Prompt:
Human: And up front here, I'm going to be covering Pages four to six.
If you take a step back, what a difference a year makes.
We reported our second quarter 2020 numbers, we were in the throes of a pandemic with no clear end in sight.
Although COVID-19 cases in some geographies are rising again, we are in a much more stable environment and have much better visibility with respect to our operations than a year ago.
We remain focused on our employee safety as we continue to work in this environment.
We had a very strong operating quarter with revenues of $2.44 billion, operating income of $133 million and earnings per diluted share of $1.78.
We maintained strong operating income margins of 5.5% and had revenue growth of 21% overall with 18% organic revenue growth.
It is important to remember that in second quarter 2020, we had several of our key geographic markets either shut down or partially shut down.
This revenue growth resulted in a sizable investment in working capital this quarter, leading to a more typical cash flow pattern for us than the prior year, during which we were liquidating our balance sheet due to COVID-19-imposed lockdowns and customer site restrictions.
Regardless of the unusual factors impacting our comparison against last year, we had a very strong quarter.
Our business trends are strong.
This RPO growth was broad-based across market sectors and geographies.
For the quarter, we continue to see excellent operational execution in both our Electrical and Mechanical Construction segments.
We had revenue growth in our Electrical Construction segment of 19.3% and in our Mechanical segment, up 21.3%, which I believe reflects more than just the resumption of normal demand from the COVID-impacted results of the second quarter last year.
With Mechanical Construction operating income margins of 8.3% and Electrical Construction operating income margins of 8.7%, we are executing with discipline and precision as we grow our business.
We had broad-based growth across our trade offerings end market sectors and across our geographic footprint.
We had especially strong growth within the commercial, and that's really across commercial but data centers and logistical infrastructure drove that and healthcare market sectors.
Our large project work and small quick term project work are both strong from a revenue and booking perspective.
We continue to work very hard to bid and schedule our work amid the uncertainty around material pricing and availability.
Our team is experienced with this issue.
And so far, we have weathered this challenge, but it requires attention to detail, communication with our supply chain partners and customers, thoughtful planning and careful contract negotiations.
The supply chain pressures are likely to be with us for most of the balance of the year.
Again, I sound redundant, but we are blessed with an execution-oriented culture across EMCOR.
Our Electrical and Mechanical Construction teams are some of the best operators in the business.
We leave the quarter with very strong RPO growth across these segments of almost 8% from the year ago period and nearly 10% for the end of 2020, and this is despite very strong revenue growth.
Our U.S. Building Services segment had a very strong quarter with revenue growth of 30.4% and operating income growth of 13.9%.
Operating income margins were strong at 4.9%.
RPOs additionally increased 37.8% versus the year ago period and organically, RPOs are up 21.2%.
We see accelerating demand for HVAC retrofit projects with a special emphasis on energy retrofit and IAQ or indoor air quality.
We are also performing very well in our commercial site-based business with strong bookings year-to-date and several important customer wins.
We are not only executing for our current customers, but are winning new work and have a very healthy pipeline of opportunities in this business.
We expect to continue to see strong demand for our mechanical services as well as our commercial site-based business services as customers seek to improve their facilities as they emerge from the pandemic.
Our Building Services team has done an exceptional job of anticipating our customers' needs post-pandemic, and we are a key partner in making these facilities more energy efficient and safer with improved air quality and movement.
In our Industrial Services segment, we had a near breakeven performance on an operating income basis despite taking a $4 million charge for a receivable from a customer who recently entered into bankruptcy protection.
We had positive EBITDA, and I believe we will start seeing better revenue comparisons as we move through the second half of 2021.
We do expect our forward view to improve as customer inquiries and scheduling are at very robust levels for late 2021 and early 2022.
Crack spreads remained strong, and utilization continues to improve.
Our U.K. Building Services segment had another strong quarter with operating income growth of 31.7%.
We continue to execute well for our customers in the U.K. and have strong retrofit project growth and also for our full facilities management offering.
Overall, a very strong quarter, and we remain poised to deliver for our customers and shareholders for the remainder of 2021.
With that, I will turn the discussion over to Mark.
Over the next several slides, I will supplement Tony's opening commentary on EMCOR's second quarter performance as well as provide a brief update on our year-to-date results through June 30.
So let's revisit and expand our review of EMCOR's second quarter performance.
Consolidated revenues of $2.44 billion are up $423.6 million or 21% over quarter two 2020.
Our second quarter results included $53.8 million of revenues attributable to businesses acquired, pertaining to the time that such businesses were not owned by EMCOR in last year's second quarter.
Acquisition revenues positively impacted both our United States Electrical Construction and United States Building Services segments.
Excluding the impact of businesses acquired, second quarter revenues increased to nearly $370 million or 18.4% when compared to the second quarter of 2020, which was severely impacted by the COVID-19 pandemic and the corresponding containment and mitigation measures mandated by certain of our customers as well as numerous governmental authorities.
Despite the less-than-difficult compare between quarterly periods due to the challenging environment in 2020, EMCOR's quarter two 2021 revenues represent an all-time quarterly revenue record for the company.
The specifics to each of our reportable segments are as follows: United States Electrical Construction segment revenues of $489.5 million increased $79.1 million or 19.3% from 2020 Second quarter.
Excluding acquisition revenues of $8.6 million, this segment's revenues increased 17.2% quarter-over-quarter.
Significant increases in revenue contribution from projects within the commercial, institutional and healthcare market sectors, were the primary drivers of the period-over-period improvement.
We continue to see strength in the telecommunications submarket sector as we experience sustained customer demand for data center projects driving the growth in commercial market sector activity within this segment.
United States Mechanical Construction segment revenues of $958.7 million increased $168.2 million or 21.3% from quarter two last year.
Revenue growth was primarily attributable to an increase in commercial and healthcare market sector activities.
With respect to the commercial market sector, consistent with the growth experienced by our Electrical Construction segment, this segment also continues to see strong demand for data center project work, given growth in data storage and cloud computing across the country.
In addition, the continued build out of our customers' e-commerce supply chains has resulted in an increase in the number of fire protection project opportunities for this segment within various warehousing and distribution facilities.
With regard to the healthcare market sector, consistent with the trends we experienced during the first quarter of this year, we are engaged in a number of projects ranging for mechanical system retrofits to complete installations in both new and existing healthcare facilities.
Second quarter revenues for EMCOR's combined United States Construction business of $1.45 billion increased $247.3 million or 20.6%.
This revenue performance represents an all-time high for our combined construction segments.
Despite this record revenue performance, we increased remaining performance obligations, which Tony briefly covered, within each of these segments as a result of strong project bookings.
United States Building Services quarterly revenues of $624.4 million increased to $145.5 million or 30.4%.
Excluding acquisition revenues in this segment of $45.2 million, this segment's revenues increased almost 21% organically.
This performance also represents a time quarterly record for this segment's revenues.
Revenue gains within each of the divisions due to the resumption of maintenance and project activity as compared to 2020's COVID-impacted quarter augmented by incremental projects aimed at improving customers indoor air quality as well as increased building automation and controls activity were the primary drivers of this quarter's strong revenue performance.
EMCOR's Industrial Services segment revenues of $235.2 million decreased to $5.9 million or 2.5% as this segment has yet to return to pre-pandemic revenue levels due to prolonged adverse market conditions within the oil and gas and related industries.
Although still below the prior year, this 2.5% quarter-over-quarter revenue reduction is significantly less then the more abrupt quarterly revenue declines experienced in other quarters post quarter one of 2020.
As Tony previously indicated, we are beginning to see positive signs of demand returning as we look forward toward our turnaround planning for early 2022.
Let's hope that we do not see any additional macro economic headwinds impacting in this industry.
United Kingdom Building Services revenues of $129.9 million increased $36.7 million or 39.5% from last year's quarter.
Resumption of maintenance contract activity that began during quarter one of this year strengthened in quarter two as project work that was deferred in 2020 has recommenced.
Additionally, revenues of this segment benefited from $14.5 million of favorable exchange rate movement during the period.
Selling, general and administrative expenses of $242.9 million represent 10% of revenues and reflect an increase of $37.7 million from quarter two 2020.
Adjusting for incremental expenses attributable to companies acquired, inclusive of intangible asset amortization, EMCOR's organic SG&A increase was $33.4 million.
As a reminder, the prior year period benefited from substantial cost reductions resulting from actions taken in response to the COVID-19 pandemic.
A significant percentage of such actions pertain to employment costs including furloughs, headcount reductions and temporary salary reductions.
