2019 compared to our prior expectation of up 11%. In total, we are raising our full year non-GAAP earnings per diluted share outlook to a range of $8 to $8.70 compared to our prior outlook of $4.40 to $5.20.

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completion activity steadily improved during the fourth quarter, albeit off a low base, ending the quarter up 67% sequentially in terms of the average frac spread count as reported by primary vision. Our fourth-quarter results reflected 2% sequential growth in revenues and a significant 55% improvement in gross profits before DD&A, reflecting the cost mitigation measures implemented earlier in the year. Partially offsetting these benefits was $2.7 million of severance and restructuring charges. During the fourth quarter, our well site services revenues were up 3% sequentially, and adjusted segment EBITDA margins improved. Our completion services incremental adjusted EBITDA margins came in at 89%. In our downhole technologies segment, revenues continued their recovery and were up 24% sequentially, with adjusted segment EBITDA margins also up nicely. In contrast, revenues in our offshore/manufactured products segment, which is a later-stage business, decreased 4% sequentially due primarily to weaker connector product sales. Segment backlog at December 31, 2020, totaled $219 million, a decrease of 4% sequentially. Our segment bookings totaled $65 million for the quarter, yielding what appears to be an industry-leading book-to-bill ratio of 0.9 times for the fourth quarter and 0.8 times for the year. To that end, we had an exceptional year in 2020, generating $133 million of cash flow from operations. With our significant free cash flow, we materially delevered during the year, reducing our total net debt by $128 million. During the fourth quarter, we generated revenues of $137 million, while reporting a net loss of $19 million, or $0.31 per share. Our revenues increased 2% sequentially, and our adjusted consolidated EBITDA improved significantly due to better cost absorption in our U.S. businesses. For the fourth quarter of 2020, our net interest expense totaled $2.6 million, of which the majority are $1.8 million was noncash amortization of debt discount and debt issue costs. At December 31, our net debt-to-book capitalization ratio was 12.8%, and our total net debt declined $128 million during 2020 through opportunistic open-market purchases of our convertible senior notes and repayments of borrowings outstanding under our revolving credit facility. As Cindy mentioned, on February 10, we announced that we had entered into a new $125 million asset-based revolving credit agreement with a group of our key commercial relationship banks. With a springing maturity 91 days prior to the maturity of any outstanding debt with a principal amount in excess of $17.5 million. Borrowings outstanding under the new revolving credit facility will bear interest at LIBOR plus a margin of 2.75% to 3.25% based on our calculated availability under the facility with a LIBOR floor of 50 basis points. We must also pay a quarterly commitment fee of 0.375% to 0.5% on the unused commitments. At the closing of the new facility, we had approximately $29 million available, which was net of $12 million in outstanding borrowings and $29 million of standby letters of credit. Together with $72 million of cash on hand at the end of December, pro forma liquidity would have been approximately $101 million. At December 31, our net working capital, excluding cash and the current portion of debt and lease obligations, totaled $215 million. In terms of our first-quarter 2021 consolidated guidance, we expect depreciation and amortization expense to total $23 million; net interest expense to total $2.1 million, of which approximately $1 million is noncash; and our corporate expenses are projected to total $8.4 million. In this environment, we expect to invest approximately $15 million in total CAPEX during 2021, which is essentially flat when compared to 2020 spending levels. In our offshore/manufactured products segment, we generated revenues of $76 million and adjusted segment EBITDA of $7.5 million during the fourth quarter. Revenues decreased 4% sequentially due primarily to continued slow connector product sales. Adjusted segment EBITDA margin of 10% compared to 12% margins achieved in the third quarter, reflecting lower revenues and reduced cost absorption. As I mentioned earlier, orders booked in the fourth quarter totaled $65 million with a quarterly book-to-bill ratio of 0.9 times. At December 31, our backlog totaled $219 million. For over 75 years, our offshore/manufactured products segment has endeavored to develop leading-edge technologies, while cultivating the specific expertise required for working in highly technical, deepwater, and offshore environments. While our 2020 bookings were lower than the levels achieved in 2019, our book-to-bill ratio for the year averaged 0.8 times, providing visibility as we progress into 2021. In our downhole technologies segment, our revenues accelerated for the second quarter in a row, increasing 24%, while generating incremental adjusted segment EBITDA margins of 68% sequentially due primarily to cost savings measures implemented at the segment level. Sales trends for our STRATX integrated gun systems and addressable switches continue to gain improved customer acceptance, and we experienced a 49% sequential improvement in international sales of our traditional perforating products. In our well site services segment, we generated $39 million of revenue with sequentially increasing adjusted segment EBITDA. Excluding the Northeast region, revenues increased 20% sequentially. International and U.S. Gulf of Mexico market activity comprised 26% of our fourth-quarter completion service business revenues. The fourth-quarter 2020 U.S. rig count average was 311 rigs, which was up 22% sequentially. As we are now a month and a half into the first quarter of 2021, the average frac spread count has increased by about 26 spreads or roughly 20% since the fourth quarter. We expect 2021 full-year consolidated EBITDA of $35 million to $40 million, with roughly 60% of the total generated in the second half of 2021.

During the fourth quarter, we generated revenues of $137 million, while reporting a net loss of $19 million, or $0.31 per share.

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We are very pleased to report outstanding second quarter results, highlighted by strong growth with net written premium increases of 11.7% or 8.6% on an adjusted basis, excluding the impact of 2020 premium returns, driven by gains across all segments. Operating income of $104 million or $2.85 per share, operating return on equity of 14.7% and a combined ratio of 94.4%. In Personal Lines, we delivered growth of 11.6% in the quarter or 5% excluding the effect of premium returns in the prior year period. We grew our Commercial Lines business by 11.7%, driven by the strong performance of our specialty portfolio as well as our small commercial business, which benefited from the economic recovery and is beginning to see the impact of the rollout of our new quote-and-issue platform, TAP sales. Our efforts to selectively apply rate adjustments where warranted have been very successful, as demonstrated by our sequential PIF growth of 1.8% in auto and 1.7% in home during the quarter. Account business represents over 85% of our overall book, leading to a high level of retention and business stability. We executed extremely well on our strategic priorities, posting growth of 12% in Specialty and 11% in Core Commercial, driven by a pickup in new business, rate increases and exposure growth. In the second quarter, we launched this new platform in an additional nine states, bringing the total to 20 states, and we complete the implementation countrywide for our first product business owners advantage by year-end. The efficiency gains are substantial, enabling the quoting and an issuance of a single location risk in 50% of the time it required before. We achieved rate increases of 6.5% in Core Commercial and sustained strong retention at 84.9%. We achieved rate increases of 8.5% in Specialty, up from 7.5% in the first quarter. For the second quarter, we reported net income of $128.5 million or $3.52 per diluted share compared with net income of $115.2 million or $3.01 per diluted share in the second quarter of 2020. After-tax operating income was $104 million or $2.85 per share compared with $62.7 million or $1.63 per share in the prior year quarter. Book value per share increased 4.8% in the quarter driven by earnings and to a lesser extent, an increase in unrealized gains in our fixed income portfolio. We are pleased with our overall combined ratio of 94.4% in the second quarter of 2021 compared to 96.2% in the prior year quarter, which, a year ago, reflected several large catastrophe events, including losses from social unrest. In the second quarter 2021, we incurred catastrophe losses of $76.8 million or 6.5% of net earned premium, 40 basis points above our quarterly expectation, primarily reflecting severe wind, torrential rain and hail events throughout the Midwest in June on the heels of a very light April and May. Prior year reserve development, excluding catastrophes, was favorable in the quarter, adding $12.6 million to the bottom line, primarily reflecting continued favorability in workers' compensation, Personal Auto and several Specialty lines. Our expense ratio for the second quarter of 2021 was 31.2%. We are confident that we can deliver a 30 basis point expense ratio improvement for full year 2021. Overall, current accident year combined ratio ex-CAT was 89% in the quarter. Our Commercial Lines combined ratio, excluding catastrophes, was 89.5%, up 2.7 points from the second quarter of last year, primarily reflecting a comparison to an extraordinarily low level of losses in the second quarter of last year. Our CMP current accident year loss ratio, excluding catastrophes, was 57.6%, in line with most recent trends but slightly elevated compared to our expectations, driven by a higher incidence of property large losses. In other Commercial Lines, the current accident year loss ratio, excluding catastrophes, was 55.3%. Current accident year loss ratio was 61.5%, which was generally in line with recent historical results. Commercial Lines net written premiums grew exceptionally well at 11.7% in the second quarter, powered by our small commercial and Specialty businesses. We achieved strong operating metrics, including improved rate, meaningful increases in exposures, return to strong new business growth and a solid core commercial retention of 84.9%. Our combined ratio, excluding catastrophes, was quite low at 85.3%, but up from 76.8% in the same period last year reflecting the benefit of COVID-19 related auto claims frequency declines. Our Personal Lines auto current accident year loss ratio, excluding catastrophes, was 62.2% below historical trends, but up slightly from 60% in the first quarter. Personal Lines net written premiums grew 11.6% in the quarter or 5% adjusted for last year's premium returns. Our net investment income was $75.6 million for the quarter, up $17.9 million or 31% from the prior year period. Net investment income in the second quarter of 2020 was adversely affected by a $4.6 million loss on limited partnerships, while partnership income in the second quarter of 2021 was $16 million, exceeding our expectations by $9 million. Cash and invested assets at the end of the second quarter were $9.1 billion, with fixed income securities and cash representing 85% of the total. Our fixed maturity investment portfolio has a duration of five years and is 96% investment grade. Net unrealized gains on the fixed maturity portfolio at the end of the second quarter 2021 were $357.8 million before taxes. Our book value per share of $88.23 reflects an increase of 4.8% in the quarter. Through July 26, 2021, we repurchased approximately $10 million of stock, leaving about $395 million of capacity under our stock repurchase authorization that the Board expanded in May. In addition, during the quarter, we paid a regular cash dividend of approximately $25 million. With two quarters of better-than-expected ex-CAT combined ratio performance, we are improving our full year 2021 ex-CAT combined ratio outlook from 90% to 91% to 89% to 90%. As noted earlier, we remain on track to reduce our expense ratio by at least 30 basis points in 2021 to 31.3% and we expect our third quarter cat load to be 5.2%.

Operating income of $104 million or $2.85 per share, operating return on equity of 14.7% and a combined ratio of 94.4%. For the second quarter, we reported net income of $128.5 million or $3.52 per diluted share compared with net income of $115.2 million or $3.01 per diluted share in the second quarter of 2020. After-tax operating income was $104 million or $2.85 per share compared with $62.7 million or $1.63 per share in the prior year quarter. We are pleased with our overall combined ratio of 94.4% in the second quarter of 2021 compared to 96.2% in the prior year quarter, which, a year ago, reflected several large catastrophe events, including losses from social unrest.

