Total sales were $1.7 billion, an increase of more than $250 million, or 18%, compared to Q1 two years ago.
This is significant because two years ago, we had 467 more stores than we have today.
E-commerce is playing an increasingly important role with sales up more than 110% in the quarter versus last year and 124% versus two years ago.
Cash flow from operating activities of $161 million year to date was up $169 million compared to last year and $56 million compared to two years ago.
Having already paid down debt and with $1.3 billion of cash at quarter-end, we are continuing to invest in growing our business and, as Joan will discuss, returning cash to shareholders.
Ending inventory was $2 billion, $373 million lower than last year.
Our Q1 performance demonstrates that we are off to a strong start implementing phase 2 of Signet's transformation, which we call Inspiring Brilliance.
For example, roughly 60% of our sales growth in Q1 across Kay and Zales came from new customers.
Further, increasingly optimized assortments for our target customers led to an ATV increase of nearly 20% in these banners versus two years ago.
Among recently engaged people, 13% designed their ring from scratch.
We also continue to build on our investments in James Allen, a specialist in the custom jewelry space, and we're seeing strong results with more than 130% revenue growth to last year.
We offered customers a 10% discount to bring in existing pieces of jewelry to be reimagined or restored to their previous brilliance.
We are building momentum and services, which we continue to believe is a billion-dollar growth opportunity on the path to the $9 billion overall revenue goal we laid out at our virtual investor event.
For example, Jared's fastest growth this quarter came through higher price point merchandise, primarily above $3,000.
This includes Jared's new premium diamond assortment with sales of larger stones up roughly 30% to two years ago.
Customers are highly receptive to our new assortment with particular emphasis on gold, which represents 75% of Pagoda sales.
Pagoda now has more than 135 stores on track to deliver $1 million in sales this year.
And we currently have four Pagoda locations that already have more than $1 million in sales to date this fiscal year, a feat that took until August to achieve in fiscal '20.
Sales were up three times to Q1 of last year and up 80% to two years ago on a smaller store base in both years.
For perspective, Kay delivered nearly 17% more brick-and-mortar sales per square foot of physical store space than in the first quarter two years ago.
And Zales is delivering 35% more.
In total, Q1 e-commerce sales were up more than 110% compared to last year, and brick-and-mortar same-store sales were up more than 105%.
We added more than 100 new features and capabilities across our digital platforms in Q1 to ensure every digital touchpoint is a moment of customer delight.
Virtual try-on for Kay drove over a 110% increase in its add-to-cart rate and nearly a 70% increase in order conversion in Q1.
Last year, we implemented virtual selling at the end of Q1 and had around 50,000 virtual interactions with customers.
This quarter, we had more than 450,000 virtual interactions.
The customer loved the ring and bought it on the spot, a $25,000 sale I might add.
That's the power of Signet connecting digital and physical, alongside our mission of helping all people celebrate life and express their love, even in 24 hours or less.
We announced our 2030 corporate sustainability goals through our three love: love for all, love for our team, and the love for our planet and products.
We outperformed expectations in Q1, and we're making progress in all of our strategic focus areas.
Turning to the quarter, first-quarter total sales grew 98.2% over last year on a lower store base.
specialty jewelry market grew over 72% for the three months ending in April.
Compared to that market growth, our U.S. banners grew total sales more than 109% this quarter.
Moving on to gross margin, we delivered approximately $680 million this quarter or 40.3% of sales.
SG&A was approximately $512 million or 30.3% of sales.
We're effectively using data analytics to create a labor model that integrates our new capabilities, resulting in a 60% improvement in labor productivity versus two years ago.
Our new labor model, coupled with our enhanced product assortment and marketing strategies resulted in a 15.2% increase in our North America average transaction value to last year.
Non-GAAP operating profit was $168.9 million, compared to an operating loss of $142.5 million in the prior year.
First-quarter non-GAAP deluded earnings per share was $2.23, up from a loss per share of $1.59 in the prior year.
We reduced our inventory by $370 million to this time last year.
We ended the quarter with $2.5 billion in liquidity, up over $1.2 billion to last year.
As these agreements were more favorable than originally contemplated, we're raising our fiscal '22 cost savings guidance by $20 million to a range of $75 million to $95 million, and we now expect cumulative three-year cost savings to be in the range of $220 million to $240 million.
As a result, we continue to conservatively plan for same-store sales to be negative in the second half of the fiscal year.
We expect second-quarter total sales in the range of $1.6 billion to $1.65 billion with same-store sales in the range of 76% to 82%, and non-GAAP EBIT of $118 million to $130 million.
For the fiscal year, we now expect total sales to be in the range of $6.5 billion to $6.65 billion with same-store sales in the range of 24% to 27%, and non-GAAP EBIT of $490 million to $545 million.
We remain on track to open up 100 locations and close at least 100 locations, with nine openings and nine closings this year.
First, in keeping with these priorities and as a result of our performance and cash generation, we are increasing our capex by $25 million to invest in growth initiatives.
This brings our fiscal '22 capital expenditures to a range of $175 million to $200 million with a continued focus on digital and technology investments to further strengthen our competitive advantage and long-term positioning.
And third, on capital return, as we announced today, we're pleased to return cash to shareholders through a common quarterly dividend, which has been reinstated at $0.18 per share.

Total sales were $1.7 billion, an increase of more than $250 million, or 18%, compared to Q1 two years ago.
We added more than 100 new features and capabilities across our digital platforms in Q1 to ensure every digital touchpoint is a moment of customer delight.
We outperformed expectations in Q1, and we're making progress in all of our strategic focus areas.
First-quarter non-GAAP deluded earnings per share was $2.23, up from a loss per share of $1.59 in the prior year.
As these agreements were more favorable than originally contemplated, we're raising our fiscal '22 cost savings guidance by $20 million to a range of $75 million to $95 million, and we now expect cumulative three-year cost savings to be in the range of $220 million to $240 million.
As a result, we continue to conservatively plan for same-store sales to be negative in the second half of the fiscal year.
We expect second-quarter total sales in the range of $1.6 billion to $1.65 billion with same-store sales in the range of 76% to 82%, and non-GAAP EBIT of $118 million to $130 million.
For the fiscal year, we now expect total sales to be in the range of $6.5 billion to $6.65 billion with same-store sales in the range of 24% to 27%, and non-GAAP EBIT of $490 million to $545 million.
We remain on track to open up 100 locations and close at least 100 locations, with nine openings and nine closings this year.


For the quarter, constant currency organic revenue increased 12%, with growth across all segments.
Growth was driven by organic volume as well as 130 basis points of price.
Of the approximately $220 million in acquired revenue, about 65% is consumable revenue from both Key and Cantel Medical, about 20% of the balance is capital equipment revenue, with the last 15% being service revenue.
Gross margin for the quarter increased 120 basis points compared to the prior year to 46.2%, as favorable productivity, pricing and acquisitions were somewhat offset by higher material and labor costs.
Combined, material and labor costs were about $10 million in the quarter, significantly higher than we were expecting.
As we look at the second half of the fiscal year, we anticipate that higher material labor costs will continue to impact gross margin by approximately $20 million or more.
EBIT margin for the quarter was 23.3% of revenue, an increase of 80 basis points from the second quarter of last year.
The adjusted effective tax rate in the quarter was 22%, higher than last year, but in line with our expectations for the full fiscal year.
Net income in the quarter increased to $200.3 million and earnings per share were $1.99.
Our leverage ratio at the end of the second quarter is now below 2.8 times.
The total cash settlement value was approximately $371.4 million.
At the end of the quarter, cash totaled $383.5 million.
During the first half, capital expenditures totaled $133.4 million, while depreciation and amortization was $201.7 million, reflecting recent acquisitions.
Free cash flow for the first half was $135.8 million.
Our fiscal 2022 is shaping up to be another record year for STERIS.
In particular, growth in our AST segment remained strong, with 23% constant currency organic growth year-to-date despite some tough comparisons in the second quarter of last year.
Healthcare has also rebounded nicely, with 17% constant currency organic growth in the first half and record backlog of $311 million at the end of the quarter for the legacy STERIS products.
Life Sciences consumables have stabilized, contributing 3% constant currency organic growth in the first half.
And our capital equipment business backlog has grown to a record $98 million.
Lastly, our newest segment, Dental, reported 10% growth for the quarter, in line with our expectations.

Net income in the quarter increased to $200.3 million and earnings per share were $1.99.
Our fiscal 2022 is shaping up to be another record year for STERIS.


