We grew revenue 15% operationally, which is once again above the anticipated growth rate for the animal health market, and these results were highlighted by 27% operational growth in our companion animal portfolio with 1% operational growth in livestock.
From a segment perspective, we saw solid balance across our global footprint with the U.S. up 14% and international growing 17% operationally.
Operationally, for the year, China grew 25%, Brazil grew 28% and other emerging markets grew 22%, leading the way for our international performance.
Another major growth driver for the year has been our global diagnostics portfolio, which grew 21% operationally with significant strength in international markets and the continued launch of VetScan Imagyst, our AI-driven diagnostics platform.
Based on the strong revenue performance, we were able to deliver 19% operational growth in adjusted net income for the year while investing significantly in our latest product launches as well as staffing, R&D, and manufacturing projects for future growth.
As a result, we are guiding to full year operational growth of 9% to 11% in revenue.
In January, the Human Animal Bond Research Institute and Zoetis released the results of a new global survey of more than 16,000 pet owners and 1,200 small animal clinics which reinforce how deep the connection is between pets and pet owners and how that dynamic relates to views on veterinary care and the related benefits of pet ownership.
In the study, 92% of respondents said there was no reason they could ever be convinced to give up their pets and 86% said they would pay whatever it takes if their pet needed extensive veterinary care.
In any given year, weather, disease, and market dynamics may have various regional impacts, but the underlying demand continues to be served locally or through global trade across more than 100 markets where Zoetis products are sold.
We see continued growth potential for our dermatology portfolio which surpassed $1 billion in revenue for the first time in 2021.
Our parasiticide, driven by our triple combination, Simparica Trio as well as Revolution Plus, Stronghold Plus, Simparica, and ProHeart 12 will continue to achieve growth as we gain market share in major markets and look at further life cycle innovations and label gains across the portfolio.
Meanwhile, our R&D team, along with external partners, will continue to generate the industry's most productive pipeline in the years to come with more than $500 million in R&D spending in 2021 our largest ever annual investment for R&D.
2021 was an exceptional year for us with revenue of $7.8 billion and adjusted net income of $2.2 billion both exceeding the high end of our November full year guidance range.
Full year revenue grew 16% on a reported basis and 15% operationally with adjusted net income increasing 21% on a reported basis and 19% operationally.
Looking deeper into the 2021 numbers, price contributed 1% to full year operational revenue growth with volume contributing 14%.
Volume growth consisted of 6% from other in-line products, 5% from new products, including Simparica Trio, and 3% from key dermatology products.
Revenue growth was again broad-based with the U.S. growing 14% and international growing 17% operationally.
Our strong performance was driven by our innovative, diverse and durable companion animal portfolio, which grew 27% operationally.
Our livestock business, which faced generic competition on key franchises as well as challenging macro conditions in certain markets, grew 1% operationally on a year-over-year basis.
Performance in companion animal was led by our small animal parasiticide portfolio bolstered by full year sales of Simparica Trio, which generated revenue of $425 million, an increase of $305 million compared to 2020 sales.
Sales of Simparica also grew double digits for the year with operational revenue growth of 13%.
For the year, the Simparica franchise grew 82% operationally with revenue of approximately $0.75 billion.
Our key dermatology products performed incredibly well, growing 24% operationally with approximately $1.2 billion in revenue for the year, performing above our expectations.
Our diagnostics portfolio grew 21% operationally in the year with strong contributions from our U.S. and international segments, and we will continue to make meaningful investments in the coming years to drive global growth.
We posted another strong quarter with revenue of $2 billion, representing an increase of 9% on both a reported and operational basis.
Adjusted net income of $474 million is an increase of 8% on a reported basis and 5% operationally.
Of the 9% operational revenue growth, 1% is from price and 8% from volume.
Volume growth of 8% consisted of 5% from new products, which includes Simparica Trio, 2% from key dermatology products, and 1% from other in-line products.
Companion animal products led the way in terms of -- growth, growing 21% operationally, with livestock declining 6% on an operational basis in the quarter.
Small animal parasiticides were the largest contributor to growth in the quarter where our innovative and diverse flea, tick, and heartworm portfolio was 32% operationally.
Simparica Trio posted revenue of $124 million, representing operational growth of 106% versus the comparable 2020 period and the third consecutive quarter with sales exceeding $100 million.
Meanwhile, our key dermatology products, Apoquel and Cytopoint, again, had significant global growth in the quarter with $316 million of revenue, representing 23% operational growth against a robust prior year in which key derm grew 27% in the fourth quarter of 2020.
Our livestock business declined 6% in the quarter as a result of generic competition for DRAXXIN unfavorable market conditions in the U.S., primarily resulting from elevated input costs as well as softer conditions in China, loss driven by reduced pork prices.
U.S. revenue grew 9%, with companion animal products growing 20% and livestock sales declining by 13%.
U.S. pet care vet practice trends remained robust in Q4, with practice revenue growing approximately 8% with visits growing 3% despite challenging prior year comps.
growth in Simparica Trio was again strong in the quarter with sales of $114 million growing more than 100%.
Key dermatology sales were $216 million for the quarter, growing 22% with Apoquel and Cytopoint each growing significantly.
U.S. livestock fell 13% in the quarter, primarily resulting from our cattle business which, as expected, was challenged by generic competition for Draxxin as well as elevated input costs continuing to weigh on producer profitability.
Moving on to our International segment, where revenue grew 8% on a reported and operational basis in the quarter.
Companion animal revenue grew 23% operationally, and livestock revenue declined 2% operationally.
We are encouraged by the performance of our monoclonal antibodies for OA pain with Librela generating $15 million and Solensia delivering $3 million in fourth quarter sales.
1 pain product in the EU in its first year with the underlying performance metrics being very favorable for future growth.
Reordering rates were in excess of 90%, and compliance rates exceeded our initial expectations.
Therefore, we were extremely pleased to see approximately 40% of Librela and Solensia sales were from patients receiving medication for the first time.
International livestock declined 2% operationally in the quarter as declines in cattle and swine were partially offset by growth in fish and poultry.
Adjusted gross margin of 69.6% increased 190 basis points on a reported basis compared to the prior year resulted from favorable product mix, lower inventory charges, favorable FX, and price.
Adjusted operating expenses increased 12% operationally with compensation-related costs being the primary driver of the 15% operational increase in SG&A as well as 3% operational increase in R&D expenses.
The adjusted effective tax rate for the quarter was 18.6%, an increase of 510 basis points driven by the impact of prior year discrete tax benefits and changes to the jurisdictional mix of earnings.
And finally, adjusted net income grew 5% operationally, and adjusted diluted earnings per share grew 6% operationally for the quarter.
In December, we announced a 30% annual dividend increase continuing our commitment to grow our dividend at or faster than the growth in adjusted net income.
In the quarter, we repurchased approximately $200 million of Zoetis' shares and announced the authorization of a $3.5 billion multiyear share repurchase program.
We are expecting an unfavorable foreign exchange impact versus prior year by approximately $160 million on revenue, which is roughly 200 basis points, and approximately $0.12 on EPS, which is about 250 basis points.
For 2022, we are projecting revenue between $8.325 billion and $8.475 billion, representing 9% to 11% operational growth.
As Kristin mentioned, in 2022, we expect Librela to become a blockbuster product in the first full year of sales with revenue exceeding $100 million largely from the EU markets.
In livestock, we expect generic competition to negatively impact Draxxin revenue by approximately 20% in 2022 comparable to the impact we saw this year.
For the remainder of the P&L, adjusted cost of sales as a percentage of revenue is expected to be approximately 29%, where favorable product mix and price are expected to generate margin expansion.
Adjusted SG&A expenses for the year are expected to be between $2.07 billion and $2.12 billion with the increase from 2021 focused on supporting primary drivers of revenue growth, including investments to support new and existing products as well as diagnostics.
Adjusted R&D expense for 2022 is expected to be between $540 million and $560 million.
Adjusted interest and other income inductions are expected to be approximately $240 million, representing a minimal year-over-year change.
Our adjusted effective tax rate for 2022 is expected to be approximately 20%.
Adjusted net income is expected to be in the range of $2.415 billion to $2.470 billion, representing operational growth of 10% to 13%.
Finally, we expect adjusted diluted earnings per share to be in the range of $5.09 to $5.19 and reported diluted earnings per share to be in the range of $4.75 to $4.87.
2021 was another exceptional year, our best performing year with 15% operational revenue growth and 19% operational growth in adjusted net income.

We posted another strong quarter with revenue of $2 billion, representing an increase of 9% on both a reported and operational basis.
For 2022, we are projecting revenue between $8.325 billion and $8.475 billion, representing 9% to 11% operational growth.
Finally, we expect adjusted diluted earnings per share to be in the range of $5.09 to $5.19 and reported diluted earnings per share to be in the range of $4.75 to $4.87.