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Sarah has been with Genworth for 10 years and she held several leadership roles in Genworth's finance organization. Genworth's U.S. GAAP net income for the full year was $904 million. Adjusted operating income for 2021 was $765 million. Adjusted operating income was $1.48 per share, which is well above analysts' expectations and our own internal projections. These outstanding results were led by a record year for NAT and adjusted operating income available to Genworth shareholders in 2021 was $520 million. Full year adjusted operating income for U.S. life and runoff combined was $321 million, led by strong LTC adjusted operating income of $445 million for the year. We have included our statutory information through September 2021 on pages 15 and 16 of the investor deck. life statutory after-tax net income for the full year to be approximately $660 million. The strong net income result was driven by outstanding results for LTC, with pre-tax statutory income of approximately $910 million in 2021. We expect GLIC's capital and surplus to increase from $2.1 billion at the end of 2020 to approximately $2.9 billion at year-end 2021. Similarly, GLIC's negative unassigned surplus is expected to improve from negative $1.8 billion to approximately negative $1.0 billion at year-end. GLIC's RBC ratio at year-end 2021 is projected to be approximately 290, an increase of approximately 61 points from 229 at the end of 2020. Genworth's board considered several different options for Enact in 2021, including selling 100% of Enact, maintaining 100% ownership before deciding ultimately to move forward with a partial IPO. Genworth therefore decided to proceed with a partial IPO and sold approximately 18.4% of Enact shares, which we believe was the best viable option for shareholders. Genworth's 81.6% retained interest will allow us to receive significant future cash flows from Enact to enable delevering at Genworth and return of capital to Genworth shareholders. I'm extremely proud of the significant progress achieved in 2021 on our second strategic priority, which is to reduce Genworth's holding company debt to approximately $1 billion. We reduced our outstanding debt by approximately $2.1 billion last year, including paying off the AXA promissory note and redeeming the $400 million of parent holding company debt due in 2023. We now have approximately $1.2 billion of parent holding company debt outstanding. However, because Genworth ended the fourth quarter with cash of $356 million, our net debt position is already below $1 billion. Our U.S. GAAP debt to capital ratio at the end of the year was 13%, one of the lowest among life insurers that report this metric. After we retire the remaining of Genworth's $280 million of debt due in 2024, our pro forma cash flow coverage will be approximately five times based on a conservative view of projected future cash flows. We are hopeful that with a substantial reduction in outstanding parent holding company debt in 2021, our improved cash interest coverage ratio, significant excess cash available to repurchase our outstanding 2024 debt, the long duration of the remaining 2034 and 2066 debt and the expectation of continued strong U.S. statutory net income that the rating agents will continue to upgrade the parent debt ratings over time. During 2021, Genworth delivered a new record for approved LTC rate increases of $403 million from 45 states on 173 separate rate filings. The net present value of the 2021 LTC rate increases was approximately $2.3 billion. Our 2021 LTC margins remain positive, in the $0.5 million to 1 -- $0.5 billion to $1 billion range, and the assumption update did not cause a financial statement impact in the quarter. In addition to the approximately $2.3 billion NPV benefit from the $403 million of approved increases in 2021, the models project based on the latest assumption changes that the NPV achieved since 2012 has improved by an additional $2.8 billion compared to our earlier projections. As of the end of 2021, Genworth now projects that the LTC premium increases and benefit reductions achieved since 2012 have improved the legacy LTC portfolio by $19.6 billion on a net present value basis. This is a $5.1 billion increase from the $14.5 billion that reported at the end of 2020. If we can achieve both objectives, it would facilitate the future spinoff of Genworth's 81.6% of Enact because the remaining Genworth business would be viable as a stand-alone public company. Joost has approximately 30 years of experience in the insurance industry. Joost worked with me at ING Group for over a decade, including stints helping me oversee ING's worldwide insurance and investment management businesses in over 40 countries and restructuring ING's very large side agency distribution channels in the emerging markets in Asia, Latin America and Eastern Europe. Acquired by Genworth in 2008, CareScout is a market leader in providing LTC care assessments and care support through our network of 35,000 clinicians nationwide. We see tremendous potential in the business as part of our LTC growth strategy, so we are making an investment of approximately $8 million in CareScout in the first quarter to expand its clinical assessment capabilities in care support solutions. We expect this investment to triple the annual assessment revenues in the next few years to approximately $30 million. Legacy LTC products were sold pursuant to a regulatory regime designed to make premium adjustments difficult to obtain even though it is impossible to price products with assumptions that will hold, and of course, they did not hold for 30 to 40 years. The product has a maximum lifetime benefit of $250,000, and the pricing assumptions for the key LTC risk were interest rates, lapses, morbidity and mortality are based on Genworth's current experience and projections for these factors. However, because we understand that these pricing assumptions may not hold over the next 30 to 40 years, we will only write new business in states that will allow annual rerating to change premiums if pricing assumptions and market reality differ over time. We expect that 75% of the risk with a new LTC product will be reinsured with the A+ rated reinsurer, though the level of reinsurance that we expect to be reduced to 50% over time. Given that our net debt position is now below $1 billion, and we expect Enact to share their dividend policy later this year, we plan to consider initiating a capital management program later in 2022. The fourth quarter was another excellent quarter for Genworth, with net income of $163 million and adjusted operating income of $164 million or $0.32 per share. In this quarter alone, we fully retired $400 million of debt due in August 2023 and reduced our February 2024 debt maturity by $118 million for a total of $518 million. Even with this debt management activity, we ended the quarter with a solid holding company cash and liquidity position of $356 million. For the fourth quarter, Enact reported adjusted operating income of $125 million to Genworth and a strong loss ratio of 3%, driven in part by a $32 million pre-tax reserve release on pre-COVID delinquencies. I'll note that Genworth's fourth quarter adjusted operating income excludes 18.4% of minority interest, which accounted for $29 million of adjusted operating income. Last quarter, minority interest accounted for only $4 million of adjusted operating income due to the timing of the initial public offering in September. Enact saw a 9% year-over-year increase in insurance in-force growth, driven in part by $21 billion of new insurance written in the quarter. In addition, Enact finished the quarter with an estimated PMIER sufficiency ratio of 165% or approximately $2 billion of published requirements. Subsequent to the quarter, in January, Enact executed an excess of loss reinsurance transaction, which will cover the 2022 production and is expected to provide approximately $300 million in PMIERs credit. The $1.23 per share dividend generated $163 million for Genworth. We reported $41 million of adjusted operating income in the quarter, driven by the continued strength of LTC earnings from the multiyear rate action plan and variable investment income. Results in the quarter also included charges in our term universal life and universal life insurance products of $102 million related to assumption updates and DAC recoverability testing. In our long-term care insurance business, we reported strong results with fourth quarter adjusted operating income of $119 million compared to $133 million reported in the prior quarter and $129 million in the prior year. This reserve reduced LTC earnings by $121 million after tax during the quarter. As of year-end, the pre-tax balance of the profits followed by losses reserve was $1.3 billion, up from $625 million at year-end 2020. Our fourth quarter adjusted operating earnings from in-force rate actions were $296 million after tax and before applying profits followed by losses, which increased from $225 million in the fourth quarter of 2020. The legal settlement on our LTC choice one policy forms continued to favorably impact our results by $57 million or $14 million after profits followed by losses this quarter. The choice one legal settlement applies to approximately 20% of our LTC policyholders. As of quarter end, approximately 65% of the settlement class had reached the end of this election period. The one for our PCS 1 and PCS 2 policy forms comprises approximately 15% of our LTC policyholders and is subject to final court approval. Additionally, we've reached an agreement in principle for a settlement on our choice two policy forms, which covers approximately 35% of our LTC policyholders or as many policies as the two other settlements combined. During the quarter, we received approvals impacting approximately $223 million of premiums with a weighted average approval rate of 36%. On a year-to-date basis, we received approvals impacting nearly $1.1 billion in premiums with a weighted average approval rate of 37%. This is favorable compared to the prior year when we received approvals impacting $1 billion in premiums with a weighted average approval rate of 34%. We made a minimal adjustment to our previously established COVID-19 mortality reserve for the quarter, decreasing the cumulative balance to $134 million. In the fourth quarter, given the gradual increase in incidents, we reduced our COVID-19 IBNR claim reserve by $34 million, resulting in a cumulative balance of $75 million. The combined margin was approximately $500 million to $1 billion, which is consistent with the prior year's range. Since margin testing remained positive, we're not required to increase our LTC active life reserves for policies not yet on claim as the model benefit from adjustments to our multiyear rate action plan offsets the approximately $4 billion impact from the assumption updates. As evidenced on page 13, 44% of policyholders have selected reduced benefit or non-forfeiture options, which reduces our long-term risk. We now project the need in aggregate for approximately $28.7 billion in LTC premium increases and benefit reductions on a net present value basis, which is important in our progress toward achieving economic breakeven on our legacy LTC block. While this amount has increased as a result of the assumption update, we are over two-thirds of the way there, having achieved $19.6 billion in rate actions since 2012. The $19.6 billion we've achieved has grown significantly since last year, in part because of the value of our 2021 rate action approvals of $2.3 billion. Additionally, the benefit utilization trend assumption update for higher cost of care growth increased the value of our previously achieved rate actions by $2.8 billion. The remaining amount we have left to achieve is $9 billion, which has grown from last year, largely to offset the unfavorable impact from the assumption updates. We reported a fourth quarter adjusted operating loss of $98 million compared to operating losses of $68 million in the prior quarter and $20 million in the prior year. The fourth quarter included approximately $27 million after tax and COVID-19 claims based upon death certificates received to date. As part of our annual assumption review, we made assumption updates on the term universal and universal life products as well for both mortality and interest rates, which resulted in a combined unfavorable impact of $70 million in the fourth quarter. In our universal life products, we recorded a $32 million after-tax charge for DAC coverability testing compared to $30 million in the prior quarter and $50 million in the prior year. In fixed annuities, adjusted operating earnings of $20 million for the quarter included the benefit from favorable mortality in the single premium immediate annuity products. In the runoff segment, our adjusted operating income was $16 million for the fourth quarter compared to $11 million in the prior quarter and $13 million in the prior year. We expect consolidated capital in Genworth Life Insurance Company, or GLIC, as a percentage of RBC to be approximately 290% at December 31, in line with the 291% at September 30. This is due in part to the expected negative impacts of the life assumption updates and cash flow testing offset by the $170 million statutory capital benefit from the life block reinsurance transaction completed in the quarter. RBC is significantly higher than the 229% at December 31, 2020, due primarily to the favorable LTC statutory earnings in the year. We expect GLIC consolidated year-end capital in surplus to be close to $3 billion as we've seen a strong trend throughout the year. Pages 15 and 16 highlight recent trends in statutory performance for LTC and GLIC consolidated on a quarter-lag basis due to the timing of when statutory results are finalized. Rounding out our results, we reported an adjusted operating loss in the corporate and other segment of $18 million, which was an improvement of $31 million from the prior year, reflecting lower interest expense given the reduction of holding company debt, as well as lower corporate expenses. We ended the quarter with $356 million of cash and liquid assets. Page 17 provides a detailed cash activity for the quarter. Key items in the quarter included the debt reduction of $518 million of principal, the dividend from Enact of $163 million, and $75 million in the intercompany cash tax payments, reflecting strong underlying taxable income from Enact and the U.S. life insurance business. The holding company received $370 million in cash taxes in 2021. We will continue to utilize holding company tax assets in 2022 and anticipate that the holding company will receive approximately $200 million in cash taxes in 2022, subject to ultimate taxable income generated. For the full year 2021, net income was very strong at $904 million versus $178 million in 2020, and adjusted operating income was $765 million versus $310 million in 2020. Enact contributed $520 million in adjusted operating earnings to Genworth in 2021, and we're very pleased with LTC's $445 million in adjusted operating earnings. While statutory results are still in progress, we estimate full year after-tax statutory net income for the U.S. life insurance business of $660 million, driven by LTC's estimated $910 million of pre-tax statutory income. Throughout 2021, we improved our financial strength and flexibility each quarter, putting up strong operating results, driving efficiencies to reduce our annual run rate expenses by approximately $75 million, maximizing the value of our assets and reducing our debt and overall cost of capital. We retired over $2 billion in debt, including the AXA promissory note and of approximately $1.2 billion of parent holding company debt remaining as of year-end. We plan to retire the remaining 2024 debt of $282 million ahead of its maturity date. After we retire the 2024 debt, our next debt maturity will be more than a decade away in 2034, and we would expect cash interest coverage to be approximately five times based on a conservative view of projected cash flows, which will be great progress. While it has been over 13 years since Genworth returned capital to shareholders, we plan on announcing more specific capital management plans later this year given the tremendous improvement in our financial condition achieved in 2021. The timing is dependent on redeeming the remaining $282 million of debt due in 2024 and Enact's announcement of its future dividend policy.

The fourth quarter was another excellent quarter for Genworth, with net income of $163 million and adjusted operating income of $164 million or $0.32 per share.

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Whirlpool's 110 year history is rooted in our value-driven commitment to our shareholders, employees, consumers and communities in which we operate. 2020 marked our 14th time on the list in the last 15 years. We delivered strong organic net sales growth of over 10% driven by solid industry demand across the globe. Additionally, we delivered ongoing EBIT margin of over 11%, a second consecutive quarter of double-digit margins and a year-over-year expansion of 410 basis points. We took immediate and decisive action as we announced and executed our $500 million plus cost takeout program. And structural and sustained positive demand trends and the exceptional execution of our COVID-19 response strategy resulted in record ongoing earnings per share of $18.55, a 16% improvement compared to the prior year, above our previous guidance. Record ongoing EBIT margin of 9.1%, a 220 basis point improvement and a 25% increase in total EBIT compared to the prior year. And record free cash flow of approximately $1.25 billion with positive free cash flow in North America, Latin America and Europe. We reduced our gross debt leverage to 2.3 times making progress toward our long-term target of 2 times. We delivered a return on invested capital of approximately 11%, representing the fourth consecutive year of improvement as we realize the benefit of continued EBIT margin expansion at an optimized asset base in our Europe region. In the fourth quarter price-mix delivered 375 basis points of margin expansion, driven by reduced promotional investment and mix benefit as consumers invest in their homes. Additionally, we delivered on our cost takeout program positively impacting margin by 125 basis points. Further, reduced steel and resin cost resulted in a favorable impact of 125 basis points. In North America, we delivered 4% revenue growth driven by continued strong demand in the region. Additionally, the region delivered year-over-year EBIT improvement of $29 million led by increased demand and strong cost takeout. Net sales increased 5% with organic net sales growth of 28% led by strong demand in Brazil. The region delivered very strong EBIT margins of 12% with continued strong demand and disciplined execution of go-to-market actions, offsetting significant currency devaluation. Based on our internal model for industry and broad economy we expect global industry growth of 4%. It is with confidence that we provide our '21 guidance, which reflects our fourth consecutive year of record earnings per share and significant top line growth. We expect to drive net sales growth of approximately 6% as we capitalize on strong demand and share gains in all regions. Additionally, we expect to deliver above 9% ongoing EBIT margin and deliver free cash flow of $1 billion or more. Turning to Slide 14, we show the drivers of our 9% plus ongoing EBIT margin guidance. We expect price mix to deliver approximately 100 basis points of margin expansion through three key initiatives, one, disciplined execution of our go-to-market actions, two, recently announced cost-base price increase in Brazil, Russia, and India and, three, new product launches. Next, we expect net cost to positively impact margin by 150 basis points. We expect raw material inflation to negatively impact margin by 150 basis points, led by higher steel and resin cost. Further, as we continue to invest in the future, we expect increased marketing and technology investments to drive a negative margin impact of 50 basis points, while unfavorable currency, primarily Latin America, expected to impact margin by approximately 50 basis points. In total, we expect these actions to deliver 9% plus ongoing EBIT margin, an EBIT improvement of over $100 million compared to the prior year. In EMEA, we expect a continued recovery in the first half of the year to support strong growth, while in Latin America, we expect modest growth of 2% to 4% as the benefits from government stimulus in Brazil are lessened. Asia industry is expected to accelerate by 6% to 8% as the region rebounds from prolonged shutdowns in 2020. Regarding our EBIT guidance, we expect very strong margins of 15% or more in North America. In EMEA, we expect the strategic actions laid out during our 2019 Investor Day to drive EBIT margin expansion of over 250 basis points and a full-year EBIT margin of over 2.5%. In Latin America, we expect to deliver EBIT margins of 7% or higher. Lastly, we expect to achieve EBIT margins of 2% or higher in Asia, driven by demand recovery. We expect another year of very strong cash earnings of approximately $2 billion, driven by sustained EBIT margins. We anticipate restructuring cash outlays of approximately $225 million primarily due to the impact of COVID-19-related restructuring actions executed in 2020 and the exit of our Naples, Italy operations. Overall, we expect to drive free cash flow of $1 billion or more as we focus on continuing to deliver record EBIT margin levels and prioritizing our capital investments. We expect to invest over $1 billion in capital expenditures and research and development, highlighting our commitment to driving innovation and growth in the future. Lastly, we have a clear line of sight to delivering on our long-term goal of gross debt to EBITDA up 2 times. In North America, we delivered nearly 16% EBIT margins for the full year, significantly above our long-term margin goal for the region of 13% plus. And finally, we delivered record free cash flow of $1.25 billion or 6.4% of sales, above our long-term goal of 6% of sales.

It is with confidence that we provide our '21 guidance, which reflects our fourth consecutive year of record earnings per share and significant top line growth. We expect to drive net sales growth of approximately 6% as we capitalize on strong demand and share gains in all regions. Additionally, we expect to deliver above 9% ongoing EBIT margin and deliver free cash flow of $1 billion or more. Asia industry is expected to accelerate by 6% to 8% as the region rebounds from prolonged shutdowns in 2020. Overall, we expect to drive free cash flow of $1 billion or more as we focus on continuing to deliver record EBIT margin levels and prioritizing our capital investments. We expect to invest over $1 billion in capital expenditures and research and development, highlighting our commitment to driving innovation and growth in the future. And finally, we delivered record free cash flow of $1.25 billion or 6.4% of sales, above our long-term goal of 6% of sales.