Despite working from more than 1,800 offices globally, we are effectively communicating with our clients and each other.
22 million Americans alone have lost their jobs in the last four weeks and millions more around the world have been similarly affected.
So, we anticipate a strong return once market stabilizes, similar to what we saw in the second and third and fourth quarters of 2009, following the depths of the global financial crisis.
Adjusted net revenues of $435 million increased 4% versus the first quarter of 2019.
In aggregate, our total revenues of $436 million from our investment banking businesses, advisory, underwriting and commissions, increased 10% versus the first quarter of last year.
Advisory fees of $359 million, our largest revenue source, increased 10% compared to the first quarter of 2019, and held up very well compared to our larger competitors, almost all of whom experienced double-digit declines between 10% and 20% in their advisory revenues.
These results are especially impressive considering the fact that the dollar value of announced M&A transactions globally declined 24% in the first quarter and the dollar value of closed M&A transaction fell by 37% compared to the quarter a year ago.
Due to the strength of our advisory revenues compared to the declines experienced by our larger competitors, we expect to increase again our market share of advisory fees among all publicly reporting firms on a trailing 12-month basis, the 8.6% from 7.9% for the 12-month period ending March 31, 2019, and from 8.3% at the end of 2019.
Underwriting fees were $21.1 million, a decline of 22% from the first quarter of 2019.
Commissions and related fees of $55.4 million increased 32% versus the first quarter of 2019 or our best first quarter since 2016.
Asset management and administration fees from our consolidated businesses were $15.3 million, an increase of 7% versus the first quarter of 2019.
Our first quarter compensation ratio of 62% was impacted by the revenue decline in other revenue, caused by the shift from gains to losses associated with the investment portfolio that hedges a portion of our deferred cash compensation plan.
Non-compensation costs were $82.8 million, up 2.7% from the first quarter of 2019.
Adjusted operating income and adjusted net income of $82.5 million and $57.8 million declined 14% and 29% respectively, and adjusted earnings per share of $1.21 declined 27% versus the first quarter of 2019.
We remain focused on our capital management strategy, and returned $178.1 million to shareholders during the quarter through dividends and repurchase of 1.8 million shares at an average price of $76.57.
Our Board declared a dividend of $0.58, consistent with prior quarters and reflective of our results for the quarter.
In each of the last two years, we have generated revenues in excess of $2 billion and experienced operating margins that averaged in excess of 25%.
When the markets begin to show sustained stability, we believe that we will begin to see an increase in proactive attention to strategic matters.
We sustained our number-one ranking for volume of announced transactions over the past 12 months, both globally and in the U.S., among independent firms.
We've also found more ways to connect with institutional clients and interactions are 35% higher than in prior periods.
Our Advisory clients have had an intense interest in our research, and over the past months we've added more than 1,800 corporate executives to our research distribution.
For the first quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $427 million, $31.2 million and $0.74 respectively.
Net revenue of approximately $40 million was recognized in the first quarter as transactions that closed at the beginning of the second quarter of 2020.
For comparison purposes, net revenue was approximately $34 million in the first quarter of $2019 and $3 million for the first quarter of 2019.
Specifically, we adjusted for costs associated with divesting of Class J LP Units, granted in conjunction with the ISI acquisition.
For the quarter, we expensed $1.1 million related to those units.
As we noted last quarter, we expect to incur separation and transition benefits and related costs of approximately $38 million, $22.1 million of which was recorded as special charges in the first quarter of 2020.
We continue to review additional opportunities in smaller markets.
Our adjusted results for the quarter also exclude special charges of $1.5 million related to accelerated depreciation expense for leasehold improvements and our business realignment initiatives.
Turning to non-compensation costs, our firmwide non-compensation cost per employee was $44,000.1 [Phonetic] for the first quarter, down 6% on a year-over-year basis.
Our GAAP tax rate for the first quarter was 25.8% compared to 9.1% in the prior year period.
On a GAAP basis, our share count was 42.3 million shares for the first quarter.
On an adjusted basis, the share count was 47.7 million, down versus the prior-year period, driven by share repurchases and a lower average share price.
Finally, we hold approximately $588 million of cash and $264 million in investment securities as of March 31, 2020, with our current assets exceeding current liabilities by approximately $880 million.
By comparison, at year-end, we held $634 million of cash and $624 million in investment securities.
While we have never faced a dislocation like the one we are facing now, we have spent the last 25 years building a firm that has a broad range of capabilities and products to serve our clients in all kinds of markets, including the one that we are in now.

Adjusted operating income and adjusted net income of $82.5 million and $57.8 million declined 14% and 29% respectively, and adjusted earnings per share of $1.21 declined 27% versus the first quarter of 2019.
Our Board declared a dividend of $0.58, consistent with prior quarters and reflective of our results for the quarter.
When the markets begin to show sustained stability, we believe that we will begin to see an increase in proactive attention to strategic matters.
For the first quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $427 million, $31.2 million and $0.74 respectively.
For comparison purposes, net revenue was approximately $34 million in the first quarter of $2019 and $3 million for the first quarter of 2019.
Specifically, we adjusted for costs associated with divesting of Class J LP Units, granted in conjunction with the ISI acquisition.
As we noted last quarter, we expect to incur separation and transition benefits and related costs of approximately $38 million, $22.1 million of which was recorded as special charges in the first quarter of 2020.
We continue to review additional opportunities in smaller markets.
Turning to non-compensation costs, our firmwide non-compensation cost per employee was $44,000.1 [Phonetic] for the first quarter, down 6% on a year-over-year basis.


Core FFO was $1.12 per share, with net promote earnings of $0.05.
For the full year, core FFO was $4.15 per share, with net promote earnings of $0.06.
Excluding promotes, core FFO grew 14% year over year.
Net effective rent change on rollover accelerated to 33%, up 510 basis points sequentially and was led by the U.S. at over 37%.
Average occupancy was 97.4%, up 80 basis points sequentially.
Cash same-store NOI growth remained strong at 7.5% for the quarter and 6.1% for the full year.
Using this new definition consistently applied, our net effective lease mark-to-market at year-end jumped almost 800 basis points sequentially to 36%.
This current rent spread represents embedded organic NOI of more than $1.2 billion or $1.55 per share that we will capture without any further market rent growth.
UKLV's $1.7 billion of operating assets were contributed to our PELF and PELP Ventures, we earned net promote income of $0.05 in connection with the closeout of this venture and our percentage of infinite life vehicles has consequently grown to 95% of our $66 billion of third-party assets under management.
For the year, our team raised $4.4 billion of third-party equity.
After drawing down $1.9 billion in our open-ended funds for acquisitions during the year, equity Qs stood at a record $4 billion at yearend.
Development starts totaled $3.6 billion with margins of 32%.
We continue to maintain a long development runway with a land portfolio able to support $26 billion of future starts.
Stabilizations totaled $2.5 billion with estimated value creation of $1.3 billion and average margin of 53%, both all-time highs.
Realized development gains were $817 million for the year, also an all-time high.
Fortunately, the scale of our 1 billion square foot portfolio puts us in a unique position to help our customers address these current supply chain challenges.
During the quarter, we signed 62 million square feet of leases and issued proposals on 90 million square feet.
E-commerce made up 19% of our new leasing this quarter, with further broadening of customer diversity.
We signed 357 new leases, with 265 unique e-commerce customers in 2021, both of which are high watermarks.
Inventory to sales ratios are more than 10% below pre-pandemic levels.
Our customers not only need to restock at this 10% shortfall but build additional safety stock of 10% or greater.
This combination has the potential to produce 800 million square feet or more of future demand in the U.S. alone.
is approximately 70% pre-leased, which is well above the historical average.
In the fourth quarter, rents in our portfolio grew 5.7% globally and 6.5% in the U.S., bringing full year growth to records 18% and 20%, respectively, far exceeding our initial forecast.
Our portfolio posted its highest quarterly value increase, rising more than 12.5% globally, bringing the full year increase to a remarkable 39%.
We expect cash same-store NOI growth to range between 6% and 7% and average occupancy to range between 96.5% to 97.5%.
We are forecasting rent growth in our markets to be 11% in the U.S. and 10% globally.
For strategic capital, we expect revenue, excluding promotes, to range between $540 million and $560 million.
We expect net promote income of $0.55 per share for the year, almost all of which will occur in the third quarter and is driven by our PELF venture.
In response to continued strong demand, we are forecasting development starts of $4.5 billion to $5 billion, with approximately 35% build-to-suits.
Dispositions will range between $1.5 billion and $1.8 billion, two-thirds of which we expect to close this quarter.
We're forecasting net deployment uses of $2.3 billion at the midpoint, which we plan to fund with $1.6 billion of free cash flow after dividends and a modest increase in leverage.
We project core FFO, including the $0.55 of net promote income, to range between $5 and $5.10 per share, representing 22% year-over-year growth at the midpoint.
Core FFO, excluding promotes, will range between $4.45 and $4.55 per share or year-over-year growth of 10% at the midpoint.
Since our Investor Forum in 2019, our three-year earnings CAGR has been 13%, excluding promotes, well ahead of the 8% to 9% CAGR forecast we originally provided.
In fact, approximately 75% of the increase to our core FFO for 2022, excluding promotes, is derived from organic growth, principally same-store NOI and strategic capital fee-related earnings.
It's important to point out that in 2022, our strategic capital revenue, including promotes, will be over $1 billion, a new milestone.
When we introduced this business back in 2018, we set a target of $300 million from procurement savings and Essentials revenue.
We will hit that target this year with more than $225 million from procurement and $75 million from Essentials.
We also have a long development runway of $26 billion, much of which comes from our international opportunity set, positioning us for continued strong value creation well into the future.

Core FFO was $1.12 per share, with net promote earnings of $0.05.
We project core FFO, including the $0.55 of net promote income, to range between $5 and $5.10 per share, representing 22% year-over-year growth at the midpoint.
Core FFO, excluding promotes, will range between $4.45 and $4.55 per share or year-over-year growth of 10% at the midpoint.