Overall, revenue at constant currency grew 14% and every business improved their EBIT performance.
Global Ecommerce revenue at constant currency grew 40% for the quarter and EBIT margins improved nearly 400 basis points on a year-to-year basis.
Revenue was $915 million and grew 14% over prior year.
Adjusted earnings per share was $0.07 and GAAP earnings per share was a loss of $0.18.
GAAP earnings per share includes a $0.22 loss on the refinancing of our debt as well as a $0.02 loss from discontinued operations and $0.01 on restructuring charges.
Free cash flow was a net use of $1 million and cash from operations was $66 million, both an improvement from prior year due to favorable working capital changes largely around the timing of accounts payable and accounts receivable along with improved collections.
During the quarter, we paid $9 million in dividends and made $4 million in restructuring payments.
We invested $43 million in capex as part of our plan to drive future operational efficiencies.
We ended the quarter with $697 million in cash and short-term investments.
Total debt was $2.4 billion.
We took several actions during the quarter to refine our capital structure along with reducing overall debt by $126 million from prior year.
When you take our finance receivables and cash into account with our debt, our implied operating debt is $690 million.
Business services grew 28%, equipment sales grew 12% and rentals were flat to prior year.
We had declines in Support Services of 4%, supplies of 10% and financing revenues of 14%.
Gross profit was $299 million and gross margin was 33%, which was down from the same period last year largely due to the mix and shift of the portfolio, but is an improvement from the fourth quarter.
SG&A was $238 million or 26% of revenue.
This is an improvement of $10 million and 5 points respectively from prior year.
Within SG&A, corporate expenses were $57 million which was up about $14 million over prior year largely due to benefits recognized last year around employee variable-related costs and a sales tax credit.
R&D was $11 million or 1% of revenue and down slightly from prior year.
Adjusted EBIT dollars were $50 million, which was a slight improvement over prior year.
Adjusted EBIT margin was 5%.
Interest expense, including finance interest was $37 million.
Our tax provision on adjusted earnings was a benefit of about $400,000 and includes a benefit associated with an affiliate reorganization.
Compared to prior year, our tax provision benefited earnings per share by about 1.5%.
For purposes of determining adjusted EPS, shares outstanding are approximately $179 million.
Revenue for the segment was $413 million and grew 40% over prior year.
Domestic Parcel Services volumes grew 23%, Cross Border volumes were more than doubled and our Digital Services volumes grew 36%.
EBIT was a loss of $26 million and EBITDA was a loss of $8 million.
Compared to prior year, EBIT improved $3 million and EBIT margin improved nearly 400 basis points.
However, as we move through the quarter, our Domestic Parcel Network improved parcel process per hour by approximately 45% as our labor model continued to mature.
Of the $26 million EBIT loss in the quarter, we saw a loss of $4 million in March and reported positive EBITDA for the month.
We placed one new sorter in a high volume site in the first quarter and expect to roll out more over the next 12 to 24 months.
We expect these to account for approximately 75% of the margin improvement.
Our Presort Services saw the momentum from the second half of 2020 continue into the first quarter.
Revenue was $143 million and grew 2%.
Overall, average daily volumes were flat to prior year where First Class Letter Mail declined 2%, Marketing Mail grew 11% and Marketing Mail Flats and Bound Printed Matter grew 30%.
EBIT was $19 million and EBIT margin was 13%.
EBITDA was $27 million and EBITDA margin was 19%.
Compared to prior year, we improved pieces fed per labor hour by 4% resulting in 85,000 less processing hours.
Revenue was $359 million and declined 3%.
SendTech's shipping related revenues grew at a low double-digit rate to approximately $30 million in the quarter.
The number of labels printed through our shipping offerings grew over 40% and paid subscriptions grew approximately 80%.
Additionally, we are seeing good growth in shipping volumes that our US clients are financing which grew nearly 80% over prior year.
Equipment sales grew 12% over prior year driven by strong placement of our SendPro C, which include a large government deal and we continue to see good placements of our new central mail station, multipurpose device.
We turned in a strong EBIT performance of a $114 million which represents growth of $8 million over prior year and is the second consecutive quarter of EBIT growth.
EBIT margin was 32%, which improved 250 basis points over prior year.
EBITDA was $122 million, EBITDA margin was 34%, both improving over prior year.
Today, about 80% of all US sales transactions are happening through our web or inside sales channel.

Revenue was $915 million and grew 14% over prior year.
Adjusted earnings per share was $0.07 and GAAP earnings per share was a loss of $0.18.
Our Presort Services saw the momentum from the second half of 2020 continue into the first quarter.


Sales increased 20% on a volume increase of 1%.
Compared to the third quarter of 2019, sales increased 25%.
Excluding a partial quarter of the Planters business, organic sales increased 14% and volume declined 2%.
For the quarter, we saw an acceleration in our Foodservice business as sales grew 45% compared to last year.
What is even more impressive is sales increased 17% compared to 2019 pre-pandemic levels.
Hormel Bacon 1 fully cooked bacon, Wholly Guacamole, Fontanini authentic Italian sausages and Hormel Fire Braised meats are all excellent examples of products that are succeeding in today's environment.
Our retail business also showed 9% growth compared to 2020.
Compared to pre-pandemic levels in 2019, this business delivered outstanding growth of 31%.
Sales in the deli channel increased 12% this quarter and are up 16% compared to pre-pandemic levels.
Our International channel delivered impressive growth of 36% compared to 2020 and is 33% above 2019 levels.
On a consolidated basis, diluted earnings per share were $0.32, a 14% decline, compared to 2020.
Adjusted earnings per share were $0.39, a 5% increase.
Turning to the segments, Refrigerated Foods volume decreased 2%, sales increased 19% and segment profit was flat.
Organic volume decreased 3% and organic sales increased 18%.
Nearly every category grew volume and sales compared to last year, with standout performances from products like Hormel Bacon 1, pizza toppings and sliced meats.
Bacon 1, Fire Braised, Fontanini, Applegate and pizza toppings were just some of the items that also grew volume and sales compared to 2019.
Brands like Bacon 1, Austin Blues, Fire Braised and Cafe H are designed to solve for this challenge and have never been as important or in higher demand than they are today.
International delivered its sixth consecutive quarter of record earnings growth, with volume up 2%, sales up 26% and segment profit up 18%.
Organic volume increased 1%, and organic sales increased 24%.
Grocery Products volume increased 4%.
Sales increased 20% and segment profit increased 1%.
Organic volume decreased 6%, and organic sales were flat.
Our MegaMex joint venture delivered excellent results as equity in earnings increased 30%.
Jennie-O volume increased 9% and sales increased 22%, a combination of a foodservice recovery and higher whole bird and commodity volumes drove the volume increase.
Jennie-O Turkey Store segment profit declined 17%, driven by the impact from significantly higher fee and freight costs.
We expect net sales to be between $11 billion to $11.2 billion and for diluted earnings per share to be between $1.65 to $1.69.
We opened a new Columbus charcuterie plant in Omaha, and we immediately invested in Phase 2, representing a major expansion of our pepperoni capacity.
Third quarter sales were $2.9 billion, an all-time record for the company.
Net sales and organic net sales increased 20% and 14%, respectively, compared to last year.
Segment profit increased 2% for the quarter, driven by strong results in the International segment, Foodservice growth and the addition of Planters.
Earnings per share were $0.32.
Adjusted earnings per share, excluding one-time costs and accounting adjustments related to the acquisition of Planters was $0.39, a 5% increase.
Adjusted SG&A was 6.9% of sales compared to 7.6% last year.
Advertising for the quarter was $31 million, an increase of 25%.
Adjusted operating margins for the quarter were 8.7%, a decrease from 10.5% last year.
The effective tax rate for the quarter was 13.3%.
The revised guidance range assumes a full year tax rate between 19% and 20.5%.
We paid our 372nd consecutive quarterly dividend, effective August 16 at an annual rate of $0.98 per share, a 5% increase over 2020.
Capital expenditures were $54 million in the quarter.
The company's target for the capital expenditures in 2021 is $260 million.
In June, we issued $2.3 billion of notes in three, seven and 30-year tranches.
This debt was incremental to the $1 billion of 10-year notes we issued in 2020.
Including the treasury locks, the weighted average cost of debt is 1.6% and the weighted average maturity is 10.4 years.
We are committed to an investment-grade rating and plan to deleverage to 1.5 to 2 times debt-to-EBITDA over the next two to three years.
Hog prices were up 250% compared to 20-year lows last year.
The USDA composite cutout was up 50% compared to last year and 20% compared to the second quarter.
Compared to the prior year, belly prices were 62% higher and trim prices were 27% higher.
However, the rate of the drastic rise in the total pork input costs negatively impacted profitability.
The latest estimates from the USDA indicate pork production for the year to decrease 2% compared to 2020.

Excluding a partial quarter of the Planters business, organic sales increased 14% and volume declined 2%.
On a consolidated basis, diluted earnings per share were $0.32, a 14% decline, compared to 2020.
Turning to the segments, Refrigerated Foods volume decreased 2%, sales increased 19% and segment profit was flat.
Organic volume decreased 3% and organic sales increased 18%.
Sales increased 20% and segment profit increased 1%.
We expect net sales to be between $11 billion to $11.2 billion and for diluted earnings per share to be between $1.65 to $1.69.
Earnings per share were $0.32.
However, the rate of the drastic rise in the total pork input costs negatively impacted profitability.


Approximately 75% of the growth came from increased volumes.
In our Food + Beverage segment, top line growth was strong across each market segment with about 60% of the growth coming from price adjustments related to the passing through of higher resin costs.
We have entered into an agreement to acquire 80% of Weihai Hengyu Medical Products, a leading manufacturer of elastomer components for injection devices in China.
As previously announced, 3BL Media evaluated the 1,000 largest public U.S. companies on ESG performance, and Aptar is honored to be named among the top 50 companies who are leading in corporate citizenship.
Canvas is a highly accomplished business leader with over 30 years of experience developing and marketing products for the healthcare, cosmetics, food and beverage industries.
Second quarter adjusted earnings per share increased 7% to $0.91 per share on a comparable basis with the prior year and when neutralizing currency effects.
Aptar's adjusted EBITDA increased 8% to $148 million compared to the prior year, and this included the negative impact of the shift in business across our markets as well as a net negative inflation impact of approximately $9 million.
Our consolidated adjusted EBITDA margin would have been approximately 180 basis points higher without the net negative inflation effect and the margin compression impact from passing on the higher costs.
Slide eight and nine cover our year-to-date performance and show the 5% core sales growth and our adjusted earnings per share which were $2.01, up 10% compared to the $1.83 a year ago, including comparable exchange rates.
Briefly summarizing our segment results, our Pharma business performance was mixed across the different divisions with total segment core sales growth of 2%.
Pharma had an adjusted EBITDA margin of approximately 33%, which was reflective of the mix of business across the different markets compared to the previous year.
Additionally, Pharma's margin was negatively impacted by approximately 100 basis points due to net negative inflation costs in the quarter of approximately $2 million.
Core sales to the prescription market decreased 7%, and core sales to the consumer healthcare market decreased 1% as certain pharma customers in these markets continue to draw down inventory levels as treatment for allergic rhinitis and cough and cold are impacted by low levels of patient consumption and fewer overall noncritical doctor appointments.
Core sales to the injectables market increased 14%, and half of the growth was related to vaccine administration, of which the majority was for COVID-19 vaccines.
Core sales of our active material science solutions increased 20%, primarily due to increased sales of our protective packaging solutions for probiotic products and COVID-19 diagnostic test solutions.
core sales increased 13% over the prior year second quarter, which is the most difficult period during the COVID-19 pandemic.
Approximately 75% of the growth came from increased volumes.
This segment's adjusted EBITDA margin was 11% in the quarter and was negatively impacted by the timing of passing through increased resin and other raw material costs as well as other inflationary costs, which had negatively affected adjusted EBITDA by roughly $5 million.
Had we not had this net negative inflation impact and we did not have the margin compression effect of passing through the higher costs, EBITDA margins would have been approximately 180 basis points higher.
Core sales to the beauty market increased 28% due to higher consumer demand for fragrances and facial skin care products.
Core sales to the personal care market decreased 1% as higher sales to the hair care and sun care markets were offset by declines in personal cleansing as hand sanitizer demand normalizes.
Core sales to the home care market increased 26% on strong demand for a variety of applications and increased custom tooling sales.
Turning to our Food + Beverage segment, which had another solid performance, core sales increased 23%.
Approximately 60% of the core sales increase is due to passing through higher resin and other input costs.
The segment had an adjusted EBITDA margin of 16% and was negatively impacted by net inflationary cost increases of approximately $2 million.
Had we not had this net negative inflation impact and we did not have the margin compression effect of passing through higher costs, EBITDA margins would have been approximately 360 basis points higher.
Looking at each market, core sales to the food market increased 21% as volume rose on increased demand for specialty food dispensing closures as consumers continue to cook at home.
Core sales to the beverage market increased 26% as we realized some recovery over a very low prior year second quarter.
I'd like to take a minute to remind everyone that in the prior year third quarter, we had a progresssignificant amount of cost and tooling sales that caused an atypical jump in our sales last year in our Active Material Solutions Group, where we were up over 50% in year-over-year top line growth.
We don't yet see a significant change in the prescription drug market in the third quarter but are anticipating an improvement in the fourth.
We expect our third quarter adjusted earnings per share, excluding any restructuring expenses, acquisition costs and changes in the fair value of equity investments, to be in the range of $0.90 to $0.98 per share.
The estimated tax rate range for the third quarter is 28% to 30%.
In closing, we continue to have a strong balance sheet with a leverage ratio of approximately 1.5.
On a gross basis, debt to capital was approximately 36%.
While on a net basis, it was approximately 29%.
In addition, we continue to invest in innovative growth projects, and we are confirming our forecasted range of capital expenditures for the year at a range of $300 million to $330 million.
We anticipate a stronger performance toward the end of the year.
To mitigate those effects, we aim to implement further price adjustments where necessary to pass on these costs.