Additionally, 2020 Second quarter included reduced levels of incentive compensation expense as a result of the downward recalibration of our internal forecasts driven by the uncertainty created by the pandemic.
In contrast, the results for the second quarter of 2021 include significant included a significant growth in revenues as well as profitability forecasts, which equips EMCORE's previous earnings performance records across numerous of our operating companies.
These factors have necessitated headcount additions to support such growth as well as increased levels of quarterly incentive compensation accruals.
Just so that there is no misunderstanding, at this time last year, we were either reversing the previous quarter's incentive accruals or accruing at significantly reduced rates.
While at this point in 2021, based on our performance for the first six months of the year and our projections for the remainder of the year, our incentive compensation levels are tracking more linear with our current year earnings expectations.
In addition to these increases in employment costs, our results for the second quarter of 2021 included a $4.1 million provision for credit losses due to the bankruptcy filing of a customer within our U.S. Industrial Services segment which negatively impacted our quarterly consolidated SG&A margin by 20 basis points.
Reported operating income for the quarter of $133.4 million compares to an operating loss of $122.6 million in 2020 Second quarter due to the $232.8 million noncash impairment charge recorded in the prior year.
Excluding 2020's impairment charge, operating income for the current period represents a $23.2 million or 21.1% improvement over last year's adjusted non-GAAP second quarter operating income of $110.1 million.
For the second quarter of 2021, operating margin represents 5.5% of revenues and is consistent with our adjusted non-GAAP operating margin in last year's quarter.
Consistent with our quarterly revenue performance, the operating income of each of our reportable segments, other than U.S. Industrial Services, has increased by double-digit percentages.
Specific quarterly operating performance by reporting segment is as follows: operating income of our U.S. Electrical Construction Services segment of $42.7 million for the quarter ended June 30, 2021, increased by $11.1 million from the comparable 2020 period.
Reported operating margin of 8.7% represents a 100 basis point improvement over last year's second quarter due to an improvement in gross profit margin given a more favorable revenue mix and continued strong project execution.
Second quarter operating income of our U.S. Mechanical Construction Services segment of $79.3 million increased $12.3 million from the comparable 2020 period.
Reported operating margin of 8.3% represents a slight reduction from last year's quarter.
Our over 20% increase in quarterly revenues was the major driver of our period-over-period operating income improvement, while the slight reduction in operating margin resulted from a modest decrease in gross profit due to the composition of work performed during each period.
Each of our Electrical and Mechanical Construction segments established new second quarter records in terms of operating income dollars.
Our total U.S. construction business is reporting $122 million of operating income and an 8.4% operating margin.
This performance has improved by $23.4 million and 20 basis points from last year's second quarter.
Operating income for U.S. Building Services is $30.3 million or 4.9% of revenues.
This represents a $3.7 million improvement quarter-over-quarter and like most of our other reporting segments represents a new second quarter record for operating income dollars.
Increased gross profit from the mechanical services and commercial site-based services divisions due to a strong resumption in demand as compared to 2020's challenging second quarter was the primary reason for the period-over-period increase in operating income.
The 70 basis point reduction in quarterly operating margin is due to revenue mix, which included a larger percentage of fixed-price capital projects that traditionally have a lower gross profit margin profile than the segment's call-out service work.
Our U.S. Industrial Services segment operating loss of approximately $200,000 represents a decrease of $3.5 million from last year's second quarter operating income of $3.3 million.
While this segment experienced an increase in both gross profit and gross profit margin during the current quarter, its results included an increase in credit losses due to the aforementioned customer bankruptcy, which negatively impacted operating income by $4.1 million and operating margin of the segment by 180 basis points.
U.K. Building Services operating income of $7 million or 5.4% of revenues represents an improvement of $1.7 million with a slight reduction in operating margin over 2020 Second quarter.
Approximately $800,000 of this period-over-period improvement is due to positive foreign exchange movement with the remainder attributable to an increase in project activity primarily within the commercial market sector.
The decrease in quarterly operating margin is a result of an increase in the ratio of selling, general and administrative expenses to revenues in the current quarter as the prior year benefited from certain short-term cost-cutting initiatives and acute response to the COVID-19 pandemic.
We are now on Slide nine.
Additional financial items of significance for the quarter not addressed on my previous slides are as follows: quarter two gross profit of $376.3 million was higher than 2020's comparable quarter by $61 million or 19.3%.
Gross margin of 15.4% is 30 basis points lower than last year's quarter due to shifts in revenue mix in both our U.S. Mechanical Construction and U.S. Building Services segment within the quarter.
Diluted earnings per share in the second quarter of 2021 is $1.78 as compared to a loss per diluted share of $1.52 in the year ago period.
On an adjusted basis, after adding back the impairment loss on goodwill, identifiable intangible assets and other loan of assets recorded last year, 2020's non-GAAP diluted earnings per share was $1.44.
When compared to our current year's when compared to our current quarter's performance, we are reporting a $0.34 or 23.6% quarter-over-quarter earnings per share improvement.
This 2021 quarterly diluted earnings per share of $1.78 represents a new all-time record for any quarterly period in our history despite some of the headwinds we continue to face.
With the quarterly commentary complete, I will touch on some high-level highlights with respect to EMCOR's results for the first six months of 2021.
Revenues of $4.74 billion represent an increase of $427.9 million or 9.9%.
Operating income of $250.4 million or 5.3% of revenues represent sizable increases from both 2020's reported and as-adjusted non-GAAP six-month results.
Year-to-date diluted earnings per share was $3.32.
Although not shown on this slide, and my last comment on our results for the first six-month period is with respect to our slightly negative operating cash flow as compared to 2020 strong cash flow performance during the first half of the year.
With substantial organic revenue growth in this year's second quarter, we have experienced an increase in working capital investment as both our accounts receivable and contract asset balances have elevated in concert with our project and service volumes.
Further, it is important to note that our cash flow for the prior year period was favorably impacted by certain government legislation passed in light of the COVID-19 pandemic, which allows for the deferral of the employer portion of social security taxes throughout the majority of 2020 and also extended the deadline for making estimated federal tax payments from the second to third quarter of last year.
These measures, along with the United Kingdom's deferral value-added tax in the prior year, favorably impacted both our second quarter and six-month operating cash flows in 2020 by almost $100 million.
My expectation for full year 2021 is that we will generate operating cash flow in excess of $300 million.
EMCOR's balance sheet remains strong and liquid.
Cash on hand is down from year-end 2020, driven by cash used in financing activities of approximately $157 million, inclusive of $138 million used for the repurchase of our common stock and cash used in investing activities of approximately $71 million most notably due to payments for acquisitions net of cash acquired, totaling just shy of $56 million.
Working capital levels have increased modestly as increases in accounts receivable and contract assets resulting from our substantial organic growth during the period were offset by the decrease in our cash balance just referenced.
The increase in goodwill is predominantly a result of the three businesses acquired during the first six months of this year.
Net identifiable intangible assets have increased slightly as the impact of additional intangible assets recognized, in connection with the previously referenced acquisitions, were largely offset by $31 million of amortization expense during the year-to-date period.
Total debt, exclusive of operating lease liabilities, is virtually unchanged since year-end 2020.
As a result of our consistent outstanding borrowings and the growth in our stockholders' equity due to our net income for the first six months of 2021, EMCOR's debt-to-capitalization ratio has reduced to 11.7% and from 11.9% at the end of last year.
EMCOR remains in a position of strength which allows us to continue to invest in our business, return capital to shareholders and execute against our strategic objectives, both in the near and the long term.
I'm going to be on Pages 12 to 13, I'm going to talk about remaining performance obligations by segment and market sector.
I'll give you a top summer here.
They're at their highest level ever.
We have a strong mix.
Our bookings were strong for both small and large projects.
We have a book-to-bill, 1:12.
And what I'm going to do is I'm going to intermix comments from what would be Page 13 and we talk about some of those sectors we've been talking about into my overall RPO commentary.
We sort of had an RPO triple play here with RPOs increasing in three comparable periods.
The year period, that's versus 2020 -- for June 2021, June 2020, six-month period, 2021 June versus December; 21 and sequentially from March 2021.
All five of our business segments are RPO growth for each of these measurement periods.
But that, to be fair, we've said this many times, this is not a quarter-to-quarter or month-to-month business, movement is not something we draw sweeping conclusions from month-to-month or quarter-to-quarter.
But the reality is with the kind of bookings we had and the level we're at, we feel pretty good about the forward view of our business.
And I had a quarter one statement where I talked about the nonres market.