Revenues were up 1% for the quarter, and favorable business mix drove an 8% growth of adjusted EBITDA and a 100-basis-point improvement in margin.
For the full year, adjusted EBITDA grew by 10% on a 3% increase in revenue, and we generated record adjusted free cash flow of $208.5 million.
High single-digit adjusted EBITDA growth fueled a 140-basis-point margin improvement as the segment topped 20% for the third straight quarter.
Incineration utilization increased to 89%, and landfill tonnage was up 40% from a year ago.
Average incineration price per pound for the full year rose 11% from 2018, largely due to enhancements at our facilities which can now handle a mix of higher-value waste streams.
While there were no major emergency response events in the quarter, for the full year, we recorded approximately $15 million of ER revenue.
Safety-Kleen revenue was up 2% on growth in our SK branch business and pricing of our core services which offset year-end weakness in base oil and blended pricing.
Adjusted EBITDA in the segment dipped 1% and margins declined from a year ago due to a lower pricing in SK oil and a drop in value of certain byproducts in our rerefining process in the early days of IMO 2020.
Parts washer services were up from a year ago, waste oil collection volumes were healthy at 55 million gallons, with a charge for oil rate that was higher than a year ago and above Q3's rate.
Our direct loop volumes grew by approximately 30% in the quarter, and the business accounted for 7% of total volumes sold in Q4.
Total blended product sales in Q4 were up 24% -- were 24%, up from 22% a year ago.
And for the full year, our volumes of direct lube sales grew by nearly 25%.
In 2020, we are again raising our 401(k) contributions and absorbing all healthcare cost increases resulting in millions more of incremental spend on our workforce.
Sustainability is part of Clean Harbors' DNA for 40 years and we expect it to only become a larger part of our story in years ahead.
In 2019, we invested just over $200 million in capital assets, added two successful bolt-on acquisitions, divested a small non-core business in Western Canada and repurchased our shares.
We increased revenue by $12.8 million which represents 1% growth from the prior year.
Adjusted EBITDA grew by $10.3 million.
From a gross profit perspective, we saw a decline in Q4 on both an absolute dollar and percentage basis from a year ago due to business mix including the project work associated with the 2008 California wildfires and higher costs related to labor, insurance and healthcare expenses.
On a full-year basis, gross profit increased by approximately $30 million, with gross margin essentially flat year over year.
SG&A expenses were down significantly in the quarter compared with a year ago, declining by $18.4 million which drove a 240-basis-point improvement in percentage terms.
On a full-year basis, SG&A expenses were down 110 basis points.
Depreciation and amortization in Q4 was down slightly to $77.4 million.
For 2020, we expect depreciation and amortization in the range of $290 million to $300 million which is consistent with the past two years.
Income from operations in Q4 increased 26% to $52.3 million reflecting the combination of our revenue growth and improved SG&A spend.
This is the same story with the full year as our annual income from operations also rose 26%.
On a GAAP basis, earnings per share was $0.43 in Q4 versus $0.29 a year ago.
Our adjusted earnings per share was $0.42.
For the full-year 2019, earnings per share was $1.74 versus $1.16 in the prior year, and adjusted earnings per share rose 50% to $1.86 from $1.26 in 2018.
Cash and short-term marketable securities at year-end totaled $414.4 million, up more than $85 million from September and in line with our expectations.
For the full year, we increased cash on the balance sheet by $135 million.
Our current and long-term debt obligations at year-end were about $1.56 billion, down $11 million from the prior year -- from a year ago primarily due to mandatory payments under our term loan.
We concluded the year with a strong balance sheet, and we sit at 2.1 times levered at year-end on a net debt basis.
Cash from operations in Q4 was up slightly to $128.5 million.
capex, net of disposals, was $39.1 million, up from a year ago resulting in adjusted free cash flow in the quarter of $89.4 million.
From an annual perspective, we ended 2019 with net capex spend of $204.7 million, and adjusted free cash flow was $208.5 million, in line with our free cash flow guidance.
For 2020, we expect net capex of $195 million to $215 million which, at the midpoint, is essentially flat with the prior year.
This number excludes the capital spend of $20 million to $25 million related to the purchase of, and investments to be made in our corporate headquarters in 2020.
During the quarter, we repurchased 59,000 shares of our stock at an average price of $84.28 a share for a total of $5 million.
For the full year, we bought back 299,000 shares at an average price of $71.65 a share for a total of $21.4 million.
Based on our 2019 results and current market conditions, we expect 2020 adjusted EBITDA in the range of $545 million to $585 million.
The midpoint of that range represents a 5% increase from 2019.
Based on our current guidance and working capital assumptions, we expect 2020 adjusted free cash flow in the range of $210 million to $240 million.

On a GAAP basis, earnings per share was $0.43 in Q4 versus $0.29 a year ago.
Our adjusted earnings per share was $0.42.
Based on our 2019 results and current market conditions, we expect 2020 adjusted EBITDA in the range of $545 million to $585 million.
Based on our current guidance and working capital assumptions, we expect 2020 adjusted free cash flow in the range of $210 million to $240 million.


The fourth quarter of 2019 marked a return to profitability for Teekay, as we recorded consolidated adjusted net income of $31 million or $0.31 per share compared to an adjusted net loss of $2 million or $0.02 per share in the same period of the prior year.
We also generated total adjusted EBITDA of $324 million, an increase of $113 million or 53% from the same period in the prior year, excluding the contribution from Teekay Offshore which we sold in May of 2019.
In addition, we narrowed our consolidated adjusted net loss in the fiscal year 2019 to $19 million from $53 million in 2018 and we continue to expect 2020 to be a profitable year.
Teekay Parent generated positive adjusted EBITDA of $14 million in the fourth quarter, which includes EBITDA from our directly owned assets and cash distributions from our publicly traded daughter entities.
Our results were up compared to the fourth quarter of 2018, mainly as a result of lower interest expense due to bond repurchases over the past year and our bond refinancing completed in May 2019, higher contributions from the Banff and Hummingbird Spirit FPSO units, a 36% increase in TGP's quarterly cash distribution and lower G&A expenses.
On the balance sheet side, in January 2020, Teekay Parent eliminated $52 million of debt guarantees previously provided to Teekay Tankers as a result of their $533 million refinancing completed during that month and we fully repaid the remaining balance on our 2020 unsecured bond with cash.
On the gas side we have significant declines in LNG prices in Asia and Europe with Asia reaching levels below $3 per MMBTU, primarily due to the coronavirus outbreak and milder winter weather, which has put pressure on spot LNG shipping rates.
On the Tanker side, crude spot tanker rates reached the highest level since 2008 due to positive underlying tanker supply and demand fundamentals, normal winter seasonality, as well as one-off events such as US sanctions on COSCO that removed 26 VLCCs from the trading fleet, floating storage ahead of the implementation of IMO 2020 and the removal of vessels from the global trading fleet to retrofit scrubbers.
Looking ahead, we believe the medium-term fundamentals remain intact with a record year in 2019 for new LNG projects reaching final investment decision that are expected to start up in 2022 onwards, and long-term demand for LNG expected to rise by 4% to 5% per year to 2030, as LNG continues to displace coal.
We have provided a graph of our annual total adjusted EBITDA over the past three years that adjusted for our sale of Teekay Offshore has increased by 66% since 2017, primarily underpinned by our stable and growing cash flows from our gas business that have increased by 52% during this time.
We expect our total adjusted EBITDA to continue to grow in 2020 with our gas cash flows expected to grow another 10% to 14% in 2020 compared to 2019 and a full year of potentially stronger earnings from our tanker business.
Our FPSO results improved significantly in the fourth quarter as the units ramped up production, following plant maintenance in the third quarter and the recognition of approximately $8 million in operational tariff revenues from the Foinaven, which is typically recognized in the fourth quarter of each year.
Teekay LNG Partners report a strong fourth quarter and fiscal 2019 results that were within its guidance, generating total adjusted EBITDA of $184 million and adjusted net income of $50 million or $0.56 per unit, up significantly during the quarter compared to the same period of the prior year as growth projects continued to drive higher earnings and cash flows.
We expect these results to continue to grow in 2020 with adjusted earnings per unit expected to be 45% to 73% higher than 2019.
Teekay LNG has reached an important milestone with the completion of its growth program, with the delivery of its fifth and sixth 50% ARC7 LNG carrier newbuilding for the Yamal LNG project, which immediately commenced their respective 26-year charter contracts, as well as its 30% owned Bahrain regas terminal completed mechanical construction and commissioning, and began receiving revenues in early January.
Also in early January, Awilco LNG fulfilled its obligation to repurchase two of TGP's LNG carriers, resulting in receipt of over $260 million in cash that was used to delever its balance sheet and increased its liquidity by over $100 million.
Additionally, Teekay LNG continues to execute on its balanced capital allocation strategy, which includes prioritizing balance sheet delevering for now and second consecutive year of over 30% increase in quarterly cash distributions with a 32% increase commencing in May 2020.
As outlined on the graph on the far right, this approach has allowed for significant delevering from a proportionate net debt to total adjusted EBITDA of 9.1 times in 2018 to 6.4 times based on our Q4 '19 annualized results, pro forma for the Awilco transaction that I touched on earlier.
This is creating significant equity value for all Teekay LNG unitholders with more to come as Teekay LNG approaches its target leverage of around 4.5 to 5.5 times and which is expected to result in significantly increased financial flexibility.
Lastly, since December 2018, TGP has opportunistically repurchased 3.5% of its outstanding common units at an average repurchase price of $12.85 per unit.
Teekay Tankers reported record high adjusted net income in the fourth quarter, generating total adjusted EBITDA of $132 million, up from $62 million in the same period of the prior year and adjusted net income of $83 million, or $2.47 per share, in the fourth quarter, an improvement from $14 million or $0.42 per share in the same period of the prior year.
TNK's results were driven by stronger spot tanker rates which reached the highest levels since 2008.
This strength continued into the first quarter of 2020 and I'm pleased to report that the tanker rates we have secured so far in Q1 are even higher with 77% of Q1 Suezmax days fixed at $51,700 per day and 63% of Q1 Aframax and LR2 days fixed at $38,600 per day compared to $39,100 and $33,000 per day in the fourth quarter, respectively.
On an annualized basis, the rates that we achieved in the fourth quarter of 2019 would translate to over $320 million of free cash flow or over $9.50 per share.
This is compelling relative to TNK's closing share price yesterday of $12.66 per share and equates to a free cash flow yield of 75%.