Second quarter adjusted earnings per share increased 7% to $0.91 per share on a comparable basis with the prior year and when neutralizing currency effects.
We don't yet see a significant change in the prescription drug market in the third quarter but are anticipating an improvement in the fourth.
We expect our third quarter adjusted earnings per share, excluding any restructuring expenses, acquisition costs and changes in the fair value of equity investments, to be in the range of $0.90 to $0.98 per share.
In addition, we continue to invest in innovative growth projects, and we are confirming our forecasted range of capital expenditures for the year at a range of $300 million to $330 million.
We anticipate a stronger performance toward the end of the year.
To mitigate those effects, we aim to implement further price adjustments where necessary to pass on these costs.


Six of our seven segments combined delivered 12% organic growth, while our Auto OEM segment continued to be impacted by near-term limitations on auto production due to component supply shortages and, as a result, was down 16% in the quarter.
At the enterprise level, we delivered organic growth of 5%, GAAP earnings per share of $1.93, operating margin of 22.7%, and free cash flow of $695 million or 114% of net income.
As a result, for the full year, we generated organic growth of 12%, with each of our seven segments delivering organic growth ranging from 6% to 18%.
And despite a seemingly constant barrage of input cost increases, we expanded operating margin by 120 basis points to 24.1%, with another 100-basis-point contribution from enterprise initiatives.
GAAP earnings per share was an all-time record at $8.51, an increase of 28% versus the prior year.
And in 2021, we also raised our dividend by 7%, returned $2.5 billion to our shareholders in the form of dividends and share repurchases, and closed on a very high-quality acquisition in the MTS test and simulation business.
The strong growth momentum that we experienced in the third quarter continued into the fourth quarter as revenue grew 5.9% year over year to $3.7 billion, with organic growth of 5.3%.
The MTS acquisition added 1.3% and foreign currency translation impact reduced revenue by 0.7%.
Sequentially, organic revenue accelerated by 6% from Q3 into Q4 on a sales per-day basis as compared to our historical sequential of plus 2%.
By geography, North America grew 9% and international was up 1%.
Europe declined 2%, while Asia Pacific was up 7%, with China up 2%.
GAAP earnings per share of $1.93 included $0.02 of headwind from the MTS acquisition and related transaction costs.
Operating margin was 22.7%, 23.1% excluding MTS.
As expected, in the fourth quarter, we experienced price cost margin headwinds of 200 basis points, the same as in the third quarter.
As expected, organic revenue was down 16%, with North America down 12%, Europe down 29%, and China down 3%.
Food Equipment led the way this quarter with the highest organic growth rate inside the company and 21%.
North America was up 22%, with equipment up 26% and service up 15%.
Institutional growth of 28% was particularly strong in education and restaurants were up around 50%.
International growth was strong and on par with North America at 20%, mostly driven by Europe, up 23%, with Asia Pacific, up 9%.
Both equipment and service grew 20%.
Organic growth was 11% with Electronics up 4% and Test and Measurement up 17% driven by continued strong demand for semiconductors and capital equipment, as evidenced by our organic growth rate of 17% in our install business.
We acquired Instron in 2006, and today it's a business growing consistently at 6% to 7% organically, with operating margins well above the company average.
Welding delivered broad-based organic revenue growth of 15%, with 30% operating margin in Q4.
Equipment revenue grew 14% and consumables were up 16%.
Industrial revenue grew 18%, and the commercial business grew 8%.
North America was up 15%, and international growth was 14%, driven by 18% growth in oil and gas.
Polymers and Fluids organic growth was 3%, with 8% growth in Polymers, with continued strength in MRO and heavy industry applications.
Fluids was down 5% against a tough comp of plus 16% last year when demand for industrial hygiene products surged.
Automotive aftermarket grew 4% with continued strength in retail.
Construction organic revenue was up 12% as North America grew 22%, with residential renovation up 23%, driven by continued strength in the home center channel.
Commercial construction, which is about 20% of our business, was up 21%.
Europe grew 2% and Australia and New Zealand was up 10%.
Specialty organic growth was strong at 7%, with North America up 10% and international up 2%.
As a result, revenue grew 15% to $14.5 billion, with broad-based organic growth of 12%, 14% if you exclude Auto OEM, where growth was obviously very constrained due to component shortages at our customers.
Operating income increased 21% and operating margin was 24.1%.
The incremental margin was 32%, which is below our typical 35% to 40% range due to price cost.
Excluding the impact of price cost, incremental margin was 40%.
GAAP earnings per share increased 28% and after-tax ROIC improved by more than 300 basis points to 29.5%.
Free cash flow was $2.3 billion with a conversion rate of 84% of net income which is below our 100% plus long-term target for free cash flow due to higher working capital investments to support the company's 15% revenue growth and the strategic decision that we have made to increase inventory levels on select key raw materials, components and finished goods to help mitigate supply chain risk and sustain service levels to our key customers.
So, we're headed into 2022 with strong momentum and the company is in a very good position to deliver another year of strong financial performance, with organic growth of 6% to 9% and 10% to 15% earnings growth.
As you can see by segment on the next page, every segment is positioned to deliver solid organic growth in 2022 with organic growth of 6% to 9% at the enterprise level.
Our total revenue growth projection of 7.5% to 10.5% includes a 3% contribution from MTS, partially offset by 1.5% of foreign currency headwind at today's exchange rates.
Specific to MTS, guidance includes full-year revenue of $400 million to $450 million, the expectation that margins are dilutive at the enterprise level by approximately 50 basis points and, finally, consistent with what we've said before, EPS-neutral.
Operating margin, excluding MTS, is forecast to expand by about 100 basis points to 24.5% to 25.5% as enterprise initiatives contribute approximately 100 basis points.
We expect price cost headwind of about 50 basis points.
Incremental margin is expected to be about 30%, including MTS.
And our core incremental margin, excluding MTS, is in our typical 35% to 40% range.
We expect GAAP earnings per share in the range of $8.90 to $9.30, which is up 10% to 15%, excluding one-time tax items from last year.
The tax rate for 2022 is expected to be 23% to 24% as compared to 19% in 2021.
We are forecasting solid free cash flow with a conversion rate of 90% to 100% of net income, with further working capital investments to support the company's growth, mitigate supply chain risk, and sustain service levels to our key customers as needed.
1 remains internal investments to support our organic growth efforts and sustain our highly profitable core businesses.
Third, selective high-quality acquisitions, such as MTS, that enhance ITW's long-term profitable growth potential, have significant margin improvement potential from the application of our proprietary 80-20 front-to-back methodology and can generate acceptable risk-adjusted returns on our shareholders' capital.
Lastly, we allocate surplus capital to an active share repurchase program, and we expect to buy back $1.5 billion of our own shares in 2022.
And in 2022, we will reinitiate divestiture processes for five businesses, with combined annual revenues of approximately $500 million.
When these divestitures are completed over the next 12 to 18 months, we expect approximately 50 basis points of lift to ITW's organic growth rate and operating margins.
You can see that based on current run rates, we are expecting some solid organic growth rates in every one of our seven segments, with organic growth of 6% to 9% at the enterprise level.
For Automotive OEM, our guidance of 6% to 10% is based on a risk-adjusted forecast of automotive production in the mid-single digits, plus our typical penetration gains of 2% to 3%.

At the enterprise level, we delivered organic growth of 5%, GAAP earnings per share of $1.93, operating margin of 22.7%, and free cash flow of $695 million or 114% of net income.
The strong growth momentum that we experienced in the third quarter continued into the fourth quarter as revenue grew 5.9% year over year to $3.7 billion, with organic growth of 5.3%.
Sequentially, organic revenue accelerated by 6% from Q3 into Q4 on a sales per-day basis as compared to our historical sequential of plus 2%.
GAAP earnings per share of $1.93 included $0.02 of headwind from the MTS acquisition and related transaction costs.
We expect GAAP earnings per share in the range of $8.90 to $9.30, which is up 10% to 15%, excluding one-time tax items from last year.