And I think I talked about it also as we moved through last year, that we wouldn't know what the impact of that second quarter would be until we got to the second quarter.
And I think we can now say that we expect growth in the nonresidential market.
I would guess that growth is going to be somewhere in the mid-single digits, and we're clearly outperforming that mid-single-digit growth.
As mentioned, total company RPOs at the end of the second quarter were just over $5.1 billion.
They're up $516 million or 11.2% when compared to the year ago level of $4.6 billion.
They increased $511 million for the first six months of the year.
And really important to look at is the organic RPO growth, which increased $409 million or 8.9%.
And again, I talked about our book-to-bill well over one.
Our domestic construction segments had RPO growth in the quarter, $301 million since June 30, 2020, and that was both in the Electrical and Mechanical Construction segments.
And we're seeing it being driven by strong overall bookings in data centers, manufacturing, industrial, water and wastewater, healthcare and logistical infrastructure work.
We also expect strength to continue in our small project short-duration work, and a lot of that centers on commercial and manufacturing, is where we see that work.
Building Services is 13% of total RPOs in the second quarter, increased $202 million, $114 million of that $22 million was organic.
Pre-pandemic, small project demand is active.
There's one other way of saying it across the country.
And you're also getting more value now because of the indoor air quality and air movement work that we're doing in addition to the energy efficiency work.
Our customers are executing both types of these projects as a result of an expectation of increased energy costs, a desire to reduce their carbon footprint and a strong belief that IAQ solutions will improve their employees' productivity by approving their ease of mind and their safety.
One of the things I'd point out is we are one of the key problem solvers for energy efficiency work and IAQ work and as you demand, more energy efficiency from your facility.
We bring concepts from ideas and things that people think about to real projects for our owners and tenants.
We're uniquely positioned to help our customers reduce their carbon footprint, a key cost reduction goals and have better and cleaner buildings.
Every time we service repair or replacement an HVAC unit or install or service a newer or updated building control systems, and this is exactly what Mark told you we were growing in Building Services, we are making facilities, healthcare facilities, factories and office buildings, less carbon intense and more efficient.
The other thing we're seeing is the combination of these energy savings projects with more on-site generation.
whether it be renewable generation like solar or combined heat and power, which takes waste heat and turns it into either HVAC or power generation.
It is important to note that most of our Industrial Service segment field services work would not be in RPOs as it is executed via time and material contracts.
And in that case, we're seeing strong demand for us to schedule for people as we go from the back half of this year into next year.
What we're seeing across the RPOs is we're winning at a rate that we believe is much faster than the underlying nonresidential market growth and then we have durability to move within these sectors and flexibility and that will continue to benefit us as we move through the remainder of 2021 and into 2022.
With that, I'm now going to wrap up on Pages 15 and 16.
As we assess our performance at the half, we are performing very well across our business.
And as a result of that performance through the first half we will be raising our earnings and revenue guidance for 2021.
We will raise our revenue guidance to $9.5 billion in revenues, which exceeds our previous range of $9.2 billion to $9.4 billion in revenues.
We will raise our earnings per diluted share guidance from $6.35 to $6.75 to a new range of $6.65 and to $7.05.
Previously, we had told you that we would know more at the conclusion of the second quarter.
And with greater visibility that we now have, we can raise our guidance.
For us to achieve the middle to the top end of that guidance range, a large percentage of the following must happen.
I think most of you know, I'd like to talk about what we control and what we don't control.
We like to focus on the things we don't control and prepare contingency plans for those things that we don't control.
So we focus on the things we control and have contingency plans for the things we don't control.
Well, we like to think we control our costs.
And we're known for keeping our costs in check, whether that be direct and indirect labor costs, material costs, we're pretty good at this.
And it's been an operating fundamental here at EMCORE for a long time.
We need to continue to have success in navigating the supply chain challenge with respect to pricing and availability.
I talked about that earlier in my opening commentary, it's a challenge.
I mean I've listened to a bunch of calls, you listen to more calls.
We're positioned well to navigate it.
We think we'll continue navigating a well, but it is a challenge.
We also need to continue to be able to find the right labor at the right time.
We've always been very successful with that.
It's a question you all asked.
I'll answer it for you now.
We expect to continue to be successful with that.
We will always struggle to find HVAC technicians in the summer like everybody else.
And our route technicians and our operating engineers, we always are looking for because we're growing that business pretty healthily right now.
And so those are the two areas we always look for people, but we have great labor relations at the local level, and we expect to be able to man our construction projects with the right people at the right time and the right skill mix.
We are an employer of choice.
We expect the booking momentum to continue, especially with respect to quick term project work.
And for us, that means projects really less than $2.5 million or so.
It's very strong right now.
We expect that to continue.
And that's what gives us conviction to talk about the underlying strength in the market overall.
I'm humble enough that our team is home enough to know that there's a whole bunch of things we don't consume.
We don't control whether the nonresidential market will continue to be strong.
We expect it to be.
But if it's not, we will react and have a contingency plan to adapt to that.
We don't control what will happen in industrial services.
We know what we see with respect to what people want us to do.
But we've been doing this long enough to know that, that can change.
And look, we're a little shy about being overly optimistic as what weather has done to us in the Gulf Coast over the last three years.
We don't expect any major COVID disruptions in our business or our geographies.
I do expect that there will be increased demand from our customers for us to supply vaccinated people, and we are advocating that strongly in our business and for our employees, safety is one of our key corporate values.
And we think keeping our employees safe and asking them to be vaccinated.
We've had pretty good success.
We need to have better success.
We also don't think the supply chain issues as of today will be more pronounced than they are.
They could be, but we do expect them to last for the balance of the year.
And clearly, we don't control everything that goes on with the supply chain.
As far as capital allocation, we spent nearly $57 million on acquisitions year-to-date.
They were right down the pipe are the kind of things that we like to do.
We returned $138 million year-to-date on share repurchases, and Mark talked about.
And we've also returned $14.2 million in dividends back to our shareholders.
We expect to continue to be balanced capital allocators as the year progresses, and we have a decent pipeline of acquisitions that we are working on.
I will tell you unequivocally right now that one of the strengths of our company is our balance sheet.
Our customers look to that balance sheet.
It's one of the reasons we can grow as fast as we can organically.
And it's one of the reasons we've had so much success on a lot of the quick-term work in these large data center projects and healthcare projects because people know that we will have the working capital and the ability to fill the team on a very quick basis with the right labor at the right time and have the access to the capital to do that.
 Assistant:

Chosen response:
compname reports q2 earnings per share of $1.78.
q2 earnings per share $1.78.
q2 revenue $2.44 billion versus refinitiv ibes estimate of $2.25 billion.
sees fy earnings per share $6.65 to $7.05.
sees fy revenue about $9.5 billion.


Prompt:
Human: This quarter, the battery category information includes both brick-and-mortar and e-commerce retail sales.
In our first quarter, strong demand, expanded distribution and execution in the holiday season led to a solid start to our fiscal year.
While the operating environment remains challenging, our first quarter results are a testament to our team's preparation, resilience and commitment.
Before I go into detail on the quarter, there are three key points to take away from our call today.
First, our team delivered in the critical holiday season and our categories remain strong.
Second, we continue to manage through a very challenging cost environment with increases in transportation, commodity and labor costs, as well as ongoing supply chain disruption.
And third, as a result of our additional pricing actions and cost containment measures, we are reaffirming our outlook for net sales, adjusted earnings per share and adjusted EBITDA for the full year.
As we look specifically at the results for the quarter, we maintained strength in our top line, delivering revenue of $846 million.
This was roughly flat to prior year on an organic basis.
Global price increases and expanded distribution in the battery business were offset by an expected decline in volumes as we comped elevated COVID demand from the prior year.
Adjusted gross margin decreased 320 basis points as increased input costs were partially offset by price increases, synergies and the comping of prior year COVID costs.
On a sequential basis, gross margin was roughly flat to the prior quarter, consistent with our view for the start of the year.
With our solid topline performance and lower interest expense, we partially offset the gross margin decline and delivered adjusted earnings per share of $1.03 in the quarter.
Before John provides more details on the quarter, I want to provide some additional color on the performance of our categories, the rising cost environment, the resiliency of our supply chain and other actions we have taken to operate with excellence in an uncertain environment.
First, our categories remain healthy with both battery and auto care showing robust demand versus pre-pandemic levels.
Specifically, the battery category benefited from two drivers: the increase in devices owned per household And an increase in usage of those devices, resulting in higher battery replacement frequency.