In fact, year-to-date are up 4% on the topline and over 6% on the bottom line, so a very solid performance for those businesses.
The total loan book was off about 1%, with slight declines in every business.
The mortgage business was quite strong, we sold over $100 million of lower rate, conforming production in the secondary market, where premiums are -- at the present moment -- very generous.
The company recorded $0.79 in fully diluted GAAP earnings per share for the third quarter, excluding $0.04 per share for litigation reserve expense, net of tax effect and $0.02 per share for acquisition-related expenses, net of tax effect.
Fully diluted operating earnings per share were $0.85 for the quarter.
These results were $0.01 per share higher than the third quarter of 2019, fully diluted operating earnings per share of $0.84 and $0.09 higher than the linked second quarter 2020, fully diluted operating earnings per share of $0.76.
The company's adjusted pre-tax pre-provision net revenue per share of $1.10 was consistent with the third quarter of 2019 and $0.02 per share higher than the linked second quarter results.
The company closed the third quarter of 2020 with total assets of $13.85 billion.
This was up $401.1 million or 3% from the end of the linked second quarter and up $2.25 billion or 19.4% from the year earlier.
Similarly, average interest earning assets for the third quarter of 2020 of $11.96 billion were up $852.5 million or 7.7% from the linked second quarter of 2020, and up $2.15 billion or 21.9% from one year prior.
The very large increase in total assets and average interest earning assets over the prior 12 months was driven by the second quarter 2020 acquisition of Steuben Trust Corporation and large inflows of government stimulus-related funding in PPP originations.
Ending loans at September 30th, 2020 were $7.46 billion, up $605.5 million, or 8.8% from one year prior, due to the Steuben acquisition and the origination of $507.4 million of PPP loans.
Ending loans were down $69.4 million or 0.9% from the end of the linked second quarter, due to a decline in business activities in the company's markets due to the COVID-19 pandemic.
The company's average total deposits were up $823 million or 8.1% on a linked quarter basis, and up $2 billion or 22.6% over the third quarter of 2019.
A significant portion of these funds were invested in overnight federal funds sold, which increased average cash equivalents in the quarter to $1.3 billion, up $635.1 million or 95.4% higher than the third quarter of 2019 and $478 million or 58.1% higher than the linked second quarter balances.
The company's net tangible equity to net tangible assets ratio was 9.92% at September 30th, 2020.
This was down from 10.08% at the end of the second quarter, but up from 9.68% one year prior.
The company's Tier 1 leverage ratio was 10.21% at the end of the third quarter, which remained over two times the well capitalized regulatory standard of 5%.
At September 30th, 2020, checking and savings account balances represented 71.3% of the company's total deposit base.
The combination of the company's cash and cash equivalents, borrowing availability at the Federal Reserve Bank, borrowing capacity at the Federal Home Loan Bank and unpledged available-for-sale investment securities portfolio, provided the company with over $4.8 billion of immediately available sources of liquidity.
The company recorded total revenues of $152.6 million in the third quarter of 2020, an increase of $4.3 million or 2.9% from the prior year's third quarter.
Net interest income was up $1.7 million or 1.9% between comparable annual quarters, driven by a $2.15 billion or 21.9% increase in average assets between the periods, offset in part by a 61-basis point decrease in net interest margin.
The company's fully taxable equivalent net interest margin was 3.12% in the third quarter of 2020 as compared to 3.73% in the third quarter of 2019.
A precipitous drop in market interest rates and significant increases and change in the composition of earning assets between the periods, including a $635.1 million increase in average cash equivalents, negatively impacted the company's net interest margin.
Noninterest banking revenues were up $1.2 million or 6.9% from $17.9 million in the third quarter of 2019 to $19.1 million in the third quarter of 2020.
This was driven by a $4 million increase in mortgage banking revenue, offset in part by a $2.8 million decrease in deposit service and other banking fees.
Employee benefit services revenues were up $0.8 million or 3.4% from $24.3 million in the third quarter of 2019 to $25.2 million in the third quarter of 2020, driven by increases in plan administration and recordkeeping revenues and employee benefit trust revenues.
Wealth management, insurance services revenues were also up $0.5 million or 3.6% between comparable annual quarters.
Similarly, total revenues were up $7.7 million or 5.3% on a linked quarter basis, due to a $1 million or 1.1% increase in net interest income, a $4.8 million or 33.4% increase in banking noninterest revenues and a $2 million or 5.1% increase in revenues from our financial services businesses.
The substantial increase in banking noninterest revenues was driven by a $2.5 million increase in mortgage banking income due to an increase in secondary market mortgage sales activities, a $2.3 million increase in deposit service and other banking fees, as deposit transaction activity levels rebounded in the third quarter.
The company recorded $1.9 million in the provision for credit losses during the third quarter of 2020.
This amount was significantly less than the amounts recorded in the prior two quarters of 2020, and only a $100,000 greater than the amount recorded in the third quarter of 2019.
The company recorded loan net charge-offs of $1.3 million or 7 basis points annualized during the third quarter of 2020.
Comparatively, loan net-charge offs in the third quarter of 2019 were $1.6 million or 10 basis points annualized.
On a year-to-date basis, the company recorded net charge-offs of $3.7 million or 7 basis points annualized.
This compares to $5.4 million or 11 basis points annualized for the nine-month period ended September 30th, 2019.
Exclusive of $0.8 million of acquisition-related expenses and $3 million of litigation reserve charges, the company recorded $93.2 million of operating expenses in the third quarter of 2020.
This compares to $90.9 million in operating expenses recorded in the third quarter of 2019, exclusive of $6.1 million of acquisition-related expenses and $87.5 million in operating expenses in the linked second quarter of 2020, exclusive of $3.4 million of acquisition-related expenses.
Although the company continued to experience reduced levels of business activities during the third quarter of 2020 due to the ongoing COVID-19 pandemic, the resumption of certain marketing and business development activities and incremental costs associated with operating a larger organization, as a result of the acquisition of Steuben in the second quarter of 2020, resulted in a $2.3 million or 2.6% net year-over-year increase in operating expenses between the comparable third quarters.
The $5.7 million or 6.5% increase in operating expenses between the third quarter of 2020 and the linked second quarter was driven by a $2.6 million or 4.7% increase in salaries and employee benefits, $1.3 million or 11.7% increase in data processing and communications expense, a $0.4 million or 3.9% increase in occupancy and equipment expense and a $1.4 million or 16.4% increase in other expenses.
The effective tax rate for the third quarter of 2020 was 20.3%, consistent with the linked second quarter.
During the third quarter, the company grew $3 million or $0.04 per fully diluted share, net of tax effect, in litigation reserves related to a class action suit brought against the company for its deposit account overdraft disclosures.
From a credit risk and lending perspective, the company continues to closely monitor the activities of its COVID-19-impacted borrowers and develop loss mitigation strategies on a case-by-case basis, including but not limited to the extension of forbearance arrangements.
At September 30th, 2020, 216 borrowers representing $193 million or 2.6% of loans outstanding were active under COVID-related forbearance.
As of last week, the outstanding loan balances under active forbearance dropped below $125 million.
At September 30th, 2020, nonperforming loans increased to 43 basis points or 0.43% of total loans outstanding.
This compares to 0.42% of total loans outstanding at the end of the third quarter of 2019 and 0.36% at the end of the linked second quarter of 2020.
Total delinquent loans, which includes nonperforming loans and loans 30 or more days delinquent, to total loans outstanding was 0.79% at the end of the third quarter of 2020.
This compares to 0.85% at the end of the third quarter of 2019 and 0.72% at the end of the linked quarter -- second quarter of 2020.
The company's allowance for credit losses increased from $64.4 million or 0.86% of total loans outstanding at June 30th to $65 million or 0.87% of total loans outstanding at September 30th.
The allowance for credit losses at September 30th represented over 10 times the company's trailing 12 months of net charge-offs.
For these reasons, it is uncertain as to the timing in which the company's remaining $11.3 million of net deferred PPPs will be recognized through the income statement.
Fortunately, the company's diversified noninterest revenue streams, which represent approximately 38% of the company's total year-to-date revenues, remain strong and are anticipated to mitigate some of the margin compression.

The company recorded $0.79 in fully diluted GAAP earnings per share for the third quarter, excluding $0.04 per share for litigation reserve expense, net of tax effect and $0.02 per share for acquisition-related expenses, net of tax effect.
Fully diluted operating earnings per share were $0.85 for the quarter.
The company recorded total revenues of $152.6 million in the third quarter of 2020, an increase of $4.3 million or 2.9% from the prior year's third quarter.
From a credit risk and lending perspective, the company continues to closely monitor the activities of its COVID-19-impacted borrowers and develop loss mitigation strategies on a case-by-case basis, including but not limited to the extension of forbearance arrangements.
Total delinquent loans, which includes nonperforming loans and loans 30 or more days delinquent, to total loans outstanding was 0.79% at the end of the third quarter of 2020.
This compares to 0.85% at the end of the third quarter of 2019 and 0.72% at the end of the linked quarter -- second quarter of 2020.


Over the next 60 minutes or so, we will review our strong fourth quarter and fiscal 2021 results, followed by yet another great outlook for fiscal 2022.
But as Mark often says, our people are our greatest differentiator and that couldn't be more apparent as you visit our global network of factories and meet the roughly 260,000 people that make Jabil's foundation so strong.
Through over 50 million square feet of manufacturing space and 100-plus sites, our people strive to make anything possible and everything better for over 400 of the world's most recognizable brands.
And since 2017, we have added more than $10 billion in revenue across several key end markets.
Moving to the right side of the chart, you'll see the composition of our $29.3 billion in revenue, and you'll likely notice that no end market dominates our diverse portfolio.
Our healthcare business serves programs and products with long stable life cycles of 10 to 20 years with high cost of change, thus providing stable earnings and cash flows.
Following me today will be Mike who joined Jabil in 2000 as a regional controller based in Hong Kong.
Then Mark, who joined Jabil in 1992 as a manufacturing supervisor, will share some of the value that Jabil provides to its customers through our people, our culture, and our best-in-class manufacturing capabilities.
An extensive list of these risks and uncertainties are identified in our annual report on Form 10-K for the fiscal year ended August 31, 2020, and other filings.
This flexibility has enabled us to reshape our end-market portfolio over the last several years, and in the last 18 months, our strategy has been pressure tested.
Despite this, our core operating margin performance in the quarter was quite strong coming in at 4.2%, approximately 10 basis points higher than expected, a testament to our team's execution in the quarter, solid cost optimization, and our ever more resilient end-market portfolio.
Net revenue for the fourth quarter was $7.4 billion, up 1% over the prior-year quarter.
GAAP operating income was $265 million, and our GAAP diluted earnings per share was $1.16.
Core operating income during the quarter was $314 million, an increase of 23% year over year, representing a core operating margin of 4.2%, a 70-basis-point improvement over the prior year.
Net interest expense in Q4 was $36 million, and core tax rate came in at approximately 22.3%.
Core diluted earnings per share was $1.44, a 47% improvement over the prior-year quarter.
Revenue for our DMS segment was $3.9 billion, an increase of 9.7% on a year-over-year basis.
Core margin for the segment came in at 4.1%, 20 basis points higher than the previous year.
Revenue for our EMS segment came in at $3.5 billion, down 6.4%, primarily driven by our previously announced transition to a consignment model.
Core margin for the segment was 4.3%, up 120 basis points over the prior year reflecting solid execution by the team.
For the year, our DMS segment revenue was $15.4 billion, an increase of 17% over the prior year, while core operating income for the segment was up an impressive 49% year over year.
This resulted in core margins expanding 110 basis points to 4.8%, reflective of our improved mix.
In EMS for the year, core margins were also up strong, coming in at 3.7%, 100 basis points higher than the prior year on revenue of $13.9 billion.
Net capital expenditures for the fourth quarter were $202 million and for the full fiscal year came in better than expected at $793 million or 2.7% of net revenue.
In Q4, inventory days came in higher than expected at 71 days, an increase of three days sequentially, driven by the previously mentioned incremental tightness in the supply chain.
While these higher inventory days may continue in the short term, we expect it to normalize below 60 over the mid- to longer term.
In spite of this, our fourth quarter cash flows from operations were very strong, coming in at $762 million.
As a result of the strong fourth-quarter performance and cash flow generation, adjusted free cash flow for the fiscal year came in higher than expected at approximately $640 million.
We exited the quarter with total debt to core EBITDA levels of approximately 1.4 times and cash balances of $1.6 billion.
During the fourth quarter, we repurchased 2.9 million shares, bringing total shares repurchased in FY '21 to 8.8 million shares or $477 million.
This brings our cumulative shares repurchased since FY '13 to approximately 90 million shares at an average price under $27, bringing our total returns to shareholders, including repurchases and dividends, to approximately $3 billion, reflective of our ongoing commitment to return capital to shareholders.
Jabil's long-standing capabilities and over 10 years of experience and credibility in this space have positioned us extremely well to benefit from this ongoing trend.
For FY '22, we expect both gross profit margins and core operating margins to improve 30 basis points over the prior year, mainly driven by our end market growth and improved mix of business.
Net capital expenditures are expected to be in the range of $830 million or 2.6% of net revenue.
We now have 100 sites in more than 30 countries.
At this scale, our factories require approximately $500 million in annual maintenance investments.
In FY '22, we expect to generate adjusted free cash flow of $700 million.
We ended FY '21 with committed capacity under the global credit facilities of $3.8 billion.
With this available capacity, along with our year-end cash balance, Jabil ended the year with access to more than $5.3 billion of available liquidity, which we believe causes forges ample flexibility.
As a reminder, in July earlier this year, we announced a $1 billion buyback authorization from our Board of Directors over the next two years.
DMS segment revenue is expected to increase 10% on a year-over-year basis to $4.7 billion, while the EMS segment revenue is expected to be $3.6 billion, consistent with the prior year.
We expect total company revenue in the first quarter of fiscal '22 to be in the range of $8 billion to $8.6 billion.
Core operating income is estimated to be in the range of $365 million to $425 million.
GAAP operating income is expected to be in the range of $321 million to $381 million.
Core diluted earnings per share is estimated to be in the range of $1.70 to $1.90.
GAAP diluted earnings per share is expected to be in the range of $1.40 to $1.61.
The tax rate on core earnings in the first quarter is estimated to be approximately 25%.
We have deep domain expertise complemented by investments we made in capabilities, all of which give us confidence in our ability to deliver 4.5% in core margins in FY '22 along with $6.35 in core earnings per share and $700 million in free cash flow.
Fiscal '21 came in well ahead of plan, resulting in a core operating margin of 4.2%.
We also co-chaired an external DE&I certification program, a program attended by 165,000 participants, of which the vast majority earned their formal certificates.
An example of one of our actions is our greenhouse gas emissions, where our goal is a 25% reduction by 2025 and a 50% reduction by 2030.
Our employees will look to complete 1 million volunteer hours in aggregate during calendar 2022.
We look to deliver a core operating margin of 4.5% on revenues of $31.5 billion, a 30 basis point expansion when compared to fiscal '21.
This translates to $6.35 in core earnings per share or 13% earnings growth year on year.