These last 18 months are a perfect example of the balance and resilience of our business model.
Over the same 18 months, we've delivered on our strategic goal of expanding our product offerings.
Looking at the third quarter, we continue to set new records with Investment and Savings sales up more than 50% year-over-year.
At $8.7 billion, total sales during the first 9 months of 2021 have already eclipsed full year 2020 levels, and we're on pace to break $10 billion in annual sales for the first time in our history.
And while sales are down versus the record levels, we forecast full year sales to be about 10% above pre-pandemic levels.
We also expect to surpass $900 billion of face amount in force by the end of the year, another milestone in our corporate history.
Starting on Slide 3, adjusted operating revenues of $692 million increased 22% compared to the third quarter of 2020 and diluted adjusted operating income per share of $2.98 increased 7%.
These results include an adjusted net operating loss of $4.6 million or $0.12 per diluted adjusted operating earnings per share for our newly acquired interest in e-TeleQuote.
ROAE at 24.1% during the quarter remained strong.
We added nearly 92,000 new recruits during the quarter, down from the third quarter of last year when focus and urgency driven by the pandemic created tailwind.
A total of 9,381 individuals obtained a new life license during the quarter, which is below our historical pull-through rate.
We ended September with approximately 130,000 Life licensed representatives included in the total of about 800 individuals with either a co-contemporary license or a license with an extended renewal date.
As we noted last quarter, we now expect the majority of these licenses to age out, placing the normalized size of the sales force around 129,200.
Normalizing all periods to provide an apples-to-apples comparison, we ended June 2021 with 129,600 life licenses and December 2020 with 130,700 life licenses.
During the third quarter, we issued nearly 76,000 new life insurance policies with productivity at 0.19 policies per life license representative per month well within our historical range.
Total face amount of $894 billion in force rose 6% year-over-year.
We project fourth quarter sales to decline between 13% and 15% year-over-year.
While full year results would be down approximately 8% versus 2020's elevated levels, it will still represent more than a 10% increase over pre-COVID 2019 full year results.
Sales of $2.8 billion were up 52% year-over-year.
Net inflows of $1 billion during the quarter remained well above historical levels.
Barring an unexpected change in market sentiment, we expect the fourth quarter investment sales to grow between 20% and 25% year-over-year and more than 40% full year 2021 versus 2020.
As I noted earlier, we've made significant strides in expanding our product offering over the last 2 years.
In our new mortgage business, we continue to make steady progress and are now actively doing business in 17 states through more than 1,200 license representatives.
We have closed nearly $1 billion in U.S. mortgage volume through the third quarter of this year, eclipsing the $442.5 million closed in the entire 12 months of 2020.
Given the lower staffing levels coming into AEP, we expect fourth quarter approved policy levels to be around 36,000 to 40,000 or approximately double third quarter levels.
Today, I will take you through third quarter results, including those for our new Senior Health segment, and highlight key additions to our financial metrics and disclosures introduced as part of the acquisition of 80% of e-TeleQuote on July 1.
Starting on Slide 7 with our Term Life segment, Topline growth remained strong with operating revenues up 12% to $401 million, driven by 13% growth in adjusted direct premiums.
The compounding impact of 18 months strong sales and policy persistency continues to drive adjusted direct premium growth and added $12 million pre-tax income during the quarter.
This compares to $5 million added in the prior year period.
Third quarter net COVID-related death claims were $14 million, up from $8 million in the prior year period.
The rate of COVID mortality in our insured population also increased from around 11 million to 14 million per 100,000 deaths.
COVID claims continue to be linked to older policies with less than 1% of claims coming from policies issued since the onset of the pandemic.
We incurred about $2 million of excess death claims in the quarter, not specifically identified as COVID, but that we believe are indirectly tied to the pandemic, either through delayed medical care, societal issues such as crime or the behavioral health crisis.
During the third quarter, lapses remained around 25% to 30% lower in pre-COVID levels for all durations except duration one, which was about 15% lower.
Compared to the pre-pandemic baseline, DAC amortization was favorable by $11 million, offset by $6 million in higher benefit reserves due to strong persistency for a net favorable impact of $5 million to pre-tax income.
The third quarter of 2020 experienced record persistency with lapses around 35% lower than pre-COVID across all durations, including Duration one for a net contribution to pre-tax income of $14 million.
Year-over-year DAC amortization was higher by $11 million and benefit reserves were lower by $2 million due to persistency changes with the increase in DAC amortization largely driven by duration one.
Given the higher COVID-related death claims and lower net contribution provided by persistency, pre-tax income growth was compressed to 2% year-over-year with margins remaining around 20%.
Looking to the fourth quarter, we expect adjusted direct premiums to grow by approximately 12% year-over-year and future growth rates to taper as we layer our new business and transact the pre-pandemic activity levels.
COVID-related deaths are estimated at $14 million based on 100,000 projected population deaths in the U.S. and Canada.
We expect strong persistency to continue lapses that are 20% to 25% lower than pre-pandemic levels across all durations except duration 1, where we expect lapses to be around 15% lower.
Overall, we anticipate Term Life margins in the range of 19% to 20% for the fourth quarter.
Operating revenues of $233 million increased $57 million or 32% year-over-year.
Our pre-tax income of $69 million increased 35%.
Sales-based revenues increased 45%, slightly slowed the growth in revenue-generating sales due to a higher proportion of sales volumes in large dollar trades, which have a lower commission rate.
Asset-based revenues increased 31%, reflecting a similar increase in average client asset value.
As Glenn mentioned, we expect fourth quarter ISP sales to grow between 20% and 25% year-over-year.
Based on the current sales mix, this would increase sales-based net revenue by approximately $4 million over the prior year period.
Assuming no significant market movement during the quarter, average assets under management would be approximately 20% higher year-over-year and asset-based net revenues would increase $7 million.
This quarter, we are introducing our Senior Health segment as a result of the acquisition of 80% of e-TeleQuote.
The key identified intangible asset is relationships with health insurance carriers of $159 million, which will be amortized over its estimated useful life of 15 years.
In the current period, we had intangible amortization expense of $2.9 million related to acquired intangible assets recognized in the operating results of our Senior Health segment.
We will acquire the remaining 20% interest at e-TeleQuote, which is held by or for the benefit of e-TeleQuote's management through a series of puts and calls based on formulaic price defined in the purchase agreement.
We have recognized the remaining interest outstanding in the preliminary purchase price allocation in 2 categories: redeemable non-controlling interest; and liability classified share-based compensation based on the terms and conditions of the individual shares.
Each of these items is defined further on Page 13 of the financial supplement, where we also highlight the non-controlling interest and other purchase-related accounting items discussed earlier.
During the quarter, the Senior Health segment had an adjusted operating loss before taxes of $6.6 million, including purchase accounting adjustments.
The cost associated with this drove contract acquisition costs per approved policy up to $1,287, which when combined with the low supply of leads typical in the quarter resulted in a loss for the period.
We anticipate pre-tax operating earnings to be in the $20 million range fourth quarter with lifetime value commissions around $1,170 and contract acquisition costs around $640 per approved policy.
Moving next to Slide 10 in our Corporate and Other Distributed Products segment, the adjusted operating loss increased by $1.5 million year-over-year to $13.5 million.
Commissions and fee revenue were higher by $6 million, including $3.7 million from mortgage sales.
This was partially offset by $3.7 million lower net investment income as portfolio yields were lower and the allocation to the Term Life segment increased in support of the growing book of business.
Adjusted benefits and expenses increased $3.7 million, largely due to the expansion of the mortgage program, including $2.6 million higher sales commissions and operating expenses.
Operating results for the Corporate and Other segment excludes certain costs related to the acquisition of e-TeleQuote, most notably $9.6 million in transaction-related expenses.
Consolidated insurance and other operating expenses increased $17.3 million or 16% year-over-year with $7.5 million coming from Senior Health and the remainder due largely to growth in our businesses.
Looking ahead, we expect fourth quarter insurance and other operating expenses to be around $129 million, including the layering unit e-TeleQuote other operating expenses of $8 million.
Consolidated net investment income was $20 million, down slightly from the prior year period due to lower effective yields, partially offset by an increase in the size of the portfolio.
The portfolio had unrealized gains at the end of September of approximately $108 million, down slightly from the end of June as rates rose during the quarter.
On Slide 13, liquidity at the holding company remains strong, with invested assets in cash of $192 million.
The Primerica Life statutory risk-based capital ratio is estimated to be 420% at quarter end using the new NAIC bond factor approach.
We estimate that funding needed to support the Senior Health business in 2022 to be in the high $70 million range, up from earlier expectations of the mid-$40 million range.
Given anticipated growth in this business, we expect negative cash flow to decline over time and approach breakeven in about 6 years.