These trends have resulted in consumers using more batteries.
On a two-year stack basis, the global battery category has grown by 9.7% in value and 7.8% in volume.
As anticipated, we saw the category decline in the three months ending November 2021, which was down 3.5% in value and 8.4% in volume.
This was due to comping elevated demand in the prior year.
As we look to the long term, we anticipate category value to experience flat to low single-digit growth off a higher base.
as the category has increased in size due to consumers' behavior during the pandemic.
being the key driver.
As we turn to the auto care category in the latest 13 weeks, category value was up 9% versus a year ago and 20.6% on a two-year stack basis.
As with batteries, the growth is being driven by changing consumer behavior, including do-it-yourself habits, which were established during the pandemic, such as higher levels of cleaning and renewed interest in car care as a hobby, a higher number of cars in the car park and an increase in the age of vehicles given the shortage of new vehicles and a recovery in miles driven given the increase in personal travel by car.
As we look ahead, we anticipate that auto care category value will grow at low single digits once it has cycled through the COVID-related demand.
Energizer continues to be a leader in the auto care category through our strong portfolio of brands.
Specifically in appearance, the largest subsegment in which we compete, our Armor All brand outpaced the category in the U.S. due to distribution gains and the strength of our innovation.
In addition, our international auto care growth plan has resulted in growth ahead of the category in key markets, including Australia, Germany, New Zealand, the U.K., and Mexico.
While our categories are healthy, the macro environment in which we are operating, remains difficult.
This leads me to the next important topic, operating costs.
Commodities, transportation and labor costs continue to rise, resulting in increased cost pressures that are incremental to the outlook we provided in November.
We have moved quickly to offset these pressures through additional pricing actions, cost reduction initiatives and improved mix management.
Pricing actions in both our segments were announced within the last couple of weeks and are incremental to the increases discussed in November.
They will become effective late in the second quarter for North America and in the third quarter for international markets.
We expect the cumulative effect of these actions to offset the inflationary cost pressures on a dollar basis.
In addition to inflationary pressures, the global supply chain network remains stressed from pandemic-related disruptions, which includes port congestion and transportation delays, as well as availability challenges with respect to labor, sourced product and raw materials.
As a result of this dynamic, we took a proactive approach by investing in incremental inventory in the prior year and also in the current quarter.
This decision paid dividends as we were positioned to meet our customers and consumers' needs and delivered a successful first quarter.
We expect to operate with elevated safety stock for the foreseeable future while we monitor the supply network for signs of stability.
As you can see, the business is operating on solid footing and the underpinnings of our categories remain healthy, and in a stronger position than before the pandemic.
Even with the difficulties we experienced, we delivered strong results and are on track to deliver another successful year.
Before expanding on the financial highlights, I would like to point out that our segment reporting has changed from two geographical segments to two product line segments.
Going forward, our two segments will be battery and lighting products and auto care, more accurately reflecting how we manage the operations.
Now, turning to our results.
Reported and organic revenues were both essentially flat.
In battery and lights, strong demand and solid execution resulted in a modest decline in organic sales, while auto care continued its strong performance with organic growth of 1.3%.
Pricing actions globally delivered roughly 2% growth and additional distribution contributed another 1%.
Offsetting these gains was a decrease in replenishment volumes driven by the timing of COVID-related demand in the prior year.
As a reminder, we executed price increases in our battery segment in the first quarter of this year, and we have taken pricing in auto care in both the second and third quarters of the prior year.
The impact of these pricing actions was reflected in our initial outlook for this year.
As Mark mentioned, we experienced significant incremental cost pressures during the first quarter and moved quickly to implement additional pricing that will benefit the second half of fiscal 2022.
Sequentially, adjusted gross margin was roughly flat versus the fourth quarter of fiscal 2020 as we expected.
However, adjusted gross margin decreased 320 basis points to 37.5% versus the first quarter of 2021 as pricing, lower COVID-related costs and synergies were offset by more than 700 basis points of margin erosion from inflationary cost pressures.
This quarter also marks the conclusion of the integration of our battery and auto acquisitions.
The successful integration positions us well to focus on continuous improvement initiatives to offset inflationary pressures going forward.
A&P as a percent of sales was 6.1% versus 5.8% in the prior year as a result of planned increased spend.
We remain committed to investing in our brands for the long-term health of our businesses.
Excluding acquisition and integration costs, SG&A as a percentage of net sales was roughly flat at 13.2% but declined $2 million on an absolute basis as lower compensation expense was partially offset by increased travel and higher IT spending related to our digital transformation.
Looking at segment profit.
Both battery and lights and auto care benefited from continued strong demand, pricing actions and distribution gains.
However, the inflationary input cost pressures more than offset the stronger-than-expected top line performance.
This impact flowed through to the bottom line for each business, resulting in a segment profit decline of $12 million for battery and $18 million in auto care.
Interest expense was $37 million or $10.3 million lower than the prior year, reflecting the benefits of significant refinancing activity of our debt capital structure over the past year.
We expect a similar quarterly run rate for interest expense over the remainder of the year.
I would also like to point out changes to our shares outstanding for the quarter and the remainder of the year.
In the first quarter, we completed the accelerated share repurchase program that was announced last August.
The total number of shares purchased under this program was nearly 2 million.
Additionally, on January 18, our mandatory convertible preferred stock converted to approximately 4.7 million common shares.
Absent any additional share repurchase, weighted average shares outstanding for the remainder of the year will be approximately 72.
As we look at our outlook for 2022, we are facing a number of gross margin headwinds.
We continue to experience significant cost pressures in transportation, driven primarily by the global backlog of ocean freight.
In addition, labor availability is a major challenge across most U.S. sites, pressuring rates.
And finally, many commodity markets remain at all-time highs impacting our raw material costs.
Through a combination of pricing actions, improved mix management and cost reduction efforts, we expect to offset the absolute dollar amount for these rising costs.
However, due to the lag in timing between the recognition of these higher costs, and the successful rollout of our pricing actions and cost reduction efforts, we expect as much as 50 basis points of additional gross margin pressure to impact us for the full year 2022.
This is incremental to the 150 basis points provided in our outlook in November.
We expect to see the most significant impact to gross margin in our second fiscal quarter as we will absorb the full effect of these costs without the offset from our incremental pricing position.
With the benefit of the actions we are taking now, we expect gross margin to recover in the back half of the year.
Given the continued strength of demand in our categories and our efforts to offset the majority of these headwinds through pricing and cost reduction initiatives, we are maintaining our fiscal 2022 outlook for roughly flat net sales, adjusted earnings per share in the range of $3 to $3.30, and adjusted EBITDA of $560 million to $590 million.
As I mentioned at the beginning of the call, our team delivered well in the critical holiday season and our categories performed well globally.
Like many companies, we also continue to face a rising cost environment and supply chain disruption.
Given these conditions, we are taking aggressive action to offset the most recent cost escalation, including an additional recently announced pricing action in North America battery and auto care.
We remain confident in our outlook for the year reflected in our reaffirmation of our guidance for net sales, adjusted earnings per share and adjusted EBITDA.
I am incredibly proud of our team to continue to operate with excellence and deliver on our priorities and commitments.
 Assistant:

Chosen response:
q1 adjusted earnings per share $1.03.
reaffirms fiscal year outlook for net sales, adjusted earnings per share and adjusted ebitda.
had a strong start to year driven by resilient demand, increased distribution, pricing actions and improved fill rates.
improved inventory planning and supply chain durability enabled co to deliver in quarter.
continue to see escalating input cost pressures in transportation, labor and materials.


Prompt:
Human: Against the backdrop of the reopening of the U.S., we are seeing consistent improvements in our business fundamentals.
Key among these include accelerated cash collection levels and significant progress in our theater portfolio.
Our increased cash collection levels reflect strengthening the businesses and an increasingly more positive environment for the experiences our properties deliver.
At a macro level, with the broad increase of vaccine deployment, we are seeing a meaningful improvement in consumer confidence and stabilization of the economy as is evidenced by employment and GDP data.
Separately, the new protocols from the CDC for fully vaccinated people reflect the opportunity to achieve increasing levels of normalcy and life as we once knew it.
Across our portfolio, consumers have been exhibiting their desire to experience out-of-home entertainment, and our tenants businesses have been beneficiaries of this pent-up demand.
In particular, during the quarter and continuing through April, consumers demonstrated their desire to return to theaters as we achieved new box-office high since the onset of the pandemic.
