Revenue grew more than 20% with double-digit gains in each business segment.
Lottery same-store sales rose 9% and were up 19% from the third quarter of 2019, demonstrating an improved underlying business growth profile.
Global Gaming revenues increased over 30% and the segment profit margin reached the highest level in seven quarters.
Adjusted EBITDA of $407 million yielded a margin of 41%, which is among the strongest we have achieved.
Leverage improved to 3.8 times, the lowest level in the IGT PLC history and below the 4x threshold we have been targeting for some time.
Our lottery momentum remains strong with the same-store sales up over 50% compared to last year and more than three times Q3 '19 levels.
This builds on our over 20 years partnership with the operator of the French National Lottery, the fourth largest in the world.
We had 18 in total at the show, a mix of both leased and for-sale games.
We are already a leader in the B2B ecosystem, and that is reflected in the results with revenue up over 50% year to date and reaching a 32% adjusted EBITDA margin.
Margins should strengthen as the business gains scale even as we increase investments to support growth.
In the nearly two decades of industry experience with 888.com and bet365, will help drive the strong growth we expect over the next several years.
We intend to provide a special bonus to employees not covered by existing incentive compensation plans who were impacted by furloughs and salary reductions last year.
This will amount to about 5% of the annual base salary for our -- sorry, workforce.
Operating income increased more than 140% year-on-year on high profit flow-through of global Lottery same-store sales growth, including a positive mix impact from Italy lottery sales and strong operating leverage across business segments, primarily associated with savings from the OPtiMa program.
Year-to-date, cash from operations increased 78% to more than $600 million and free cash flow more than tripled to $445 million.
Our quarter and year-to-date results have been impressive across several key financial metrics, driven by solid revenue growth as well as disciplined cost management including the achievement ahead of schedule of over $200 million in OPtiMa structural cost savings.
During the quarter, IGT delivered nearly $1 billion in revenue, over $200 million in operating income and more than $400 million in adjusted EBITDA.
We achieved operating income and adjusted EBITDA margins of 24% and 43%, respectively, bolstered by higher operating leverage.
Sustained strength in player demand drove global Lottery revenue up 14% to $652 million.
Global same-store sales increased 9% year-on-year and 19% compared to Q3 2019, with growth across many geographies and games.
Italy lotteries continue to benefit from strong demand, generating 16% same-store sales growth even after other gaming alternatives gradually return with the reopening of gaming halls at the end of the second quarter.
Same-store sales grew a solid 8% in North America and the rest of the world, driven by continued momentum and the benefit of higher jackpot activity.
Operating income increased 19% to $234 million, and adjusted EBITDA was 12% and to almost $350 million with a strong 53% adjusted EBITDA margin.
Revenue rose 34% to $289 million, driven by solid increases in active units, yield, number of machine units sold and ASPs.
Terminal service revenue increased 44% on a higher number of active machines and growth in total yield.
The installed base in North America increased over 500 units sequentially, driven by North America new and expansion activity and additional placements of multiyear progressive units.
In the rest of world, the installed base was up over 400 units year-on-year and stable sequentially.
Currently, over 95% of our U.S. and Canada casino installed base is active with closures still impacting some cruise ships and capacity restrictions still limiting the number of active machines in Canada.
We sold around 5,700 units globally in the quarter compared to about 3,700 units in the prior year.
In the third quarter, revenue increased 37% year-on-year to $43 million, driven by double-digit increases across both iGaming and sports betting.
High flow through of revenue growth drove profitability significantly higher, with operating income doubling over the prior year to $12 million and adjusted EBITDA increasing 66% to $15 million.
The Digital & Betting segment delivered 36% EBITDA margins in the quarter bolstered by lower jackpot funding and the timing of marketing spend.
We delivered $113 million in cash from operations and $66 million in free cash flow during the third quarter.
Very strong year-to-date free cash flow of almost $450 million, coupled with approximately $900 million in net proceeds from the sale of our Italy gaming business has allowed us to reduce our net debt by over $1.2 billion this year.
We received EUR 100 million payment on the Italy asset sale during the quarter, ahead of the December 2021 to date.
As a reminder, the final payment of EUR 125 million is due in September 2022.
The leverage has improved to 3.8 times, well below pre-pandemic levels and exceeding our target of four times.
And as Marco mentioned, IGT board of directors has reinstated a $0.20 per share quarterly cash dividend to be paid in early December.
I am proud and happy to say that we have already achieved an increase in our ESG rating, lowering our borrowing cost another $0.5 million on an annual basis.
We achieved our '21 goal of delivering over $200 million in OPtiMa structural cost savings ahead of schedule and expect more benefits to materialize as the Global Gaming segment continues to scale.
We generated record level of cash flow so far this year, which allowed us to significantly pay down debt and improve our leverage to 3.8x.
And lastly, IGT board of directors have instated a $0.20 per share quarterly cash dividend, signaling my confidence in our long-term outlook and providing a nice return of capital to shareholders.
On the back of very strong year-to-date results, we are raising our outlook as we currently expect to deliver revenue of approximately $4.1 billion, operating income of about $900 million and total depreciation and amortization of between $700 million and $725 million.
This represents a positive impact of about 300 basis points on our operating income margin for the full year.
Free cash flow for the full year is expected to reach record or near record levels with cash from operations expected to range between $850 million and $900 million and capex coming in below $300 million.

Margins should strengthen as the business gains scale even as we increase investments to support growth.
We intend to provide a special bonus to employees not covered by existing incentive compensation plans who were impacted by furloughs and salary reductions last year.
And as Marco mentioned, IGT board of directors has reinstated a $0.20 per share quarterly cash dividend to be paid in early December.
And lastly, IGT board of directors have instated a $0.20 per share quarterly cash dividend, signaling my confidence in our long-term outlook and providing a nice return of capital to shareholders.
On the back of very strong year-to-date results, we are raising our outlook as we currently expect to deliver revenue of approximately $4.1 billion, operating income of about $900 million and total depreciation and amortization of between $700 million and $725 million.
This represents a positive impact of about 300 basis points on our operating income margin for the full year.
Free cash flow for the full year is expected to reach record or near record levels with cash from operations expected to range between $850 million and $900 million and capex coming in below $300 million.


For the third quarter, we achieved consolidated earnings of $0.76 per share versus $0.72 last year, an increase of $0.04 per share or 5.6%.
Included in the results for the third quarter of 2021 were minimal gains on investments held to fund one of the company's retirement plans, as compared to $0.02 per share of gains included in the third quarter of 2020.
Excluding these gains from both periods, adjusted diluted earnings for the third quarter of 2021 were $0.76 per share, as compared to adjusted earnings of $0.70 per share for the third quarter of 2020, an increase of $0.06 per share or 8.6%.
The third quarter contributed to a strong 2021 year-to-date, where we've achieved 11.7% earnings-per-share growth over last year or 10.7% on an adjusted basis.
Consolidated earnings for the third quarter of 2021 were $0.76 per share, as compared to $0.72 per share in 2020.
Adjusted diluted earnings for the third quarter were $0.76 per share, as compared to adjusted earnings of $0.70 per share for the third quarter of 2020.
This represents an increase of $0.06 per share or 8.6%, compared to the adjusted earnings last year.
Our Water segment's reported earnings were $0.62 per share, as compared to $0.57 per share last year.
Excluding the gains on investments, including both quarters adjusted earning at Water segment were $0.62 per share for the third quarter, as compared to adjusted earning of $0.55 per share for the third quarter of last year.
This adjusted increase of $0.07 per share was largely due to higher water operating revenue, less supply costs as a result of new rates for 2021 authorized by the public -- by the California Public Utilities Commission.
Our Electric segment's earnings were $0.04 per share for both periods, an increase in electric operating revenues, less electric supply costs was largely offset by higher operating expenses.
Earnings from our contracted services segment increased $0.01 per share for the quarter, due to a decrease in operating expenses.
Diluted earnings from AWR parent decreased $0.02 per share due to changes in state unitary taxes, as compared to the same period in 2020.
Our consolidated revenue for the quarter increased by $3.1 million, as compared to the same period in 2020, while the revenues increased $4.1 million, due to the third-year step increases for 2021 as a result of passing earnings test.
Contracted services revenues decreased to $1.3 million largely due to lower construction activity, partially offset by increases in management fees, due to the successful resolution of various economic price adjustments.
Our water and electric supply costs were $33.3 million for the quarter, an increase of $1 million from last year.
Consolidated expenses decreased $800,000, as compared to the third quarter of last year.
Interest expense, net of interest income and other increased by $600,000, due to lower gains generated on investments held for retirement plan during the quarter as previously discussed.
This slide reflects our year-to-date earnings per share by segment as reported, fully diluted earnings for the nine months ended September 30, 2021 were $2, as compared to $1.79 for the same period in 2020, included in these results were gains on investments, held to fund a retirement plan, which increased earnings by $0.04 per share and $0.02 per share for the nine months ended September 30, 2021 and 2020 respectively.
Adjusted year-to-date earnings for 2021 were $1.96 per share, as compared to adjusted year-to-date earnings of $1.77 per share for 2020.
This results in a 10.7% increase in adjusted EPS.
Turning to liquidity, net cash provided by operating activities were -- was $81.9 million for the first nine months of 2021, as compared to $87.8 million in 2020.
Our regulated utility invested $105.4 million in company-funded capital projects during the nine months -- first nine months this year, and we estimate our full-year 2021 company-funded capital expenditure to be $130 million to $140 million.
The Governor of California has now proclaimed a state of emergency for all 58 counties within the state and signed an executive order asking all Californians to voluntarily reduce water usage by 15%, as compared to 2020.
Among other things, Golden State Water requested capital budgets of approximately $450.6 million for the three-year rate cycle and another $11.4 million of capital projects to be filed for revenue recovery through advice letters, when those projects are completed.
Regarding our cost of capital application, which was filed in May of this year, we requested capital structure of 57% equity and 43% debt, which is our currently adopted capital structure.
A return on equity of 10.5% and a return on rate base of 8.18%.
On July 12th of this year, the Governor of California approved almost $1 billion in relief funding for overdue Water Customer Bills and almost $1 billion in relief funding for overdue Electric Customer Bills.
Funds for both water and electric utility relief are expected to be distributed to utilities during the fourth quarter of 2021, for the first quarter of 2000 -- for the first quarter of 2022.
The adopted weighted average water rate base has grown from $752.2 million in 2018 to $980.4 million in 2021, a compound annual growth rate of 9.2%.
The rate base amounts for 2021 do not include any rate recovery for advice letter projects.
ASUSs earnings contribution increased by $0.01 per share to $0.11 during the third quarter of 2021, as compared to the same quarter last year, largely due to a decrease in overall operating expenses.
For the year-to-date September 30th, 2021 ASUSs earnings contribution is $0.05 per share higher than last year, primarily due to an overall increase in construction activity and management fee revenue, as well as a decrease in overall operating expenses, including lower, legal and other outside services costs, labor cost and maintenance expense.
We reaffirm our projection that ASUS will contribute $0.45 to $0.09 per share for 2021.
Given the uncertainties we project ASUS to contribute the same range of earnings $0.45 to $0.49 per share for 2022.
Last week, the Board of Directors approved a fourth quarter dividend of $0.365 per common share.
If you recall last quarter, the Board of Directors approved a 9% increase in the annual dividend from $1.34 per share to $1.46 per share.
Currently, our dividend policy is to provide a compound annual growth rate of more than 7% over the long-term.
Compound annual dividend growth rate for the quarterly dividend is 9% over the last five years and nearly 10% over the last 10-years.
Our log and consistent history of dividend payments dates back to 1931.