Net revenue for the fourth quarter was $7.4 billion, up 1% over the prior-year quarter.
GAAP operating income was $265 million, and our GAAP diluted earnings per share was $1.16.
Core diluted earnings per share was $1.44, a 47% improvement over the prior-year quarter.
We expect total company revenue in the first quarter of fiscal '22 to be in the range of $8 billion to $8.6 billion.
Core diluted earnings per share is estimated to be in the range of $1.70 to $1.90.
GAAP diluted earnings per share is expected to be in the range of $1.40 to $1.61.


Q1 revenue increased 5.3% to $698 million.
Segment operating income increased 52.5% to $119 million, and reported earnings per share increased 4.2% to $0.99.
The health of our people has been our top priority from day 1.
Today, we have nearly $1.5 billion of liquidity at our disposal.
This resulted in structural reductions in 2020 of nearly $65 million.
Organic sales in Motion Technologies were up 17% after 10% organic sales growth in the fourth quarter of 2020.
The new auto platforms that we won and Friction's ability to deliver for our customers drove 1,500 basis points of outperformance versus global auto production.
And we secured positions on 9 new platforms with EV content during the quarter, 8 of which are in China, the largest automotive market in the world.
This is building on the 42 EV platforms wins in 2020.
Connectors grew sales in all regions, and orders were up 20% organically with strength primarily in the distribution channel.
From a profitability perspective, ITT generated adjusted segment operating income growth of 27% and margin expansion of 300 basis points on 2% organic sales growth.
Incremental margin was above 70% for the quarter.
IP's margin was nearly 16%, driven by net productivity as we continue to drive supply chain improvements and better manufacturing performance.
This follows a 15%-plus margin performance in Q4 of 2020.
As a result of the revenue growth and margin expansion, ITT delivered adjusted earnings per share of $1.06, a sequential and year-over-year increase.
Even more telling is the fact that earnings per share was $0.15 above the first quarter of 2019.
Free cash flow was up 70%, representing a margin of nearly 16%.
On capital deployment, we repurchased ITT shares totaling $50 million early in Q1, executing on our repurchase plan and achieving half of our full year plan of $100 million.
On organic sales, we now anticipate growth of 5% to 7%, a 300 basis point increase on both the low and high end of our original guidance.
On adjusted earnings per share, the increased sales volume and the strong productivity expected in 2021, combined with the carryover impact of our 2020 cost actions, will generate earnings per share in the range of $3.80 to $4 at the high end, which equates to 19% to 25% growth versus prior year.
This is a $0.30 improvement at the midpoint from our prior guidance and puts ITT on pace to surpass 2019 EPS.
From a top line perspective, Motion Technologies delivered a solid performance driven by strong auto growth and continued share gains in our 3 main regions.
Our Friction OE business grew nearly 30% organically with impressive 42% growth in North America.
Our focus on operational excellence produced 280 basis points of net productivity in Q1.
These included $50 million of savings from our 2020 cost actions.
Industrial Process grew margin 450 basis points to 15.8% despite a 12% organic sales decline.
And Motion Technologies expanded margin nearly 300 basis points to 20.6%.
The impact was 100 basis points this quarter, substantially higher than what we were expecting.
This smart growth investment drove roughly 50 basis point impact this quarter.
Our plan for the year still assumes approximately $100 million of capex, an increase of over 50% relative to 2020.
We drove positive organic growth at an incremental margin of over 70%.
We generated nearly 300 basis points of productivity and invested in ITT's future.
We repurchased ITT shares worth $50 million and raised our dividend 30%, the ninth consecutive dividend increase.
Q1 organic revenue growth of 17% was primarily driven by strength in auto.
Our strong momentum from last year carried forward as Q1 grew 5% sequentially over Q4 2020.
Friction OE grew 29% organically, and we outperformed global auto production by 1,500 basis points.
Segment margin expanded 280 basis points versus prior year and 110 basis points versus Q4 2020.
For Industrial Process, revenue was down 12% organically, driven by short-cycle declines, primarily in oil and gas and chemical markets.
However, we continue to see steady sequential progress in short-cycle orders with 9% sequential growth from Q4 and a strong book-to-bill of 1.1.
IP margin expanded 450 basis points to a segment record of 15.8%.
This represents $6 million of operating income growth on $25 million of lower sales.
Our Connector business was up 20% versus prior year and up 3% sequentially, driven by continued North American distribution strength.
And we delivered a much improved 29% decremental margin in Q1.
Partially offsetting the share count benefit was a roughly $0.01 headwind from a higher-than-planned effective tax rate of 22%.
The increase in adjusted segment margin expansion by 40 basis points across our range reflects our expectations for higher volumes and continued productivity generation in addition to the stronger-than-planned margin expansion from Q1.
As you will see on Slide 7, our revised guidance assumes the incremental impact from this global trend will be $0.25 to $0.30 for the remainder of 2021.
Our revised earnings per share guide reflects a $0.30 improvement at the midpoint of our range to $3.90, which would put us $0.09 above 2019.
Our 4-year effective tax rate is now expected to be approximately 22%.
Our guidance also continues to assume a reduction of approximately 1% in our 4-year weighted average share count.
We are raising our free cash flow guidance by $25 million at the midpoint to reflect the impact of higher operating income, and we now expect free cash flow margin of 11% to 12%.
Organic sales growth is expected to be above 20%, driven by MT's strong performance and an easy 2020 compare.
From a total ITT perspective, adjusted segment margin should be equal or slightly above second quarter of 2019 of 16.1%, which we believe is a more representative comparison.

Segment operating income increased 52.5% to $119 million, and reported earnings per share increased 4.2% to $0.99.
From a profitability perspective, ITT generated adjusted segment operating income growth of 27% and margin expansion of 300 basis points on 2% organic sales growth.
As a result of the revenue growth and margin expansion, ITT delivered adjusted earnings per share of $1.06, a sequential and year-over-year increase.
On organic sales, we now anticipate growth of 5% to 7%, a 300 basis point increase on both the low and high end of our original guidance.
On adjusted earnings per share, the increased sales volume and the strong productivity expected in 2021, combined with the carryover impact of our 2020 cost actions, will generate earnings per share in the range of $3.80 to $4 at the high end, which equates to 19% to 25% growth versus prior year.