Importantly, this momentum has been established in an environment with capacity constraints, limited content and direct-to-consumer streaming options, which provide the opportunity to view select features at home.
Said another way, even with the challenges and limitations of the current operating environment, these results indicate that consumers still value the theater experience for new movie titles.
We look forward to being able to fully maximize the reopening of theater exhibition as we expect that 98% of our theaters will be opened by the end of May, and consumers will have the opportunity to see a strong lineup of film titles for the remainder of 2021, many of which have been delayed several times.
As we continue to manage the business, we remain laser focused on our goals for 2021, including our exit from covenant relief, reestablishment of a dividend and a return to sustained growth.
During the quarter, we also made progress on our strategic capital recycling activities and utilized proceeds from dispositions and stronger collections to pay off the remaining $90 million balance on our $1 billion unsecured revolving credit facility.
These steps of strengthening liquidity and optimizing the portfolio are supportive of our goals and should fuel growth as we move into the second half of the year.
This was an important quarter as we sustained ongoing positive trends in key business measures necessary for us to add our existing debt covenant waivers, most specifically, continued improvement of our cash collection levels.
As I stated earlier, the trends appear to be very favorable at this point, including vaccinations, consumer demand and exhibition recovery.
Having positive momentum across all these areas should propel us toward the achievement of our goals.
At the end of the first quarter, our total investments were approximately $6.5 billion with 354 properties in service and 93% occupied.
During the quarter, our investment spending was $52.1 million, entirely in our experiential portfolio.
The spending included build-to-suit development and redevelopment projects that were committed prior to the COVID-19 pandemic, as well as the acquisition of a newly constructed TopGolf facility in San Jose, California, for $26.7 million, which was acquired primarily with cash received from TopGolf as payment of a portion of their deferred rent balance.
Effectively, we acquired TopGolf, San Jose, using a portion of their deferred rent as currency, a creative and complementary outcome for both sides.
Our experiential portfolio comprises 280 properties with 42 operators is 93% occupied and accounts for 91% of our total investments or approximately $5.9 billion of the total $6.5 billion.
We have four properties under development.
Our education portfolio comprises 74 properties with eight operators and at the end of the quarter was 100% occupied.
Now I'll update you on the operating status of our tenants, our deferral agreements and rent payment time lines.
71% of our theaters were open as of April 30.
Under Regal's announced reopening schedule, all of our Regal theaters will be opened by May 21.
And at that point, we anticipate 98% of our theaters will be open.
Five of our theaters remained closed because of governmental orders.
All four of our Canadian theaters are closed at least through May 20 due to governmental mandate, and our dine-in theater in San Francisco is closed until July because of local indoor dining restrictions.
We have five vacant theaters not operated by any of our major exhibitors, which we are releasing and seven closed theaters, which we are selling, six of which are under contract.
Finally, we are continuing to operate two theaters through a third-party manager, a former AMC in Columbus, Ohio, and the former Goodrich Savoy in Champagne, Illinois.
April's box-office performance exceeded industry expectations, led by King Kong versus Godzilla, Mortal Combat and Demon Slayer.
The outperformance of all three films drove box office to $189 million for April, a 66% increase from March's $113 million.
The strong results from these three films show the consumer is eagerly embracing the opportunity to get back to the movies.
openings and won't be fully open until late May and that less than 20% of Canadian theaters are open.
With increasing vaccinations, the approach of summer and easing restrictions, the primary challenge for exhibitors now is a lack of film supply.
The remaining film slate of high-quality, tent-pole films lines up nicely to drive increasing consumer demand through 2021, beginning at Memorial Day with A Quiet Place Part II and following with Venom: Let There Be Carnage, Dune, Cruella, Fast and Furious 9, Black Widow, Suicide Squad, Shang-Chi and the Legend of the Eternals, Ghostbusters: Afterlife, Top Gun: Maverick, Spider-Man: No Way Home, the Kingsman and Matrix 4.
Studios, content providers and the consumer all value the big-screen experience.
April's performance bears that out.
I want to briefly address lessons learned over the past year.
The studio's decision to delay the release of the vast majority of their tent-pole titles until theaters reopened in 2021 and 2022 is the best evidence of their commitment to the exhibition economic model and the importance of the theatrical window as a critical revenue driver for the studios and content providers.
COVID-19 forced studios and exhibitors to experiment.
Studios understandably evaluated alternative content delivery options, including premium video on demand, PVOD; subscription video on demand, SVOD; hybrid models of theatrical release mixed with PVOD or SVOD; and selling movies to streaming services.
We believe the best indicator of the results of this experimentation is that the overwhelming majority of tent-pole films scheduled for theatrical release pre-COVID-19 will be released theatrically 2021 or 2022.
It made economic sense for the studios to wait until theaters were permitted's to reopen throughout the U.S., and they did.
Studios and content providers do not consider PVOD, SVOD and other forms of at-home viewing as replacements for theatrical exhibition.
Consumer subscribed to streaming services for all-you-can-eat buffet content and generally aren't interested in paying an upcharge for an individual release.
The relative lack of PVOD content during COVID-19 at a time when much of the country was looking for any entertainment option in their home demonstrates that studios don't see a big market for PVOD.
Strong box-office numbers for Warner Bros.
Films released day and date to theaters and HBO Max without upcharge also bear this out.
While streaming services need content, it's hard to make the math work for PVOD or direct to SVOD without a theatrical release for major motion pictures.
Additionally, major exhibitors continue their negotiations with the studios on the length of the exclusive theatrical window.
It appears to be coalescing around 45 days, down from the prior 90 days.
From our perspective, there are positives.
Historically, over 90% of ticket sales occurred in the first 45 days.
So economically, the shift in the window is not that material.
With the reduced window and the need for studios, content providers and exhibitors to continue experimentation, we could see content from Netflix, Amazon and Apple shown theatrically before being moved to streaming services.
Just this week, Cinemark and Marcus both announced announcement -- both announced agreements with Netflix to show Army of the Dead in theaters for one week, starting on May 14 before it's available on Netflix on May 21.
This follows Cinemark and Netflix's partnering to show Ma Rainey's Black Bottom, the Midnight Sky and the Christmas Chronicles 2 theatrically.
The consumers' desire to return to see movies on the big screen is reflected in the surprisingly strong performance of King Kong versus Godzilla, Mortal Combat and Demon Slayer.
When theaters were allowed to reopen, box-office records were set in China, Japan and Australia.
Our tenants are coming up with new and better ways to enhance the customer experience from touchless ticketing and concession ordering to private screenings.
Going to the movie still remains a remarkable value for an out-of-home consumer experience.
Turning now to our other major customer groups.
Approximately 96% of our non theater operators are open.
Our seasonal businesses are closed in the normal course.
With increases in vaccinations and the fast approach of summer, we see continued strong performance in our drive-to value-oriented destinations.
We are pleased with the results from the ski season.
People demonstrated they still want to ski, particularly in drive-to destinations.
Across the portfolio, attendance was in line with three-year averages, and revenues were down only slightly, reflecting restrictions on food and beverage in many locations.
We continue to see strong performance across Eat & Play.
All of our TopGolf locations, including our recently acquired San Jose location, are open.
All four of our Andretti Karting locations are open, and we're delighted that our fifth in view for Georgia will open in May.
All of our gyms are open and attendance continues to increase.
We are seeing very strong pent-up demand across our attractions and cultural holdings.
We expect this trend to continue throughout the summer as vaccinations increase and restrictions are lifted.
The City Museum, Santa Monica Pier and our Titanic Museums are open.
We expect all of our amusement parks and water parks to open in 2021.
Seven are currently open.
Five have confirmed May opening dates, and we're awaiting dates for the final two, subject to state restrictions in California and Washington.
We are likewise seeing strong demand in our experiential lodging portfolio and expect the trend will continue throughout the summer as well.
Pete Beach, all of our experiential lodging assets are open.
Kartriteremains subject to New York State phased reopening plans for water parks, and we are working toward an opening in the summer of 2021.
We are completing a substantial renovation of the Bellwether, and it will fully reopen by mid-June.
Resorts World Catskills is open.
All of our early childhood education centers are open, and we are seeing a steady increase in demand monthly as COVID restrictions ease and parents return to work.
All of our private schools are open, utilizing a combination of in-person, online and hybrid instruction models.
Our primary capital recycling activity has been in the theater category.
In Q1, we sold one theater property and a vacant non-theater building for net proceeds of $13.7 million.
We're very pleased with our progress in disposing vacant theaters.
Since Q1 -- Q3 2020, we have sold three theaters.