For the third quarter, we achieved consolidated earnings of $0.76 per share versus $0.72 last year, an increase of $0.04 per share or 5.6%.
Excluding these gains from both periods, adjusted diluted earnings for the third quarter of 2021 were $0.76 per share, as compared to adjusted earnings of $0.70 per share for the third quarter of 2020, an increase of $0.06 per share or 8.6%.
Consolidated earnings for the third quarter of 2021 were $0.76 per share, as compared to $0.72 per share in 2020.
Adjusted diluted earnings for the third quarter were $0.76 per share, as compared to adjusted earnings of $0.70 per share for the third quarter of 2020.
The rate base amounts for 2021 do not include any rate recovery for advice letter projects.


We are experiencing the highest level of tower activity in our history, resulting in a year of outsized growth as we now anticipate 12% growth in AFFO per share for full year 2021, meaningfully above our long-term annual target of 7% to 8%.
Our current 7% to 8% growth target was established in 2017 when we expanded our fiber and small cell strategy through the completion of our largest acquisition.
This 7% to 8% growth target was an increase of 100 basis points from our prior target since we expected a diverse portfolio to increase our ability to consistently drive long-term growth.
Since that time, the strategy has worked better than expected as we have grown our dividend per share at a compounded annual growth rate of 9%, with some years being driven by outsized growth in our fiber and small cell business like last year, and other years like this one being driven by higher growth in our tower business.
While driving strong growth in our tower business this year, the initial focus by our customers on towers has also led to some delays in our small cell deployment, shifting the timing of when we expect to complete the nearly 30,000 small cells contractually committed in our backlog.
When combined with zoning and permitting challenges as well as the previously disclosed Sprint cancellation, we now expect to deploy approximately 5,000 small cells in each of this year and next year with the remaining nearly $20,000 from our current backlog completed beyond 2022.
With more than 50,000 small cells on air, we have already seen how important small cells are as a key tool used by the carriers to add network capacity by reusing their spectrum over shorter and shorter distances.
With that view in mind, we've invested nearly $40 billion in shared infrastructure assets that we believe are mission-critical for today's wireless networks and sit in front of what is expected to be a massive decade-long investment by our customers to deploy 5G in the U.S. As you can see on slide four, our tower and fiber investments are at two different stages of development and maturity.
Our tower investment began more than 20 years ago at an approximately 3% yield, when we built and acquired assets that we could share across multiple customers.
As we have proven out the value proposition for our customers over time, our tower assets now generate a yield on invested capital of 11% with meaningful capacity to support additional growth.
As we realize the wireless network architecture would need to evolve with 4G, requiring a network of cell sites that would be much denser and closer to end users, we expanded our shared infrastructure offering beyond towers, establishing the industry-leading small cell business in the U.S. It's encouraging that the business is already generating a current yield on invested capital of more than 7%, given the relative immaturity of these investments.
Looking at a collective view of how these five markets have performed over the last year on slide five, growth from both small cells and fiber solutions has contributed to an incremental yield of 7% on the approximately $200 million of incremental net capital investment.
Adjusted for the timing impacts associated with the large in-process small cell project, where capital investment has occurred in advance of the corresponding revenue and cash flows, the incremental yield is approximately 8%.
This incremental yield resulted in a modest decline in the combined cash yield from 9.2% a year ago to 9% currently.
This is in line with our expectations as we have invested in new small cells at a 6% to 7% initial yield that we expect to grow over time as we lease up those assets to additional customers.
During the last year in these markets, we have added more than 500 route miles of new high-capacity fiber to support the deployment of approximately 2,000 small cells.
Importantly, approximately 40% of the small cells deployed were co-located on existing fiber with the balance representing new anchor builds in attractive areas of these markets where we expect to capture future small cell and fiber solutions demand.
This is true because we have more time to add customers to existing assets, which is consistent with our historical experience with towers, where we have, on average, added about one tenant -- one new tenant every 10 years.
Importantly, during the last 12 months, we achieved strong yields on incremental invested capital in Denver, increasing the market yield by 70 basis points.
The best example to point to here is Philadelphia, where despite having a less mature capital base and lower node density than Phoenix, it is generating a similar yield on invested capital of nearly 10% due primarily to the higher contribution from fiber solutions.
Over the last year, the market yield in Philadelphia has contracted by 60 basis points due to a combination of a lack of small cell activity as this was not a priority market for our customers and more muted growth from fiber solutions.
As has been obvious to all of us over the last 18 months, connectivity is vital to our economy and how we live and interact with one another.
Importantly, none of this is possible without a team at Crown Castle that embraces diversity and inclusion, ensuring that our employees and our business partners are empowered to help us serve our customers, connect our communities and build the future of communications infrastructure in the U.S. So to wrap up, we expect to deliver outsized AFFO per share growth of 12% this year as we capitalize on the highest tower activity levels in our history with our customers deploying 5G at scale.
Our diversified strategy of towers and small cells has driven higher growth than expected as we have grown our dividend at a compounded annual growth rate of 9% since we expanded our strategy in 2017.
And looking forward, I believe our strategy to offer a combination of towers, small cells and fiber solutions, which are all critical components needed to develop 5G will extend our opportunity to deliver dividend per share growth of 7% to 8% per year.
The elevated tower activity drove strong second quarter financial results and another increase to our full year outlook, which now includes an expected 12% growth in AFFO per share.
Site rental revenue increased 8%, including 5.3% growth in organic contribution to site rental revenue.
This growth included 8.6% growth from new leasing activity and contracted escalators net of 3.3% from nonrenewal.
The higher activity levels also drove a $40 million increase in contribution from services when compared to second quarter 2020, leading to 15% growth in adjusted EBITDA and 18% growth in AFFO per share.
With the strong second quarter and continued momentum, we have again increased our full year outlook, highlighted by a $30 million increase to adjusted EBITDA and a $20 million increase to AFFO.
The higher activity in towers drove the majority of these changes to our outlook including an additional $15 million in straight-line revenue, a $45 million increase to the expected contribution from services and $15 million of additional labor costs.
The lower expected volume of small cells deployed this year that Jay discussed earlier results in a $10 million reduction in organic contribution to site rental revenue, which translates to a 20 basis point reduction in the expected full year growth in consolidated organic contribution to site rental revenue to 5.7%.
Our expectations for the contribution to full year growth from towers and fiber solutions remains unchanged at approximately 6% for towers and 3% for fiber solutions, with small cell growth now expected to be approximately 10% compared to our previous outlook of approximately 13% growth.
During the second quarter, capital expenditures totaled $308 million, including $19 million of sustaining expenditures, $60 million of discretionary capital expenditures for our tower segment and $223 million of discretionary capital expenditures for our fiber segment.
Our full year expectation for capital expenditures has reduced to $1.3 billion from our prior expectation of $1.5 billion, primarily attributed to the reduction in small cells we expect to deploy this year.
Specifically, since our first investment-grade bond offering in early 2016, we have increased the weighted average maturity from just over five years to nearly 10 years, increased our mix of fixed rate debt from just under 70% to more than 90% and reduced our weighted average borrowing rate from 3.8% to 3.2%.
Consistent with that focus, we issued $750 million of 10-year senior unsecured notes in June at 2.5% to refinance outstanding notes maturing in 2022 and to repay outstanding borrowings on our commercial paper program.
We are capitalizing on those positive fundamentals and expect to deliver a great year of growth with AFFO now expected to grow 12% for the full year 2021, meaningfully above our long-term annual target of 7% to 8%.
Our diverse portfolio of assets and customer solutions has performed better than expected since we meaningfully augmented our fiber footprint with a large acquisition in 2017 as we have grown our dividend per share at a compound annual growth rate of 9% over that time.
We continue to invest in new assets that we believe will allow us to grow our dividend per share at 7% to 8% per year going forward.
This growth provides a very attractive total return opportunity when combined with our current approximately 3% dividend yield, and we believe our investments in new assets will extend this opportunity into the future.