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Earnings were $1 billion or $a 1.73 per diluted share, an increase of a $1.28 over the last year. Importantly, purchase volume increased a strong 8% over last year with a substantial increase in purchase volume per account of 18%. While we're seeing strong trends on purchase volume, loan receivables were down 7% to $76.9 billion given elevated payment rates with the infusion of additional stimulus this quarter. Though, average balances per account have rebounded, increasing 1% over the first quarter of last year, as our new accounts which were up 3%. Net interest margin was down 117 basis points to 13.98% as further stimulus continue to elevate payment rates, which lowered our receivable mix and yield. The efficiency ratio was 36.1% for the quarter. We are on track with our strategic plans to reduce our expense base by moving $210 million of expenses by the end of the year. The net charge-offs were 3.62% this quarter compared to 5.36% last year. Deposits were down $1.9 billion or 3% versus last year. Total deposits comprised 81% of our funding as our direct deposit platform remains an important funding source. During the quarter we returned $328 million capital through share repurchases of $200 million and $128 million in common stock dividends. We expect that exiting this partnership and redeploying the capital will be earnings per share neutral relative to current program economics and accretive to proposed renewal terms. Approximately 60% of our applications were done digitally during the first quarter and we grew 14% in mobile channel applications. In retail part 50% of our sales occurred online and approximately 65% of payments were made digitally. During the quarter, we renewed 10 programs including American Eagle, Ashley HomeStore, CITCO, and Phillips 66. We also added 10 new programs including Prime Healthcare, Mercyhealth and Emory Healthcare, which furthers our penetration of health systems. We have unparalleled scale and depth in this space with $9.3 billion in receivables and acceptance of approximately 250,000 enrolled provider health and wellness retail locations. The card is used by more than 8 million cardholders. We earn more than 80% of dental offices nationwide and over 40 healthcare specialties, 13 of which we entered into since 2018. We see big opportunity in health systems and hospitals and have rapidly expanded our reach by launching eight new programs in 2020, bringing our total to 13. With the growth in our pet vertical, we are now in over 85% of that practices and have grown pets and force by 174% since our acquisition of the Pets Best insurance business two years ago. Our cardholders give us high marks as we have increased our customer satisfaction score to 92% from 78% back in 2009. Our net promoter score is nearly double the credit card industry average, and is proof the value our cardholders placed on the card we've been able to increase our repeat sales to nearly 60%. Our receivables have increased 44% in seven years. We have also increased the breadth of our business with an increase in provider locations of 41% in that time frame, and active accounts currently stand at 5.7 million, another double-digit increase in seven years. This translates to a significant opportunity of more than $405 billion in out-of-pocket health expenditures in the U.S., but flexible and extended financing is only a small component of overall healthcare payments. CareCredit is already accepted at more than 17,000 pharmacies nationwide and we recently announced that we will become the issuer of the Walgreens co-branded credit card program in the U.S., the first such credit program in the retail health sector and expect to launch the new program in the second half of 2021. Americans spend more than $100 billion on expenditures. Purchase volume an increased 8% versus last year and exceeded our expectations for the quarter. This is evident in the increase in purchase volume per account which is up 18% over the last year. Average active accounts were down 8%, which marks a slowing in the rate of decline that remains impacted by the macroeconomic effects of the pandemic in 2020 and uneven recovery in the first quarter. We did originate over 5 million new accounts, an increase of 3% versus the first quarter 2020 which is a positive sign and reflective of improved consumer sentiment. Loan receivables declined 7% which was worse than our expectations. Interest and fees on loans were down 14% from last year, driven by the elevated payment rate in addition to lower delinquencies. Dual and co-branded cards accounted for 38% of the purchase volume in the first quarter and increased 6% in the prior year. On loan receivable basis, they accounted for 23% of the portfolio and declined 10% from the prior year. RSAs increased $63 million or 7% from last year. RSAs as a percentage of average receivables was 5.1% for the quarter. This coupled with lower net charge-offs resulted in a significant decrease in the provision for credit losses of $1.3 billion or 80% from last year. Other income increased $34 million, due to investment income. Other expenses decreased $70 million or 7% from last year due to lower operational losses and lower marketing costs, partially offset by an increase in employee costs. In Retail Card, loan receivables declined 9%, that show momentum with purchase volume increasing 11% versus last year. Average active accounts were down 7% and interest in fees were down 16% due to the impact from the pandemic. During the quarter, loan receivables declined 1% and average active accounts were down 9%. Interest and fees were down 11%, which was driven primarily by lower late fees, finance charges, and merchant discount, all resulted reduction in loan receivables. We did see positive momentum in purchase volume, which was up 3% over last year. We continue to drive organic growth through our partnerships and networks and added 3,900 new merchants during the quarter. We also continue to drive higher card reuse, which now stands at approximately 34% purchase volume excluding oil and gas. Loan receivables were down 8% this quarter and drove a decrease in interest and fees on loans of 7% as we reported lower late fees and merchant discounts. The expansion of our network and acceptance strategy has helped us drive the reuse rate to 59% of purchase volume in the first quarter. During the quarter, recently enacted stimulus contributed to an elevation of payment rates, which were up about 2 percentage points on average compared to the average payment rates we experienced pre-pandemic. The difference was as high as 3.5 percentage points in March when the most recent stimulus plan was enacted. Net interest income decreased 12% from last year, driven by lower finance charges and late fees. The net interest margin was 13.98% compared to last year's margin of 15.15%, largely driven by the impact of the pandemic on loan receivables and increase in liquidity and lower benchmark rates. Specifically, the loan receivables yield of 19.32% was down 135 basis points versus last year and was the primary driver of 117 basis point reduction in our net interest margin. The mix of loan receivables as a percent of total earning assets declined over 3 percentage points from 81.7% to 78.6%, driven by the higher liquidity held during the quarter. This accounted for 61 basis points of the net interest margin decline. The liquidity yield declined as a result of lower benchmark rates and accounted for 23 basis points reduction in our net interest margin. These impacts were partially offset by a 93 basis point decrease in the total interest-bearing liabilities costs to 1.57%, primarily due to lower benchmark rates. This provides a 78 basis point increase in our net interest margin. Our 30-plus delinquency rate was 2.83% compared to 4.24% last year. Our 90-plus delinquency rate was 1.52% compared to 2.10% last year. Focusing on net charge-off trends, our net charge-off rate was 3.62% compared to 5.36% last year. Our loss for credit losses as a percent of loan receivables was 12.88%. Overall expenses were down $70 million or 7% from last year to $932 million as we continue to execute on our strategic plan to reduce costs. The efficiency ratio for the first quarter was 36.1% compared to 32.7% last year. Our deposits declined by $1.9 billion from last year. Our securitized and unsecured funding sources declined by $2.1 billion. This resulted in deposits being 81% of our funding compared to 79% last year. The securitized funding comprising 9% and unsecured funding comprising 10% of our funding sources at quarter end. Total liquidity including undrawn credit facilities was $28 billion, which equated to 29.2% of our total assets, up from 25.3% last year. With this framework, we ended the quarter at 17.4% CET1 under the CECL transition rules, 310 basis points above last year's level of 14.3%. The Tier 1 capital ratio was 18.3% under the CECL transition rules compared to 15.2% last year. The total capital ratio increased 320 basis points to 19.7%. And the Tier 1 capital plus reserve ratio on a fully phased in basis increased to 28.7% compared to 24.1% last year, reflecting the increase in the reserves as a result of implementing CECL. During the quarter, we returned $328 million to shareholders, which included $200 million of share repurchases and paid a common stock dividend of $0.22 per share. So, we now believe the peak will occur later than we anticipated, likely in early 2022. As we outlined previously, we've implemented cost reductions across the organization and I'm pleased to report that we are in a pace which expense savings target of $210 million for the full year. Consumer sentiment has improved, the unemployment rate has dropped, the U.S. retail posted the largest gain in 10 months. Our business is showing its resilience as growth has accelerated with purchase volume up 8% and 5 million new accounts opened in this quarter.

Earnings were $1 billion or $a 1.73 per diluted share, an increase of a $1.28 over the last year. Though, average balances per account have rebounded, increasing 1% over the first quarter of last year, as our new accounts which were up 3%. We expect that exiting this partnership and redeploying the capital will be earnings per share neutral relative to current program economics and accretive to proposed renewal terms. During the quarter, loan receivables declined 1% and average active accounts were down 9%. Net interest income decreased 12% from last year, driven by lower finance charges and late fees. The Tier 1 capital ratio was 18.3% under the CECL transition rules compared to 15.2% last year. And the Tier 1 capital plus reserve ratio on a fully phased in basis increased to 28.7% compared to 24.1% last year, reflecting the increase in the reserves as a result of implementing CECL. So, we now believe the peak will occur later than we anticipated, likely in early 2022.

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AFG reported core net operating earnings of $2.39 per share, an impressive 257% increase year-over-year. Improved results from the companys $1.6 billion of alternative investments were partially offset by lower other property and casualty net investment income, primarily due to lower short-term interest rates. Annualized core operating return on equity in the second quarter was a strong 14.7%. Youll see that the second quarter 2021 net earnings per share of $11.70 included after-tax noncore items totaling $9.31 per share. These noncore items included earnings from our discontinued Annuity operations, inclusive of an after-tax gain on the sale of $8.14 per share. Second quarter 2021 noncore items also included $0.40 per share in after-tax noncore net realized gains on securities. Based on results through the first half of the year, we now expect AFGs core net operating earnings in 2021 to be in the range of $8.40 to $9.20, up from our previous range of $7 to $8 per share, an increase of $1.30 per share at the midpoint of our guidance. As youll see on slide five, this guidance range continues to assume 0 earnings on AFGs $2.2 billion in parent company cash as we continue to consider alternatives for deployment of the remaining proceeds from the sale of the Annuity business. Furthermore, the above guidance reflects a normal crop year and an annualized return of approximately 8% on alternative investments over the remaining two quarters of 2021. Pretax core operating earnings in AFGs Property & Casualty Insurance segment were a record $288 million in the second quarter of 2021, an increase of $172 million from the comparable prior year period. The Specialty Property and Casualty insurance operations generated an underwriting profit of $153 million in the second quarter compared to $54 million in the second quarter of 2020, an increase of 183%. The second quarter 2021 combined ratio was a very strong 87.9%, improving 7.3 points from the 95.2% reported in the comparable prior year period. Second quarter 2021 results included 0.9 points in catastrophe losses and 5.4 points of favorable prior year reserve development. Catastrophe losses, net of reinsurance and including reinstatement premiums, were $11 million in the second quarter of 2021 compared to $26 million in the prior year period. Results for the 2021 second quarter include 0.2 points in COVID-19-related losses compared to 7.6 points in the 2020 second quarter. AFG recorded $2 million in losses related to COVID-19 in the second quarter of 2021, primarily related to the economic slowdown impacting our trade credit business. And we recorded favorable reserve development of approximately $4 million related to accident year 2020 COVID-19 reserves based on loss experience. Given the uncertainty surrounding the ultimate number and scope of claims relating to the pandemic, approximately 66% of the $96 million in AFGs cumulative COVID-19-related losses are held as incurred but not reported reserves at June 30, 2021. Average renewal pricing across our entire Property and Casualty Group, including comp, was up approximately 9% for the quarter. Excluding our workers comp business, renewal pricing was up approximately 12% in the second quarter. Gross and net written premiums for the second quarter of 2021 were up 26% and 22%, respectively, when compared to the second quarter of 2020. Excluding workers comp, gross and net written premiums grew by 30% and 26%, respectively, year-over-year. In the aggregate, year-over-year growth in gross written premium during the first six months of 21, excluding crop, was fairly evenly split with just over half of the overall growth attributable to rate and about half attributable to net growth and change in exposures. Property and Transportation Group reported an underwriting profit of $62 million in the second quarter compared to $33 million in the second quarter of last year. The businesses in the Property and Transportation Group achieved a very strong 86.6% calendar year combined ratio overall in the second quarter, an improvement of 5.1 points from the comparable period in 2020. Catastrophe losses in this group, net of reinsurance and inclusive of reinstatement premiums, were $7 million in the second quarter of 2021 compared to $15 million in the comparable 20 period. Second quarter 2021 gross and net written premiums in this group were 39% and 32% higher, respectively, than the comparable prior year period, with growth reported in all the businesses in this group. Overall renewal rates in this group increased 7% on average for the second quarter, consistent with the results in the first quarter this year. Commodity futures for corn and soybeans are approximately 20% and 12% higher, respectively, than spring discovery prices, as I was looking at my monitor today. Crop conditions vary by geography with industry reports of 62% of corn and 60% of soybean crops in good to excellent condition. Specialty Casualty Group reported an underwriting profit of $71 million in the 2021 second quarter compared to $27 million in the comparable 2020 period. Catastrophe losses for this group were approximately $2 million in the second quarter of 2021 compared to $6 million in the comparable prior year period. Results in the second quarter of last year included $52 million of COVID-19-related losses, primarily in workers comp and executive liability businesses. This group reported a very strong 87.9% combined ratio for the second quarter, an improvement of seven points from the comparable period in 2020. Gross and net written premiums increased 19% and 16%, respectively, when compared to the same prior year period. And excluding comp, gross and net written premiums grew by 26% and 25%, respectively, year-over-year. Renewal pricing in this group was up 11% for the second quarter. And excluding workers comp, renewal rates in this group were up a very strong 17%. Specialty Financial Group reported an underwriting profit of $21 million in the second quarter of 2021 compared to an underwriting loss of less than $1 million in last years second quarter. And results last year included COVID-19-related losses of $30 million primarily related to trade credit insurance. This group continued to achieve excellent underwriting margins and reported an 86.4% combined ratio for the second quarter of 2021. And gross and net written premiums increased by 7% and 14%, respectively, in the 2021 second quarter when compared to the prior year period. Renewal pricing in this group was up 8% for the quarter, consistent with results in the first quarter of 2021. We now expect the 2021 combined ratio for the Specialty Property and Casualty Group overall between 88% and 90%. Net written premiums are now expected to be 10% to 13% higher than the $5 billion reported in 2020, which is an increase of three percentage points from the midpoint of our previous estimate. Growth in net written premiums, excluding workers comp, is now expected to be in the range of 12% to 16%, an increase from the range of 9% to 12% estimated previously. And looking at each segment, we now expect the Property and Transportation Group combined ratio to be in the range of 87% to 90%. We now expect growth in net written premiums for this group to be in the range of 15% to 19%. Our Specialty Casualty Group is now expected to produce a combined ratio in the range of 87% to 90%. Weve raised our projection for growth in net written premiums to a range of 5% to 9% higher than 2020 results, a change from the previous estimate of 2% to 5%. Excluding workers comp, we now expect 2021 premiums in this group to grow in the range of 10% to 14%, an increase of 5% from the midpoint of our previous guidance. And we now expect the Specialty Financial Group combined ratio to be 84% to 87%. We now expect growth in net written premiums for this group to be between 10% and 14%, reflecting stronger underwriting results for the first half of the year and projected premium growth in our fidelity and crime and surety businesses. Based on the results through the end of June, we expect overall property and casualty renewal pricing in 2021 to be up 9% to 11%, an improvement from the range of 8% to 10% estimated previously. And excluding comp, we expect renewal rate increases to be in the range of 11% to 13% as indicated by the continued pricing momentum we saw through the first half of 2021. The details surrounding our $16.1 billion investment portfolio are presented on slides nine and 10. AFG recorded second quarter 2021 net realized gains on securities of $34 million after tax. Approximately $29 million of the after-tax realized gains pertained to equity securities that AFG continued to own at June 30, 2021. Pretax unrealized gains on AFGs fixed maturity portfolio were $260 million at the end of the second quarter. The annualized return on alternative investments reported in core operating earnings in the second quarter of 2021 was 21.1%. The average annual return on these investments over the past five calendar years was approximately 10%. These properties represented approximately 55% of our alternative investment portfolio at June 30, 2021. As you can see on slide 10, our investment portfolio continues to be high quality with 88% of our fixed maturity portfolio rated investment grade and 98% of our P&C group fixed maturities portfolio with an NAIC designation of one or 2, its two highest categories. Initial cash proceeds from the sale based on the preliminary closing balance sheet were $3.5 billion. AFG recognized an after-tax noncore gain on the sale of $697 million or $8.14 per AFG share upon closing. Prior to the completion of the transaction, AFGs Property and Casualty Group acquired approximately $480 million in real estate-related partnerships, and AFG parent acquired approximately $100 million in directly owned real estate from Great American Life Insurance Company. Over the last 10 years, this business generated an internal rate of return of approximately 16%, as shown on slide 12. As you will see on slide 13, for the 10-year period ended December 31, 2020, AFGs Annuity segment net earnings were 108% of Annuity core operating earnings compared to only 74% for the life insurance industry overall. When we include the five months of Annuity earnings during 2021, Annuity net earnings as a percent of Annuity core operating earnings improved to 110%, demonstrating the quality of our earnings relative to the industry. In connection with the closing of this transaction, the company declared a special onetime cash dividend of $14 per share totaling $1.2 billion, which was paid in mid-June. Earlier this week, we paid an additional $170 million in connection with an additional $2 per share special dividend declared in July. We repurchased $114 million of AFG common stock during the quarter at an average price per share of $116.13 when you adjust it for the special dividend. During the quarter, in addition to the share repurchases and the special dividend that Craig mentioned earlier, we returned $42 million to our shareholders through the payment of our regular $0.50 per share quarterly dividend. With the gain on the Annuity sale, annualized growth in adjusted book value per share plus dividends was a strong 47% in the first six months of 2021. Our excess capital is approximately $3.2 billion at the end of June. This number included parent company cash and investments of approximately $3 billion. As of June 30, AFG parent had invested approximately $500 million of the proceeds from the Annuity sale in high-quality fixed maturity investments with an average life of less than 0.5 year and a yield of approximately 1.2%. While all of AFGs excess capital is available for internal growth or acquisitions, over $700 million of that excess capital can be used for share repurchases and special dividends above and beyond the nearly $1.5 billion distributed to shareholders through the $14 per share special dividend paid in June, the $2 special dividend paid Monday of this week and the $114 million in second quarter share repurchases while still staying within our most restrictive debt to capital guideline.