For the third quarter of 2021, revenues increased to $225.3 million compared to $116.6 million in the third quarter of the prior year.
Operating profit for the third quarter was $8 million compared to an operating loss of $31.8 million in the same quarter of the prior year.
EBITDA for the third quarter was $26.5 million compared to EBITDA of negative $12.3 million in the same quarter of the prior year.
Our diluted earnings per share for the third quarter were $0.02 compared to an $0.08 loss per share in the same quarter of the prior year.
Cost revenues -- cost of revenues during the third quarter of 2021 was $170.6 million or 75.7% of revenues compared to $100.9 million or 86.5% of revenues during the third quarter of 2020.
Selling, general and administrative expenses were $31.4 million in the third quarter of 2021 compared to $32.4 million in the third quarter of the prior year.
Selling, general and administrative expenses decreased from 27.8% of revenues in the third quarter of last year to 14% of revenues in the third quarter of 2021 due to leverage of higher revenues over costs that are relatively fixed during the short term.
Depreciation was $18.1 million in the third quarter of 2021 compared to $18.7 million in the same quarter of the prior year.
Our Technical Services segment revenues for the third quarter were $211.8 million compared to $109.3 million in the same quarter last year due to significantly higher activity and some pricing improvement.
Segment operating profit in the third quarter of 2021 was $8.3 million compared to a $24.9 million operating loss in the third quarter of the prior year.
Our Support Services segment revenues for the third quarter of this year were $13.5 million compared to $7.3 million in the same quarter last year.
Segment operating loss in the third quarter was $55,000 compared to an operating loss of $3.8 million in the third quarter of the prior year.
On a sequential basis, RPC's third quarter revenues increased 19.4% to $225.3 million from $188.8 million in the prior quarter.
Cost of revenues during the third quarter of 2021 increased 17% to $170.6 million compared to $145.8 million in the prior quarter.
As a percentage of revenues, cost of revenues decreased slightly from 77.2% in the second quarter of this year to 75.7% in the third quarter of 2021, reflecting some pricing improvement and operating expense leverage.
Selling, general and administrative expenses during the third quarter of 2021 increased 6.9% to $31.4 million from $29.4 million in the prior quarter, resulting in positive operating expense leverage.
As a result of these improvements, operating profit during the third quarter of 2021 was $8 million compared to an operating loss of $1.2 million in the prior quarter.
RPC's EBITDA was $26.5 million in the third quarter compared to EBITDA of $17.3 million in the prior quarter.
Our Technical Services segment revenues increased by $35.7 million or 20.3% in the third quarter due to increased activity levels and some pricing improvement in the segment service lines.
RPC's Technical Services segment generated an $8.3 million operating profit in the current quarter compared to an operating profit of $1.4 million in the prior quarter.
Our Support Services segment revenues increased by 6.6% to $13.5 million in the third quarter.
Operating loss was $55,000 in the current quarter compared to an operating loss of $2.4 million in the prior quarter.
This equipment was added late in the third quarter and is reflected as a finance lease on our balance sheet with a balloon payment due at the end of 12 months.
Third quarter 2021 capital expenditures were $19 million, excluding the equipment acquired under a finance lease in the third quarter.
We currently estimate full year 2021 capital expenditures, excluding lease financed equipment, to be approximately $65 million, comprised primarily of capitalized maintenance for existing equipment and selected growth opportunities.
At the end of the third quarter, RPC's cash balance was approximately $81 million, and we remain debt-free.

Our diluted earnings per share for the third quarter were $0.02 compared to an $0.08 loss per share in the same quarter of the prior year.
On a sequential basis, RPC's third quarter revenues increased 19.4% to $225.3 million from $188.8 million in the prior quarter.


Our Q4 bookings were a record $197 million, up 23% compared to the prior year, with our Industrial Processing segment driving this growth.
Strong demand led to a 9% sequential increase in Parts & Consumables revenue, which made up 67% of total Q4 revenue.
Total revenue was down 8% compared to the fourth quarter of 2019.
We were particularly pleased that our adjusted EBITDA margin increased to 19.1%, and our free cash flow was up 7% to a record $38 million in the fourth quarter.
Full year revenue declined 10% to $635 million, while our bottom line performance benefited from a favorable product mix along with cost containment measures and government systems programs.
Cash flow from operations strengthened throughout the year, and free cash flow was near a record $85 million for the full year 2020.
Our diluted earnings per share was $4.77 and on an adjusted basis, declined 7% to $5 compared to our record of $5.36 per share in 2019.
Our Flow Control segment benefited from a rebound in capital project activity in the fourth quarter, which led to bookings increasing nearly 9% compared to the prior year period.
Our Parts & Consumables revenue was up 5% sequentially and made up 68% of total Q4 revenue.
As many of you know, our aftermarket parts business has a more favorable margin profile compared to capital business, and the product mix combined with improved operating leverage led to a 13% increase in adjusted EBITDA compared to Q4 of 2019 and represented 26% of revenue.
One was a robust U.S. housing market, which saw single-family homebuilding, the largest share of the housing market, increased 12% in December.
Revenue in this segment declined 13% to $69 million year-over-year, but increased 11% sequentially.
Parts & Consumables revenue was up 12% compared to the same period last year, and made up 70% of total revenue in the fourth quarter.
Revenue was down 7% to $39 million, and Parts & Consumables revenue in the fourth quarter made up 58% of total revenue.
Capital bookings in our Material Handling segment increased 23% compared to the same period last year and were up 18% sequentially.
This uncertainty limits our ability to forecast the timing of orders and as a result, we will not be providing guidance at this time.
Consolidated gross margins were 44.1% in the fourth quarter of 2020 compared to 40.9% in the fourth quarter of 2019, up 320 basis points.
Our overall percentage of Parts & Consumables revenue increased to 67% of total revenue in the fourth quarter of 2020 compared to 60% in the fourth quarter of 2019.
Also contributing to the increase in gross margins was approximately 50 basis points due to the receipt of government assistance benefits related to the pandemic.
SG&A expenses were $47.4 million in the fourth quarter of 2020, down $0.2 million from the fourth quarter of 2019.
SG&A expense as a percentage of revenue was 28.1% in the fourth quarter of 2020 compared to 26.1% in the fourth quarter of 2019.
There was an unfavorable foreign currency translation effect, which increased SG&A expenses by $1.1 million, and we received government assistance benefits of $0.4 million in the fourth quarter of 2020.
Excluding these items, along with backlog amortization and the SG&A from our acquisition, SG&A expenses for the fourth quarter of 2020 were down $1.3 million or 3% compared to the fourth quarter of 2019, primarily due to reduced travel-related expenses.
Our GAAP diluted earnings per share was $1.40 in the fourth quarter compared to $0.76 in the fourth quarter of 2019.
Our GAAP diluted earnings per share in the fourth quarter includes $0.12 from an intangible asset impairment charge, $0.01 of restructuring costs and $0.01 of acquired backlog amortization.
In addition, our fourth quarter results included pre-tax income of $1.2 million or $0.07 net of tax attributable to government employee retention assistance programs.
Our tax rate in the fourth quarter was 20.4% and included approximately $0.12 of tax benefits related to the following items.
Excluding these items, our tax rate would have been 27%.
For the full year 2020, gross margins increased 200 basis points to 43.7% compared to 41.7% in 2019.
Excluding the government assistance benefits, which contributed approximately 60 basis points to the 2020 gross margins and the amortization of profit and inventory in 2019, gross margins were up 90 basis points, primarily due to higher gross profit margins on Parts & Consumables and a higher overall percentage of Parts & Consumables.
Our percentage of Parts & Consumables revenue increased to 66% in 2020 compared to 63% in 2019.
SG&A expenses decreased $10.6 million or 6% to $181.9 million in 2020 compared to $192.5 million in 2019.
As a percentage of revenue, SG&A expenses were 28.6% in 2020 compared to 27.3% in 2019.
We had $0.6 million of SG&A from our acquisitions in 2020 and incurred acquisition-related costs of $1 million and $2.2 million in 2020 and 2019, respectively.
In addition, there was a favorable foreign currency translation effect of $0.4 million and we received government assistance benefits of $2.2 million in 2020.
Excluding SG&A from our acquisition, acquisition-related costs, the impact of foreign currency translation and government assistance benefits, SG&A expenses were down $7.4 million or 4% compared to 2019, primarily due to a decrease in travel-related costs.
Our GAAP diluted earnings per share in 2020 was $4.77, up 5% compared to $4.54 in 2019.
Our GAAP diluted earnings per share in 2020 includes $0.12 from an intangible asset impairment charge, $0.07 of restructuring costs, $0.04 of acquired backlog amortization, $0.03 of acquisition costs and $0.03 from a discrete tax benefit.
In addition, our 2020 results included pre-tax income of $6.1 million or $0.39 net of tax attributable to government employee retention assistance programs.
In the fourth quarter of 2020, adjusted EBITDA was $32.1 million or 19.1% of revenue compared to $32.2 million or 17.6% of revenue in the fourth quarter of 2019.
On a sequential basis, adjusted EBITDA increased 7% due to increased profitability in our Material Handling segment.
For the full year, adjusted EBITDA was $115.9 million or 18.3% of revenue compared to the record set in 2019 of $127.1 million or 18% of revenue.
In the fourth quarter of 2020, operating cash flow was a record $40.3 million and included a positive impact of $12.8 million from working capital compared to operating cash flows of $39.2 million in the fourth quarter of 2019, which included a positive impact from working capital of $17.9 million.
For the full year, operating cash flow was $92.9 million, down 5% compared to the record of $97.4 million in 2019.
We repaid $30.1 million of debt, paid a $2.8 million dividend on our common stock and paid $2.2 million for capital expenditures.
For the full year, we repaid $72 million of our debt.
Free cash flow was a record $38.1 million in the fourth quarter of 2020, increasing 69% sequentially and 7% compared to the fourth quarter of 2019.
For the full year, free cash flow was $85.3 million, down $2.2 million or 2% compared to the record of $87.5 million in 2019.
In the fourth quarter of 2020, GAAP diluted earnings per share was $1.40 and adjusted diluted earnings per share was $1.54.
The $0.14 difference relates to an intangible asset impairment charge of $0.12, restructuring costs of $0.01 and amortization of acquired backlog of $0.01.
The $0.12 intangible asset impairment charge is associated with our timber harvesting product line, which is part of our Wood Processing Systems business.
This is an ancillary product line that was part of our acquisition of NII FPG's Forest Products business in 2017 and represents less than 1.5% of our consolidated revenues in 2020.
We evaluated the recoverability of the intangible asset related to this business, which resulted in a pre-tax impairment charge of $1.9 million in the fourth quarter of 2020 and $2.3 million in the fourth quarter of 2019.
After these impairment charges, the remaining intangible asset for this product line is $0.5 million.
In the fourth quarter of 2019, GAAP diluted earnings per share was $0.76 and adjusted diluted earnings per share was $1.32.
The $0.56 difference relates to a $0.55 charge for the settlement of a pension plan, an intangible asset impairment charge of $0.16, and restructuring costs of $0.01, which were partially offset by a $0.16 tax benefit associated with the exercise of previously awarded employee stock options.
The increase of $0.22 in adjusted diluted earnings per share in the fourth quarter of 2020 compared to the fourth quarter of 2019 consists of the following: $0.21 due to higher gross margins, $0.15 from a lower recurring tax rate, $0.07 due to government assistance programs, $0.06 due to lower interest expense, $0.02 due to lower operating expenses and $0.01 from the operating results of our acquisition.
These increases were partially offset by $0.29 due to lower revenue and $0.01 due to higher weighted average shares outstanding.
Collectively, included in all the categories I just mentioned was a favorable foreign currency translation effect of $0.03 in the fourth quarter of 2020, compared to last year's fourth quarter due to the weakening of the U.S. dollar.
We reported GAAP diluted earnings per share of $4.77 in 2020, and our adjusted diluted earnings per share was $5.
The $0.23 difference relates to an intangible asset impairment charge of $0.12, restructuring costs of $0.07, amortization of acquired backlog of $0.04, acquisition costs of $0.03 and a discrete tax benefit of $0.03.
We reported GAAP diluted earnings per share of $4.54 in 2019 and our adjusted diluted earnings per share was $5.36.
The adjusted diluted earnings per share excludes $0.55 from a pension settlement charge, $0.32 for the amortization of acquired profit and inventory and backlog, an intangible asset impairment charge of $0.16, acquisition costs of $0.06, $0.01 of restructuring costs and $0.29 of tax benefits from the exercise of previously awarded employee stock options.
Decrease of $0.36 in adjusted diluted earnings per share from 2019 to 2020 consists of the following: $1.87 from lower revenue and $0.05 from higher weighted average shares outstanding.
These decreases were partially offset by $0.45 from lower operating expenses, $0.39 from government assistance programs, $0.35 due to lower interest expense, $0.33 from higher gross margins, $0.03 from the operating results of our acquisition and $0.01 from a lower recurring tax rate.
Collectively, included in all the categories I just mentioned, was an unfavorable foreign currency translation effect of $0.04 in 2020 compared to 2019.
Cash conversion days measure, calculated by taking days in receivables plus days in inventory and subtracting days in accounts payable, was 125 at the end of the fourth quarter of 2020, down from 140 at the end of the third quarter of 2020, but up from 104 days in the fourth quarter of 2019.
Working capital as a percentage of revenue was 14.2% in the fourth quarter of 2020 compared to 15.6% in the third quarter of 2020 and 12.2% in the fourth quarter of 2019.
Net debt, that is debt less cash, at the end of 2020 was $166.8 million compared to $232.8 million at the end of 2019.
We were able to lower our net debt by $66 million due to the excellent free cash flow generated in 2020.
Our interest expense decreased 42% or $5.4 million to $7.4 million in 2020 compared to $12.8 million in 2019 due to our ability to successfully leverage cash generated around the world to pay down debt and lower interest rates.
Our leverage ratio calculated defined in our credit agreement was 1.61 at the end of the fourth quarter of 2020, down from 2.03 in the fourth quarter of 2019, as we continue to make excellent progress in paying down debt.
We currently anticipate an overall increase in revenue of 9% to 12%, with stronger performance in the second half of the year.
Excluding the government assistance programs, our gross margins came in at 43.1% in 2020.
As a percentage of revenue, we anticipate SG&A will be approximately 27% to 28%, while the percentage of R&D expense will be the same as 2020.
Overall, we expect minimal benefit from government assistance programs in 2021 compared to the $0.39 we received in 2020.
We expect our recurring tax rate will be approximately 27% to 28% in 2021.
We anticipate capex spending in 2021 will be approximately 2% of revenue.
In addition, we expect depreciation and amortization will be approximately $30 million to $31 million in 2021.