Our We Stand Together College Scholarship, a $10 million multi-year commitment to support underrepresented students.
We held an Investor Day to outline our strategy and growth trajectory through fiscal year 2025, a trajectory that I believe we are well on track to hit and we raised almost $360 million through a convertible note offering to facilitate further investment in both organic and inorganic growth.
In our General Education business, we saw student enrollment increase by almost 50%.
Our Career Learning business finished the year with over $250 million in revenue.
This is an increase from less than $10 million just four years ago, a 150% compounded annual growth.
This year, we saw a growth of over 125% to almost 30,000 students.
We will continue our focus on IT and healthcare training because these industries are projected to add more than 2.5 million new positions in the US by 2029.
We will also look for ways to invest behind and expand our adult learning offerings with a lens for making Career Learning a $1 billion plus business.
So by 2030, our goals are to graduate over 100,000 students from our Stride career high school program, to graduate hundreds of thousands of students from our adult programs, and to achieve leading graduation of learning growth rates for over a million students.
The COVID-19 pandemic has raised consumer awareness around the need for and the benefits of online education in grades K through 12 and in adult learning.
We still anticipate achieving revenue of $1.9 billion to $2.2 billion, adjusted operating income of $250 million to $350 million by the year 2025.
Revenue for the full fiscal year 2021 was $1.54 billion, an increase of 48% over the prior fiscal year.
Adjusted operating income was $161.4 million, up 160% compared to the prior year.
Capital expenditures were $52.3 million, an increase of $7.3 million over last year.
Revenue from our General Education business increased $346 million or 37% to $1.28 billion.
General ed enrollments rose 45% year-over-year to more than 156,000, while revenue per enrollment declined 5%.
Career Learning revenue rose to $256.6 million in FY '21, an increase of 140%.
Gross margins were 34.8%, up 140 basis points compared to fiscal 2020, driven by an increased contribution from the higher margin adult learning businesses and lower costs from efficiencies and automation initiatives.
We are confident that we will achieve our 36% to 39% gross margin targets much sooner than fiscal 2025, which was our original target communicated during our November 2020 Investor Day.
Selling, general and administrative expenses were $424.4 million, up 35% from fiscal 2020.
Adjusted EBITDA of $239.9 million reflects an increase of 87% over FY '20.
Adjusted EBITDA margin improved 400 basis points from 12% of revenue in FY '20 to 16% in FY '21.
Stock-based compensation expense came in at $39.3 million, up 67% year-over-year, driven by the timing of certain stock-based grants tied to our Career Learning business.
We currently expect stock-based compensation expense to decline to a range of $30 million to $34 million in FY '22.
Interest expense totaled $18 million for fiscal 2021, in line with the expectations we provided last quarter.
This consisted of approximately $5 million in cash interest and $13 million in non-cash amortization of the discount in fees on our convertible senior notes.
Our full year tax rate for FY '21 was 26%, below the guidance range we provided last quarter.
In FY '22, we anticipate an increase in non-deductible compensation that will cause our tax rate to be closer to the 28% to 30% range.
Capital expenditures for the year totaled $52.3 million, up 16% from the prior year, due mainly to higher capitalized software development costs associated with adult learning, automation and improvements to our platforms.
Capex, as a percent of revenue was 3.4% and that is lower than our historical average of approximately 4% to 5% over the past few years.
Free cash flow defined as cash from operations less capex totaled $81.9 million for FY 2021.
This was approximately $45 million below the expectations provided at Investor Day last November due entirely to the timing of receipts, which drove lower than expected cash from operations.
Finally, we ended the year with cash and cash equivalents of $386.1 million, an increase of $173.8 million compared to the same period a year ago.
Our Career Learning assets, which accounted for less than $7 million of revenue four years ago, generated over a quarter billion dollars in revenue during the year, a sign of the tremendous demand for Career Education offerings, and Stride's innovation and leading position within this market.

Our Career Learning business finished the year with over $250 million in revenue.
We still anticipate achieving revenue of $1.9 billion to $2.2 billion, adjusted operating income of $250 million to $350 million by the year 2025.


Our total sales for the third quarter were $128.7 million, an increase of 13.3% over the $113.6 million in the same period last year.
Total utility water product line sales increased 12.2%.
Excluding approximately $10 million of sales from the s::can and ATI acquisitions, core utility water revenues increased 1.7% year-over-year.
The flow instrumentation product line did not escape the impact of production limitations from component shortages, but delivered a strong 18.5% year-over-year increase in sales.
Starting with gross margins, we increased gross profit dollars by $6.2 million and as a percent of sales, gross margins improved 20 basis points to 39.8% from 39.6%.
SEA expenses in the third quarter were $31.7 million consistent with the first two quarters on a dollar basis, with sequentially improved leverage as a percent of sales to 24.7%.
SEA expenses increased $6.2 million year-over-year with the inclusion of the water quality acquisitions as well as more normalized pandemic impacted expenses such as travel.
As a result of the above, overall operating profit margin was 15.1% compared to a record 17.2% in the prior year quarter.
The income tax provision in the third quarter of 2021 was 18.3%, below the prior year's 23.9% and our normalized rate in the mid 20% range due to a discrete favorable income tax benefit related to equity compensation transactions.
In summary, earnings per share was $0.54 in the third quarter of 2021, an increase of 6% from the prior year's earnings per share of $0.51.
Working capital as a percent of sales was 25.6%, an increase of 140 basis points compared to the prior quarter-end.
Free cash flow of $13.9 million was lower than the prior year, the result of this higher working capital.
On a year-to-date basis, free cash flow conversion of net earnings is 125%.
As we enter fourth quarter and look to 2022, our backlog is supportive of continued sales growth with the level of quarterly sales quite frankly dependent on the level of supply chain disruption.

Our total sales for the third quarter were $128.7 million, an increase of 13.3% over the $113.6 million in the same period last year.
In summary, earnings per share was $0.54 in the third quarter of 2021, an increase of 6% from the prior year's earnings per share of $0.51.
As we enter fourth quarter and look to 2022, our backlog is supportive of continued sales growth with the level of quarterly sales quite frankly dependent on the level of supply chain disruption.


We reported Q2 revenue of $667 million that's up 27% and cash earnings per share of $3.15, up 38%.
Organic revenue growth came in at 23% for the quarter, our full AP outsourcing platform segment, up 53% versus Q2 last year.
Our same-store sales metric improved to plus 18%, so hardness of 18%, many of the sectors in our client base recovering.
Retention, record level, we reached nearly 94%, an all-time high since we've been reporting the metric.
And interestingly, our global fuel card business reached 92% retention, also an all-time high.
Credit losses remain very good, running at historic levels and sales outstanding in the quarter finishing up almost two times last year's Q2 and up 6% against 2019.
So, today, we're raising guidance to $2.765 billion at the midpoint for full year revenue, raising cash earnings per share at the midpoint to $12.90.
As a reminder, cash earnings per share guidance up nearly $0.60 from the start of the year.
So, we opened the year at $12.30; today, $12.90, so obviously, better than we outlooked.
So, first, the revenue growth will run about 20% ahead of last year and high single-digits really above the second half 2019 baseline.
Our Q4 earnings per share profit guidance implies nearly a $14 annualized cash earnings per share exit rate.
We've already exited about $10 million of run rate payroll expense.
We're expecting the businesses to grow about 20% on the top on a pro forma basis next year and together deliver incremental cash earnings per share in 2022 in the $0.50 to $0.70 range, so big upside.
You'll see some comparisons of spend where the cost of public charging is about 70% of fossil fuel charging.
So first is digital and particularly digital selling, which now in Q2 has reached about 60% of all our new fuel card sales globally coming to us digitally.
We've redesigned our maximize sales conversion, and we're beginning investments at the top of the funnel in the form of digital TV, radio, Facebook advertising, which is driving about 50% more visitors to our websites, so obviously leading to incremental sales.
The last innovation I'd like to touch on is our effort to transform our fuel card UI, which is used by over 100,000 clients, really into a broader payment platform.
Our second half guidance calls for nearly $7 in cash earnings per share for the second half or approximately $14 annualized, again, forecasting record sales for the full year, which will flow revenue into next year.
We'll roll off $1 billion in interest rate hedges in January.
That will free up about $0.20 of incremental cash EPS.
And lastly, our two newest acquisitions, hoping to contribute in the $0.50 to $0.70 range of incremental cash EPS.
For Q2 of 2021, we reported revenue of $667 million, up 27%; GAAP net income up 24% to $196 million; and GAAP net income per diluted share up 26% to $2.30.
Adjusted net income for the quarter, or ANI, increased 36% to $268 million and ANI per diluted share increased 38% to $3.15 as we finally lapped the worst of COVID.
Organic revenue growth improved 29 points sequentially to up 23% on a year-over-year basis, driven by strong sales, record retention levels, and same-store sales recovery.
Corporate payments was up 32% in the second quarter, led by our full AP solutions.
T&E card revenue was up 58% year-over-year, rebounding significantly as business activity and travel began to resume.
Cross-border revenue was up 25%.
And finally, virtual card revenue was up 13%.
Fuel was up organically 19% year-over-year with strong retention trends and record digital sales helping to drive the performance.
Tolls was up 9% compared with last year and showed impressive performance in light of the lockdowns in place for much of the quarter.
We also added 25% more fuel stations to our tag acceptance network during the first half with plans to add another 50% during the second half.
Lodging was up 39%, with workforce up 36%.
Airline lodging was up 49% as domestic air travel recovered faster than expected but still remains below historical norms.
Gift organic growth was 22% year-over-year, benefiting from continued retailer embrace of the online sales channel.
Our operating expenses were up 18% to $370 million, totaling 55% of revenue.
Operating margins improved four points from last year to 45% due to recovering volumes that have higher margins, higher fuel prices, and solid expense control.
In the quarter, bad debt was $6 million or two basis points.
Interest expense increased 7% to $34.7 million due to a $6.2 million charge associated with our debt refinance, a higher balance on the new Term B note, partially offset by lower borrowings on our revolver and lower LIBOR rates on the unhedged portion of our debt.
Our effective tax rate for the second quarter was 25.2%, similar to last year, and reflects a $6.5 million adjustment to our deferred tax position due to a rate change in the UK.
We ended the quarter with $1.3 billion of unrestricted cash.
We also had approximately $1.2 billion of undrawn availability on our revolver.
In total, we had $4.1 billion outstanding on our credit facilities and $1 billion borrowed on our securitization facility.
As of June 30th, our leverage ratio was 2.62 times trailing 12-month adjusted EBITDA as calculated in accordance with our credit agreement.
We repurchased approximately 926,000 shares during the quarter for $246 million at an average price of $266 per share.
The Board increased our share repurchase authorization by $1 billion on July 27, which now gives us $1.6 billion of share buyback capacity.
Our high margin, high cash flow business, which generated $268 million of ANI this quarter quickly replenishes capital, allowing us to pursue attractive buying opportunities as they present themselves.
We are raising our full year revenue guidance to between $2.74 billion and $2.79 billion, which is up over $100 million at the midpoint.
We are also raising our adjusted net income per diluted share guidance to between $12.80 and $13 or $12.90 at the midpoint.
We are expecting Q3 2021 adjusted net income per diluted share to be in the range of $3.35 to $3.55.