AFG reported core net operating earnings of $2.39 per share, an impressive 257% increase year-over-year. Youll see that the second quarter 2021 net earnings per share of $11.70 included after-tax noncore items totaling $9.31 per share. Based on results through the first half of the year, we now expect AFGs core net operating earnings in 2021 to be in the range of $8.40 to $9.20, up from our previous range of $7 to $8 per share, an increase of $1.30 per share at the midpoint of our guidance.

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Our people and our infrastructure were put to the test, literally, and performed remarkably during that bitter cold stretch when temperatures dropped to minus 42 degrees Fahrenheit in the northern portion of our service area. Our company today stands stronger than ever and our $16.1 billion capital plan, the largest in company history, is on track. Over the next five years, we expect our investment plan to drive average annual growth in our asset base of 7%. Our goal is now a 60% reduction in carbon emissions by 2025 and then an 80% reduction by the end of 2030, both from a 2005 baseline. And, of course, our long-term goal remains net zero carbon emissions from our generating fleet by 2050. In emission, on the natural gas distribution side of our business, we're now targeting net zero methane emissions by the end of 2030. Our ongoing effort to upgrade our gas delivery networks and incorporate renewable natural gas into our system will clearly help us achieve this 2030 milestone. As we continue to reshape our asset mix, we project that less than 10% of our revenues, and less than 10% of our assets will be tied to coal by the end of 2025. Wisconsin's unemployment rate stands today at 3.8%. The agreement provides for up to $80 million of performance-based incentives if Foxconn hires 1,454 qualified workers and invest $672 million by 2026. In fact, we understand that Foxconn supply is approximately 40% of the worldwide market for servers. For example, Green Bay Packaging just completed a $500 million expansion of its paper mill in Northeastern Wisconsin. And Uline is growing again, building two new distribution warehouses in the Kenosha area south of Milwaukee with a projected investment of $130 million. At the end of March, our utilities were serving approximately 7,000 more electric customers and 25,000 more natural gas customers compared to a year ago. Retail electric and natural gas sales volumes are shown on a comparative basis beginning on Page 10 of the earnings package. Natural gas deliveries in Wisconsin increased 3.2%. And on a weather normal basis, natural gas deliveries in Wisconsin increased by 0.005% [Phonetic]. Retail deliveries of electricity, excluding the iron ore mine, were up 1.1% from the first quarter of 2020 and on a weather normal basis were up 1.4%. We acquired a 90% ownership interest in the Jayhawk Wind Farm. This project will be built in Kansas and consists of 70 wind turbines with a combined capacity of more than 190 megawatts. We plan to invest $302 million for the 90% ownership interest and substantially all of the tax benefits. This represents $1.9 billion of investment. With a strong pipeline of opportunities ahead, we expect to invest an additional $1.5 billion in this segment through 2025. In total, our shares of these projects would provide 675 megawatts of solar generation, 316 megawatts of battery storage, and 82 megawatts of wind. Pending on the Commission's approval, we will invest approximately $1.5 billion to bring them online between 2022 and 2024. We are also proposing to build 128 megawatts of generation at our existing Weston Power plant site in North Wisconsin. If approved, we expect to invest $170 million in this project for a targeted in-service date in 2023. We look forward to the Commission's decision in 60 to 90 days. As we look to the remainder of the year, assuming normal weather, we expect to reach the top end of our earnings guidance for 2021 that stands at $3.99 a share to $4.03 a share. We're also reaffirming our projection of long-term earnings growth in a range of 5% to 7% a year. And as you may recall, in January, our Board of Directors declared a quarterly cash dividend of $0.6575 [Phonetic] a share. That was an increase of 7.1% over the previous quarterly rate. We continue to target a payout ratio of 65% to 70% of earnings. Our 2021 first quarter earnings of $1.61 per share increased $0.18 per share compared to the first quarter of 2020. Starting with our utility operations, we grew our earnings by $0.04 compared to the first quarter of 2020. First, colder winter weather conditions, when compared to the first quarter of last year, drove a $0.05 increase in earnings. Also rate adjustments and weather normalized sales added $0.05 compared to the first quarter of 2020. Negative drivers included $0.04 of higher depreciation and amortization expense and a $0.02 increase in day-to-day O&M expense. Overall, we added $0.04 quarter-over-quarter from utility operations. Moving on to our investment in American Transmission Company, we picked up a $0.01 related to continued capital investments. Recall that our investment is now earning a return on equity of 10.52%. The past [Phonetic], ATC would lose the 50 basis points ROE adder. On an annualized basis, it will be a $0.02 earnings drag for WEC. Earnings at our Energy Infrastructure segment improved $0.02 in the first quarter of 2021 compared to the first quarter of 2020, primarily from production tax credits related to wind farm acquisitions. Finally, you'll see that earnings at our Corporate and Other segment increased $0.11, driven by improved Rabbi trust investment performance, some favorable tax items result in the quarter and lower interest expense. In summary, we improved on our first quarter 2020 performance by $0.18 per share. For the full year, we expect our effective income tax rate to be between 13% and 14%. Excluding the benefit of unprotected taxes flowing to customers, we project our 2021 effective tax rate would be between 19% and 20%. Looking now at the cash flow statements on Page 6 of the earnings package. Net cash provided by operating activities decreased $295 million. Total capital expenditures and asset acquisitions were $590 million in the first quarter of 2021, a $94 million increase from 2020. On the financing front, with the $600 million holdco issuance in March, along with our refinancing efforts last year, the average interest rate on our holdco senior note is now 1.8% compared to 3.5% a year ago. For the quarter, we are expecting a range of $0.75 to $0.77 per share. As a reminder, we earned $0.76 per share in the second quarter last year. Excluding $0.03 of better than normal weather and a $0.03 pickup from a FERC ROE decision, we would have earned $0.70 per share in the second quarter 2020. As Gale mentioned earlier, we're guiding to the top end of our range for the full year, and as a reminder, that range is $3.99 per share to $4.03 per share.

As we look to the remainder of the year, assuming normal weather, we expect to reach the top end of our earnings guidance for 2021 that stands at $3.99 a share to $4.03 a share. Our 2021 first quarter earnings of $1.61 per share increased $0.18 per share compared to the first quarter of 2020.

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Our contribution profit grew 37% year over year to $40.7 million in the quarter. We have signed over 140 billers so far through Q3 and had an exceptionally strong quarter for sales, driven by a large enterprise business deal. This deal alone could add in excess of 400 basis points to our current revenue run rate when fully implemented. We processed 70.6 million transactions in the quarter, an increase of 45% year over year, giving us an annualized run rate of over 280 million transactions. This amount remains less than 2% of the overall domestic bill payment market of over 15 billion transactions. In five of the six verticals that we currently focus on, utilities, insurance, financial services, telecommunications, government, and healthcare, we have less than 2% of the billers as clients, with utilities being the only one over 2%. For example, we brought one of the largest water utilities in the US live in Q3, serving well over 1 million customers, both residential and commercial. The implication is that we are no longer limited to only processing transactions for our 1,400-plus direct billers. 1, find and implement as many billers as possible; No. 2, constantly grow biller payment volume through digital adoption and usage; No. 3, expand the reach of IPN to process every payment from every partner as possible; No. 4, generate a long lead list of all billers that are outside of our biller-direct platform, but processed through our IPN network, and therefore, add them to our sales pipeline. Our B2B payment volume is over $1 billion now on a run rate basis. And similarly, our IPN network payment volume is over $1 billion as well. In the third quarter, we processed 70.6 million transactions, representing a year-over-year increase of 44.9%. This transaction growth drove a 30.3% increase in revenue over the same period in 2020, which resulted in revenue of $101.7 million. I'd just like to take a moment to highlight that this is the first time the company has crossed the $100 million mark for a quarter, which is a great achievement and milestone for us. Contribution profit for Q3 was $40.7 million, a 37.1% increase over the same period last year. Note that the combined impact of Payveris and Finovera was less than $1 million on both revenue and contribution profit. Adjusted gross profit for the third quarter was $32.6 million, which is an increase of 38.3% from Q3 of 2020. Adjusted EBITDA was $5.5 million, which represents a 13.6% adjusted EBITDA margin. The 8.6% decline in adjusted EBITDA from the second quarter of 2021 is due to the cost increases related to being a public company, increased investments in R&D and sales and marketing and some small dilutive impact from the acquisitions. Operating expenses rose $10.9 million to $30 million for Q3 of 2021 from the same period last year. Specifically, R&D expense increased $2.6 million or 41.7% from the third quarter in 2020 as we continue innovating with and for our customers and partners. Sales and marketing increased $3.3 million or 41.4% as we continue to add headcount to accelerate the acquisition of new customers and partners, given the significant market opportunity and strong market position that we have and also a portion of the intangible amortization winning this sales and marketing as well. Our GAAP net income was $0.4 million, and GAAP earnings per share for Q3 was 0. Non-GAAP net income was $1.4 million. Non-GAAP earnings per share was $0.01 for the quarter. As a result of the valuation performed, we recorded $53 million of identifiable intangible assets. And so, the related amortization decreased our GAAP net income by $933,000 and our GAAP earnings per share by $0.01 in Q3, and it will have a meaningful impact on our GAAP net income and earnings per share going forward. As of September 30, 2021, we had $177.5 million of cash and cash equivalents on our balance sheet. The cash decreased primarily due to the acquisitions and our share count on that date was 119.96 million shares. Our revenue outlook for 2021 is in the range of $391 million to $393 million, which represents growth between 29.5% and 30.5% year over year. For contribution profit, our full year outlook is between $156 million and $158 million or approximately 30% to 31%. It's worth highlighting that our guidance now for revenue and contribution profit growth is at 30% for the full year. For full year 2021, we also see adjusted EBITDA in the range of $26.5 million to $28 million with an adjusted EBITDA margin of approximately 17% to 18%. We expect that our full year effective tax rate will be approximately 55%, and this is due to the discrete onetime tax items that were discussed in Q2. On a normalized basis going forward, we would anticipate that our effective tax rate would be approximately 30%, assuming no changes to current US federal tax laws or rates. Despite processing nearly $50 billion of processing volume in the past 12 months, I still think of it as a start-up company that truly understands the overall fintech landscape and the opportunities therein. 1, a team of industry leaders. 2, a strong, loyal and growing customer base and therefore, a line of sight to revenues in outer years. 3, a great ecosystem, leading to more biller sales and consumer adoption. 4, multiple vectors of monetization. 5, a multitrillion-dollar addressable market in the US alone.

This transaction growth drove a 30.3% increase in revenue over the same period in 2020, which resulted in revenue of $101.7 million. Non-GAAP earnings per share was $0.01 for the quarter. And so, the related amortization decreased our GAAP net income by $933,000 and our GAAP earnings per share by $0.01 in Q3, and it will have a meaningful impact on our GAAP net income and earnings per share going forward. Our revenue outlook for 2021 is in the range of $391 million to $393 million, which represents growth between 29.5% and 30.5% year over year. For full year 2021, we also see adjusted EBITDA in the range of $26.5 million to $28 million with an adjusted EBITDA margin of approximately 17% to 18%.