And as I mentioned earlier, we have executed contracts for another six.
In Q4, we terminated all seven of our AMC transition leases and took back the properties.
In Q4, we sold one for an industrial use.
We have executed contracts for the remaining five.
We also have a former CMX theater, which was rejected in bankruptcy under contract.
These six projected sales are for industrial, multifamily, office, and theater reuse, and we anticipate closing on all six sales throughout 2021 and into 2022.
Finally, I want to update you on the status of our cash collections and deferral agreements.
Throughout the COVID-19 pandemic, our No.
1 priority was to work proactively and diligently with our customers to structure appropriate deferral and repayment agreements.
We tailored each deal to give them the right amount of breathing room to reopen efficiently and help ensure their long-term health, all while protecting and improving our position in rights as landlord.
We wanted to and have helped them through a period where they had significantly reduced or no cash flow, allowing them to ramp back to a stabilized cash flow.
Our agreements are generally structured with rent and mortgage payments, including deferred amounts, commencing and ramping up through 2021, and in some cases, after 2021.
Cash collections continue to improve in conjunction with reopenings.
Tenants and borrowers paid 72% of contractual cash revenue for the first quarter and 77% in April.
We're seeing results from these efforts, and I want to share two examples of this win-win approach.
First, as noted earlier in my remarks, we are delighted to have acquired the brand-new TopGolf San Jose, which opened on April 16, using a portion of their deferred rent as currency.
San Jose is TopGolf's second location in California.
It's an outstanding location in a compelling DMA.
The transaction reflects our long and valued partnership with TopGolf and our creative approach throughout the pandemic to work with our tenants to address difficult issues.
Second, as noted, the ski season was strong.
Early in the pandemic, before anyone knew what the ski season would look like, we worked with CamelBak to ensure they had sufficient cash to weather what we all feared could be a rough winter.
Because Ski season was strong, in April, CamelBak repaid its entire deferred balance six months early.
Again, this demonstrates our commitment to taking the long view of our customers' ability to perform informed by the underlying strength of our underwriting and real estate.
Finally, customers representing substantially all of our contractual cash revenue, which includes each of our top 20 customers, are either paying their contract rent or interest or have a deferral agreement in place.
In those deferral agreements, we have granted approximately 5% of permanent rent and interest payment reductions.
Mark will provide additional color on the revenue recognition and cash collection implications for the second quarter of 2021.
Today, I will discuss our financial performance for the quarter, provide an update on our balance sheet and strong liquidity position and close with some estimated forward information.
I am pleased that I'll be briefer than I have been in the past few quarters.
FFO as adjusted for the quarter was $0.48 per share versus $0.97 in the prior year.
And AFFO for the quarter was $0.52 per share, compared to $1.14 in the prior year.
Total revenue from continuing operations for the quarter was $111.8 million versus $151 million in the prior year.
This decrease was due primarily to the accounting for restructured agreements with various customers, and revenue from certain tenants, which continue to be recognized on a cash basis, both as a result of the COVID-19 impact.
This decrease was also due to property dispositions and an increase in vacancies.
Additionally, we had lower other income and lower other expense of $6.9 million and $7 million, respectively, due primarily to the Kartrite Resort & Indoor Waterpark remaining closed due to COVID-19 restrictions.
Percentage rents for the quarter totaled $2 million versus $2.8 million in the prior year.
This decrease related to lower percentage rents from tenants due to the impact of COVID-19 on their operations, as well as our disposition of certain private schools in December of 2020.
This decrease was partially offset by additional percentage rent from an early education tenant due to a restructured agreement.
I would like to point out, as I did last quarter, that we are defining percentage rents here as amounts do above base rent and not payments in lieu of base rent based on a percentage of revenue.
Property operating expense of $15.3 million for the quarter was about $2.2 million -- was up about $2.2 million from prior year, due primarily to increased vacancy.
Interest expense increased by $4.4 million from prior year to $39.2 million.
This increase resulted, in part, from a higher weighted average amount outstanding on our $1 billion revolving credit facility.
As you may recall, at the end of the first quarter of 2020, we borrowed $750 million as a precautionary measure to provide us additional liquidity during the uncertainty caused by COVID-19.
At December 31, 2020, due to stronger collections and significant liquidity, including proceeds from dispositions, we reduced the outstanding balance to $590 million and then further reduced the balance to $90 million in January of 2021.
Subsequent to quarter end, we used a portion of our cash on hand to pay off the remaining balance.
Adding to the increase in interest expense, we continue to pay higher rates of interest on our bank credit facilities and private placement notes during the covenant relief period of about 100 basis points and 125 basis points, respectively.
We also earned less interest income from short-term investments in the first quarter as we use cash on hand to pay down the revolver and deposit rates were also lower than last year.
Lastly, during the quarter, we reduced our allowance for credit loss on our mortgage notes and notes receivable, which resulted in a credit loss benefit of $2.8 million versus a loss of $1.2 million in the prior year.
This benefit resulted from changes in the macro environment due to signs of recovery from the pandemic, which reduced the allowance calculated using our third-party model.
Note that this benefit is excluded from FFO as adjusted.
Now let's turn to our balance sheet and capital markets activities.
Our debt-to-gross assets was 39% on a book basis at March 31.
At quarter end, we had total outstanding debt of $3.2 billion, of which $3.1 billion is either fixed rate debt or debt that has been fixed-through interest rate swaps with a blended coupon of approximately 4.7%.
Additionally, our weighted average debt maturity is approximately five years, and we have no scheduled debt maturities until 2022 when only our revolving credit facility matures, which currently has a 0 balance.
As previously discussed, due to the impact of COVID-19 on our near-term financial results during 2020, we amended our bank credit facilities and private placement notes to waive certain covenants through the end of 2021, subject to certain conditions.
This provides us additional time and flexibility to work with our customers.
Note that we can elect to get out of the covenant relief period early, subject to certain conditions.
We had $538.1 million of cash on hand at quarter end.
And as I mentioned, we paid down our revolver to 0 in April.
Cash collections from customers continued to improve, and we're approximately 72% of contractual cash revenue or $98.1 million for the first quarter and 77% for April.
During the quarter, we also collected $29.5 million of deferred rent and interest from accrual basis tenants and borrowers, including the payment received from TopGolf that was used to purchase its San Jose location.
And the deferred rent and interest receivable balance on our books at March 31 was $59 million.
Subsequent to the end of the quarter in April, we received an additional $10.5 million of such deferral payments, bringing the year-to-date total to $40 million.
We expect to continue to collect deferred rent and interest from accrual basis tenants and borrowers, primarily over the next 36 months.
We are encouraged by the positive signs we are seeing in our customers' businesses, and we anticipate the positive trajectory of cash collections to continue over the remainder of 2021 and into 2022.
As previously announced, due to the uncertainties created by the COVID-19 disruption, we are not providing any forward earnings guidance.
However, we would like to update you on the expected ranges of contractual cash revenue that we expect to recognize in our financial statements for the second quarter of 2021, as well as our expected collections that relate to that same period.
The expected range we expect to recognize in Q2 2021 of such contractual cash revenue is $109 million to $116 million or 80% to 85%.
Additionally, the expected range we expect to collect of such contractual cash revenue in Q2 of '21 is $102 million to $109 million or 75% to 80%.
Differences from the full amount of contractual cash revenue relate to deferrals granted and the associated accounting, as well as abatements.
As evident from our discussion today, we are very pleased with our results and the trajectory of the recovery.
The continued success of the vaccine deployment should further strengthen the momentum of experiential assets.
As we've discussed previously and today, we do not have a consumer demand issue but rather a restricted environment.
And as these restrictions continue to be relaxed, our properties and tenants will benefit from this pent-up demand.
 Assistant:

Chosen response:
qtrly ffoaa per share $0.48.
qtrly affo per share $0.52.


Prompt:
Human: Third quarter was highly productive.
With our strong cash collection results and the meaningful steps we took to further solidify our balance sheet and strengthen our liquidity, we reinforced our position to pursue additional investment growth.
We were pleased to report cash collections, which exceeded our expectations, driven by the accelerated recovery across our experiential properties.
We believe that increased vaccination levels and new protocols have translated to increased levels of confidence as people are again going out and seeking memorable experiences.
Consumers are returning to the theater in a significant way, driven by highly appealing content as studios reestablish a rhythm of releasing major titles and theaters.
Strong momentum has been established with the box office with pandemic area of records being broken.
This demand for the theater experience has also provided studios much greater clarity around the economic value that box office contributes.