We reported Q2 revenue of $667 million that's up 27% and cash earnings per share of $3.15, up 38%.
We'll roll off $1 billion in interest rate hedges in January.
For Q2 of 2021, we reported revenue of $667 million, up 27%; GAAP net income up 24% to $196 million; and GAAP net income per diluted share up 26% to $2.30.
Adjusted net income for the quarter, or ANI, increased 36% to $268 million and ANI per diluted share increased 38% to $3.15 as we finally lapped the worst of COVID.
In total, we had $4.1 billion outstanding on our credit facilities and $1 billion borrowed on our securitization facility.
The Board increased our share repurchase authorization by $1 billion on July 27, which now gives us $1.6 billion of share buyback capacity.
We are raising our full year revenue guidance to between $2.74 billion and $2.79 billion, which is up over $100 million at the midpoint.
We are also raising our adjusted net income per diluted share guidance to between $12.80 and $13 or $12.90 at the midpoint.
We are expecting Q3 2021 adjusted net income per diluted share to be in the range of $3.35 to $3.55.


We leverage the strength of our business model by raising over $13 billion for our commercial clients of which we retained approximately 19% on our balance sheet.
We also identified 70 branches for consolidation representing approximately 7% of our network.
We reported net income of $591 million or $0.61 per share for the first quarter.
On a per share basis, this is an increase of 9% from the fourth-quarter results and up significantly from the year-ago period.
We reached a new milestone in our consumer mortgage business with record loan originations of $3 billion for the quarter.
In addition to adding high-quality loans to our balance sheet, consumer mortgage fees were up 135% from the year-ago period.
We reported a record $8.3 billion of originations in 2020, and we expect to eclipse that level this year.
Our common equity Tier 1 ratio ended the quarter at 9.8%, which is above our targeted range of nine to nine and a half percent.
This quarter, we repurchased $135 million of common shares.
Our board of directors also approved our first-quarter common stock dividend of 18 and half cents a share.
Since our acquisition, Laurel Road has generated over $4.6 billion in high-quality loan originations adding high-value digital relationships with healthcare professionals.
As Chris said, it was a strong start to the year with net income from continuing operations of $0.61 per common share, up 9% from the prior quarter and over four times from the year-ago period.
Total average loans were $101 billion, up 5% from the first quarter of last year, driven by growth in both commercial and consumer loans.
PPP loans had an impact of $7 billion in the first quarter of 2021 average balances.
Consumer loans benefited from the continued growth from Laurel Road and as Chris mentioned, record performance from our consumer mortgage business with $3 billion of consumer mortgage loans this quarter.
Linked quarter average loan balances were down 1%, reflecting lower commercial utilization rates and a reduction in average PPP balances.
We had just under $1 billion of PPP forgiveness in the current quarter.
Consumer loans were up 1% from the prior quarter, again related to continued production from consumer mortgage and Laurel Road.
Average deposits totaled $138 billion for the first quarter of 2021, up $28 billion or 25% compared to the year-ago period and up 1.5% from the prior quarter.
The interest-bearing deposit costs came down another 3 basis points from the fourth quarter of 2020, following an 8-basis-point decline last quarter.
We continue to have a strong, stable core deposit base with consumer deposits accounting for over 60% of our total deposit mix.
Taxable equivalent net interest income was $1.012 billion for the first quarter of 2021 compared to $989 million a year ago and $1.043 billion for the prior quarter.
Our net interest margin was 2.61% for the first quarter of 2021 compared to 3.01% for the same period last year and 2.7% from the prior quarter.
Compared to the prior quarter, net interest income decreased $31 million and the margin declined 9 basis points.
The decrease in net interest income was caused by the day count of approximately $14 million, lower loan fees of $8 million and lower loan balances resulting in an additional $8 million reduction to NII.
Non-interest income was $738 million for the first quarter of 2021 compared to $477 million for the year-ago period and $802 million in the fourth quarter.
Compared to the year-ago period, non-interest income increased 55%.
We had a record first quarter for investment banking and debt placement fees, which reached $162 million driven by broad-based strength across the platform.
Record mortgage originations drove mortgage -- consumer mortgage fees this quarter, which were up $27 million or 135% from the first quarter of '20.
Cards and payments income also increased $39 million related to higher prepaid card activity from state government support programs as well as the growth in the core platform.
Other income in the year-ago period included $92 million of market-related valuation adjustments.
Compared to the fourth quarter, non-interest income decreased by $64 million.
Total non-interest expense for the quarter was $1.071 billion compared to $931 million last year and $1.1 billion in the prior quarter.
The increase from the prior year is primarily in personnel expense related to higher production-related incentive compensation, which increased $58 million and the increase in our stock price resulting in a $36 million increase compared to last year.
Employee benefit costs also increased $15 million.
Year over year, payments-related costs reported in other expense were $32 million higher, driven by higher prepaid activity.
Compared to the prior quarter, non-interest expense decreased $57 million.
For the first quarter, net charge-offs were $114 million or 46 basis points of average loans.
Our provision for credit losses was a net benefit of $93 million.
Non-performing loans were $728 million this quarter or 72 basis points of period-end loans, a decline of almost $60 million from the prior quarter.
Additionally, criticized loans declined and the 30- to 90-day delinquencies also improved again quarter over quarter with a 5-basis-point decrease, while the 90-day plus category remain relatively flat.
We ended the first quarter with a common equity Tier 1 ratio of 9.8%, which places us above our targeted range of nine to nine and a half perccent.
Our board of directors approved a first-quarter dividend of $0.185 per common share.
We also repurchased $135 million of common shares under the share repurchase authorization we announced in January of up to $900 million.
This leaves us with a capacity of up to $765 million for the next two quarters.
We have reduced our net charge-off guidance, which is now expected to be in the 35 to 45-basis-point range for the year.
And our guidance for our GAAP tax rate remains unchanged at around 19% for the year.

We reported net income of $591 million or $0.61 per share for the first quarter.
Since our acquisition, Laurel Road has generated over $4.6 billion in high-quality loan originations adding high-value digital relationships with healthcare professionals.
Taxable equivalent net interest income was $1.012 billion for the first quarter of 2021 compared to $989 million a year ago and $1.043 billion for the prior quarter.
For the first quarter, net charge-offs were $114 million or 46 basis points of average loans.
Our provision for credit losses was a net benefit of $93 million.