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In 2020, we originated more than 43,000 loans amounting to $8 billion through the first round of the Paycheck Protection Program. Net interest income was up almost 4% from the prior quarter with an 8-basis-point increase in our net interest margin. We achieved record volume in the fourth quarter with $2.5 billion in funded loans. For the full year, our consumer mortgage originations were $8.3 billion, up 90% from the prior year. This drove both balance sheet growth, as well as a 179% increase in fee income. In the fourth quarter, we generated $243 million in fees, which represents a record quarter. Last year, Laurel Road originated over $2.3 billion in loans. We expect to consolidate over 70 branches, representing 7% of our network. Credit quality remained strong this quarter with net charge-offs of 53 basis points within our targeted over the cycle range. Additionally, nonperforming loans declined by almost $50 million this quarter. In the fourth quarter, our Common Equity Tier 1 ratio increased 30 basis points to 9.8%, which is above our targeted range of 9% to 9.5%. Last week, our board of directors authorized a new share repurchase program of up to $900 million over the next three quarters. We also approved our first-quarter common stock dividend of $18.5 a share. As Chris said, it was a very strong quarter for us with record net income from continuing operations of $0.56 per common share, up 37% from the prior quarter and 24% from the prior year-ago period. Return on average tangible common equity for the quarter was over 16%, up over 400 basis points from the third quarter. Turning to Slide 6, total average loans were $102 billion, up 9% from the fourth quarter of last year, driven by growth in both commercial and consumer loans. Commercial loans reflect an increase of over $7.5 billion from the PPP loans. Laurel Road originated $590 million of loans this quarter and $2.3 billion for the full year, up over 20% from the full-year 2019. We also generated ano -- another record, $2.5 billion of consumer mortgage loans in the quarter, bringing the total for the year to $8.3 billion. Linked-quarter average loan balances were down 3%, reflecting pay downs from a heightened commercial loan draws, as well as a small reduction in PPP balances related to initial forgiveness. Average deposits totaled $136 billion for the fourth quarter of 2020, up $23 billion or, 21%, compared to the year-ago period and up 0.6% from the prior quarter. The total interest-bearing deposit costs came down 11 basis points from the third quarter of 2020, exceeding our guidance of a 6 to 9-basis-point decline, continue to have a strong stable core deposit base with consumer deposits accounting for over 60% of the total deposit mix. Taxable equivalent net interest income was $1.043 billion for the fourth quarter of 2020, compared to $987 million a year ago and just over $1 billion from the prior quarter. Our net interest margin was 2.70% for the fourth quarter of 2020, compared to 2.98% for the same period last year and 2.62% from the prior quarter. Compared to the prior quarter, net interest income increased $37 million, and the margin improved by 8 basis points. We saw the average rate paid on interest-bearing deposits declined 11 basis points from the prior quarter. The forgiveness of the PPP loans accelerated about $28 million of additional fee recognition this quarter. Noninterest income was $802 million for the fourth quarter of 2020, compared to $651 million for the year-ago period and $681 million for the third quarter. Compared to the year-ago period, noninterest income increased $151 million. The primary driver was a record quarter for investment banking and debt placement fees, which reached $243 million, up $62 million from the year-ago period. This business also had a record year with $661 million of total fees. Record mortgage originations drove consumer mortgage fees this quarter, which were up $22 million from the fourth quarter of '19. Cards and payments income also increased $30 million related to higher prepaid card activity from the state government support programs. Compared to the third quarter, noninterest income increased by $121 million. The largest driver of the quarterly increase was once again the record quarter for investment banking, which was up $97 million. Commercial mortgage servicing fees also had a strong quarter, up $14 million. Total noninterest expense for the quarter was $1.128 billion, compared to $980 million last year and $1.037 billion in the prior quarter. Year over year, payments-related costs reported and other expense were $40 million higher, driven by higher prepaid activity, and we incurred COVID-19 related expenses to ensure the health and safety of our teammates. Compared to the prior quarter, noninterest expense increased $91 million. The increase was largely due to $40 million of higher production-related incentives, $22 million of severance, $12 million of higher stock-based compensation related to the share price, and a $15 million additional contribution to our charitable foundation. Marketing expense was also up $8 million from the prior quarter. For the fourth quarter, net charge-offs were $135 million or 53 basis points of average loans. Our provision for credit losses was $20 million. Nonperforming loans were $785 million this quarter, or 78 basis points of period in loans, compared to $834 million, or 81 basis points, from the prior quarter. Additionally, 30 to 89 de -- day delinquencies actually improved quarter over quarter with a 9-basis-point decrease while the 90-day plus category remained relatively flat. As of December 31, loan subject to forbearance terms were less than $600 million, down from a peak of $5.2 billion, equating to about 0.5% of our outstanding balances. We ended the fourth quarter with a Common Equity Tier 1 ratio of 9.8%, up 30 basis points from 9.5% in the third quarter. This places us above our target range of 9% to 9.5%. Last week, our board of directors approved a new share repurchase authorization of up to $900 million for the next three quarters. They also approved our first-quarter 2021 common dividend of $18.5 per share. Net charge-off to average loan should be in the 50 to 60-basis-point range, which is consistent with our through the cycle range of 40 to 60 basis points. And our guidance for our GAAP tax rate should be around 19% for the year.

Last week, our board of directors authorized a new share repurchase program of up to $900 million over the next three quarters. As Chris said, it was a very strong quarter for us with record net income from continuing operations of $0.56 per common share, up 37% from the prior quarter and 24% from the prior year-ago period. Taxable equivalent net interest income was $1.043 billion for the fourth quarter of 2020, compared to $987 million a year ago and just over $1 billion from the prior quarter. For the fourth quarter, net charge-offs were $135 million or 53 basis points of average loans. Our provision for credit losses was $20 million. Last week, our board of directors approved a new share repurchase authorization of up to $900 million for the next three quarters.

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First quarter revenues increased 16% year-over-year to $536 million compared to our guidance range of $490 million to $505 million. Organic growth is a key priority and revenues increased 8% year-over-year on an organic basis. Incoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially. This resulted in a healthy book-to-bill ratio of 1.3 times. EBITDA increased 32% year-over-year to $80 million. EBITDA margins expanded 180 basis points from 13.1% in the year ago period to 14.9%. EPS increased 40% year-over-year to $0.94 compared to our guidance range of $0.60 to $0.70. For the full year 2021, we are increasing the high-end of our revenue and earnings per share guidance ranges by $130 million and $0.50 respectively, largely due to strength in the Industrial Automation and broadband and 5G markets. As you know, we initiated a process last year to divest approximately $200 million in revenues associated with certain undifferentiated copper cable product lines. We have plans to open other CICs around the world over the next 12 months to 18 months. Revenues were $536 million in the quarter, increasing $73 million or 16% from $464 million in the first quarter of 2020. Revenues were favorably impacted by $33 million from currency translation and higher copper prices and $4 million from acquisitions. After adjusting for these factors, revenues increased 8% organically from the prior year period. Incoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially and accelerating as the quarter progressed. This resulted in a healthy book-to-bill ratio of 1.3 times, with particular strength in Industrial Automation and Broadband and 5G. Gross profit margins in the quarter were 36%, decreasing 90 basis points compared to 36.9% in the year ago period. In the first quarter, the pass-through of higher copper prices had an unfavorable impact of approximately 180 basis points. Excluding this impact, gross profit margins would have increased 90 basis points year-over-year that. EBITDA was $80 million, increasing $19 million or 32% compared to $61 million in the prior year period. EBITDA margins were 14.9% compared to 13.1% in the prior year period, an improvement of 180 basis points year-over-year. The pass-through of higher copper prices had an unfavorable impact of approximately 70 basis points in the quarter. Excluding this impact, EBITDA margins would have increased 250 basis points year-over-year, demonstrating solid operating leverage on higher volumes. Net interest expense increased $2 million year-over-year to $16 million as the result of foreign currency translation. At current foreign exchange rates, we expect interest expense to be approximately $61 million in 2021. Our effective tax rate was 19.9% in the first quarter, consistent with our expectations. For financial modeling purposes, we recommend using an effective tax rate of 20% throughout 2021. Net income in the quarter was $42 million compared to $31 million in the prior year period. And earnings per share was $0.94, increasing 40% compared to $0.67 in the first quarter of 2020. The Industrial Solutions segment generated revenues of $310 million in the quarter, increasing 23% from $251 million in the first quarter of 2020. Currency translation and higher copper prices had a favorable impact of $20 million year-over-year. And acquisitions had a favorable impact of $4 million. After adjusting for these factors, revenues increased 14% organically. Within this segment, Industrial Automation revenues also increased 14% year-over-year on an organic basis, with growth in each of our primary market verticals. Cybersecurity revenues increased 8% year-over-year in the first quarter, with nonrenewal bookings our best leading indicator of revenues increasing 74%. Industrial Solutions segment EBITDA margins were 16.6% in the quarter, increasing 250 basis points compared to 14.1% in the year ago period. The Enterprise Solutions segment generated revenues of $226 million during the quarter, increasing 7% from $212 million in the first quarter of 2020. Currency translation and higher copper prices had a favorable impact of $13 million year-over-year. After adjusting for these factors, revenues increased 1% organically. Revenues in Broadband and 5G increased 9% year-over-year on an organic basis. This supports continued robust growth in our fiberoptic products, which increased 23% organically in the first quarter. Revenues in the Smart Buildings market declined 6% year-over-year on an organic basis consistent with our expectation. Enterprise Solutions segment's EBITDA margins were 12.4% in the quarter, increasing 80 basis points compared to 11.6% in the prior year period. Our cash and cash equivalents balance at the end of the first quarter was $371 million compared to $502 million in the prior quarter and $251 million in the prior year period. Working capital turns were 6.7 compared to 10.3 in the prior quarter and 5.6 in the prior year period. Days sales outstanding of 54 days compared to 50 in the prior quarter and 57 in the prior year period. Inventory turns were 5.0 compared to 5.2 in the prior quarter and 4.6 in the prior year. Our debt principal at the end of the first quarter was $1.53 billion compared to $1.59 billion in the prior quarter. Net leverage was 4 times net debt to EBITDA at the end of the quarter. This is temporarily above our targeted range of 2 to 3 times, and we expect to trend back to the targeted range as conditions normalize. As a reminder, our debt is entirely fixed at an attractive average interest rate of 3.5%, with no maturities until 2025 to 2028, and we have no maintenance covenants on this debt. Cash flow from operations in the first quarter was a use of $42 million compared to a use of $52 million in the prior year period. Net capital expenditures were $11 million for the quarter compared to $19 million in the prior year period. And finally, free cash flow in the quarter with a use of $53 million compared to a use of $71 million in the prior year period. We anticipate second quarter 2021 revenues of $535 million to $550 million and earnings per share of $0.88 to $0.98. For the full year 2021, we now expect revenues of $2.13 billion to $2.18 billion compared to prior guidance of $1.99 billion to $2.05 billion. We now expect full year 2021 earnings per share to be $3.50 to $3.80 compared to prior guidance of $2.90 to $3.30. We expect interest expense of approximately $61 million for 2021 and an effective tax rate of 20% for each quarter and the full year. This guidance continues to include the contribution of the copper cable product lines that we are in the process of divesting, which contributed approximately $200 million in revenue and $0.20 in earnings per share in 2020. As a result, we are increasing our volume outlook for the year by $90 million. Our revised full year guidance implies consolidated organic growth in the range of 6% to 9% compared to our prior expectation of approximately 1% to 4%. Relative to our prior guidance, we expect higher copper prices and current foreign exchange rate to have a favorable impact on revenues of approximately $40 million in 2021, but a negligible impact on earnings. For the full year 2021, the high-end of our guidance implies total revenue and earnings per share growth of 17% and 38%, respectively.

EPS increased 40% year-over-year to $0.94 compared to our guidance range of $0.60 to $0.70. And earnings per share was $0.94, increasing 40% compared to $0.67 in the first quarter of 2020. We anticipate second quarter 2021 revenues of $535 million to $550 million and earnings per share of $0.88 to $0.98. For the full year 2021, we now expect revenues of $2.13 billion to $2.18 billion compared to prior guidance of $1.99 billion to $2.05 billion. We now expect full year 2021 earnings per share to be $3.50 to $3.80 compared to prior guidance of $2.90 to $3.30.

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We generated nearly $4.5 billion in funds from operation in '21 or $11.94 per share. The $4.5 billion is a record amount for our company for the -- for a year. Fourth-quarter funds from operations were 1.160 billion -- I'm sorry, $1.16 billion or $3.09 per share. Included in the fourth quarter results was a net loss of $0.10 per share from a loss on extinguishment of debt and a write-off of predevelopment cost, partially offset by an after-tax gain on the sale of equity interest. Domestic property NOI increased 22.4% year over year -- I'm sorry, for the quarter and 12% for the year, including our share of NOI from TRG and our international properties, portfolio NOI increased 33.6% for the quarter and 22.3% for the year. Mall and outlet occupancy at the end of the fourth quarter was 93.4%, an increase sequentially of 60 basis points and 260 basis points year over year. Average base minimum rent was $53.91, add $8 to that if you included variable rent. For the year, we signed more than 4,100 leases for a total of more than 15 million square feet. Mall sales for the fourth quarter were up 8% compared to the fourth quarter of 2019 and up 34% year over year. Reported retail sales per square foot reached a record level for 2021 at $713 per foot for our Mall and Outlet Business and $645 for the Mills. Occupancy costs at the end of 2021 are the lowest they've been in five years at 12.6% year-end. Their liquidity position is growing, now $1.6 billion. TRG, Taubman Realty Group, which we own 80% posted great operating metrics and results, which also beat our underwriting. Reported retail sales was $942 per square foot, a 31% increase year over year. Occupancy also increased 210 basis points for the year. We amended and extended our $3.5 billion revolving credit facility with a lower pricing grid for five years. We issued $2.75 billion of senior notes 750 million-euro notes, completed the refinancing of 25 property mortgages for a total of $3.3 billion at an average interest rate of 3.14%. We paid more than $4 billion in debt and de-levered by $1.5 billion. And with the recent January notes offering, our liquidity stands at $8 billion. We paid out $2.7 billion in cash common stock dividends last year. Today, we announced a dividend of $1.65 per share for the quarter, a year-over-year increase of 27%. Our FFO guidance is $11.50 to $11.70 per share. Approximately $0.32 per share gain related to the reversal of a deferred tax liability at Klepierre, approximately $0.32 per share in gains related to our investment in authentic brands. These gains were partially offset by approximately $0.14 per share in debt extinguishment charges resulting in an adjusted FFO of $11.44 per share for '21. '21 also included significant increase in overage and percentage rent compared to prior years and lease settlement income of approximately $0.10 higher than historical average. Our guidance reflects the following assumptions: Domestic property NOI growth of up to 2%, approximately $0.15 to $0.20 drag on FFO from additional investments in RGG, and SPO, JCPenney, and the Reebok integration cost at SPARC all to fund future growth, the impact of a continued strong U.S. dollar versus the euro and yen compared to '21 levels and continued muted international tourism, no significant acquisition or disposition activity. And I think -- Tom knows, but I think our FFO guidance was -- which was consistent with basically the analytic community around $9.60 per share, and we reported $11.94 per share.

Fourth-quarter funds from operations were 1.160 billion -- I'm sorry, $1.16 billion or $3.09 per share. Mall and outlet occupancy at the end of the fourth quarter was 93.4%, an increase sequentially of 60 basis points and 260 basis points year over year. Our FFO guidance is $11.50 to $11.70 per share.