In TAVR, despite headwinds, more than 100,000 patients benefited from treatment with SAPIEN valves worldwide.
And in Critical Care, we met the increased demand for core pressure monitoring products due to the pandemic, and we're proud that we were able to help over 1 million patients globally with our monitoring technology.
During the year when job losses impacted many families across the globe, Edwards prioritized protecting our employees and we grew our team to 15,000 worldwide.
We continue to make strategic R&D investments that enabled us to fuel progress and despite this unique environment and extraordinary prior year growth, underlying sales grew 1% in 2020 to $4.4 billion, which is a reflection of the life-threatening needs of the patients that Edwards serves.
As we indicated at our investor conference, we expect full year sales between $4.9 billion and $5.3 billion representing mid-teens underlying growth on a year-over-year basis.
Now turning to our quarterly results, consistent with our guidance at our investor conference last month, fourth quarter sales of $1.2 billion were in line with the year ago period when Edwards' grew nearly 20% on an underlying basis, reflecting the strength, even during the ongoing pandemic.
Full-year 2020 global sales -- global TAVR sales of 2.9 billion increased 4% on an underlying basis over the prior year.
In the fourth quarter, global TAVR sales were $776 million, up slightly from the year ago period.
Although the rollout was somewhat impacted, SAPIEN 3 Ultra now represents more than two-thirds of our global TAVR sales and physician feedback on ease of use and improved paravalvular leak performance remains outstanding.
Recall that our U.S. TAVR sales in the year ago period increased nearly 40% driven by the strong PARTNER 3 evidence that led to a third quarter 2019 indication expansion and improved patient access under an updated TAVR NCD.
In Japan, we continue to anticipate providing SAPIEN 3 for low-risk patients prior to the end of this year.
AHA noticed that if left untreated, the condition worsens and patients with severe aortic stenosis have a survival rate as low as 50% at two years.
Aortic stenosis is also a risk factor for heart failure, a costly disease projected the cost the US Healthcare System $70 billion in 2030.
In summary, we continue to anticipate 2021 underlying TAVR sales growth in the 15% to 20% range, as we shared at our Investor Conference.
We remain confident in this large global opportunity will exceed $7 billion by 2024, which implies a compounded annual growth rate in the low double-digit range.
Turning to Transcatheter Mitral and Tricuspid Therapies or TMTT, we've made meaningful progress moving from early stage development to clinical use across all of our platforms with over 3,000 patients treated to-date.
Fourth quarter global sales were $13 million, representing sequential improvement versus Q3.
Full year 2020 sales were $42 million.
We continue to estimate the global TMTT opportunity to reach $3 billion by 2025 with significant growth beyond.
In Surgical Structural Heart, full-year 2020 global sales of $762 million decreased 10% on an underlying basis over the prior year, in line of our guidance, with our guidance of 5% to 15% decline.
Fourth quarter sales of $204 million held steady with Q3 and declined 2% year-over-year on an underlying basis, which was below our previous expectation for positive growth.
We believe the current $1.8 billion Surgical Structural Heart opportunity will grow mid single digits through 2026.
In Critical Care, full year 2020 global sales of $725 million decreased 3% on an underlying basis versus the prior year, in line with our guidance of flat to down 5%.
Fourth quarter Critical Care sales of $198 million decreased 2% on an underlying basis, driven by the decline in HemoSphere orders in the U.S., as hospitals limited their capital spending.
Sales in the fourth quarter were flat year-over-year on an underlying basis and adjusted earnings per share grew 2% to $0.50 versus the prior year.
GAAP earnings per share was similar at $0.49.
For the full year 2020, sales increased 1% on an underlying basis to $4.4 billion, adjusted earnings per share was flat at $1.86 and we generated over $700 million of adjusted free cash flow.
For the fourth quarter, our adjusted gross profit margin was 75.3% compared to 75.8% in the same period last year.
We continue to expect our 2021 adjusted gross profit margin to be between 76% and 77%.
Selling, general and administrative expenses in the fourth quarter were $339 million or 28.4% of sales, compared to $347 million in the prior year.
We continue to expect full year 2021 SG&A as a percentage of sales, excluding special items to be 28% to 29%, which is similar to pre-COVID levels.
Research and development expenses in the quarter grew 1% to $196 million or 16.4% of sales.
For the full year 2021, we continue to expect R&D as a percentage of sales to be in the 17% to 18% range, similar to pre-COVID levels, as we invest in developing new technologies and generating evidence to expand indications for TAVR and TMTT including enrolling seven clinical trials.
Turning to taxes, our reported tax rate this quarter was 13.1% or 13.9% excluding the impact of special items.
This rate included a 350 basis point benefit from the accounting for stock-based compensation.
Our full-year 2020 tax rate, excluding special items was 12.5%.
We continue to expect our full year rate in 2021 excluding special items to be between 11% and 15%, including an estimated benefit of 5 percentage points from stock based compensation accounting.
Foreign exchange rates increased fourth quarter reported sales growth by 150 basis points or $18 million compared to the prior year.
At current rates, we now expect an approximate $100 million positive impact or about 2% to full year 2021 sales compared to 2020.
FX rates negatively impacted our fourth quarter gross profit margin by 150 basis points compared to the prior year.
Free cash flow for the fourth quarter was $287 million, defined as cash flow from operating activities of $400 million, less capital spending of $113 million.
Now turning to the balance sheet, we have a strong balance sheet with approximately $2.2 billion in cash and investments as of the end of the year.
In addition, we have an undrawn line of credit of up to $1 billion.
We have public bonds outstanding of about $600 million that don't mature until 2028.
Average shares outstanding during the fourth quarter were 632 million, relatively consistent with the prior quarter.
We now expect average diluted shares outstanding for 2021 to be between 630 million and 635 million.
For total Edwards, we expect sales of $4.9 billion to $5.3 billion.
For TAVR, we expect sales of $3.2 billion to $3.6 billion.
For TMTT, we expect sales of approximately $80 million.
We expect Surgical Structural Heart sales of $800 million to $900 million and Critical Care sales of $725 million to $800 million.
For the full year 2021, we continue to expect adjusted earnings per share of $2 to $2.20.
For the first quarter of 2021, we project total sales to be between $1.1billion and $1.2 billion and adjusted earnings per share of $0.43 to $0.50.

As we indicated at our investor conference, we expect full year sales between $4.9 billion and $5.3 billion representing mid-teens underlying growth on a year-over-year basis.
Sales in the fourth quarter were flat year-over-year on an underlying basis and adjusted earnings per share grew 2% to $0.50 versus the prior year.
GAAP earnings per share was similar at $0.49.
For total Edwards, we expect sales of $4.9 billion to $5.3 billion.
For the full year 2021, we continue to expect adjusted earnings per share of $2 to $2.20.
For the first quarter of 2021, we project total sales to be between $1.1billion and $1.2 billion and adjusted earnings per share of $0.43 to $0.50.


Importantly, we provided electricity and natural gas safely and reliably to more than 10.5 million customers when it mattered the most.
We also received the U.K.'s customer service excellence award for the 28th time since 1992.
This achievement included overcoming a $0.12 per share unfavorable impact from COVID, due primarily to low sales volumes in the U.K. and lower commercial and industrial demand in Kentucky, as well as a $0.05 per share unfavorable impact due to mild weather compared to normal conditions.
We also maintained a strong financial position and delivered on our commitment to return capital to share owners, something PPL has done each quarter for 75 consecutive years.
Building on the $27 billion we had invested over the prior decade to improve service to our customers, during 2020, we completed more than $3 billion in infrastructure improvement, in line with the original expectations we outlined for you at the beginning of the year.
The vast majority of this investment, nearly 90%, was focused on transmission and distribution infrastructure to strengthen grid resilience, incorporate new technology and advance our clean energy strategy.
In addition, our Safari Energy business also added more than 90 megawatts of solar capacity to its portfolio, increasing its own capacity to 110 megawatts.
In addition, we provided initial contributions to support local organizations focused on DEI initiatives and launched a new scholarship program that aims to award $1 million over the next decade to support minorities and females pursuing careers in engineering, IT, technical and trade roles.
LG&E and KU filed rate requests with the Kentucky Public Service Commission on November 25, seeking approval for a combined revenue increase of about $331 million in electricity and gas base rates.
Given the COVID pandemic and in an effort to reduce the near-term impact of the rate adjustment for our customers, we sought to minimize the size of the requested increase and have included in our request for approval a $53 million economic relief surcredit to help mitigate the impact of the rate adjustment until mid-2022.
In other notable Kentucky updates, LG&E and KU on January 7 issued a request for proposal for generation capacity to meet a potential energy shortfall that may be created by the anticipated retirements of 1,000 megawatts of coal-fired generation during this decade.
Brown Unit 3 are expected to be retired by 2028 as they reach the end of their economic useful lives.
The utilities are seeking 300 to 900 megawatts of capacity beginning in 2025 to 2028.
Additionally, we're asking for proposals for at least 100 megawatts of battery storage.
That draft plan proposes GBP 6 billion in new investments to support decarbonization, digitalization and enhanced network utilization.
Turning to Slide 7 and the 2021 to 2025 capital plan.
We've outlined more than $14 billion from 2021 to 2025 to support continued modernization of our transmission and distribution networks and to advance a cleaner energy future.
This forecast spending represents $1 billion of incremental capex from 2021 to 2024 compared to our prior plan.
Those increases include $400 million in Kentucky to support full deployment of advanced metering infrastructure, $300 million in Pennsylvania for additional transmission investments, as well as incremental funding for IT initiatives focused on digital transformation investments in work optimization, smart grid technology and the customer experience and $200 million in the U.K. due to a shift of certain investments from 2020 to 2021 as a result of COVID-19, additional funding for telecommunications projects and updates to our RIIO-ED2 capital plan.
PPL delivered fourth-quarter 2020 earnings from ongoing operations of $0.59 per share compared to $0.57 per share in the fourth quarter of 2019.
Weather in the quarter was about $0.01 unfavorable compared to 2019, as our Kentucky segment experienced slightly milder temperatures.
The estimated impact of COVID on our fourth-quarter results was about $0.02 per share, $0.01 due to lower U.K. sales volumes and $0.01 driven by lower demand in Kentucky.
We achieved 2020 earnings from ongoing operations of $2.40 per share compared to $2.45 per share a year ago.
As Vince mentioned earlier, our 2020 financial results reflect an estimated $0.12 unfavorable variance due to COVID-19.
During 2020, we also experienced a $0.06 unfavorable variance due to weather compared to 2019, primarily in Kentucky.
In terms of dilution for the year, we experienced $0.11 per share of dilution year over year, primarily reflecting the impact of the equity forward settlement in late 2019.
regulated segment earned $1.33 per share, a $0.01 year-over-year decrease.
These decreases were partially offset by higher foreign currency exchange rates compared to the prior period with 2020 average rates of $1.47 per pound compared to $1.32 per pound in 2019.
In Pennsylvania, we earned $0.65 per share, which was $0.07 higher than our results in 2019.
We earned $0.55 per share in 2020, a $0.03 increase over comparable results one year ago.
Results at corporate and other were $0.03 higher compared to the prior year.
In Pennsylvania, residential usage steadily declined following the sharp spike we experienced at the onset of COVID, yet remains up about 3.5% compared to last year, signaling strong demand from customers still working from home.
And by year-end, we're tracking less than 3% behind prior year levels.
In Kentucky, residential usage was up about 7% in Q4 compared to the last year, consistent with what we experienced in Q3.
C&I volumes were down 3.5% from last year's usage in Q4, which was an improvement from the 7% decline observed during Q3.
And finally, in the U.K., residential usage also remained higher, with volumes being up about 6% compared to last year.
C&I sectors has lagged our domestic jurisdictions overall, but has continued to make a strong comeback, down about 9% versus the prior year, a substantial improvement from the second-quarter lows of over 20%.
In 2021, that includes completing the process to sell our U.K. utility business and repositioning PPL as a purely U.S.-focused utility company.