Finally, I will conclude with comments on the longer-term financial framework we are introducing today and conclude with takeaways.
At Electronics nearly half of the 31% year-on-year revenue increase reflected organic growth with positive trends in electric vehicles, general automotive, appliances and semiconductor equipment.
Scientific revenue continued to grow at a double-digit rate with a 16% year-on-year increase driven by strong demand for COVID vaccine storage.
We now believe that COVID related storage demand is likely to be at the higher end of our previously indicated $10 million to $20 million range in fiscal 2021.
At the Engraving segment, margin improved approximately 100 basis points sequentially due to favorable geographic mix, productivity and cost actions.
Our total backlog realizable under one year was approximately $173 million at the end of the second quarter and approximately 14% sequential increase.
We are on track for over $7 million in annual savings in fiscal 2021 from cost actions and are implementing additional productivity and efficiency initiatives, which will provide further opportunity heading into fiscal 2022.
Finally, our previously announced interest expense and tax rate initiatives resulted in an approximate 15% reduction in interest expense and 510 basis point reduction in tax rate year-on-year in the second quarter fiscal 2021.
We generated strong free cash flow of $17 million in the second quarter and through the first half of fiscal 2021 have achieved 95% free cash flow to net income conversion rate.
During the quarter we also repatriated approximately $17 million from foreign subsidiaries and are on track to achieve our previously announced $35 million repatriation target in fiscal 2021.
We ended the quarter with a net debt to adjusted EBITDA ratio of 0.9 times, and approximately $200 million in available liquidity.
In the second quarter Electronics segment revenue increased approximately $14.3 million or 31.2% year-on-year to $60.1 million, supported by organic revenue growth of approximately 15%.
The recent Renco acquisition also contributed to our revenue growth in the quarter with approximately $6 million in incremental revenue contribution year-on-year.
Electronics operating income increased approximately $2.2 million or 28.1% year-on-year from operating leverage associated with revenue growth, productivity initiatives and profit contribution from Renco, partially offset by increased raw material prices.
Our new business opportunity funnel has increased to $56 million across a broad range of markets and is expected to deliver $12 million of incremental sales in fiscal 2021.
Our near-term backlog is very healthy with backlog realizable under a year increasing $15 million or 25% sequentially in the fiscal second quarter.
Revenue decreased just under 1% year-over-year to approximately $37.9 million and operating income was $6.5 million or a 6% year-over-year decrease.
Sequentially, revenue increased 2.5% excluding foreign exchange and operating margin improved approximately 100 basis points to 17.1%, reflecting favorable geographic mix and our productivity and cost actions.
Laneway sales increased approximately 9% sequentially to $12.9 million focused around soft trim tools, laser engraving and tool finishing.
Scientific segment revenue increased 16.1% year-on-year to $17.9 million largely due to positive trends at retail pharmaceutical chains and medical distribution companies, much of it associated with the demand for COVID vaccine storage.
Operating income increased 4.4% year-on-year to $4.2 million reflecting the volume increase balanced with investments to support our growth opportunities.
The segment's backlog realizable under a year increased approximately $4 million or 65% sequentially compared to fiscal first quarter 2021.
We expect COVID vaccine storage demand to come in at the high end of our previously indicated $10 million to $20 million sales range in fiscal 2021.
On a year-over-year basis, Engineering Technologies revenue and operating income decreased approximately 33.9% and 60.2% to $17.5 million and $1.4 million respectively.
On a sequential basis, segment operating margin increased approximately 500 basis points on a similar revenue level to fiscal first quarter 2021 as a result of product mix and our ongoing productivity actions.
On a year-over-year basis, Specialty Solutions revenue decreased approximately 17.8% to $22.8 million and operating income of $3.2 million or a 26% year-on-year decrease.
Supporting this outlook, our backlog realizable under a year increased sequentially approximately $3.5 million for 35% compared to Q1 fiscal 2021, reflecting ongoing recovery in food service equipment and refuse end markets.
From a strategy standpoint, our emphasis on shifting hydraulics manufacturing capacity toward higher-margin aftermarket opportunities continues with aftermarket revenue increasing 15% year-on-year.
We continue to focus our efforts on productivity actions and are on track to realize savings of over $7 million in fiscal '21 related to our previously announced cost actions.
We also generated approximately $17 million of free cash flow in the second quarter.
We had approximately 95% free cash flow to net income conversion rate to the first half of fiscal 2021.
On a consolidated basis, total revenue increased 1.7% year-on-year and 3.3% sequentially.
Organic revenue declined 4.3% year-on-year, much of it due to the impact of the pandemic.
Renco contributed approximately $6 million to revenue or 3.9% offset to the organic revenue decline on a consolidated basis.
In addition, FX contributed a 2% increase to year-on-year revenue growth.
On year-on-year basis our adjusted EBIT margin declined by 60 basis points to 11.4%.
On a sequential basis adjusted EBIT margin increased 40 basis points.
Interest expense decreased approximately 17% year-on-year primarily due to lower overall interest rate as a result of the previously implemented variable to fixed rate swaps.
In addition, our tax rate of 20.9% in the second quarter of 2021 was largely due to various tax optimization strategies we began to implement earlier in the fiscal year.
For fiscal 2021 we continue to expect approximately 22% tax rate.
This assumes a tax rate in the mid 20% range in the third quarter and a tax rate in the low 20% range in the fourth quarter of 2021.
Adjusted earnings per share was a $1.05 in the second quarter of '21 compared to $0.99 a year ago.
We continue to consistently generate free cash flow with a conversion to net income of over 140% in the second quarter of '21.
We reported free cash flow of $17 million inclusive of $4.8 million pension payment, compared to $3.6 million a year ago.
This free cash flow increase reflected solid working capital performance as we deleveraged the balance sheet by approximately $9 million in the quarter.
Standex had net debt of $90.9 million at the end of December, compared to $106.2 million at the end of September.
Net debt for the second quarter of '21 consisted primarily of long-term debt of $200 million and cash and equivalents of approximately $109 million with approximately $80 million held by foreign subs.
Standex net debt to adjusted EBITDA leverage ratio was approximately 0.9 at the end of the second quarter with a net debt to total capital ratio of 15.4%.
The Company's interest coverage ratio increased sequentially to approximately 10.3 times.
We had approximately $200 million of available liquidity at the end of the second quarter and continued to repatriate cash with approximately $17 million repatriated during the quarter.
We remain on plan to repatriate approximately $35 million in fiscal '21.
From a capital allocation perspective, we repurchased approximately 36,000 shares for $2.5 million.
There is approximately $35 million left remaining on our current repurchase authorization.
We also declared our 226th consecutive quarterly cash dividend on January 28 of $0.24.
Finally, we continue to expect fiscal 2021 capital expenditures to be between approximately $25 million to $28 million.
We are targeting an adjusted EBITDA margin in excess of 20% compared to the 16.4% we reported in fiscal 2020.
We believe a free cash flow conversion ratio of 100% is achievable under these assumptions, particularly, given our continued working capital focus.
Finally, it is our expectation that with this financial performance and disciplined capital allocation, we will increase our return on invested capital to above 12%.
We will continue to exercise discipline in our capital allocation process as illustrated in this page.
We have recently increased our hurdle for internal growth investments to over 20% IRR.

Finally, I will conclude with comments on the longer-term financial framework we are introducing today and conclude with takeaways.
During the quarter we also repatriated approximately $17 million from foreign subsidiaries and are on track to achieve our previously announced $35 million repatriation target in fiscal 2021.
Supporting this outlook, our backlog realizable under a year increased sequentially approximately $3.5 million for 35% compared to Q1 fiscal 2021, reflecting ongoing recovery in food service equipment and refuse end markets.
Adjusted earnings per share was a $1.05 in the second quarter of '21 compared to $0.99 a year ago.
We remain on plan to repatriate approximately $35 million in fiscal '21.
There is approximately $35 million left remaining on our current repurchase authorization.
Finally, we continue to expect fiscal 2021 capital expenditures to be between approximately $25 million to $28 million.
We will continue to exercise discipline in our capital allocation process as illustrated in this page.


Our first quarter net income totaled $6.8 million or $0.04 per diluted share and FFO totaled 60.2 million or $0.35 per diluted share and in line with consensus estimates.
Portfolio operating income totaled about 68.5 million and was below our fourth quarter estimate.
Termination and other income totaled 2.1 million or 1 million -- 1.9 million below our fourth quarter guidance.
Land gain and tax provision totaled about $2 million or $1.5 million above our fourth quarter guidance.
We had a forecasted land gain of $0.5 million that didn't occur and it was delayed and will now we anticipate occurring in the second quarter.
G&A expense totaled 6.6 or 1.4 million below our $8 million fourth-quarter guidance.
FFO contribution from our unconsolidated joint ventures totaled $6.3 million, slightly below our fourth quarter guidance.
Our first quarter fixed charge and interest coverage ratios were 4.1 and 3.8 times respectively.
Our first quarter annualized net debt-EBITDA increased to 6.5 and is above our current 6.1to 6.3 range, and the increase is due to lower NOI, sequential NOI from the fourth quarter.
As far as other reporting items, Jerry did mention collections has been excellent at roughly 99%.
Less than 100% of deferrals was in our results for the first quarter.
Portfolio changes 2340 Dulles Corner, as previously discussed, with Northrop move out, we have placed this property into redevelopment.
905 Broadmoor, with the expiration of the IBM lease, we have taken this building out of service and it will be demolished at a future date as part of our overall Broadmoor Master Plan.
As a result of that, we did have Broadmoor taken out of our same-store and leasing statistics as of 1-1 of this year.
Portfolio operating income will be about $68 million.
FFO contribution from our unconsolidated joint ventures will total $5.5 million for the second quarter.
1.3 sequential decrease primarily due to some leasing at Commerce Square and our MAP joint venture.
Our second quarter G&A expense will total 6.0 -- will increase from $6.6 million to $8.2 million.
Interest expense will approximate $16 million and capitalized interest will approximate $1.7 million.
Termination fee and other income will total about $1 million for the second quarter.
Net management and leasing and development fees will be about $3 million.
The $7 million -- the $700,000 decrease from the first quarter is primarily due to the timing and volume of the leasing commission.
Income interest and investment income will total $1.7 million consistent with the first quarter.
Land sale and tax provision will be about $1.1 million generating proceeds of about $12 million.
Our CAD remains unchanged at 75% to 81% range and we have -- we have 100 -- and then we have a common dividends of about 98 million, revenue maintain capital of 30 million, revenue create 35 million.
Based on the capital plan outlined above, our line of credit balance will be approximately $132 million, leaving a 168 million of line availability.
We also project that net debt-EBITDA will remain at a range of 6.3 to 6.5, main variable between timing is the development activity.
In addition, our debt to GAV will be in the 42% to 43% range and we anticipate our fixed charge ratios will remain at 3.7 and our interest coverage around 4.
A good -- a good data point, as the pipeline in our development projects increased by 23% during the quarter, evidencing that real focus of flight to quality.
Our planned 3 million square feet of life science at development can create a real catalyst to accelerate the overall pace of the development of Schuylkill Yards.
Private equity is abundant and the debt markets are incredibly competitive evidenced by the 65% loan to cost of Schuylkill Yards West.