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Before I address Equifax's strong second quarter results, I want to recognize our 11,000 associates around the globe for their continued hard work and dedication in these challenging times. Revenue at $1.235 billion was the highest quarterly revenue in our history, breaking the record from last quarter. Local currency revenue growth of 23% and organic local currency growth of 20% were both very strong in some of the highest growth rates in our history. Our U.S. B2B businesses, our Workforce Solutions and USIS, which together represent over 70% of our revenue, again drove our overall growth delivering very strong 25% total and 22% organic revenue growth despite the headwinds from the mortgage market that declined about 5%. The 5% decline in the mortgage market was about 500 basis points more than our flat expectation we shared with you in April. U.S. B2B organic non-mortgage growth of 20% accelerated sequentially from the 16% we delivered in the first quarter. The 20% organic growth is also a record and reflects the underlying strength of Workforce Solutions and USIS has returned to a competitive position. But at a high level, Workforce Solutions again led Equifax growth with revenue up a strong 40%. And as a reminder, this is off growth of 53% in second quarter last year and the mortgage market that declined 5% in the quarter. USIS delivered another strong quarter with revenue up 11%, driven by non-mortgage total revenue growth of over 20% and strong organic revenue growth of 14%. International delivered a very strong quarter of COVID recovery with revenue growth of 25% in local currency and importantly all regions internationally delivered growth about 20%. Slightly better than expected GCS revenue was down 3% in local currency. However, our consumer-direct revenue delivered 11% growth in the quarter, its second consecutive quarter in double-digits. Second quarter Equifax adjusted EBITDA totaled $431 million, up 20% with margins of 34.9%. Margins were down a 160 basis points versus last year due to the inclusion of the cloud technology transformation costs in our adjusted results in 2021, which were excluded last year. This negatively impacted second quarter adjusted EBITDA margins by 310 basis points. Adjusting for cloud transformation costs of $38 million in the quarter, our margins would have been up a strong 150 basis points. Adjusted earnings per share of $1.98 per share was up a strong 21% from last year. Again, adjusting for the cloud transformation costs, adjusted earnings per share would have been up a very strong 36%, reflecting the strong performance in operating leverage of Equifax. During the quarter, we continue to make significant progress with the Equifax Cloud Data and Technology transformation, including an additional 7,700 customer migrations to the Cloud in the United States and more than 900 migrations internationally. In the second quarter, we released 46 new products, which is up almost 2x from the 24 products we released a year ago in the quarter. And we continue to expect our vitality index defined as revenue from new products introduced in the last three years to exceed 8%, a big step-up from the 5% last year and a reflection of the strong product focus across EFX. Based on our strong first half results and confidence in the future, we increased our full year revenue guidance by a $155 million to a midpoint of $4.78 billion, which is up 400 basis points to 16% growth. We also increased our full year adjusted earnings per share guidance by $0.45 per share to a midpoint of $7.35 per share which adjusting for the technology transformation costs is up 700 basis points to 19% growth. This includes our expectation that the U.S. mortgage market as measured by credit inquiries will decline approximately 8% in the year, which is consistent with the guidance we provided in April. In the second quarter, Equifax core revenue growth, the green section of the bars on Slide 6 accelerated to 29%. This is up significantly from the 20% core revenue contribution we delivered in the first quarter and 11% in the fourth quarter and well above our historical core growth rates. While our outperformance in the mortgage market continues to drive significant core growth, the contribution from U.S. non-mortgage in International increased significantly in the quarter, reflecting approximately 50% of core revenue growth in the quarter, excluding acquisitions and FX favorability. Workforce Solutions, our largest business had another exceptional quarter, delivering 40% revenue growth and 58% adjusted EBITDA margins. Again as a reminder, the 40% revenue growth is on top of 53% growth last year in the second quarter. EWS is cementing itself is our largest and most valuable business and is powering our results, representing 40% of total Equifax revenue in the quarter. EWS Verification Services revenue of $395 million was up a strong 57%. Verification Services mortgage revenue grew 52% in the quarter, despite the 5% decline in the mortgage market from increased records, penetration and new products. Importantly, Verification Services non-mortgage revenue was up over 60% in the quarter and up over 15% sequentially from the first quarter. Our government vertical, which provide solutions to federal and state governments in support of assistance programs including food and rental support grew over 10% in the quarter. We continue to expand our products and solutions in the government vertical and expect our new Social Security Administration contract to go live this quarter with revenue ramping to a $40 million to $50 million run-rate in 2022. Talent Solutions, which arise income and employment verifications as well as other information for the hiring and on-boarding process through our EWS Data Hub had another outstanding quarter from customer expansion and NPIs, growing over 200%. Talent Solutions now represents almost 30% of non-mortgage verification revenue. Over 75 million people changed jobs in the U.S. annually, with the vast majority having some level of screening as a part of that hiring process. Our non-mortgage consumer business, principally in Banking and Auto showed strong growth of about 50% in the quarter as well, though from deepening penetration with lenders and some recovery in these markets. Employer Services revenue of a $101 million was about flat in the quarter as expected. Combined, our unemployment claims and employee retention credit businesses had revenue of about $64 million, down over 15% from last year. Employer Services non-UC and ERC businesses had revenue up over 50% in the quarter. Our I-9 business driven by our new I-9 Anywhere product, continue to show very strong growth, up over 50%. Our I-9 business is now almost half of Employer Services non-UC and ERC revenue. Reflecting on the growth in I-9 and the return to growth of workforce analytics, we expect Employer Services non-UC and ERC businesses to deliver organic growth of over 20% for the year. Reflecting the power and uniqueness of between dataset, strong verified revenue growth and operating leverage resulted in adjusted EWS EBITDA margins of 58%, a 160 basis point expansion from last year. Excluding Technology Transformation expenses, EWS margins would have been up over 240 basis points. They had another strong quarter with revenue up 11%, driven by strong performance across the business. Total USIS mortgage revenue of a $160 million was down about 2% in the quarter, while mortgage inquiries were down 5%, a little bit flat expectation we shared in April. USIS mortgage revenue outgrew the market by over 300 basis points, driven by growth in marketing and debt monitoring products. Importantly, non-mortgage revenue performance was up 21% with strong organic growth of 14%. Importantly, organic non-mortgage revenue also delivered strong sequential growth, acceleration of 250 basis points from the first quarter's 11%, an important indicator of the continued strengthening of the USIS business. Banking and Insurance both grew over 20% in the quarter. Auto and Direct-to-Consumer were both up over 10% and Telecom and Commercial were just about flat in the quarter. Financial Marketing Services revenue, which is broadly speaking, our offline or batch business was $59 million in the quarter and up about 14%. The strong performance was driven by marketing related revenue, which was up over 20% and ID and fraud revenue growth of over 15% as consumer marketing and originations ramped up coming out of COVID. In 2021, marketing related revenue is expected to represent about 40% of FMS revenue, identity and fraud about 20% and risk decisioning about 35%. USIS adjusted EBITDA margins were 40.3% in the quarter, the decline of 380 basis points from second quarter last year was principally due to the costs related with Cloud transformation. Their revenue was up a strong 25% on a local currency basis, which is a third consecutive quarter of growth in our global markets. Revenue growth was up over 20% in all of our markets in Canada, Asia Pacific, Latin America and Europe. Asia-Pacific, which is principally our Australia business had a very strong quarter with revenue up $91 million or up about 21% in local currency. Australia consumer revenue turned positive and was up 23% versus last year and up about 2% sequentially. Our Commercial business combined online and offline, revenue was up a very strong 26% in the quarter and almost 18%, up almost 18% sequentially. Fraud and identity was up 30% in the quarter, following 15% growth in the first quarter. European revenues of $68 million were up 27% in local currency in the quarter. Our European credit reporting business was up about 20% with strong growth in both the UK and Spain. In UK, which is our largest European market, we saw growth of over 25% in consumer, data analytics and scores and over 40% growth in commercial. Our European debt management business revenue increased about 30% in local currency off the lows we saw in the second quarter last year during the COVID recession. Canada delivered record setting revenue of $47 million in the quarter, up about 26% in local currency. Consumer online was up about 26% in the quarter, an improvement of 12 percentage points from the first quarter. Latin American revenues of $44 million, grew 30% in the quarter in local currency, which was the second consecutive quarter of growth coming out of COVID. International adjusted EBITDA margins of 27.3% were up 540 basis points from last year, driven by leverage on revenue growth and continued very good cost control by the international team. Excluding the impact of the inclusion of the technology transformation costs in adjusted EBITDA, margins were up over 750 basis points. Global Consumer Solutions revenue was down 2% on a reported basis and 3% on a local currency basis in the quarter and slightly above our expectations. Direct-to-Consumer revenue was up a strong 11% in the quarter, their fourth consecutive quarter of growth. GCS adjusted EBITDA margins of 22.5% were up just about a 170 basis points, which was better than our expectations. Workforce Solutions revenue grew a very strong 40% in the quarter, with core revenue growth of 46%. And again the 40% growth in the quarter was on top of 53% growth in the second quarter last year. At the end of the second quarter, TWN reached a 119 million active records, an increase of 13% or 14 million records from a year ago and included 91 million unique records. At 91 million unique, we now have over 60% of non-farm payrolls, which makes our TWN dataset we're valuable to our customers by delivering higher hit rates. Beyond focusing on adding the over 50 million non-farm payroll records not in the TWN database yet, we're also focused on adding data records from the 40 million to 50 million gig workers and around 30 million pension recipients in the United States marketplace to further broaden the TWN database. We are now receiving contributions from 1.2 million companies across the U.S., up from 27,000 employers a short two plus years ago. And as a reminder, over 60% of our records are contributed directly by employers that EWS provides comprehensive employer services to like unemployment claims, W-2 management, I-9, WOTC, Employee Retention Credit, HSA and other HR in compliance-related solutions. The remaining 35% are contributed through partnerships with payroll providers in HR software companies, most of which are exclusive. As of the most recent data available at the end of 2020, Workforce Solutions received an inquiry in almost 60% of completed U.S. mortgages, which is up from 55% in 2019. This 500 basis point increase shows a continuation of growth in TWN mortgage penetration as well as the substantial opportunity for continued growth at existed mortgage with only 60% of mortgages using TWN data today. During the quarter, about 75% of TWN mortgage transactions were fulfilled system-to-system, which was up 2x from the 32% in 2019. We plan to roll-out new products in mortgage Talent Solutions government and I-9 in the second half of the year. New product revenue will increase in '21 and '22 as we begin to reap the benefits of our new products introduced in the market by Workforce Solutions in the past 18 months. In 2017, Workforce Solutions revenue and EBITDA made up 23% of Equifax revenue and 27% of business unit EBITDA. For the first half of '21, Workforce Solutions revenue and EBITDA have increased to 40% of Equifax revenue and over half of Equifax business unit EBITDA. In a short four years, Workforce Solutions has more than doubled in size and is now almost 50% in the first half versus the same period last year. It is up almost 50% in the first half versus same period last year. The strong mortgage market has advantage USIS as shown in the bottom left of the slide, USIS has driven consistent sequential improvement in non-mortgage growth in second quarter last year, with the overall growth in USIS being driven by 18% non-mortgage growth in the first half of 2021. Our U.S. B2B businesses delivered a combined 25% revenue growth in mortgage in the second quarter, which was 30 point stronger than the 5% mortgage decline we saw in overall mortgage market. The strong outperformance was again primarily driven by Workforce Solutions with core mortgage growth of 57%. USIS delivered 4% core mortgage revenue growth in the second quarter, driven primarily by new debt monitoring solutions and further support from marketing. As Mark discussed, our Q2 results were very much stronger than we discussed with you in April, with revenue about $85 million higher than the midpoint of the expectations we shared. And although the mortgage market was down 5% versus our expectation of flat, our mortgage revenue principally in Workforce was not impacted to the same degree. As shown on Slide 12, U.S. mortgage market credit increase declined 5% in 2Q'21, weaker than the about flat we had included in our guidance. Our financial guidance for 2021 assumes that the trend in mortgage credit increase we saw in late June and July continues in 3Q'21 resulting in a decline of mortgage market credit increase of about 23% in 3Q'21 versus 3Q'20. Despite the substantial refinance activity that has occurred over the past year, the number of U.S. mortgages that could benefit from a refinancing remains at a relatively strong level of about $12 million. Based upon our most recent data from January, mortgage refinancings continue to run just under 1 million per month. We expect revenue in the range of $1.160 billion to $1.180 billion, reflecting revenue growth of about 9% to 11%, including a 1% benefit from FX. Acquisitions are positively impacting revenue by 1.8%. We're expecting adjusted earnings per share in 3Q'21 to be $1.62 to $1.72 per share compared to 3Q'20 adjusted earnings per share of $1.91 per share. In 3Q'21, technology transformation costs are expected to be around $40 million or $0.25 a share. Excluding these costs, which were excluded from 3Q'20 adjusted EPS, 3Q'21 adjusted earnings per share would be $1.87 to $1.97 per share. This performance is being delivered in the context of the U.S. mortgage market, which is expected to be down 23% versus 3Q' 20. Comparing the midpoint of our 3Q'21 guidance sequentially to our very strong 2Q'21 performance, revenue is down about $65 million. Our guidance for adjusted earnings per share declines about $0.30 per share sequentially. We also expect our U.S. mortgage business to grow about 15% in 2021 over 20 points faster than we expected approximately 8% decline in the U.S. mortgage market. 2021 revenue of between $4.76 billion and $4.8 billion reflects revenue growth of about 15% to 16% versus 2020, including the 1.5% benefit from FX. Acquisitions are positively impacting revenue by 1.9%. EWS is expected to deliver about 30% revenue growth with continued very strong growth in Verification Services. International revenue is expected to deliver constant currency growth of about 10% and GCS revenue is expected to be down mid single-digits in 2021. In 2021, Equifax expects to incur one-time Cloud technology transformation costs of approximately a $155 million, a reduction of over 55% from the $358 million incurred in 2020. The inclusion in 2021 of this about a $155 million and one-time costs would reduce adjusted earnings per share by about $0.97 per share. This estimate of one-time technology transformation costs is up $10 million from a $145 million we guided in April. 2021 adjusted earnings per share of $7.25 to $7.45 per share which includes these tech transformation costs is up 4% to 7% from 2020. Excluding the impact of the tech transformation cost of $0.97 per share, adjusted earnings per share in 2021 which show growth of about 18% to 21% versus 2020. 2021 is also negatively impacted by the redundant system costs of $79 million related to 2020. These redundant system costs are expected to negatively impact adjusted earnings per share by about $0.49 per share and negatively impact adjusted earnings per share growth by about 7 percentage points. In 1Q'21 and 2Q'21, we delivered very strong core revenue growth of 20% and 29% respectively. We continue to deliver strong core revenue growth in 3Q'21 of 17% and 19% for all of 2021 in our expectations. We began to leverage these cloud benefits in 2020, as we more effectively developed new products and delivered them to market leveraging the new EFX cloud, growing new product introductions by 44% last year, in 2020. As I discussed earlier in the second quarter, we delivered 46 new products, which is up about almost 2x from the 24 we delivered last year. Year-to-date, we've rolled out 85 new products, which is up 44% from the 59 that we delivered in the first half last year. Workforce Solution launched a new mortgage 36 product in May. In April, we increased our vitality index outlook for 2021 from 7% to 8% and we remain confident in this framework for 2021. As you can see from the left of the slide, our 8% vitality outlook for 2021 is a big step forward from the 5% vitality we delivered last year. We have unique market-leading differentiated data at scale that includes our 228 million ACRO credit records, 119 million TWN income and employment records and additional data at scale that comes from our alternative datasets, including Kount and CTUE, PayNet, IXI and others. Our team of 320 data scientists located around the world are leveraging our advanced analytics in Equifax Cloud native infrastructure to define and deploy cloud native products and solutions. Our 26% overall and 29% core revenue growth in the quarter reflects the strength and breadth of our business model and early benefits from our Equifax Cloud investments and of course it's enhanced focus on new products. As we discussed earlier, we're confident in our outlook for 2021 and we raised our full year midpoint revenue guidance to $4.78 billion, increasing our 2021 growth rate by over 370 basis points, almost 16%. We also raised our midpoint earnings per share guidance to $7.35, increasing the growth rate by over 640 basis points. As we discussed earlier, Workforce Solutions had another outstanding quarter, delivering 40% revenue growth and 58% EBITDA margins. During the quarter, Workforce Solutions delivered 40% of Equifax revenue and we expect EWS to continue to drive Equifax's operating performance throughout 2021 and beyond, as consumers recognize the value of our growing TWN database. USIS also delivered another strong quarter of 11% growth, driven by their 14% non-mortgage organic growth. International grew for the third consecutive quarter, accelerating to 25% in local currency in the second quarter as economies reopened and business activity resumes. We're beginning to see the benefits of our new product focus and resources leveraging the EFX cloud with the 85 NPIs completed in the first half, pacing well ahead of the record 134 we delivered last year. We have reinvested our strong cash flow in five bolt-on acquisitions so far this year, that will add a 170 basis points to our revenue in the second half.