Turning to Slide 7 and the 2021 to 2025 capital plan.
PPL delivered fourth-quarter 2020 earnings from ongoing operations of $0.59 per share compared to $0.57 per share in the fourth quarter of 2019.
We achieved 2020 earnings from ongoing operations of $2.40 per share compared to $2.45 per share a year ago.
In 2021, that includes completing the process to sell our U.K. utility business and repositioning PPL as a purely U.S.-focused utility company.


Client survey scores increased 3 points for price for value and 2 points for overall quality, considering the 9 point improvement in these scores last season, these results are tremendous.
Collectively, these efforts have led to strong results in our net promoter scores increasing over 3 points.
This is a significant -- this is significant considering the 9 point increase we saw last year.
Since we have remedied the issue we have seen a 4% improvement in net average charge in DIY.
All of these improvements are fueling Wave's impressive performance which continued this quarter with year-over-year revenue growth of over 40%.
Starting with revenues, we saw a year-over-year growth of $51 million or 11% to $519 million.
This increase was primarily due to higher tax preparation fees due to volume growth in Assisted and DIY and the acquisition of just over 200 franchise offices this year which continues to be a good use of capital.
In addition to increases in our tax business, Wave contributed $11 million, which represents a year-over-year increase of more than 40%.
Total operating expenses increased $65 million or 11% to $672 million.
We also recorded $19 million of incremental marketing expense during the quarter that was entirely due to a pull forward of recognition from Q4 to Q3, and was not due to an increase in spend.
Interest expense was $26 million, which reflects an increase from the prior year due to higher draws on our line of credit.
The changes in revenue and expenses resulted in an increase in pre-tax loss from continuing operations of $18 million.
GAAP loss per share increased $0.08 to $0.66.
Adjusted loss per share increased $0.07 to $0.59 driven by the increase in pre-tax loss and lower shares outstanding, partially offset by an increased tax benefit.
We came into this year with a strong financial position after generating over $500 million of free cash flow in fiscal '19.
We've increased our quarterly dividend each of the last four years, resulting in a 30% increase over that time.
Regarding share repurchases in the third quarter, we repurchased 2.8 million shares for $66 million at an average price of $23.35.
Year-to-date, we have repurchased a total of 10.1 million shares for $247 million at an average price of $24.36.
Starting with the tax industry, we continue to expect overall return growth of around 1%, with Assisted volume flat to slightly up and DIY growing around 3%.
Consistent with the outlook we provided last quarter, we expect these client growth and net average charge expectations along with Wave to result in revenue growth of 1.5% to 3.5%.
This year, we realized approximately $15 million of unplanned one-time expenses -- one-time expense increases, due to legal cost and Refund Advance fees, which will also impact our margin.
Despite these expense increases, we continue to expect EBITDA margin to be within our previously provided range of 24% to 26%.
As we indicated last quarter, we expect the tax rate of 19% to 21% due to favorable settlements with tax authorities during the second quarter.
The rest of our financial outlook also remains unchanged with total depreciation and amortization of $165 million to $175 million, of which $70 million to $80 million will be amortization of intangibles related to acquisitions.
We continue to expect interest expense of $90 million to $100 million and capital expenditures of $70 million to $80 million.

Starting with revenues, we saw a year-over-year growth of $51 million or 11% to $519 million.
GAAP loss per share increased $0.08 to $0.66.
Adjusted loss per share increased $0.07 to $0.59 driven by the increase in pre-tax loss and lower shares outstanding, partially offset by an increased tax benefit.


We're happy to announce outstanding second quarter results, highlighted by sales of $1.9 billion and adjusted earnings per share of $1.48, both of which exceeded the prior year and our expectations.
Our production rates are back to pre-pandemic levels across the company and our 14,000 dedicated team members continue to do an exceptional job of rapidly adapting to changing situations as we recover from the pandemic.
This award is the latest accomplishment in our 25 years of continuous innovation in electric drive and BEV engineering.
The inclusion in the yearbook highlights top 15 performance for Oshkosh in our industry category and underscores our commitment to creating a more sustainable future and culture that is centered on a safe and inclusive workplace.
I am also pleased to announce our expectations for 2021, adjusted earnings per share to be in the range of $6.35 to $6.85 as we return to our practice of providing quantitative guidance.
Revenue increased by 6.5% over the prior year, leading to a solid adjusted operating margin of over 11%.
Orders were also strong, leading to a solid backlog of $1.5 billion for this segment, up 80% versus last year.
The program covers the purchase of 50,000 to 165,000 units over 10 years as part of the postal services plan to significantly modernize their delivery fleet with improved safety, reliability, sustainability, cost efficiency and a much better working experience for our nation's postal carriers.
Our offering provides the postal service with both zero-emission BEV units and fuel-efficient, low-emission ICE units with the option of delivering any combination up to 100% of either model.
The Fire & Emergency segment delivered another quarter of outstanding performance with both strong sales growth and an operating income margin over 15%.
The segment finished the quarter with another solid backlog of $1.3 billion, basically on par with last year's all-time record.
As the quarter unfolded, demand increased sharply in the Access Equipment segment, leading to consolidated sales of $1.9 billion, $92 million higher than the prior year and approximately $140 million above our expectations.
The growth over the prior year was driven by a 29% increase in Fire & Emergency sales and a 6.5% increase in Access Equipment sales, offset in part by a modest sales decrease in the Defense segment.
Front discharge concrete mixer sales were muted in the prior year as the new S-Series 2.0 was still ramping up.
Consolidated adjusted operating income for the second quarter was $143.3 million or 7.6% of sales compared to $133.6 million or 7.4% of sales in the prior year quarter.
Adjusted earnings per share for the quarter was $1.48 compared to adjusted earnings per share of $1.25 in the prior year.
On a consolidated basis, we are estimating sales of $7.75 billion to $7.95 billion compared to $6.9 billion in 2020.
We are also estimating adjusted operating income of $610 million to $655 million compared to $496 million in the prior year and adjusted earnings per share of $6.35 to $6.85 compared to adjusted earnings per share of $4.94 in 2020.
At the segment level, we are estimating access equipment sales of $3.15 billion to $3.35 billion, a 25% to 33% increase compared to 2020.
We are estimating that access equipment adjusted operating margin will be 10.5% to 11.25%, included in our expectations is an approximately $30 million net headwind from elevated steel prices that we expect will primarily impact the fourth quarter.
Turning to Defense, we're estimating 2021 sales of approximately $2.5 billion, an 8% increase compared to 2020.
Backlog remains robust at $3.5 billion, providing solid visibility into 2022.
We are estimating our defense operating margins will be approximately 8%, consistent with our comments over the past several years of high single-digit operating margin percentages.
We expect Fire & Emergency segment sales will be approximately $1.2 billion, roughly $90 million higher than 2020.
We expect operating margin in the Fire & Emergency segment to increase to approximately 14% as a result of increased sales volume.
We are estimating sales of approximately $925 million in the Commercial segment, down slightly from 2020 as a result of the prior year scale of the concrete batch plant business.
And we are expecting operating margins for this segment of approximately 7%.
We estimate corporate expenses will be $150 million to $155 million, an increase of $25 million to $30 million as a result of the return of higher incentive compensation levels.
We estimate the tax rate for 2021 will be approximately 22%, and we are estimating an average share count of 69.3 million shares.
For the full year, we are estimating free cash flow of approximately $650 million, reflecting an expected strong year of cash generation.
We also estimate capital expenditures will be approximately $120 million.
Looking at the third quarter, we expect consolidated sales to be up approximately 40% over the prior year, with access equipment and defense up most significantly.
Last year, we benefited from approximately $60 million of temporary cost benefits in the third quarter.

We're happy to announce outstanding second quarter results, highlighted by sales of $1.9 billion and adjusted earnings per share of $1.48, both of which exceeded the prior year and our expectations.
I am also pleased to announce our expectations for 2021, adjusted earnings per share to be in the range of $6.35 to $6.85 as we return to our practice of providing quantitative guidance.
Adjusted earnings per share for the quarter was $1.48 compared to adjusted earnings per share of $1.25 in the prior year.
On a consolidated basis, we are estimating sales of $7.75 billion to $7.95 billion compared to $6.9 billion in 2020.
We are also estimating adjusted operating income of $610 million to $655 million compared to $496 million in the prior year and adjusted earnings per share of $6.35 to $6.85 compared to adjusted earnings per share of $4.94 in 2020.