For the year, excluding our fine chemistry services business, which was sold in June of 2021, we increased net sales by 11% to $3.3 billion, which was in line with our previous guidance.
Adjusted EBITDA grew 13% in 2021 to $871 million, surpassing the upper end of our guidance.
We expect adjusted EBITDA to grow between 35% and 55% versus 2021, excluding fine chemistry services.
La Negra 3 and 4 is currently in commercial qualification, and we expect to start realizing first sales from this facility in the second quarter.
We now expect 2025 lithium demand of approximately 1.5 million tons, up more than 30% from our previous estimates.
Beyond 2025, we anticipate continued growth with lithium demand of more than 3 million tons by 2030.
In 2021, global EV production nearly doubled to over 6 million vehicles from 3 million in 2020.
By the end of the decade, EVs are expected to account for close to 40% of automotive sales.
When you look at last year's growth rate of nearly 50% and the auto industry's ambitions for a rapid transition to EVs, it's easy to see why demand expectations are so bullish.
La Negra 3 and 4, which will add conversion capacity for our Chilean brine resource in the Salar de Atacama, is currently in the customer qualification process.
As I mentioned earlier, Kemerton 1 reached mechanical completion late last year and is currently in the commissioning phase.
Kemerton 2 remains on track to reach mechanical completion by the end of this year.
This wave of investments will provide Albemarle with approximately 200,000 tons of additional capacity.
That's up from 150,000 tons of capacity originally planned for wave three.
At Greenbushes, Talison continues to ramp production from the CGP 2 facility to meet design throughput and recovery rates.
We expect new products to make up more than 10% of annual bromine revenues by 2025, up from essentially a standing start.
For the fourth quarter, we generated net sales of $894 million, which is an increase of $15 million compared to the prior-year quarter.
Excluding FCS, we grew by 11%.
The fourth-quarter net loss attributable to Albemarle was $4 million, reflecting an increased cost estimate to construct our Kemerton lithium hydroxide plant due to anticipated cost overruns from the impact of pandemic-related issues on the supply chain and labor.
Fourth-quarter adjusted diluted earnings per share of $1.01 was down 14% from the prior year.
The primary adjustment to earnings per share is the $1.13 add-back of that Kemerton revision.
Excluding FCS, fourth-quarter adjusted EBITDA was up 12% from the prior year.
Our second-half sales grew 13% from the first half of the year, following a relatively flat growth since mid-2020.
This acceleration of growth is expected to continue into 2022.
We expect net sales of between $4.2 billion to $4.5 billion and adjusted EBITDA in the range of $1.15 billion to $1.3 billion.
This implies an adjusted EBITDA margin of between 27% and 29%.
As Kent mentioned, capex is expected to increase to the $1.3 billion to $1.5 billion range this year as we accelerate lithium investments to meet increased customer demand.
Lithium's full year 2022 EBITDA is expected to be up 65% to 85%, a significant improvement from our previous outlook.
We now expect volume growth to be up 20% to 30% for the year with the new capacity coming online as well as ongoing efficiency improvements.
Average realized pricing is now expected to increase 40% to 45% compared to 2021 due to strong market pricing as well as the expiration of pricing concessions originally agreed to in late 2019.
Catalyst EBITDA is expected to be up 5% to 15%.
Bromine EBITDA is expected to be up 5% to 10%, slightly above our previous outlook based on strong flame retardant demand supported by macro trends, such as digitalization and electrification.
Volumes are expected to increase based on the expansions we began in 2021.
We begin the year with a baseload production of 88,000 metric tons in 2021, which includes Silver Peak, Kings Mountain, Xinyu, Chengdu, and La Negra 1 and 2.
And you can see that this is virtually a 50-50 split of carbonate and hydroxide.
Therefore, we expect to reach our full 200,000 tons of conversion production by early 2025.
Our procurement cost-saving initiatives and manufacturing excellence projects will be key to offsetting higher raw materials and freight cost as we work to achieve adjusted EBITDA margin of between 27% and 29%.
We'll also continue to work with our customers to improve the sustainability of the lithium supply chain by completing our mine site certifications, Scope 3 greenhouse gas assessments, and analyzing product life cycles.

For the fourth quarter, we generated net sales of $894 million, which is an increase of $15 million compared to the prior-year quarter.
Fourth-quarter adjusted diluted earnings per share of $1.01 was down 14% from the prior year.
This acceleration of growth is expected to continue into 2022.
We expect net sales of between $4.2 billion to $4.5 billion and adjusted EBITDA in the range of $1.15 billion to $1.3 billion.
Volumes are expected to increase based on the expansions we began in 2021.


Revenue in the second quarter was a record $453.8 million, representing year-over-year as well as sequential growth.
As a result, earnings per share also increased year-over-year and sequentially to a record $1.10.
In fact, automotive revenue grew more than 30% from the first quarter and more than doubled from a year ago.
We recently broke ground on a new 1 million square foot building at our campus in Chonburi, Thailand.
This expansion will roughly triple our footprint in Chonburi and will increase our global footprint by approximately 50% to 3 million square feet, providing us with considerable capacity to serve our anticipated growth.
We expect construction to take approximately 1.5 years, which means we could start to see revenue from this facility in approximately two years.
Revenue of $453.8 million was nearly $14 million above the high-end of our guidance range.
Optical communications was $347.8 million or 77% of total revenue, up 1% from Q1.
Non-optical communications revenue was $106 million or 23% of total revenue and increased 14% from Q1.
Within optical communications, telecom revenue was $273.2 million, up 5% from last quarter.
Datacom revenue was $74.6 million, down 10% sequentially.
Silicon photonics revenue was $101.8 million, down 6% from a very strong Q1, but up 24% from a year ago.
100-gig revenue of $128.2 million was down 50% from Q1 while revenue from 400-gig and faster was $104.2 million, up 50% from last quarter and more than doubled from a year ago.
Looking at our non-optical communications business, automotive has grown to become the largest category with record revenue of $47 million in the second quarter, up 34% sequentially and more than 100% from a year ago.
Industrial laser revenue was $33.7 million, down about 1 percentage point from Q1.
Sensor revenue was stable at $2.8 million and other non-optical communications revenue was up 5% to $22.5 million.
Gross margin was 12.1%, up from 12% in the prior quarter.
Operating expenses in the quarter were $12.8 million or 2.8% of revenue.
This produced record operating income of $41.9 million or 9.2% of revenue.
Taxes in the second quarter were $1 million and our normalized effective tax rate was 3%.
Due to tax incentives at our Chonburi facility, which represents a growing portion of our profit, we now expect our effective tax rate to be about 4% for the year.
Non-GAAP net income was also a record at $41.5 million or $1.10 per share.
On a GAAP basis, net income was $35.4 million or $0.94 per diluted share.
At the end of the second quarter, cash, restricted cash and investments were $488.6 million.
Operating cash flow was an inflow of $6.8 million, a decrease from the prior quarter primarily due to increased working capital in support of our strong revenue growth.
With capex of $10.1 million, free cash flow was an outflow of $3.3 million in the second quarter.
We expect incremental capex of approximately $50 million over an estimated 1.5-year construction period.
During the quarter, we repurchased approximately 102,000 shares at an average price of $69.64 for a total cash outlay of $7.1 million.
At the end of the quarter, we had 93 [Phonetic] million remaining in our share repurchase program.
We expect total revenue in the third quarter to be between $455 million and $475 million and earnings per share to be in the range of $1.10 to $1.17 per diluted share.

Revenue in the second quarter was a record $453.8 million, representing year-over-year as well as sequential growth.
As a result, earnings per share also increased year-over-year and sequentially to a record $1.10.
Revenue of $453.8 million was nearly $14 million above the high-end of our guidance range.
Non-GAAP net income was also a record at $41.5 million or $1.10 per share.
On a GAAP basis, net income was $35.4 million or $0.94 per diluted share.
We expect total revenue in the third quarter to be between $455 million and $475 million and earnings per share to be in the range of $1.10 to $1.17 per diluted share.