Adjusted earnings per share of $1.98 per share was up a strong 21% from last year. Based on our strong first half results and confidence in the future, we increased our full year revenue guidance by a $155 million to a midpoint of $4.78 billion, which is up 400 basis points to 16% growth. Consumer online was up about 26% in the quarter, an improvement of 12 percentage points from the first quarter. We're expecting adjusted earnings per share in 3Q'21 to be $1.62 to $1.72 per share compared to 3Q'20 adjusted earnings per share of $1.91 per share. 2021 adjusted earnings per share of $7.25 to $7.45 per share which includes these tech transformation costs is up 4% to 7% from 2020.

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We ended the quarter with assets under management and administration of 36% to $1.14 trillion, a new high. We continue to transform Ameriprise with Wealth Management and Asset Management now representing over 75% of operating earnings. Revenues are up 10% to over $3 billion. Earnings per share also increased nicely in the quarter of 27% ex the NOL benefit a year ago, even with low short-term interest rates this year versus last year's quarter, and ROE remains very strong at 30%. With our strong financial foundation and free cash flow generation, we returned more than $490 million to shareholders in the quarter through dividends and our ongoing repurchase program, which is comparable to the last few quarters. Yesterday, we announced another 9% increase in our quarterly dividend, our 17th increase since becoming public 16 years ago. Our total client net flows was strong at $9.3 billion in the quarter, with total client assets of 36% to $762 billion. In the quarter, wrap net inflows were more than $10 billion, up 55% over last year. Transactional activity continued gaining strength in the first quarter, picking up 12% over last year, with good volume across a range of product solutions. Even with clients putting more of the cash back to work, client cash balances remain elevated at more than $40 billion. And advisor productivity was strong, up 8%, adjusting for interest rates. Our virtual recruiting program is driving good results with 93 advisors joining us in the quarter. We also continue to build out the Ameriprise Bank, where total assets grew to $8.8 billion in the quarter. Wrapping up AWM, even with interest rates at all-time lows, AWM margin increased 90 basis points sequentially, ending the quarter at a strong 20.7%. Variable annuity sales increased nicely, up 33%, driven by our success of structured product, as well as our annuities without living benefits. As a result, the percentage of VA sales without living benefits grew to 64% of total sales in the quarter. In fact, VUL sales were up 76%. With the continuation of positive flows in markets, assets under management were up significantly, increasing 32% to $564 billion. I'd highlight that Columbia Threadneedle ranked in the top 10 and over the one, five and 10-year time frames in the recent Barron's Best Fund Family ranking, one of only two firms that ranked in the top 10 across all-time periods. We also won seven Lipper Awards in the U.S. this year and over 22 awards in EMEA over the last year. In the quarter, we had net inflows of $4.9 billion, an improvement of $7.3 billion from a year ago. Excluding legacy insurance partner outflows, net inflows were $6.2 billion. Global retail net inflows were $4.6 billion, largely driven by the traction we've seen in North America. In the quarter, we had nine funds that generated over $250 million in net inflows, including five equity and four fixed income funds. In terms of Global Institutional, we had net inflows of $1.6 billion ex legacy partner outflows, driven by our results in EMEA. Upon close, EMEA's AUM will increase significantly to 40% of total AUM at Columbia Threadneedle, which provides a good balance to the U.S. business. It will be accretive on a cash and operating basis by 2023, generating a 20%-plus IRR and have a payback period consistent with the Columbia acquisition of eight years. We remain on track to return approximately 90% of adjusted operating earnings to shareholders in 2021. Excluding the impact from interest, Ameriprise adjusted net operating revenue grew 13%. Advice & Wealth Management and Asset Management businesses' profitability continues to increase, with adjusted pre-tax operating earnings up 35%. Excluding the impact of share price appreciation on compensation, G&A expenses were up 2% as we remain disciplined executing reengineering initiatives. In total, we delivered excellent underlying earnings per share growth of 27%, excluding the net operating loss tax benefit and very strong margins in the quarter. As Jim mentioned, Advice & Wealth Management continued to deliver excellent organic growth during the quarter, with total client assets up 36% to $762 billion. In response to the request from many of you, we are now disclosing total client flows, which increased 21% to $9.3 billion. From a product perspective, we had a terrific growth in our wrap flows, up 55% to $10.4 billion. Cash balances remain elevated at $40.4 billion, with a substantial opportunity for clients to put cash back to work in the future. On page eight, financial results in Advice & Wealth Management were strong, with underlying adjusted operating earnings up 30% to $389 million after the $78 million interest rate headwind. Adjusted operating net revenues were up 16% to $1.9 billion, driven by client flows, improved transaction activity and higher market levels. On a sequential basis, revenues increased 6% from strong performance despite fewer fee days in the current quarter. G&A expense increased only 2% including higher volume-related expenses, bank expansion, investments for future growth and elevated share-based compensation. Pretax adjusted operating margin was 20.7%. Adjusting for interest rates, the margin would have been 215 basis points higher. On a sequential basis, pre-tax operating earnings increased 11% and pre-tax adjusted operating margin expanded 90 basis points. Net inflows in the quarter was $6.2 billion, excluding legacy insurance partners, an $8 billion improvement from a year ago. Adjusted operating revenues increased 21% to $828 million, reflecting cumulative benefit of inflows, favorable mix shift toward equity strategies and market appreciation. General and administrative expenses grew 12% from higher compensation expense related to strong performance, Ameriprise share appreciation, as well as the costs associated with increased activity levels. Adjusted for compensation-related expense, G&A increased a more moderate 5%. Putting this together, pre-tax adjusted operating earnings grew 45% with a 43.9% margin. Let's turn to page 10. In the quarter, 64% of retirement product sales did not have living benefit guarantees. This sales shift is already having an impact on our in-force block, with the account value of living benefit riders down from 65% to 63%. Pretax adjusted operating earnings increased 10% to $183 million. Let's turn to page 11. In total, the corporate and other segment had a $21 million loss in the quarter, which was a $29 million improvement from the prior year. Excluding closed blocks, the loss in the corporate segment was $63 million, which included a $15 million investment gain, largely offset by $11 million of higher share-based compensation expense. The year ago quarter had $11 million benefit from Ameriprise share price depreciation. Long-term care had $46 million of earnings in the quarter. Fixed annuities had a $4 million loss related to the low interest rate environment. Including our liquidity position of $2.3 billion at the parent company, substantial excess capital of $2 billion, 96% hedge effectiveness in the quarter and a defensively positioned investment portfolio. Adjusted operating return on equity in the quarter remained strong at 30%. We returned $491 million to shareholders in the quarter through dividends and buyback. We just announced a 9% increase in our quarterly dividend, and we are on track with our commitment to return 90% of adjusted operating earnings to shareholders this year.

We just announced a 9% increase in our quarterly dividend, and we are on track with our commitment to return 90% of adjusted operating earnings to shareholders this year.

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Net income for the fourth quarter of 2020 was $67 million, or $6.12 per share, compared to net income of $50 million, or $4.48 per share, for the fourth quarter of 2019. Net income for the year was $271 million, or $24.64 per share, compared to net income of $254 million, or $22.73 a share, for the full year of 2019. Net income for the year benefited from a gain of $16.5 million related to the sale of a non-operating parcel real estate, along with a reduced effective tax rate compared to 2019. Sales for the quarter were $525 million, down 1% compared to the sales for the same period last year. Petroleum -- excuse me, petroleum additives operating profit for the quarter was $84 million, up 14.6% versus the fourth quarter of 2019. Shipments increased 1.9% between the periods with increases in lubricant additive shipments in all regions except Asia Pacific partially offset by decreases in fuel additive shipments driven by the North America and European regions. During this past quarter, in addition to funding $21 million of dividends, we spent $33 million on capital expenditures in support of our long range capital plans. Turning to the full year, petroleum additives sales were $2 billion compared to sales in 2019 of $2.2 billion. Petroleum additives operating profit for 2020 was $333 million, a 7.2% decrease compared to 2019 operating profit of $359 million. Shipments decreased 5.2% between full year periods with decreases in both lubricant additives and fuel additives shipments. The effective tax rate for 2020 was 18.3% compared to 23.3% for 2019. During the year, we funded capital expenditures of $93 million, paid dividends of $83 million and repaid $45 million of borrowings on our revolving credit facility. We also purchased 271,000 shares of our common stock for a cost of $101 million. Along with our substantial investments in petroleum additives from both the capital expenditure and R&D investment perspective, we returned value to our shareholders through dividends and share buybacks totaling $184 million. We ended the year with a very healthy balance sheet and with net debt to EBITDA at 1.1 times. As we have stated before, we are comfortable maintaining net debt to EBITDA in the 1.5 to 2 times range, and at times, may go outside of that range. In 2021, we expect to see capital expenditures and investments in the $75 million to $85 million range.

Net income for the fourth quarter of 2020 was $67 million, or $6.12 per share, compared to net income of $50 million, or $4.48 per share, for the fourth quarter of 2019.

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Earlier, we reported first quarter consolidated earnings of $0.26 per share, which includes utility earnings of $0.06 per share, earnings associated with our investment in Enable of $0.19 per share, and earnings at the holding company of $0.01 per share. Importantly, we performed our work safely, improving our year-over-year first quarter safety results by 60%, which is a great accomplishment when you consider that 2020 was our second safest year on record. This initiative enables us to essentially future-proof our communications network while saving more than 60% of our standard capital deployment and O&M costs. We now have included $25 million to our 2021 capital investment forecast to reflect the inclusion of these two projects in the first quarter. Last quarter, we stated our expectations for 2021 weather-normalized load being 2.4% above 2020 levels. Adding to our confidence around the return of load is the fact that even during the pandemic, we've continued our trend of strong customer growth, which is up 1.4% over the same period in 2020, driven primarily in our residential and commercial classes. Add to this, the fact that in Oklahoma, gross receipts are up 38% for the month of April, adding to the confidence we have in our business. When adjusted for inflation, our rates are actually 14% below what they were in 2011. So far, this year, those efforts expect to bring an additional 50 megawatts of load by the end of 2021. This combination of strong customer growth and outstanding business and economic development activity puts us on track for sustained load growth of at least 1%. We put in motion our vision to become a pure-play utility, targeting 5% earnings growth based off lower risk investments that will enhance our customers' experience. For the first quarter of 2021, we achieved net income of $53 million or $0.26 per share as compared to a loss of $492 million or $2.46 per share in 2020. At the utility, OG&E's first quarter results were $0.04 lower than 2020, primarily driven by the previously disclosed losses that occurred during the extreme winter weather from the Guaranteed Flat Bill program. As I discussed during our fourth quarter call, the GFB program represents approximately 3% of our load, whereby variabilities in fuel and purchase power costs are not trued up. Our natural gas midstream operations were income of $0.19 per share in the first quarter compared to a loss of $2.84 in 2020. As Sean mentioned, we are seeing strong employment figures in our service territory, and we are especially pleased with the customer growth of 1.4% year-over-year, illustrating the attractiveness of living and working in Oklahoma and Arkansas. Furthermore, our commercial segment is showing encouraging strength, with year-over-year load growth of approximately 6% in the month of March alone, leading to the 1.8% quarterly load increase figure you see on the slide. For the full year, we continue to expect total weather normal load results to be approximately 2.4% higher than 2020 levels. We've made outstanding progress in the quarter toward mitigating the aforementioned GFB program impacts and currently project OG&E full year 2021 results within the lower half of our original guidance range of $1.76 and to $1.86 per share. On the fourth quarter call, we outlined our initial estimate of approximately $0.10 of headwinds associated with the weather event. As I mentioned earlier, our estimates continue to come in at approximately this level, included in the $0.10 of headwinds was estimated financing costs associated with the incremental fuel and purchase power, which is no longer an earnings headwind as we were recently able to obtain regulatory orders in Oklahoma and Arkansas for the deferral of the financing cost. The OG&E team has worked hard during the quarter to further mitigate these impacts and already has line of sight to $0.03 to $0.04 of favorable mitigations, including strong O&M management. Thus, our current estimate of 2021 full year earnings per share is back in the lower half of guidance with three quarters in front of us. As I mentioned to you on our fourth quarter call, our business fundamentals are strong, and we have great confidence in our ability to grow OG&E at a 5% long-term earnings per share growth rate through 2025 off the midpoint of our 2021 guidance of $1.81. On slide 12 and 13, I'd like to update you on the fuel and purchase power costs, the status of our regulatory filings and the securitization path in Oklahoma and Arkansas. As of March 31, fuel and purchase power costs of approximately $930 million were recorded on the balance sheet, consistent with the initial estimates. In Oklahoma, approximately $830 million has been deferred to a regulatory asset with the initial carrying charge based on the effective cost of debt financing. In Arkansas, we have incurred approximately $100 million of cost with the case pending that allows interim recovery of these costs over a 10-year period, including an initial carrying cost that approximates the effective cost of financing. As we noted on our fourth quarter call, we closed on a $1 billion credit commitment agreement that provided short-term funding for our incurred fuel and purchase power costs. While our credit metrics are expected to weaken temporarily due to the fuel and purchase power costs incurred, we believe the metrics will return to the targeted 18% to 20% level once the securitizations are complete. Separately, as a procedural matter, later today, we will update our standard S-3 Chef filing with the SEC, which ensures our continued access to the capital markets. Finally, we remain confident in our ability to drive long-term OG&E earnings per share growth of 5%, which when coupled with a stable and growing dividend, offers an investors an attractive total return proposition.

Earlier, we reported first quarter consolidated earnings of $0.26 per share, which includes utility earnings of $0.06 per share, earnings associated with our investment in Enable of $0.19 per share, and earnings at the holding company of $0.01 per share. At the utility, OG&E's first quarter results were $0.04 lower than 2020, primarily driven by the previously disclosed losses that occurred during the extreme winter weather from the Guaranteed Flat Bill program. We've made outstanding progress in the quarter toward mitigating the aforementioned GFB program impacts and currently project OG&E full year 2021 results within the lower half of our original guidance range of $1.76 and to $1.86 per share. Thus, our current estimate of 2021 full year earnings per share is back in the lower half of guidance with three quarters in front of us.