Consolidated net sales for our businesses that operate within the commercial aerospace industry decreased by approximately 54% during the third quarter of fiscal '20.
Keep in mind that historically we have been able to make up and possibly collect some of that $7.5 million.
Summarizing the highlights of the third quarter, consolidated net income increased 4% to a record $251.7 million or $1.83 per diluted share in the first nine months of fiscal '20 and that was up from $242.2 million or $1.76 per diluted share in the first nine months of fiscal '19.
We continue to forecast positive cash flow from operations for the remainder of fiscal '20.
Cash flow provided by operating activities was consistently strong at $299 million and $313.4 million in the first nine months of fiscal '20 and '19 respectively.
Cash flow provided by operating activities totaled $93.1 million or 171% of net income in the third quarter of fiscal '20 as compared to $135.1 million in the third quarter of fiscal '19.
Our net debt, which is total debt less cash and equivalents, of $344.8 million compared to shareholders' equity improved to 17.7% as of July 30 [Phonetic], down from 29.8% as of October 31, 2019.
Our net debt to EBITDA ratio improved to 0.7 times, less than 1 as of July 31, '20, and that was down from 0.93 times as of October 31, '19.
I do want to point out that unlike some companies in the aerospace industry, HEICO did not have to go to the market to raise money at, what I consider, exorbitant rates of 8% or more.
In July '20, we paid the regular semiannual cash dividend of $0.08 per share, and that represented our 84th consecutive semiannual cash dividend.
Talking about acquisitions, in June 2020, we acquired 70% of the membership interest of Rocky Mountain Hydrostatics, which overhauls industrial pumps, motors, and other hydraulic units, with a focus on the support of legacy systems for the U.S. Navy.
The remaining 30% continues to be owned by certain members of Rocky Mountain's management team.
And Rocky Mountain is part of our Flight Support Group, and we expect the acquisition to be accretive to earnings within the first 12 months following closing.
In August 2020, we acquired 75% of the equity interest of Intelligent Devices and Transformational Security.
These acquisitions are part of Electronic Technologies, and we expect them to be accretive to earnings within the first 12 months following closing.
The remaining 25% interest was acquired by the non-controlling interest holders of a subsidiary in HEICO Electronic that is also a designer and manufacturer of the same type of equipment used basically for different applications.
In August '20, we acquired 90% of the equity interest of Connect Tech.
The remaining 10% interest continues to be owned by a member of Connect Tech's management team.
This acquisition is part of the Electronic Technologies Group, and we expect it to be accretive to earnings within the first 12 months following closing.
The Flight Support Group's net sales were $731.2 million in the first nine months of fiscal '20 as compared to $915.5 million in the first nine months of fiscal '19.
The Flight Support Group's net sales were $178.2 million in the third quarter of fiscal '20 as compared to $320 million in the third quarter of fiscal '19.
Net sales in fiscal '20 follows a very strong 12% and 13% organic growth reported in the third quarter and full fiscal 2019 year respectively.
The Flight Support Group's operating income was $121.6 million in the first nine months of fiscal '20 as compared to $179.8 million in the first nine months of fiscal '19.
The Flight Support Group's operating income was $12 million in the third quarter of fiscal '20 as compared to $64.8 million in the third quarter of fiscal '19.
The Flight Support Group's operating margin was 16.6% in the first nine months of fiscal '20 as compared to 19.6% in the first nine months of fiscal '19.
The Flight Support Group's operating margin was 6.7% in the third quarter of fiscal '20 as compared to 20.2% in the third quarter of fiscal '19.
The Electronic Technologies Group's net sales increased 4% to a record $638.3 million in the first nine months of fiscal '20, up from $615 million in the first nine months of fiscal '19.
This increase is attributable to the favorable impact from our fiscal '19 and fiscal '20 acquisitions, partially offset by an organic net sales decrease of 1%.
The Electronic Technologies Group's net sales decreased 2% to $210 million in the third quarter of fiscal '20 from $216.1 million in the third quarter of fiscal '19.
This decrease is attributable to an organic net sales decrease of 6%, partially offset by the favorable impact from our fiscal '19 and fiscal '20 acquisitions.
The Electronic Technologies Group's operating income increased 2% to a record $184.9 million in the first nine months of fiscal '20, up from $181.2 million in the first nine months of fiscal '19.
The Electronic Technologies Group's operating income was $61.9 million and $62.2 million in the third quarter of fiscal '20 and fiscal '19 respectively.
The Electronic Technologies Group's operating margin was 29% in the first nine months of fiscal '20 as compared to 29.5% in the first nine months of fiscal '19.
The Electronic Technologies Group's operating margin improved to 29.4% in the third quarter of fiscal '20, up from 28.8% in the third quarter of fiscal '19.
Consolidated net income per diluted share decreased 32% to $0.40 in the third quarter of fiscal '20 and that was down from $0.59 in the third quarter of fiscal '19.
Consolidated net income per diluted share increased 4% to $1.83 in the first nine months of fiscal '20 and that was up from $1.76 in the first nine months of fiscal '19, and that increase principally reflects an incremental discrete tax benefit from stock option exercises, which were recognized in the first quarter of fiscal '20, less net income attributable to non-controlling interest and lower interest expense, partially offset by the previously mentioned lower operating income of Flight Support.
Depreciation and amortization expense totaled $21.9 million in the third quarter of fiscal '20.
That was up slightly from $21.1 million in the third quarter of fiscal '19 and totaled $65.2 million in the first nine months of fiscal '20, up from $61.7 million in the first nine months of fiscal '19.
R&D expense was $15.1 million in the third quarter of fiscal '20 compared to $16.6 million in the third quarter of fiscal '19 and it increased 1% to $49 million in the first nine months of fiscal '20 and that was up from $48.7 million in the first nine months of fiscal '19.
Significant new product development efforts are continuing at both Electronic Technologies and Flight Support, and we continue to invest more than 3% of each sales dollar into new product development.
Consolidated SG&A expense decreased by 20% to $75 million in the third quarter of fiscal '20, down from $93.4 million in the third quarter of fiscal '19.
Consolidated SG&A expense decreased by 13% to $232.8 million in the first nine months of fiscal '20 and that was down from $267.9 million in the first nine months of fiscal '19.
These decreases were partially offset by an increase in bad debt expense at Flight Support, which I previously mentioned was $7.5 million due to potential collection difficulties from certain commercial aviation customers that filed for bankruptcy protection during the third quarter of fiscal '20 as a result of the financial impact of the outbreak as well as the increase from fiscal '19 and '20 acquisitions.
Consolidated SG&A expense as a percentage of net sales increased to 19.4% in the third quarter of fiscal '20 and that was up from 17.5% in the third quarter of fiscal '19.
Consolidated SG&A expense as a percent of net sales decreased to 17.1% in the first nine months of fiscal '20, down from 17.7% first nine months of fiscal '19.
Interest expense decreased to $2.6 million in the third quarter of fiscal '20, down from $5.5 million in the third quarter of fiscal '19 and decreased to $10.6 million in the first nine months of fiscal '20 and that was down from $16.5 million in the first nine months of fiscal '19.
Our effective tax rate in the third quarter of fiscal '20 was 13.4%, compared to 22% in the third quarter of fiscal '19.
Our effective tax rate in the first nine months of fiscal '20 was 3.5% compared to 17.1% in the first nine months of fiscal '19.
Net income attributable to non-controlling interest was $3.2 million in the third quarter of fiscal '20 and that compared to $8 million in the third quarter of fiscal '19.
Net income attributable to non-controlling interest was $16.6 million in the first nine months of fiscal '20 compared to $25 million in the first nine months of fiscal '19.
The decrease in third quarter and first nine months of fiscal '20 principally reflects the impact of a dividend paid by HEICO Aerospace in June '19 -- 2019 that effectively resulted in the transfer of the 20% non-controlling interest held by Lufthansa Technik in eight of our existing subsidiaries back to the Flight Support Group and a decrease in operating results of certain subsidiaries of the Flight Support Group in which non-controlling interests are held.
As we mentioned earlier, cash flow provided by operating activities was consistently strong at $299 million and $313.4 million in the first nine months of fiscal 2019 respectively.
Cash flow provided by operating activities totaled $93.1 million or 171% of net income in the third quarter of fiscal '20 as compared to $135.1 million in the third quarter of fiscal '19.
Our working capital ratio improved to 5 times as of July 31, '20, compared to 2.8 times as of October 31, 2019.
Our day sales outstanding, DSOs of receivables improved to 43 days as of July 31, '20 and that compared to 45 days as of July 31, '19.
No one customer accounted for more than 10% of net sales and our Top 5 customers represented 25% and 21% of consolidated net sales in the third quarter of fiscal '20 and '19 respectively.
Inventory turnover increased to 154 days for the period ended July 31, '20 and that compared to 125 days for the period ended July 31, '19.

We continue to forecast positive cash flow from operations for the remainder of fiscal '20.
Consolidated net income per diluted share decreased 32% to $0.40 in the third quarter of fiscal '20 and that was down from $0.59 in the third quarter of fiscal '19.