Organic revenue is up approximately 2% with mid-single-digit growth in our core government businesses, partially offset by COVID-related impacts of about three points from our commercial businesses, consistent with our expectations.
Margins expanded a robust 140 basis points to 18.9%, resulting in earnings per share of $3.18, up 14% and ahead of internal targets.
Free cash flow was $630 million supported shareholder returns in excess of $900 million, including repurchases of $700 million from our recently authorized $6 billion program, with a balance from dividends following our 20% increase in March.
It's been rewarding nearly 10 years with the hard work and dedication of our employees.
Harris grew from a small, niche, defense company to a leading mission solutions defense prime post the acquisition of Exelis and the merger with L3 with revenue today of over $18 billion.
The performance culture and the work environment we created is really special, and we recently were recognized for it by Fortune as a 100 best company to work for in 2021 and earlier this year as a world's most admired company.
In terms of the top line, our Q1 results, coupled with the Biden administration's announcement that the defense budget will continue to grow in FY '22, about 1.5 points versus FY '21, reinforces our optimism for growth.
In the first quarter, we gained traction as we grew 4.8% in our core government businesses with international up double digits, driven by solid growth in aircraft ISR and Tactical radios.
We received eight new awards, maintaining our healthy win rate of about 70% with total awards to date of approximately $400 million.
The administration's focus on climate initiatives, supported by a nearly 30% FY '22 budget increase for NOAA, reinforces the opportunity set for L3Harris as we are a leader in weather payload and ground systems, creating an opportunity of $3 billion over the next decade.
On the air side, we had strong orders on both new platforms such as the F-35 and legacy platforms, including the F-18 and F-16.
In particular, we leveraged our experience with providing F-16 systems and our expertise in software-defined open systems architecture to secure a contract to develop the next-generation electronic warfare suite on international aircraft.
We also closed on the ISR aircraft contract with the NATO customer to missionize a series of G-550s that was still pending parliamentary approval last quarter, and we continue to work on similar opportunities for other customers, which when combined with the NATO award demonstrates our ability to expand our international footprint and represents over $3 billion in potential value over the next several years.
We continue to make progress supporting modernization efforts on both the domestic and international fronts, including a follow-on production order under SOCOM's $255 million multichannel manpack IDIQ contract.
And while limited in what we can say due to its classified nature, our $1 billion intel and cyber business received a follow-on order to provide end-to-end mission solutions within its ground-based adjacency franchise as we continue to deliver against our customers most challenging cyber requirements.
These wins provide long-term visibility and support for our funded book-to-bill of 1.10 in the quarter.
Our total backlog remains above $21 billion, up 6% year-over-year when adjusted for divestitures.
In addition, with considerable recent bid and proposal activity, we're aggressively going after our three-year $125 billion pipeline to deliver sustainable top line growth.
This quarter, we saw the healthiest results since the merger at nearly 19%, which puts us in a strong position to meet the upper end of our full year guidance.
Cost synergies of $33 million, primarily attributable to supply chain and facilities consolidation, put us well on track to deliver up to $350 million of cumulative net benefits in 2021, a year ahead of schedule.
And while we're holding off on updating our $2.3 billion share repurchase target for the year based on our announced and potential divestitures, we still see considerable upside to the plan.
And to reiterate, inclusive of divestitures, we remain on track to deliver on our $3 billion free cash flow commitment in 2022, along with double-digit cash growth on a per share basis, excluding potential tax policy impacts.
Organic revenue was up about 2% as growth in IMS, SAS and CS was partially offset by the expected decline in AS due to the pandemic.
Overall, our core government businesses were up 4.8% reduced by about three points of COVID-related impacts in our commercial businesses.
Margins expanded 140 basis points to 18.9%, with expansion in all four segments, primarily from operational excellence, integration benefits and cost management.
We did better-than-expected in the quarter from stronger E3 and cost synergies of roughly 70 basis points as well as some timing benefits from lower R&D and program mix of approximately 50 basis points.
This, along with share repurchase activity led to earnings-per-share growth of 14% or $0.38 to $3.18, as shown on Slide six.
Of this growth, synergies and operations contributed $0.34, along with a lower share count, pension and interest totaling $0.23, which more than offset divested earnings and headwinds from pandemic-impacted end markets.
Free cash flow of $630 million was the result of solid net income drop-through as well as capex and working capital discipline, with days roughly steady at 55.
And shareholder returns of $909 million were comprised of $700 million in share repurchases and $209 million of dividends.
Integrated Mission Systems revenue was up 5.9%, with growth in all three businesses.
Operating income was up 19%, and margins expanded 180 basis points to 16.5% from cost management, integration benefits and operational excellence.
Funded book-to-bill was impressive at over 1.3 in the quarter.
In Space and Airborne Systems, organic revenue increased 4.1%.
From responsive programs, including SDA tracking in HBTSS, driving high single-digit growth in space, as well as growth from the F-35 platform in mission avionics and double-digit classified growth in Intel and cyber.
Operating income was up 8.6%, and margins expanded 90 basis points to 19.4% from cost management including R&D timing, operational excellence and higher pension income.
Funded book-to-bill was a solid 1.15 for the quarter from strong bookings in our Space and Electronic Warfare businesses.
Next, Communication Systems organic revenue was up 2.9% with high single-digit growth in Tactical Communications, primarily from the continued ramp in U.S. DoD modernization.
Operating income was up 12%, and margins expanded 240 basis points to 25.3% from operational excellence, cost of management and integration benefits.
Funded book-to-bill was 0.92 for the quarter.
Finally, in Aviation Systems, organic revenue decreased 8.3%, primarily driven by COVID-related impacts in our commercial aviation business, consistent with expectations and from program timing in military training.
Operating income was down 13%, primarily from the sale of our airport security and automation businesses.
Margins expanded 120 basis points to 15.7% is operational excellence, cost management, including R&D timing and integration benefits more than offset COVID-related headwinds.
Funded book-to-bill was 0.84 for the quarter.
We're off to a strong start with our first quarter results and performance, and we're confident in our integration and operating expectations, as well as our top line growth of 3% to 5%, supported by a solid 1.10 book-to-bill this quarter.
This puts us in a position to raise the bottom end of our full year earnings per share guidance by $0.10 inclusive of announced divestiture impacts.
On margins, this strong start will likely push us toward the upper end of our range of 18% to 18.5%.
On portfolio shaping, we now expect about $0.10 of dilution from announced divestitures net of buybacks from proceeds.
Embedded in our guidance is $2.3 billion of share repurchases from cash generation, which will be further augmented by over $1 billion in net divestiture proceeds.

Margins expanded a robust 140 basis points to 18.9%, resulting in earnings per share of $3.18, up 14% and ahead of internal targets.
And while we're holding off on updating our $2.3 billion share repurchase target for the year based on our announced and potential divestitures, we still see considerable upside to the plan.
This, along with share repurchase activity led to earnings-per-share growth of 14% or $0.38 to $3.18, as shown on Slide six.
Funded book-to-bill was impressive at over 1.3 in the quarter.
On margins, this strong start will likely push us toward the upper end of our range of 18% to 18.5%.
Embedded in our guidance is $2.3 billion of share repurchases from cash generation, which will be further augmented by over $1 billion in net divestiture proceeds.


As you can see on slide 4, total sales for the third quarter were $113.6 million compared to $108.6 million in the same period last year, an increase of 5%.
In municipal water, overall sales increased 11%, a roughly equal combination of improved order rates and recovery of the backlog built in Q2, which as we noted last quarter was the result of lockdown induced manufacturing disruptions which limited our output.
As noted and as anticipated, flow instrumentation sales declined 18% year-over-year, reflective of the broadly challenged markets and application served globally.
Operating profit as a percent of sales was 17.2%, a 210 basis point increase from the prior year's 15.1% with improved gross profit margins and SEA leverage contributing to the strong results.
Gross margin for the quarter was 39.6%, up 120 basis points year-over-year.
SEA expenses for the third quarter were $25.5 million down $300,000 year-over-year with higher personnel costs, mostly offset by lower travel, trade show and other ongoing pandemic impacted expenses.
The expense run rate was $2.3 million higher than the second quarter's $23.2 million reflecting the lifting of the temporary cost actions taken in the second quarter in response to the rapid onset of the pandemic.
The income tax provision in the third quarter of 2020 was 23.9%, slightly higher than the prior year's 22.1% rate.
In summary, earnings per share was $0.51 in the third quarter of 2020, an increase of 16% from the prior year earnings per share of $0.44.
Working capital as a percent of sales was 23% relatively in line with the prior two quarters.
We again delivered strong free cash flow which at $19.1 million dollars was consistent with the prior year comparable quarter despite the deferral of our federal income tax quarterly instalment payment under the CARES Act from the second quarter into the third quarter.
Our year-to-date free cash flow of $67.8 million was 22% higher than the prior year $55.6 million and is currently tracking at 187% conversion to net earnings.
We ended the quarter with approximately $94 million of cash on the balance sheet as we paid down the small euro line of credit with excess cash.
We continue to have full access to our untapped $125 million credit facility.
Our stable balance sheet and ample liquidity remain a clear source of strength for Badger Meter.

As you can see on slide 4, total sales for the third quarter were $113.6 million compared to $108.6 million in the same period last year, an increase of 5%.
In summary, earnings per share was $0.51 in the third quarter of 2020, an increase of 16% from the prior year earnings per share of $0.44.
Our stable balance sheet and ample liquidity remain a clear source of strength for Badger Meter.


Last evening, we reported strong fourth quarter results with organic revenue up 5%, EBITDA up 9% and earnings per share up 21%.
We also realized significant operational benefits from the business realignment completed earlier in the year, which generated $30 million of annualized SG&A savings in 2020, including $10 million realized in the fourth quarter, resulting in strong profit growth and operating leverage.
Cash flow from operations increased 27% year-over-year, and enabled us to pay down a total of $205 million of debt for the year, above our original $200 million target.
Strong performance continued in our Hygiene, Health and Consumables segment, where organic revenues increased by 5%, including solid organic growth in most geographic regions.
HHC segment EBITDA margins were strong at 15.3%, up 270 basis points year-over-year, reflecting volume leverage, favorable mix, savings from our business restructuring, and good overall cost control.
Construction Adhesives' organic revenue increased 1% versus the prior year with improvements in year-on-year performance for all markets when compared with the second and third quarters of the year.
Construction Adhesives' EBITDA margin was solid at 12.4%, down 80 basis points versus last year, reflecting unfavorable mix and an increase in variable compensation accruals as a result of the stronger top line results in the fourth quarter.
Engineering Adhesives continued to show strong improvement, with organic revenue up 5.6% year-on-year in the quarter, led by double-digit growth in electronics, recreational vehicles, woodworking and panels and solid results in insulating glass and automotive.
Engineering Adhesives' EBITDA margin remained strong at nearly 17%, down 80 basis points versus last year, reflecting an increase in variable compensation as a result of the stronger top line results in the fourth quarter.
Sales growth, improving margins and continued working capital efficiency will enable us to continue to drive strong cash flow and deliver another year of strong debt paydown with a target of paying down another $200 million of debt in 2021.
For the quarter, revenue was up 5.2% versus the same period last year.
Currency had a positive impact of 0.5%.
Adjusting for currency, organic revenue was up 4.7% with volume up 5% and pricing having a negative 0.3% impact year-on-year in the quarter.
Year-on-year adjusted gross profit margin was 27.5%, down 10 basis points versus last year as higher volume was offset by higher variable compensation and unfavorable absorption due to a reduction in inventory.
Adjusted EBITDA for the quarter of $123 million was up 9.4% versus last year and above the high end of our planning assumptions, reflecting strong top line performance, particularly in Engineering Adhesives.
Adjusted earnings per share were $1.06, up 21% versus the same period last year as strong volume growth, lower SG&A and lower interest expense associated with our debt reduction actions drove higher earnings per share than last year.
For the quarter, cash flow from operations of $139 million is up by 27% versus the same period last year, reflecting continued improvement in working capital performance.
This allowed us to continue to reduce debt, paying off $205 million for the full year ahead of our $200 million debt paydown plan.
Based on what we know today, and the planning assumptions that Jim laid out earlier, we anticipate full year organic revenue growth to be in the low to mid-single-digits, and EBITDA to increase by approximately 10% as volume leverage, pricing, manufacturing and supply chain savings and carryover of the restructuring-related savings and SG&A offset higher raw material costs, variable compensation rebuild and higher travel expense.
We expect our 2021 core tax rate to be between 26% and 28% compared to our 2020 core tax rate of about 25%.
Capital expenditures are expected to be approximately $95 million in the 2021 fiscal year, and we expect to devote approximately $200 million of our cash flow after capex investments and dividends to the repayment of debt.
Revenues increased and margins improved sequentially throughout the year, and in the fourth quarter, we delivered 5% organic revenue growth with positive organic growth in each of our segments.
Our customer wins continue to grow, and we are still in the process of implementing changes and optimizing the business with a focus now on driving $20 million to $30 million of efficiencies across our manufacturing network by the end of 2022.
In December, we announced our Advantra hot melt adhesive technology for extreme cold storage of vaccines and medical packaging, which provides a secure bond at minus 70 degrees Celsius.