We look forward to seeing this momentum continue as studios have committed to exclusive theatrical releases and a strong slate of titles remain in 2021 and going into 2022.
We are also continuing to see a sustained rebound across our non-theater experiential properties.
From eat and play to experiential lodging, the common attributes of value and drive two locations provide choice, allowing consumers to spend few hours or a few days outside the home.
On the capital markets front, we were pleased to once again receive an investment-grade rating with a stable outlook from S&P, while Moody's raised its investment-grade rating to a stable outlook in October, recognizing our meaningful progress.
Additionally, we further solidified our balance sheet as we completed a new $1 billion credit -- revolving credit facility and $400 million debt issuance.
These actions have certainly enhanced our liquidity profile and positions us well to reaccelerate our growth.
Mark will provide greater detail on this.
All of this progress established a strong backdrop for us to pivot to pursuing growth, and we made progress in reestablishing our investment spending momentum.
As Greg will speak to, we have reengaged in discussions across many of our experiential property types.
Lastly, I want to bring to your attention our updated company tag line in logo.
The new tag line, the diversified experiential REIT highlights diversification as an important attribute that we will continue to build on.
We believe we are uniquely positioned to capture these opportunities.
We are seeing ample evidence of consumer demand for experiential properties we have the only team in the industry with proven capabilities across the entire spectrum of experiential concepts.
With this backdrop of demand, combined with our team and focus we believe we truly offer a unique alternative for investors to gain diversified exposure to experiential real estate and the experiential economy.
At the end of the third quarter, our total investments were approximately $6.5 billion with 358 properties in service and 96% occupied.
During the quarter, our investment spending was $39.3 million, bringing the year-to-date total through September 30 to $107.9 million in each case entirely in our experiential portfolio, the spending included in acquisition, build-to-suit development and redevelopment projects.
Our experiential portfolio comprises 284 properties with 43 operators and accounts for 91% of our total investments or approximately $5.9 billion of the $6.5 billion, and at the end of the quarter was 95% occupied.
Our education portfolio comprises 74 properties with eight operators, and at the end of the quarter was 100% occupied.
Now, I'll update you on the operating status of our tenants.
Q3 theater headlines were extremely positive.
Q3 total box office was $1.37 billion.
Major film for release, customers returned to theaters and box office results steadily improved.
The first $100 million a three-day weekend in the pandemic era wasn't until July.
Since then, North American box office has exceeded $100 million for a three-day weekend five times.
Shang-Chi and the Legend of the Ten Rings put an exclamation point on the quarter, establishing an all-time four-day Labor Day box office record at $94.7 million.
Venom Let There Be Carnage, delivered the highest grossing opening three-day weekend during the pandemic era at $90 million.
Box office momentum continues as we roll into Q4.
North American box office through this past weekend is $3 billion compared to $2.1 billion for all of 2020.
We believe Q4 performance will deliver around $2 billion.
An instructive metric to evaluate box office recovery is to compare 2021 monthly grosses to the same month in 2019, which adjusts for the seasonality of the film schedule.
Q2 box office growth was around 25% of 2019.
Since then, box office has consistently improved month over month when compared to the 2019 comparable period.
July was at 45%, August at 50%, September at 53%.
And when final October numbers are in, we expect grosses will exceed $622 million or around 80% of 2019, the highest monthly gross since February 2020.
Additionally, the number of films released to exhibition is steadily increasing and should drive continued box office recovery.
During 2018 and 2019, there were around 560 new titles released to theatrical exhibition annually.
In 2020, there were 327, a 42% decrease.
Through September 30, there have been 285.
We anticipate that number will grow to around 400 by the end of the year.
The release cadence will continue to grow in 2022.
Increased product will drive continued box office recovery.
The remaining Q4 film slate is strong.
Eternals, Ghostbusters: Afterlife, West Side Story, Spider-Man: No way Home, the Kingsman and Matrix: Resurrections.
The 2022 film slate is compelling with the potential for 20 titles to gross $100 million or more up approximately 50% from 2021, anchored by two Tom Cruise pictures, Top Gun Maverick and Mission Impossible 7, three Marvel Universe films and several highly anticipated sequels, including Aquaman 2, Avatar 2, John Wick 4, The Batman, and Jurassic World.
Finally, the impact of premium video on demand and streaming on the theatrical window and exhibition and theatrical exhibition is clearer.
After the day and date hybrid release of Black Widow, Disney announced the remainder of its 2021 film slate will have an exclusive theatrical release.
had already committed to an exclusive theatrical release for 2022.
The results of day in date premium video on-demand and streaming demonstrated the best way for studios to maximize revenue is through a multipronged approach anchored by the theatrical exhibition in an exclusive window.
The exclusive theatrical window is generally settling around 45 days with some variability for individual titles and exhibitors.
Historically, the majority of box office gross occurred in the first 45 days.
The reduction of the exclusive theatrical window will lead to more streaming services releasing more films theatrically.
More content in theaters is a positive for consumers.
This is already happening.
In May, Netflix released Army of the Dead theatrically in select theaters, including 600 Cinemark theaters for one week prior to its availability on Netflix.
Netflix is continuing its experimentation.
In Q4, it will release 10 titles to theatrical exhibition before release to streaming.
It won't be a 45-day window, but Netflix understands the importance of theatrical release for both revenue generation and word-of-mouth marketing.
This is reinforced by the recent announcement that Netflix will operate the Bay theater in Pacific Palisades.
Turning now to an update on our other major customer groups.
We see continued positive performance across all segments of our drive to value-oriented destinations.
The fewer the COVID restrictions, the better the performance.
Across all segments, our customers found many ways to improve their profitability despite fewer guests.
Consumers want to engage in social activities.
We are seeing excellent performance across eat and play throughout the country with attendance approaching or exceeding 2019 levels and continued margin improvement and profitability.
We saw recovering demand across our attractions and cultural holdings throughout the summer.
Attractions with fewer COVID restrictions performed well and several were significantly ahead of 2019 levels.
Others were negatively impacted by ongoing COVID restrictions with performance improving as restrictions were relaxed and eliminated and the impact of fewer group and school events.
We anticipate continued growth in demand in 2022, assuming no material COVID restrictions.
There is high demand across our experiential lodging portfolio with strong occupancy and ADR growth.
The Cartwright Resort and indoor water park reopened on July 1 and ramped up through the summer.
We're pleased with our progress.
The Margaritaville Nashville Hotel in downtown Nashville is benefiting from Nashville's rebound to its typical diverse and robust event calendar, including live performances at the Ryman Auditorium, Tennessee Titans, and Nashville Predators games, and an IndyCar race.
The RV portion of our Camp Margaritaville RV Resort and lodge in Pigeon Forge, Tennessee opened in June.
We saw strong demand through the summer and into the fall foliage season, which draws visitors to -- Great Smoky Mountains National Park, the most visited national park in the country with over 12 million visitors in 2020.
We the lodge will be completed in Q4.
Despite the impact of reduced cruise business on Alaska, Alyeska Resort benefited from increased airlift and ground tours to Alaska and is performing well.
Our Nordic Spa will open Q4.
In St. Petersburg, our repositioned bellwether Beach Resort is completely renovated with all rooms and venues open, driving ADR increases.
We're completing the second phase of the redevelopment at the beach comer.
Heading into winter, we expect strong demand for our drive to value oriented ski destinations as evidenced by Vail's increased Epic Pass sales for 2021, '22.
Vail's recently announced $320 million capital plan will improve four of our properties.
Our education portfolio continues to perform well.
After a challenging 16 months, we are returning to growth and actively pursuing deals in all our experiential verticals other than theaters.
In Q3, we acquired the Jellystone Park Camp Resort in Warren's, Wisconsin, for $25.2 million in an unconsolidated joint venture, of which we own 95%.
This iconic family campground RV park features numerous experiential amenities, including a water park and a water slide.
Along with Camp Margaritaville, the Jellystone acquisition demonstrates our belief in the growth opportunities in the experiential RV park space.
The remainder of the quarterly investing spending was in build-to-suit development and redevelopment projects in our Eaton Play and experiential lodging categories.
Our primary capital recycling focus remains on our vacant theaters, and we're pleased with the progress.
Since Q3 2020, we've sold five vacant theaters for various uses, including one that closed yesterday for approximately $6.8 million at a slight gain.
We have five remaining vacant theaters.
Three are under executed contracts for sale, and we're marketing the remaining two with multiple expressions of interest.
In the third quarter, we also completed the sale of two land parcels.