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In the second quarter, we reported earnings per share of $1.28. We released $350 million in loan loss reserves this quarter supported by our outlook on the economy and continued improvement in credit quality metrics, the pace of which has been better than expected. Net revenue totaled $5.8 billion in the second quarter. Our book value per share totaled $31.74 at June 30, which was 4% higher than March 31. During the quarter, we returned 79% of our earnings to shareholders in the forms of dividends and share buybacks. Following the results of the Federal Reserve's stress tests in late June, we announced that management will recommend that our Board of Directors approve a 9.5% increase in our common dividend in the third quarter payable in October. Slide 4 provides key metrics, including a return on tangible common equity of 20.9%. Strong demand for our instalment loans drove other retail loan growth, while C&I loans increased 0.9%, supported by strong growth in asset-backed lending, partly offset by continued pay down activity and other C&I categories. Average credit card loan balances were stable compared with the first quarter as the payment rates remained high at 38%, reflecting a significant level of consumer liquidity. However, period end balances increased 4.5% on a linked quarter basis as we saw some pickup in activity toward the end of the quarter. Average deposits increased 0.7% compared with the first quarter and grew by 6.4% compared with a year ago, reflecting the significant level of liquidity in the financial system. In the second quarter, our non-interest bearing deposits grew 5.9% linked quarter, while time deposits declined by 8.1%. Time deposits now account for 6% of total deposits compared with 11% a year ago. Our net charge-off ratio totaled 0.25% in the second quarter compared with 0.31% in the first quarter. The ratio of non-performing assets to loans and other real estate was 0.36% at the end of the second quarter compared with 0.41% at the end of the first quarter. We released reserves of $350 million this quarter, reflective of better-than-expected credit trends and a continued constructive outlook on the economy. Our allowance for credit losses as of June 30 totaled $6.6 billion or 2.23% of loans. In the second quarter of 2021, we earned $1.28 per diluted share. These results include the reserve release of $350 million. Net interest income on a fully taxable equivalent basis of $3.2 billion increased 2.4% compared with the first quarter, primarily driven by higher yields and volumes in our investment securities portfolio and favorable earning asset and funding mix shifts, partly offset by lower loan yields. Our net interest margin increased 3 basis points to 2.53%. On a linked quarter basis, non-interest income increased 10%, driven by higher business and consumer spending activity, reflecting broad-based reopenings of local economies. Linked quarter mortgage revenue growth of 15.7% was primarily driven by the favorable linked quarter impact of a change in fair value of mortgage servicing rights, net of hedging activities. In the second quarter, total payments revenues increased 39.5% versus a year ago and was higher by 16.4% compared with the first quarter. Credit and debit card revenue increased 39.4% on a year-over-year basis, driven by stronger credit card sales volumes and higher prepaid card processing activities related to government stimulus programs. Our common equity Tier 1 capital ratio at June 30 was 9.9% compared with our target CET1 ratio of 8.5%. Given an improving economic conditions in the second quarter, we bought back $886 million of common stock as part of our previously announced $3.0 billion repurchase program. For the full year of 2021, we expect -- we currently expect our taxable equivalent tax rate to be approximately 22%.

In the second quarter, we reported earnings per share of $1.28. We released $350 million in loan loss reserves this quarter supported by our outlook on the economy and continued improvement in credit quality metrics, the pace of which has been better than expected. Our net charge-off ratio totaled 0.25% in the second quarter compared with 0.31% in the first quarter. We released reserves of $350 million this quarter, reflective of better-than-expected credit trends and a continued constructive outlook on the economy. In the second quarter of 2021, we earned $1.28 per diluted share. These results include the reserve release of $350 million. Our common equity Tier 1 capital ratio at June 30 was 9.9% compared with our target CET1 ratio of 8.5%.

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We originated $1.9 billion in loans, generated strong loan-related fees, continue to grow deposits and HSA total footings approached $10 billion. Our adjusted earnings per share in Q4 were $0.99, up from $0.96 a year ago. Our fourth quarter performance includes $42 million of pre-tax charges related to the strategic initiatives we announced last quarter. An improved economic outlook with continued uncertainty, along with a flat quarter-over-quarter loan portfolio, supported a $1 million CECL allowance release in the quarter. Our fourth quarter adjusted return on common equity was 11.5% and the adjusted return on tangible common equity in the quarter was 14.2%. On Slide 3, loans grew 8% from a year ago or 2% when excluding $1.3 billion in PPP loans. Commercial loans grew 6% from a year ago or more than $800 million. Deposits grew 17% year-over-year, driven across all business lines. Loan yield increased 4 basis points linked quarter, while deposit costs continue to decline. Slides 4 through 6 set forth key performance statistics for our three lines of business. This is a very strong quarter for Commercial Banking with more than $1.2 billion of loan originations, up solidly from Q3 and down only slightly from a strong 4Q 2019. Loan fundings of $825 million were also up solidly from Q3. Commercial bank deposits are at record levels, up more than 35% from the prior year's fourth quarter. The Commercial Banking loan portfolio yield increased 9 basis points in the quarter, driven by better spreads and enhanced by a higher level of acceleration of deferred fees as we saw payoff activity return to more normalized levels. HSA Bank total footings increased 17% from a year ago and now total nearly $10 billion. Core deposits were up 15% and 13%, excluding the State Farm acquisition, which closed in 2020. We added 668,000 accounts in 2020, 10% fewer than we added in 2019, consistent with industry trends and due primarily to lower enrollments with existing employers as COVID-19 impacted the overall employment environment. HSA deposit costs continue to decline as we remain disciplined in this low interest rate environment and totaled 9% in the quarter -- 9 basis points, excuse me, in the quarter. Community Banking loans grew 5% year-over-year and declined 5% excluding PPP. As indicated on the slide, PPP loans decreased $63 million as we saw repayment and forgiveness activity begin in the quarter. Community Banking deposits grew 14% year-over-year with consumer and business deposits growing 9% and 31% respectively. Deposit costs continue to decline and totaled 16 basis points in the quarter. Net interest income grew $8.3 million from a year ago, driven by overall loan and deposit growth. On Slide 7, we show our commercial loan sectors most directly impacted by COVID, overall loan outstandings to these sectors have declined 10% from September 30th and payment deferrals have declined $64 million or 31%. On Slide 8, we provide more detail across our $20 billion commercial and consumer loan portfolio. The key takeaway here is the payment deferrals declined by 35% to $315 million at December 31st and now represent 1.6% of total loans compared to 2.4% of total loans at September 30th. At year-end, $100 million or 32% of the $315 million in payment deferrals are first time deferrals. And CARES Act and Interagency Statement defined payment deferrals, which are included in the $315 million of total payment deferrals at December 31st, decreased 29% from September 30th and now stand at $201 million. Average securities grew $160 million or 1.8% linked-quarter. Securities represented 27% of total assets at December 31st. Average loans declined $142 million or 0.6% linked-quarter, primarily driven by a $176 million decline in consumer loans, reflecting higher pay down rates in mortgage and home equity portfolios. Prepayment and forgiveness on PPP loans during the quarter totaled $98 million. In Q4, we recognized $7.3 million of PPP deferred fee accretion and the remaining deferred fee balance totaled $27 million at December 31st. Deposits increased $276 million linked-quarter, primarily driven by growth in Community Banking and HSA. The strong growth in deposits allowed us to pay down borrowings, which were lower by $289 million from Q3. At $1.9 billion, borrowings represent 5.2% of total assets compared to 7% at September 30th and 11.6% in prior year. The tangible common equity ratio increased to 7.9% and will be 32 basis points higher, excluding the $1.3 billion and zero percent risk-weighted PDP loans. Tangible book value per share at quarter end was $28.04, an increase of about 1% from September 30th and 3% from prior year. Aggregate adjustments totaled $42 million pre-tax or $31.2 million after tax, representing $0.35 per share. Of the $42 million in adjustments, $38 million is related to our strategic initiatives, which John will discuss further. The remaining $4.1 million is associated with the debt prepayment. The prepayment expense adversely impacted current quarter net interest income and impacted net interest margin by 5 basis points. However, we will benefit by approximately $1.3 million in net interest income per quarter and NIM will benefit by 2 basis points. As highlighted on the previous page, the adjustments total $42 million pre-tax. On an adjusted basis, net interest income increased by $1.3 million from prior quarter. This was a result of a $4.5 million reduction in deposit and borrowing costs, along with $1 million in additional loan income, which was partially offset by a $4 million decline in securities income primarily as a result of elevated prepayments. Taken together, our adjusted net interest margin of 2.8% was flat to third quarter. As compared to prior year, net interest income declined by $11 million. $47 million of the decline was the net result of lower market rates and was partially offset by interest income of $29 million from earning asset growth and $8 million from a reduction in borrowings. Non-interest income increased $1.7 million linked-quarter and $5.9 million from prior year. Loan fees increased $2.5 million from prior quarter as a result of higher syndication, pre-payment and line usage fees. Other income increased $4.4 million reflecting higher direct investment income and swap fees. HSA fee income decreased $3.1 million linked-quarter as Q3 included $3.2 million of exit fees on TPA accounts. Mortgage banking revenues decreased $3 million linked quarter as a result of lower volume on loans originated for sale. The $5.9 million increase in non-interest income from prior year reflects additional loan fees, higher mortgage banking revenue and HSA fee income, partially offset by lower deposit service fees. Non-interest expense of $181 million reflects an increase of $2 million primarily due to technology and seasonal increases in temporary staffing to support the HSA annual enrollment. Non-interest expense decreased $1.5 million or 1% from prior year and our efficiency ratio was 60% in the quarter. Pre-provision net revenue was $116 million in Q4. This compares to $115 million in Q3 and $122 million in prior year. Our CECL provision in the quarter reflects the credit of $1 million, which I'll discuss in more detail on the next slide. And our adjusted tax rate was 22.1%. The allowance coverage ratio, excluding PPP loans, declined from 1.8% to 1.76%, with total reserves of $359 million. Non-performing loans in the upper left increased $3 million from Q3. Net charge-offs in the upper right decreased from the third quarter and totaled $9.4 million after $1.9 million in recoveries. The net charge-off rate was 17 basis points in the quarter. Commercial classified loans in the lower left increased $30 million from Q3 and represented 352 basis points of total commercial loans. Deposit growth of $414 million exceeded total asset growth and lowered the loan-to-deposit ratio to 79%. Our sources of secured borrowing capacity increased further and totaled $12 billion at December 31st. Our common equity Tier 1 ratio of 11.35% exceeds well capitalized by $1.1 billion. Likewise, Tier 1 risk-based capital of 11.99% exceeds well-capitalized levels by $895 million. That being said, we anticipate modest loan growth, excluding the timing of PPP forgiveness and Round 2 originations. We remain on track to deliver an 8% to 10% reduction in core non-interest expense. We announced in December the consolidation of 27 banking centers and we have targeted actions aimed at reducing corporate office square footage over time.

Our adjusted earnings per share in Q4 were $0.99, up from $0.96 a year ago.

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For the third quarter, total sales decreased 28% over the prior year period with organic sales down 26%, driven by lower volumes given the pandemic's impact on our end markets. On a positive note, total sales did improve 14% sequentially from the second quarter, primarily driven by the performance of our Industrial segment. Adjusted operating income decreased 53% compared to a year ago, while adjusted operating margin declined 640 basis points to 11.7%. Earnings per share were $0.30, down 66% from last year, obviously, significant declines from a year ago, but somewhat better than expectations we laid out in July. Exiting the third quarter, all had solid PMI readings of 53 or better. Overall, segment book-to-bill was slightly better than one times and orders grew 24% sequentially from the second quarter. In the third quarter, total Barnes Aerospace sales were down nearly 50% with OEM down 44% and aftermarket down 58%. Despite a second consecutive quarter of 50% down sales, Aerospace delivered adjusted operating margin of close to 10%, a tribute to the quality of the team. The agreement provides for an increase of production share for select parts on LEAP engine programs, extends the term of previous agreements by 10 years for select parts and expands our portfolio of components on LEAP engines. Inclusive of the contract extension benefit, the estimated sales is over $700 million through 2032. As a company, we will work to reduce the energy we use in our factories as measured in carbon dioxide equivalents by 15%, reduce the amount of water we use by 20% and reduce the amount of industrial process waste we generate from our manufacturing operations by 15%. Let me begin with highlights of our 2020 third quarter results. Third quarter sales were $269 million, down 28% from the prior year period, with organic sales declining 26%. We saw a 14% sequential improvement in sales relative to the second quarter. Also, influencing our sales results, the divestiture of Seeger had a negative impact on sales of 4%, while FX had a positive impact of 2%. Operating income was $31.2 million as compared to $67.6 million in last year's third quarter. Operating margin was 11.6%, down 650 basis points. Interest expense of $3.7 million decreased $1.6 million from the prior year period due to lower average borrowings and a lower average interest rate. Other expense decreased by $2.5 million from a year ago as a result of favorable FX. The company's effective tax rate for the third quarter of 2020 was approximately 44% as compared to 23.4% for the full year 2019. Our current expectation for the full year 2020 tax rate is approximately 39%, which includes the recognition of tax expense related to the Seeger sale that occurred in the first quarter. As we look out to next year, given where things stand today, we expect our 2021 tax rate to be in the range of approximately 27% to 29%. Net income for the third quarter was $0.30 per diluted share compared to $0.89 a year ago. Third quarter sales were $197 million, down 15% from a year ago. Organic sales decreased 12%, Seeger divested revenues had a negative impact of 6%, while favorable FX increased sales by 3%. On the positive side of the ledger, total Industrial sales increased 19% sequentially from the second quarter. Industrial's operating profit for the third quarter was $24.4 million versus $34.8 million last year. Operating margin was 12.4%, down 260 basis points. Molding Solutions organic orders and sales were down approximately 10%. Force & Motion Control organic orders were down mid-teens and sales down approximately 20%. Engineered Components organic orders were up 8% with sales down approximately 10%. Sales were $72 million, down 49% from last year. Operating profit was $6.8 million, down approximately 80%, reflecting the lower sales volume and partially offset by cost actions. Operating margin was 9.4% as compared to 23.2% a year ago. On an adjusted basis, excluding $300,000 in restructuring charges, operating margin was 9.9%. Aerospace OEM backlog ended the quarter at $534 million, down 4% from June 2020, and we expect to ship approximately 45% of this backlog over the next 12 months. Year-to-date cash provided by operating activities was $163 million, an increase of approximately $2 million over last year-to-date, driven by ongoing working capital improvements. Year-to-date free cash flow was $133 million versus $124 million last year. And year-to-date capex was $30 million, down approximately $8 million from a year ago. With respect to our balance sheet, our debt-to-EBITDA ratio, as defined by our credit agreement, was 2.8 times at quarter end, up from 2.4 times at the end of June. For the next four quarters, our senior debt covenant maximum, our most restrictive covenant, has increased from 3.25 times EBITDA as defined to 3.75 times. Our third quarter average diluted shares outstanding was 50.9 million shares. For the fourth quarter, we expect organic sales will be lower than last year by approximately 20%, though up approximately 5% sequentially from the third quarter. Operating margin is forecasted to be approximately 11%, while adjusted earnings per share are anticipated to be in the range of $0.27 to $0.35. Forecasted 2020 capex is approximately $40 million, a bit lower than our prior view.

Earnings per share were $0.30, down 66% from last year, obviously, significant declines from a year ago, but somewhat better than expectations we laid out in July. As a company, we will work to reduce the energy we use in our factories as measured in carbon dioxide equivalents by 15%, reduce the amount of water we use by 20% and reduce the amount of industrial process waste we generate from our manufacturing operations by 15%. Let me begin with highlights of our 2020 third quarter results. Third quarter sales were $269 million, down 28% from the prior year period, with organic sales declining 26%. Net income for the third quarter was $0.30 per diluted share compared to $0.89 a year ago. Force & Motion Control organic orders were down mid-teens and sales down approximately 20%. For the fourth quarter, we expect organic sales will be lower than last year by approximately 20%, though up approximately 5% sequentially from the third quarter. Operating margin is forecasted to be approximately 11%, while adjusted earnings per share are anticipated to be in the range of $0.27 to $0.35. Forecasted 2020 capex is approximately $40 million, a bit lower than our prior view.

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