We also realized significant operational benefits from the business realignment completed earlier in the year, which generated $30 million of annualized SG&A savings in 2020, including $10 million realized in the fourth quarter, resulting in strong profit growth and operating leverage.
Cash flow from operations increased 27% year-over-year, and enabled us to pay down a total of $205 million of debt for the year, above our original $200 million target.
Sales growth, improving margins and continued working capital efficiency will enable us to continue to drive strong cash flow and deliver another year of strong debt paydown with a target of paying down another $200 million of debt in 2021.
Year-on-year adjusted gross profit margin was 27.5%, down 10 basis points versus last year as higher volume was offset by higher variable compensation and unfavorable absorption due to a reduction in inventory.
Adjusted earnings per share were $1.06, up 21% versus the same period last year as strong volume growth, lower SG&A and lower interest expense associated with our debt reduction actions drove higher earnings per share than last year.
This allowed us to continue to reduce debt, paying off $205 million for the full year ahead of our $200 million debt paydown plan.
Based on what we know today, and the planning assumptions that Jim laid out earlier, we anticipate full year organic revenue growth to be in the low to mid-single-digits, and EBITDA to increase by approximately 10% as volume leverage, pricing, manufacturing and supply chain savings and carryover of the restructuring-related savings and SG&A offset higher raw material costs, variable compensation rebuild and higher travel expense.
Capital expenditures are expected to be approximately $95 million in the 2021 fiscal year, and we expect to devote approximately $200 million of our cash flow after capex investments and dividends to the repayment of debt.


As a reminder, in the prior year quarter, we also took several cost saving actions in response to the uncertainty created by the pandemic, which reduced our costs in Q2 last year by approximately $14 million.
In Q2 this year, the return of many of these costs represented a year-over-year expense headwind of approximately $5 million.
Consolidated net sales for the quarter were $335 million, up $65 million or 24% compared to last year.
Consolidated operating income for the quarter was $38.5 million, up $7.2 million or 23% compared to last year.
Consolidated adjusted EBITDA for the quarter was $51.9 million, up $6.5 million or 14% compared to last year.
That translates to a margin of 15.5% in Q2 this year compared to 16.8% last year.
Net income for the quarter was $29.7 million, up from $21.4 million last year.
That equates to GAAP earnings per share for the quarter of $0.48 per share, up 37% from $0.35 per share last year.
On an adjusted basis, earnings per share for the quarter was $0.50 per share, an improvement of 19% compared to $0.42 per share last year.
Order intake for the quarter was again outstanding with orders of $361 million representing an increase of $159 million or 79% compared to Q2 last year.
Consolidated backlog at the end of the quarter set a new company record at $437 million.
That represents an increase of $104 million or 31% compared to Q2 last year and an increase of $133 million or 44% from the end of last year.
In terms of our group results, ESG's net sales for the quarter were $281 million, up $67 million or 31% compared to last year.
ESG's operating income for the quarter was $38.5 million, up $9.9 million or 35% compared to last year.
ESG's adjusted EBITDA for the quarter was $50.6 million, up $9.7 million or 24% compared to last year.
That translates to an adjusted EBITDA margin for the quarter of 18% at the high end of our current target range but down a 110 basis points compared to last year.
ESG reported total orders of $300 million in Q2 this year, an improvement of $142 million or 90% compared to last year.
SSG's net sales for the quarter was $53 million compared to $56 million in Q2 last year, which included a large fleet sale of public safety equipment to a customer in Europe.
SSG's operating income for the quarter was $7.8 million compared to $10.4 million last year.
SSG's adjusted EBITDA for the quarter was $8.7 million compared to $11.7 million last year.
Adjusted EBITDA margin for the quarter was 16.3% compared to a record margin of 20.9% in Q2 last year, which included favorable sales mix and lower operating expenses.
SSG's orders for the quarter were $61 million, up $17 million or 39% compared to last year, with most of the improvement resulting from higher demand for public safety equipment in both domestic and international markets.
Corporate operating expenses for the quarter were $7.8 million compared to $7.7 million last year.
Turning now to the consolidated income statement, where the increase in sales contributed to an $11.3 million improvement in gross profit.
Consolidated gross margin for the quarter was 24.4% compared to 26% last year.
As a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down a 100 basis points from Q2 last year.
Other items affecting the quarterly results include a $1.3 million reduction in restructuring charges, a $2.3 million decrease in other expense and a $700,000 reduction in interest expense.
Tax expense for the quarter increased by $1.9 million, largely due to the increase in pre-tax income levels, partially offset by higher excess tax benefits from stock compensation activity.
Including the effects of these higher tax benefits, our effective tax rate for the quarter was 21.2% compared with 22.2% last year.
At this time, we expect our full year effective tax rate to be approximately 23%.
On an overall GAAP basis, we therefore earned $0.48 per share in Q2 this year compared with $0.35 per share in Q2 last year.
On this basis, our adjusted earnings for the quarter were $0.50 per share compared with $0.42 per share last year.
Looking now at cash flow, where we generated $13 million of cash from operations during the quarter, bringing the year-to-date operating cash generation to $39 million.
For the rest of the year, we are expecting strong cash flow generation, and we continue to target cash conversion of approximately 100% on a net income basis.
We ended the quarter with $169 million of net debt and availability under our credit facility of $268 million.
On that note, we paid dividends of $5.5 million during the quarter, reflecting a dividend of $0.09 per share, and we recently announced a similar dividend for the third quarter.
Some components reported to be part of the deal, which includes a total of $550 billion in new federal investment in U.S. infrastructure include: $110 billion for roads; $73 billion for power infrastructure; $65 billion to expand broadband access; $55 billion for water infrastructure; $46 billion for environmental resiliency; and $11 billion for transportation safety.
Top line growth was largely across the board, with particular strength in the sales of dump truck bodies and trailers, which were up around $15 million from Q2 last year.
Overall, our aftermarket revenues in Q2 this year were up $26 million or 46% year-over-year growing to represent a higher share of ESG revenues for the quarter at around 30%.
Despite these actions and with demand being significantly higher than we had expected, we experienced unfavorable price cost year-over-year headwind of approximately $3 million during the quarter, mostly within our dump truck and trailer business.
Demand for our product offerings continues to be strong as demonstrated by our outstanding second quarter order intake of $361 million.
As a reminder, the American Rescue Plan, COVID relief package passed earlier this year included $1.9 trillion of economic stimulus with approximately $350 billion earmarked for state, local and territorial governments for a variety of purposes, including the maintenance of essential infrastructure, such as sewer systems and streets.
In May, the first $175 billion tranche started to be distributed by the treasury department with a second tranche expected in 2022.
Further, our companywide efforts to raise awareness about vaccines assist eligible employees and gaining access to vaccines and encourage participation levels are paying off with a companywide vaccination rate of approximately 50%.
Domestically, about 2/3 of our businesses have achieved vaccination rates that are higher than the relevant state average.
And most importantly, 100% of our employees that have been affected by COVID has since recovered.
As an example, one of the nation's largest utility companies recently announced plans to bury 10,000 miles of its power lines to reduce the risk of California wildfires.
TRUVAC product demonstrations for the quarter were up 4% from last year, and our education efforts are also having a positive impact on sewer cleaner demand with the inclusion of the optional safe digging package turning our sewer cleaners into a multipurpose vehicle.
As an example, approximately 75% of our air sweeper orders in June were associated with recent product introductions.
We are pleased with the progress we are making at integrating OSW, and the teams are energized by the opportunities identified during the 80/20 improvement training sessions we recently have.
Demand for our products continues to be high with our second quarter order intake, up 79% compared to the prior year, resulting in a backlog entering the second half of the year, which is at a record level.
Assuming no significant delays in our receipt of chassis from our supplier, we are increasing our adjusted earnings per share outlook for the year to a new range of $1.78 to $1.9 from the prior range of $1.73 to $1.85.

Consolidated net sales for the quarter were $335 million, up $65 million or 24% compared to last year.
That equates to GAAP earnings per share for the quarter of $0.48 per share, up 37% from $0.35 per share last year.
On an adjusted basis, earnings per share for the quarter was $0.50 per share, an improvement of 19% compared to $0.42 per share last year.
Order intake for the quarter was again outstanding with orders of $361 million representing an increase of $159 million or 79% compared to Q2 last year.
On an overall GAAP basis, we therefore earned $0.48 per share in Q2 this year compared with $0.35 per share in Q2 last year.
On this basis, our adjusted earnings for the quarter were $0.50 per share compared with $0.42 per share last year.
For the rest of the year, we are expecting strong cash flow generation, and we continue to target cash conversion of approximately 100% on a net income basis.
Demand for our products continues to be high with our second quarter order intake, up 79% compared to the prior year, resulting in a backlog entering the second half of the year, which is at a record level.