Total revenue was down 8% compared to the fourth quarter of 2019.
This uncertainty limits our ability to forecast the timing of orders and as a result, we will not be providing guidance at this time.
Our GAAP diluted earnings per share was $1.40 in the fourth quarter compared to $0.76 in the fourth quarter of 2019.
In the fourth quarter of 2020, GAAP diluted earnings per share was $1.40 and adjusted diluted earnings per share was $1.54.


In the third quarter, Lear's sales growth outpaced the market by 9 percentage points with strong growth over market in both Seating and E-Systems, continued new business wins as well as products that are favorably aligned with the industry shift to electrification are expected to deliver continued growth above market over the next several years.
In total, we returned $100 million to shareholders during the quarter.
We also increased our credit agreement to $2 billion and extended the maturity to 2026.
In the third quarter seating growth over market was 8 percentage points, reflecting new business and the Ford Bronco and Bronco Sport, the Hyundai Tucson and strong performance on the luxury brands in Europe, the seating also benefited from strong demand from GM's full size SUVs.
The company has almost 50 years of experience in seating comfort solutions.
Technical centers and sales offices in three different continents, and an experienced and dedicated team with approximately $300 million of annual revenue.
Kongsberg is a global leader in-seat massage and he has a number 3 position in lumbar and adjustable comfort.
Kongsberg also has a strong market position as the number 2 player Heat Mats and the number 4 player in Vent Systems for thermal comfort.
The total addressable market for massage, lumbar heat, ventilation products is estimated at $2.5 billion to $3 billion.
IHS trend data indicates this market will grow about 2 percentage points faster than the vehicle production over the next five years.
In the third quarter, new system sales grew 9 percentage points faster than the market, reflecting new business on the Ford Bronco Sport in the Mustang Mach-E in North America and strong performance in connection systems in Europe and with Geely and the Great Wall in China.
We have one -- over $1 billion in business awards so far this year.
Over 80%, which are new for Lear.
Our Connection Systems Business is on track to grow to approximately $600 million next year.
We're also making progress in our plan to grow our connection systems business to $900 million to $1 billion by 2025.
As a result, global vehicle production in the third quarter decreased by 19% compared to 2020 and on a Lear sales weighted basis global production declined by approximately 25%.
Overall company growth over market was a strong 9 percentage points with E-Systems growing nine points and seating growing eight points above market respectively.
Growth over market in North America of 12 points reflected the benefit of new business in both segments and strong production on GM's full-size SUVs as well as Mercedes SUVs.
Our sales declined 13% year-over-year to $4.3 billion.
Excluding the impact of foreign exchange, commodities, and acquisitions sales were down by 16% primarily reflecting lower production and Lear platforms partially offset by the addition of new business.
Semiconductor shortages in the quarter negatively impacted our revenue by approximately 24%.
Core operating earnings were $98 million compared to adjusted operating earnings of $327 million last year.
Adjusted earnings per share were $0.53 as compared to $3.73 a year ago.
Third quarter free cash flow was negative $157 million compared to $474 million in 2020.
Sales in the quarter were $3.2 billion, a decrease of $526 million or 14% from the third quarter of 2020.
Excluding the impact of foreign exchange, acquisitions and commodities sales were down 16% reflecting lower production partially offset by the benefit of new business.
In seating production downtime in the third quarter related to semiconductor shortages reduced our sales by approximately $1.1 billion or 25%.
Core operating earnings were $144 million, down $142 million from the third quarter of 2020.
Sales in the third quarter were $1.1 billion, a decrease of 9% from the third quarter of 2020.
Excluding the impact of foreign exchange, acquisitions and commodities, sales were down 15% driven primarily by lower volumes somewhat offset by a strong backlog.
In E-Systems production downtime in the third quarter related to semiconductor shortages reduced our sales by approximately $300 million or 21%.
Core operating earnings were $23 million or 2.1% of sales compared to $93 million in 2020.
The credit agreement was increased to $2 billion and the maturity was pushed out by more than two years to October of 2026.
In the third quarter we returned $100 million through continued share repurchases and the doubling of our quarterly dividend of $0.50 per share.
Due to the ongoing supply disruptions we expect full year 2021 global vehicle production to be roughly the same as 2020 and generally in line with the most recent IHS forecast.
From a currency perspective, our 2021 outlook assumes an average Euro exchange rate of $1.19 per Euro, and an average Chinese RMB exchange rate of RMB6.46 to the dollar.
We are forecasting sales in the range of $18.8 billion to $19.2 billion and operating income in the range of $750 million to $850 million.
Our 2021 outlook for core operating earnings at the midpoint was down $215 million to $800 million, primarily reflecting lower volumes and modestly higher commodity costs partially offset by net performance improvements.
Adjusted net income is expected to be in the range of $420 million to $500 million, down $180 million at the midpoint from our prior guidance reflecting lower sales.
Our outlook for free cash flow for the year is expected to be approximately $175 million, which is lower than our prior outlook by $250 million reflecting both lower earnings and higher working capital.

Our Connection Systems Business is on track to grow to approximately $600 million next year.
Our sales declined 13% year-over-year to $4.3 billion.
Adjusted earnings per share were $0.53 as compared to $3.73 a year ago.
Due to the ongoing supply disruptions we expect full year 2021 global vehicle production to be roughly the same as 2020 and generally in line with the most recent IHS forecast.