Net sales for the quarter were $990 million compared with $1.1 billion in the third quarter of 2019.
We reported adjusted gross profit of $69 million compared with $76 million in the third quarter of 2019, with gross profit margin improvements in our fresh and value-added products segments.
Due to the early actions we took by adjusting our business in response to these challenges, we reported adjusted earnings per share of $0.35 compared with adjusted earnings per share of $0.38 in the third quarter of 2019.
Today, our three Mann Packing facilities and Fresno fresh-cut facility are now operating under one roof, which we anticipate will enable us to improve gross profit in our fresh and value-added products segment by approximately $10 million on an annual basis; a benefit which we expect to achieve over the next 12 months.
We identified assets across all of our regions that we plan to sell over the next 12 to 18 months for the total anticipated cash proceeds of approximately $100 million.
This important sustainability initiative reduces our carbon footprint and brings us closer to our 2025 commitment to reduce emissions by 10%.
Despite the COVID-19 disruptions during the third-quarter 2020, we achieved net income per diluted share of $0.37 versus net income per diluted share of $0.38 in the third quarter of 2019.
Excluding, among other things, the effect of other product-related charges, which resulted in a $2.3 million gross profit impact related to inventory write-offs, we delivered adjusted net income per diluted share of $0.35 compared with adjusted net income per diluted share of $0.38 in the third quarter of 2019.
However, I would like to point out that if you apply the adjusted gross profit margin of 7% to the $73 million of net sales impacted by COVID-19, we estimate that we would have delivered an additional $5.8 million in adjusted gross profit.
Additionally, despite the headwinds of the COVID-19 pandemic, we generated $63 million in cash flow from operating activities during the third quarter.
We reduced our long-term debt by $76 million since the end of 2019, and we reduced our long-term debt by $24 million compared with the end of the second quarter of 2020.
As Mohammad mentioned, we announced a $100 million asset sale program to be completed over the next 12 to 18 months to strengthen our cash flow position, reduce our debt and continue to reinvest in key areas of growth in our business.
Net sales were $990 million compared with $1.1 billion in third quarter of 2019, with unfavorable exchange rates negatively impacting net sales by $2 million.
Adjusted gross profit for the quarter was $69 million compared to $76 million in the third quarter of 2019.
Adjusted operating income for the quarter was $25 million, in line with the prior-year period, and adjusted net income was $16 million compared with $18 million in the third quarter of 2019.
In regards to our business segment performance in the third quarter of 2020, in our fresh and value-added product segment, net sales decreased $52 million to $601 million compared with $653 million in the prior-year period.
As compared with our third quarter of 2019 performance for the segment, the COVID-19 pandemic affected our net sales of fresh and value-added products by an estimated $56 million during the quarter, driven by reduced demand in our foodservice channel and shifting demand at retail due to the pandemic.
Gross profit increased to $54 million compared with $53 million in the third quarter of 2019, and other product-related charges represented $2 million for the segment, primarily related to inventory write-offs of pineapples due to volatile supply and demand condition, as well as additional cleaning and social distancing protocols associated with the pandemic.
In our pineapple product line, net sales were $116 million compared with $102 million in the prior-year period, primarily due to higher sales volume in all of our region, mainly as a result of lower production in the prior-year period due to adverse weather conditions in our growing regions.
Overall, volume increased 15%, unit pricing decreased 1% and unit cost decreased 1% compared with the prior-year period.
In our fresh-cut fruit product line, net sales were $130 million compared with $145 million in the third quarter of 2019.
Overall, volume decreased 11%, unit price increased 1% and unit cost increased 3% compared with the prior-year period.
In our fresh-cut vegetable product lines, net sales were $96 million compared with $122 million in the third quarter of 2019.
The decrease in net sales were primarily due to the effect of the COVD-19 pandemic, which resulted in a significant reduction of most of our global foodservice business during the quarter, mainly in our Mann Packing subsidiary.
Volume decreased 27%, unit pricing increased 7%, and unit cost increased 15% compared with the prior-year period.
In our avocado product line, net sales were $77 million compared with $98 million in the third quarter of 2019, primarily due to lower selling price as a result of normalized industry supply in the market when compared with the prior-year period.
Volume increased 13%, pricing decreased 31%, and unit cost decreased 37% compared with the prior-year period, primarily due to the improved capacity utilization at our new packing facility in Mexico, which opened in December 2019.
In our vegetable product line, net sales were $42 million compared with $46 million in the third quarter of 2019, primarily due to lower sales volume as a result of the COVID-19.
Volume decreased 13%, unit pricing increased 5% and unit cost increased 26% compared with the prior-year period.
In our nontropical product line, which includes our grape, berry, apple, citrus, pear, peach, plum, nectarine, cherry and kiwi product line, net sales were $38 million compared with $32 million in the third quarter of 2019, primarily due to higher sales volume in Europe as a result of increased demand, along with higher sales volume in the Middle East in developing markets.
Volume increased 13%, unit price increased 4%, and unit cost increased 7%.
In our banana segment, net sales decreased $24 million to $362 million compared with $386 million in the third quarter of 2019, primarily due to lower net sales in North America, Europe and the Middle East as a result of decreased sales volume and lower demand due to COVID-19.
The COVID-19 pandemic affected banana net sales by an estimated $17 million during the quarter versus our third quarter of 2019 performance for this segment.
Overall, volume decreased 4%, worldwide pricing decreased 3% over the prior-year period.
Total worldwide banana unit cost decreased 1% and gross profit decreased to $11 million compared to [Audio Gap] in the third quarter of 2019, primarily due to lower selling prices in North America as a result of increased demand, partially offset by lower cost, mainly lower ocean freight cost.
Other products related charges represented $400,000 for the segment incurred as a result of the COVID-19 pandemic.
Selling, general and administrative expenses decreased $7 million to $44 million compared with $51 million in the third quarter of 2019.
The foreign currency impact at the gross profit level for the third quarter was unfavorable by $3 million compared with an unfavorable effect of $2 million in the third quarter of 2019.
Interest expense, net for the third quarter, was $5 million compared with $6 million in the third quarter of 2019 due to lower average loan balances and lower interest rates.
The provision for income tax was $5 million during the quarter compared with income tax expense of $3 million in the prior-year period.
For the first 9 months of 2020, our net cash provided by operating activities was $174 million compared with net cash provided by operating activities of $130 million in the same period of 2019.
Total debt decreased from $587 million at the end of 2019 to $511 million at the end of the third quarter of 2020.
As it relates to capital spending, we invested $57 million in capital expenditures in the third quarter of 2020 compared with $23 million in the third quarter of 2019.
For the first nine months of 2020, we invested $93 million compared with $94 million in the same period in 2018.
Our investments in the third quarter of 2020 included the delivery of 2 new container vessels, the Del Monte Gold and Del Monte Rose.
This is an increase of $0.05 per share from our quarterly cash dividend paid on September 4, 2020.

Due to the early actions we took by adjusting our business in response to these challenges, we reported adjusted earnings per share of $0.35 compared with adjusted earnings per share of $0.38 in the third quarter of 2019.
We identified assets across all of our regions that we plan to sell over the next 12 to 18 months for the total anticipated cash proceeds of approximately $100 million.
Despite the COVID-19 disruptions during the third-quarter 2020, we achieved net income per diluted share of $0.37 versus net income per diluted share of $0.38 in the third quarter of 2019.
Excluding, among other things, the effect of other product-related charges, which resulted in a $2.3 million gross profit impact related to inventory write-offs, we delivered adjusted net income per diluted share of $0.35 compared with adjusted net income per diluted share of $0.38 in the third quarter of 2019.
As Mohammad mentioned, we announced a $100 million asset sale program to be completed over the next 12 to 18 months to strengthen our cash flow position, reduce our debt and continue to reinvest in key areas of growth in our business.


We continue to see strong demand for our mission-critical products with year-to-date orders in backlog up 11% and 15%, respectively.
Notably, Industrial organic orders growth was 28% in the quarter and our Industrial backlog is up 30% year-to-date, well above pre-pandemic levels.
Revenue in the quarter was up 2% organically with operating margin up 80 basis points year over year and 240 basis points sequentially.
EPS was up 39% versus last year.
More specifically, we saw approximately $10 million of revenue pushed out of Q3 due to supplier input delays, logistics constraints and ongoing labor availability challenges.
This reduced our organic growth by roughly 5 points in the quarter.
Looking forward, we expect these challenges to continue through the fourth quarter, resulting in a $15 million impact on revenue.
For the year, we expect approximately $25 million of revenue to push out of 2021.
Organic orders of $194 million in the quarter were up 15% versus prior year.
We saw a strong year-over-year increase of 28% in industrial with growth in all regions.
Orders were down 10% in aerospace and defense due to the timing of large defense orders.
Organic revenue was $191 million, up 1% versus prior year.
Revenue came in approximately $10 million lower than expected as a result of the supply chain challenges that Scott mentioned upfront.
Adjusted operating income was $19 million or 10.1%, up 80 basis points from prior year and up 240 basis points from the previous quarter.
Finally, we delivered $0.50 of adjusted earnings per share, up 39% versus prior year and generated free cash flow of $7 million.
Industrial organic orders were up 28% versus last year and down 9% sequentially.
Aftermarket orders were up 42% and our downstream aftermarket backlog is the highest it has been since 2017.
Our book-to-bill ratio for the quarter and year-to-date is 1.1%, an indication of continued end market demand.
Industrial organic revenue was up 3% versus last year and up 1% sequentially.
This adversely impacted revenue by $6 million or 5 points of organic growth.
Adjusted operating margin was 8.7%, up 80 basis points versus last year and up 70 basis points versus Q2.
Improvements were driven by productivity and continued value-based pricing up 2%, partially offset by higher inflation.
aerospace and defense orders were $54 million down 10% versus last year and flat sequentially.
Revenue was $61 million, down 2% year over year and up 2% from prior quarter.
Slightly lower revenue was primarily driven by lower defense OEM shipments, partially offset by recovery in commercial aerospace, up 10% and an improvement in defense aftermarket revenue, up 7%.
Similar to Industrial, aerospace and defense was also impacted by the global supply chain and logistic constraints, which negatively impacted the quarter by $4 million or six points of growth.
Finally, operating margin was 24.2% in the quarter, up 50 basis points year over year and up 430 basis points from Q2.
Free cash flow in the quarter was $7 million, an improvement versus prior year but lower than expected.
We reduced our total debt by $23 million versus prior year and ended Q3 with $445 million of net debt.
Due to the lower earnings and cash outlook for the year, we now expect to improve our leverage by approximately 0.3 turns by the end of the year.
We expect revenue to be up 1% to 3% organically, which includes $15 million of delayed revenue out of the quarter due to continued global supply chain, logistics and labor challenges.
For Industrial, we expect orders in Q4 to be up more than 10% and revenue is expected to be up 3% to 6% with growth across most end markets.
In A&D, fourth quarter orders are expected to be up greater than 50% driven by large OEM defense programs.
Revenue, on the other hand, is expected to be flat to down 5%, with double-digit growth in commercial aerospace and defense aftermarket, offset by lower deliveries on defense programs.
We're expecting adjusted earnings per share of $0.60 to $0.65 in the fourth quarter with incremental and decremental margins of 30% to 35%.
Corporate cost is expected to increase by $1 million versus prior year.
Finally, we're planning for free cash flow of $10 million to $15 million in Q4 as we expect supply chain constraints will continue to impact our ability to complete in-process projects and collect milestone billings from customers.
Organic revenue is expected to be flat to down 2%, which reflects $25 million of revenue delayed out of the year.
Adjusted earnings per share of $1.69 to $1.74 is lower as a result of this reduction in volume and free cash flow is expected to be $4 million to $9 million.
On revenue, we expect modest improvement year over year with growth between 3% and 6%.
Our short-cycle products are expected to be up 6% to 9% overall, primarily driven by aftermarket growth between 8% and 11%.
Finally, pricing is expected to net roughly 2% and as pricing actions that were taken in Q2 and Q3 start to roll through our top and bottom line.
A&D revenue in the fourth quarter is expected to be flat to down 5% versus prior year, primarily due to supply chain constraints and the timing of shipments for large defense programs.
Defense revenue is expected to be down 10% to 15% with lower shipments on our OEM programs.
On the other hand, government orders for defense spares and MRO services picked up in the third quarter and we expect aftermarket revenue growth of 10% to 15%.
Commercial aerospace is expected to continue its recovery with 25% to 30% growth following three consecutive quarters of sequential orders growth.
Revenue from commercial air framers will be up 20% to 25% and mostly driven by the increased recovery in narrow-body aircraft production, most notably the A320.
Finally, pricing is expected to be a net benefit of 3% for defense and 4% for commercial.
We launched eight new products in Q3 and remain on track to deliver 45 new products by the end of 2021.
We're making really good progress with our 80/20 initiative.
With this structured approach, we've built a meaningful pipeline of growth and simplification opportunities and have already used 80/20 to implement strategic price increases at our U.S. site.
Even more importantly, when talking to the teams, it's apparent that 80/20 is becoming a part of our culture and how we do business.
We're the first supplier to meet the latest EU transportation regulation on the balance valve and we're able to secure more than $1 million of initial orders so far in 2021.

Organic revenue was $191 million, up 1% versus prior year.
Finally, we delivered $0.50 of adjusted earnings per share, up 39% versus prior year and generated free cash flow of $7 million.
We're expecting adjusted earnings per share of $0.60 to $0.65 in the fourth quarter with incremental and decremental margins of 30% to 35%.
Organic revenue is expected to be flat to down 2%, which reflects $25 million of revenue delayed out of the year.