At the end of October, we sold our WISP and Wintergreen ski resorts to our tenant for $48 million or about a 9% cash cap rate with a gain on sale of $15.4 million.
This was a strategic decision to improve our portfolio and our credit profile.
Located in Maryland and Virginia.
They were the farthest south ski locations in our portfolio.
And other than Alyeska, they were our only ski resorts not operated by Vail.
Finally, I want to update you on the status of our cash collections.
Cash collections continue their upward trajectory.
Tenants and borrowers paid 90% of contractual cash revenue for the third quarter.
In addition, we collected a total of $11.3 million of deferred rent and interest during the quarter, as well as $5.3 million on a previously reserved note receivable.
Through September 30, we have collected a total of $59.5 million of deferred rent and interest from accrual and cash basis customers.
Mark will provide additional color on revenue recognition and cash collections for the third quarter and the remainder of the year.
We are excited by the prospect of each metric approaching 100% in the fourth quarter.
Today, I will discuss our financial performance for the quarter, provide an update on our capital markets activities and strong balance sheet and close by reviewing our increase in 2021 earnings guidance.
as adjusted for the quarter was $0.86 per share versus a loss of $0.16 in the prior year, and AFFO for the quarter was $0.92 per share compared to $0.04 in the prior year.
Total revenue for the quarter was $139.6 million versus $3.9 million in the prior year.
This increase was due primarily to improved collections and revenue from certain tenants, which continue to be recognized on a cash basis or were previously receiving abatements, as well as less receivable write-offs than in prior year.
I will have more on collections later in my comments.
Scheduled rent increases, as well as acquisitions and developments completed over the past year also contributed to the increase.
This increase was partially offset primarily by property dispositions.
Additionally, we had higher other income and other expense of $7.9 million and $5.2 million, respectively, due primarily to the reopening of the Kartrite Resort and indoor water park after being closed due to COVID restrictions, COVID-19 restrictions, as well as the operations from two theater properties.
Percentage rents for the quarter totaled $3.1 million versus $1.3 million in the prior year.
This increase related to higher percentage rents from an early education tenant due to a restructured agreement, as well as stronger performance than expected at two attraction properties and one ski property.
This was partially offset by the disposition of certain private schools in December of 2020.
I would like to point out, as I have in recent prior quarters that we are defining percentage rents here as amounts due above base rent and not payments in leaf base rent based on a percentage of revenue.
Costs associated with loan refinancing or payoff for the quarter of $4.7 million related to the write-off of fees and termination of interest rate swaps related to the repayment of our $400 million unsecured term loan facility during the quarter.
Interest expense net for the quarter decreased by $5.2 million compared to prior year due to reduced borrowings offset by lower interest income on short-term investments.
In addition to the repayment of the term loan, we had no balance on our revolving credit facility during the quarter.
You may recall that in prior year, we had drawn $750 million on our revolving credit facility as a precautionary measure which provide us with additional liquidity during the early days of the pandemic.
During the quarter, we continued to see improvement in the credit profile of our mortgage notes and notes receivable, resulting in a credit loss benefit of $14.1 million versus a loss of $5.7 million in the prior year.
The primary reason for the benefit this quarter was stronger-than-expected performance by a borrower, resulting in a partial repayment of $5.3 million on a fully reserved note and the release from an additional $8.5 million in funding commitments that also had been previously reserved.
Note that this benefit is excluded from FFO as adjusted.
Lastly, income tax expense was $395,000 for the quarter versus $18.4 million in the prior year.
This variance related to the full valuation allowance recognized on all deferred tax assets during the third quarter of 2020 and which effectively eliminated the impact of deferred income taxes after that time.
Now, let's move to our capital markets and balance sheet.
With a very productive quarter related to financing activities that resulted in several improvements in our balance sheet and a lower cost of capital for EPR.
As mentioned earlier, we repaid our $400 million unsecured term loan on September 13.
And following this repayment, we received an investment grade rating from S&P on our unsecured debt with a stable outlook, which added to the existing investment grade rating from Moody's.
Additionally, Moody's raised its outlook to stable during October.
On October 6, we amended and restated our $1 billion revolving credit facility to extend the maturity to October 2025, with extensions at our option for a total of 12 additional months subject to conditions.
We are pleased that the new facility has the same pricing terms and financial covenants as the prior facility with improved valuation of certain asset types.
On October 27, we closed on $400 million of new 10-year senior unsecured notes at a coupon of 3.6%, the lowest in the company's history.
The offering was over 4.5 times subscribed, which allowed us to significantly tighten pricing and achieve a negative 5 basis points new issue concession.
As previously announced, the proceeds from this offering will be used in part to redeem all $275 million of our 5.25% senior unsecured notes at the make-whole amount on November 12.
Our net debt to gross assets was 38% on a book basis at September 30.
Pro forma for the bond transactions, we will have total offsetting debt of approximately $2.8 billion, all of which will be either fixed rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately 4.3%.
Additionally, our weighted average debt maturity will be approximately 6.5 years with no scheduled debt maturities until 2024.
We had $144.4 million of cash on hand at quarter end, which is expected to increase by approximately $95 million with the issuance of the new 10-year bonds net of the redemption of the 2023 bonds, and we have nothing drawn on our $1 billion revolver.
We continue to be encouraged by the positive signs we are seeing in our customers' businesses and the resulting positive trajectory we are experiencing in cash collections.
Cash collections from customers continue to exceed expectations and were approximately 90% of contractual cash revenue were $124.5 million for the third quarter.
This is -- this amount is more than the high end of the guidance range we had previously provided and was primarily driven by additional collections from cash basis customers.
During the quarter, we also collected $7.7 million of deferred rent and interest from accrual basis tenants and borrowers and the deferred rent and interest receivable on our books at September 30 was $40.9 million, which we expect to collect primarily over the next 27 months.
Additionally, during the quarter, we collected $3.6 million in deferral repayments from cash basis customers that were recognized as revenue when received.
At September 30, we had about $126 million of deferred rent and interest owed to us not on the books.
We anticipate collecting some of this amount over the next two quarters.
However, most of this amount is scheduled to begin to be collected over about 60 months beginning in May of 2022.
Revenue will continue to be recognized on these amounts when the cash is received.
Finally, as discussed previously, we also received a note repayment from a cash basis customer of $5.3 million, which resulted in credit loss recovery that is excluded from FFO as adjusted.
Adding this all together, and as you can see on the slide, we collected more than 100% of contractual cash revenue for the quarter.
We are pleased to be increasing guidance for 2021 FFO as adjusted per share from a range of $2.76 to $2.86 to a range of $2.95 to $3.01.
The guidance for 2021 FFO as adjusted per share includes only previously committed additional investment spending of approximately $6 million for the last three months of 2021.
Guidance for disposition proceeds has also been increased from $40 million to $50 million to $93 million to $103 million, primarily to reflect the sale of the two ski properties that Greg discussed.
As we have done in previous quarters, we would also like to update you on the expected ranges of contractual cash revenue that we expect to recognize in our financial statements for the fourth quarter of '21, as well as our expected collections that relate to those same periods.
The range we expect to recognize in Q4 of such contractual cash revenue is $133 million to $138 million or 96% to 99%.
Additionally, the expected range we expect to collect of such contractual cash revenue in Q4 is $131 million to $135 million or 95% to 97%.
Differences from the full amount of contractual cash revenue related to deferrals granted and the associated accounting.
Please note that the definition of contractual cash revenue continues to exclude percentage rents straight line and other noncash revenue and revenue related to managed properties.
I would also like to note that beginning in 2022, we expect both current quarter collections and revenue recognition to be at 100% of contractual cash revenue, and we expect to continue to collect deferral amounts from prior periods.
Finally, I thought it would be helpful to provide a bridge from the midpoint of our previous FFO as adjusted per share guidance of $2.81 to the midpoint of our increased guidance of $2.98.
As you can see on the slide, the increase is driven by increased revenue recognition and percentage rents, as well as lower interest expense and G&A, partially offset by the impact from increased dispositions and lower operating profit from managed properties.
Details regarding all of our 2021 guidance can be found on page 22 of our supplemental.
As you've heard today, our recovery is nearly complete, and we are focusing on a return to growth.
As we've stated, we have the team, the balance sheet and equally important, the consumer demand to make that happen.
We look forward to demonstrating these efforts in the coming quarters.
 Assistant:

Chosen response:
qtrly ffoaa per diluted common share $0.86.
qtrly affo per diluted common share $0.92.
increasing its 2021 guidance for ffoaa per diluted common share to a range of $2.95 to $3.01.