Our positive momentum has continued into the fourth quarter with October Workday adjusted sales down just 3% versus prior year and a book-to-bill ratio remaining above 1.0.
Free cash flow generation was exceptional at over 300% of net income and demonstrates our resilient business model and strength through the cycle.
Notably, net debt was reduced by $280 million, consistent with our capital allocation priorities.
More importantly, financial leverage was reduced to 4.8 times at the end of the third quarter, marking a reduction of about 1.5 turns over the four-month period since closing the Anixter acquisition.
And as Dave will explain in more detail momentarily, just four months since closing the acquisition on June 22, we have already initiated actions that will deliver 100%, 100% of our year one cost synergy target of $68 million.
As a result, we are raising our year one, year two and year three cost synergy targets to $100 million, $180 million and $250 million, respectively.
So first is Electrical and Electronic systems, or EES, which is a little more than 40% of our company's total business.
Second, Communications and Security Solutions, or CSS, which is roughly 1/3 of our company's total business.
And then third, Utility and Broadband Solutions or UBS, which represents the remaining 1/4 of our overall combined company business across the enterprise.
Each of these SBUs does between $4 billion and $7 billion of business annually, and they offer hundreds of thousands of products and industry-leading services, which makes them highly valued partner to both our suppliers and our customers.
We shared these 12 evolving secular growth trends we do previously, but today, we wanted to specifically highlight that they will drive growth across all of our businesses.
Sales in the quarter were down versus prior year due to COVID and up 8% on a pro forma basis from Q2.
Prior to completing the merger with Anixter, we laid out our expectation to deliver $50 million of COVID-related cost actions.
On a pro forma basis, operating expenses were down $44 million in the third quarter versus the prior year.
Gross margin was up 20 basis points on a pro forma basis, with broad-based improvement across the combined company.
As John mentioned, we have already initiated actions to achieve the full year one synergy cost target of $68 million in the first four months of the integration and are increasing our cost synergy target.
Free cash flow was extremely strong at $307 million in the quarter, and we reduced net debt by $280 million.
Our leverage, including year one synergies, improved to 4.8 turns on an adjusted EBITDA basis.
We are increasing our three year cumulative cost synergy target to $250 million.
In Q3, we realized $15 million of cost synergies and expect to achieve $100 million in the first year of the merger.
I'll also mention that we continue to make progress with the divestiture of the legacy WESCO Canadian Utility and Datacom businesses, which represent less than $150 million in revenue.
Sales were down 5% versus the prior year and up 8% sequentially.
October Workday adjusted sales were down just 3% versus prior year.
And as John mentioned, our book-to-bill ratio remains above 1.0.
Adjusted gross margin, which excludes the effect of merger-related fair value adjustments of $28 million, was 19.6%, up 20 basis points versus prior year and sequentially.
Adjusted earnings before interest and taxes was $200 million in the quarter.
Reported EBIT was adjusted to remove the effect of merger-related cost of $14 million, the merger-related fair value adjustments on inventory of $28 million and a gain on the sale of an operating branch in the U.S. that was unrelated to the integration of $20 million.
Compared to the prior year, adjusted EBIT margin was up 30 basis points, reflecting the benefits of synergies and cost management actions in response to COVID-related demand declines.
On a sequential basis, adjusted EBIT was up 60 basis points.
As I mentioned on the prior slide, the legacy WESCO business expected to generate $50 million in total COVID-related cost savings in the last three quarters of the current year.
This quarter, we delivered approximately $28 million of these savings.
Adjusted EBITDA, which excludes the effects of the adjustments I just mentioned as well as stock-based compensation in both the current and prior year periods and other net adjustments was $252 million, 5% higher than the prior year and 19% higher sequentially.
As a percentage of sales, adjusted EBITDA margin was 6.1%, 60 basis points higher than the prior year and sequentially.
Adjusted diluted earnings per share for the quarter was $1.66.
Our EES segment delivered sales that were down 10% versus prior year and up 13% sequentially.
It is important to note that oil and gas, which previously represented approximately 7% of WESCO's business prior to the combination with Anixter, is now a low single-digit percentage of the combined company's revenue.
Adjusted EBITDA of $108 million was 6.5% of sales, approximately in line with the pro forma prior year results and 70 basis points higher sequentially, which is an excellent result given the lower sales versus the prior year.
Sales were down 2% versus prior year against a broader market that was down substantially more and up 10% sequentially.
Adjusted EBITDA of $121 million was up more than 8% versus prior year, and adjusted EBITDA margin improved 80 basis points above the prior year.
Sales in our UBS segment were flat sequentially and down 2% versus the prior year.
Adjusted EBITDA of $86 million was up more than 11% versus prior year on a pro forma basis and represented 7.8% of sales, 100 basis points above prior year and 30 basis points above Q2.
This quarter, WESCO generated $307 million of free cash flow or 315% of adjusted net income.
Year-to-date, the company has generated $462 million of free cash flow or 292% of adjusted net income.
Our priority is to rapidly delever the balance sheet and be within our long-term target leverage range of two to 3.5 times net debt-to-EBITDA by the end of year three in June, 2023.
We made substantial progress on this goal in the quarter as we reduced net debt by $280 million.
Our leverage ratio, including the revised target of year one synergies was 4.8 turns, about half a turn below the comparable metrics in Q2 of 5.3 turns.
Our liquidity, which is comprised of invested cash and borrowing availability in our bank credit facilities is exceptionally strong and totaled, approximately, $1.1 billion at the end of the third quarter.
We have increased our year one target from $68 million to $100 million and are increasing our total cost synergy target from $200 million to $250 million.

As a result, we are raising our year one, year two and year three cost synergy targets to $100 million, $180 million and $250 million, respectively.
Adjusted diluted earnings per share for the quarter was $1.66.


We collected nearly 97% of rents in the quarter and nearly 98% in October.
In the third quarter and for the year to date, we reported AFFO per share growth of 1.5% and 4.5% respectively.
Thus far, our entrance fee communities and skilled nursing properties, which together generate over 50% of our revenue, have been quite resilient.
This includes deferring up to $3 million of November rent.
They have additional deferrals of $750,000 available for each of December and January, all of which if exercised will accrue interest at an 8% rate with repayment expected over 12 months beginning in June 2021.
We are also continuing to work with prospective lenders and Bickford on the previously disclosed sale of nine properties, which we estimate will improve Bickford's annual cash flow by approximately $3 million.
Bickford has applied for grants under Phase 2 and 3 of the Provider Relief Fund, which we expect that they will receive before year-end, which will also improve their financial position.
For the quarter ending September 30, 2020, we achieved $0.95 per share in earnings.
That compares to $0.97 per share for the same period in 2019.
For the nine months ending September, we achieved $3.31 per share in earnings compared to $2.72 per share for the same period in 2019, which is reflective of the gains we recorded during 2020 for real estate dispositions.
For our three FFO performance metrics per diluted common share for the third quarter compared to the prior year quarter, NAREIT FFO and normalized FFO were both flat at $1.42 and adjusted FFO increased 1.5% to $1.34 per share.
A reconciliation to NHI's cash NOI can be found on Page 18 of our Q3 2020 SEC filed supplemental.
For the quarter ending September 30, cash NOI increased 1.2% to $75.3 million compared to $74.4 million in the prior year period.
However, reflecting Q3 rent deferrals, cash NOI was down 2.8% sequentially from the second quarter.
As a result, today, we're announcing additional rent deferrals for Bickford, which together with other previously announced rent deferrals, will impact cash NOI growth by up to approximately $5.5 million over the next two quarters or approximately 3.5% of our trailing six-month cash NOI before deferrals.
Our debt capital metrics for the quarter ending September 30 were our net debt to annualized EBITDA at 4.8 times, weighted average debt maturity at 2.9 years and our fixed charge coverage ratio at 6.3 times.
We ended the quarter with $1.53 billion in total debt, of which 91% was unsecured.
For the quarter ended September 30, the weighted average cost of debt was 2.96%.
At the beginning of the third quarter, we added liquidity to the balance sheet through a new $100 million one-year -- with one-year option to extend term loan.
Loan carries a variable interest at a rate of LIBOR plus 185 basis points with a 50 basis point LIBOR floor.
At October 31, we had $252 million in availability under our $550 million revolver and $38.2 million in unrestricted cash.
In addition, during the third quarter, we sold 79,155 shares in NHI's stock through our ATM program at an average price of $65.35 per share, raising approximately $4.8 million in net proceeds.
We have approximately $495 million capacity remaining under our ATM program, which was filed together with our shelf in February of this year.
In mid-September, we declared our third quarterly -- quarter dividend of $1.1025, which was just funded November 6.
I'm pleased to report to you that we continue to pay our dividend with an AFFO payout ratio in the low-80% range without significant further cash flow burdens from routine capital expenditures.
Our Board is committed to our financial policies, including our commitment to maintain our leverage between 4 times and 5 times net debt to EBITDA.
Active resident cases peaked in late July at 483 cases across our portfolio and then trended down to 161 cases in early October.
In our last two updates, cases have started to climb again, and we're at 367 active resident cases across 81 communities.
The active cases represent about 1.5% of our unit capacity.
Nearly 75% of the cases are in our SNFs, some of which are actively admitting COVID patients.
On the senior housing side, our operators continue to limit the spread as active resident cases per community was at 2.4 last week, which matches the average since we started reporting the data in mid-March.
We received 96.6% of our third quarter contractual rent and 97.8% of October rent.
In addition to the Bickford deferral, we agreed to defer or abate approximately $570,000 of rents for the remainder of 2020, with another tenant that will also grant that tenant the option to defer approximately $450,000 of rents related to the first quarter of 2021.
We do have credit enhancements in our leases with many of our senior housing operators, which totaled approximately $37.1 million in cash or letters of credit in addition to guarantees, and we have excellent credit from our SNF operators.
Our needs-driven senior housing operators, which account for 32% of our annualized cash revenue, were hit hard at the onset of the crisis, but did level-off through the second and third quarters as move-in activity picked up enough to slow the pace of occupancy losses.
As Eric mentioned, assisted living operators are now included as eligible providers beginning with Phase 2 of the Provider Relief Fund, which equates to approximately 2% of 2019 revenue, which most of our operators have or expect to receive.
Phase 3 applications were due by November 6.
Bickford, our largest assisted living operator representing 15% of annualized cash revenue, experienced an 80 basis point sequential decline in third quarter average occupancy, which compared to 270 basis point decline in the prior quarter comparison.
Our entrance fee communities, which account for nearly 25% of our annualized cash revenue, have proven to be resilient as the average length of stay at these properties ranges from six years to 10 years and the residents are often younger and healthier than what is typical in our other discretionary senior housing models.
Senior living communities, which represent 16% of our cash revenue, had third quarter average occupancy of 79%, which was down just 10 basis points from the second quarter.
September average occupancy was 78.9%.
EBITDARM coverage for SLC was unchanged sequentially at 1.06 times.
Our rental independent living communities, which account for 13% of our annualized cash revenue, have experienced a more pronounced and sustained occupancy decline than our needs-driven and CCRC assets.
Holiday Retirement, which represents 11% of annualized cash revenue, had average occupancy of 79.6% in the third quarter, which was down 390 basis points sequentially.
This followed a 380 basis point decline in the second quarter.
The occupancy continued to decline throughout the quarter and September's average occupancy was 78.5%.
EBITDARM coverage slightly ticked down from 1.2 times to 1.18 times as of the second quarter.
The skilled nursing portfolio, which represents 27% of annualized cash revenue, is anchored by two strong tenants in NHC and the Ensign Group who contributed 12% and 8% of annualized cash revenue respectively.
EBITDARM coverage for the trailing 12 months ended June 30 was 2.89 times, which improved from 2.81 times reported in the prior quarter.
We have announced $204.7 million in year-to-date investments.
During the third quarter, we exercised our purchase option to acquire The Courtyard at Bellevue for $12.3 million.
This is a 43-unit assisted living and memory care community in Bellevue, Wisconsin, which was opened in March 2019 and was 100% occupied upon our acquisition.
The long-term triple-net lease on Bellevue replaces a $3.9 million second mortgage that we had secured in January of this year.
The property is operated by 41 Management, which is a growing operating partner of ours that now includes eight properties.
We are encouraged by the depth of the current pipeline, as we expect we will have plenty of capital to recycle in the next 12 months from sources, including the previously mentioned Bickford portfolio sale, loan repayments, purchase options and other select dispositions.