Prompt:
Human: Actual results could differ materially from such statements and our forecast.
In particular, there remains significant uncertainty around the duration and impact of COVID-19.
This means that results could change at any time, and the contemplated impact of COVID-19 on the Company's business results and outlook is the best estimate, based on the information available as of today.
As a reminder, during the call we will discuss non-GAAP metrics.
Before I hand the call over, I'd like to remind our investors and analysts about our upcoming virtual Investor Fireside Chat, taking place on November 17th from 1:30 PM to 3:00 PM Central Time during the 2021 PROS Outperform conference.
We ended the quarter with significant outperformance on our guidance ranges for profitability and cash flow, and delivered revenue results in line with our expected ranges.
We did see impact from the Delta variant in our Q3 results and our Q4 outlook.
Stefan will expand on this later.
Our strategy is to accelerate market adoption of the PROS Platform, deliver an incredible experience and drive significant value for our customers.
Despite the challenges we faced because of COVID-19, our team continues to execute well against our strategy.
We continue to drive incredible value for customers, evident by our expanding partnerships and best-in-class gross revenue retention rates.
We received industry recognition of our leadership in both CPQ and Price Optimization and Management.
When I look at all of this and the progress of the recovery, I couldn't be more excited for what is to come.
In Travel, we're starting to see international restrictions ease, and some carriers are seeing significant increases in passenger demand as a result.
For example, when the announcement was made that the Europe to U.S. travel ban would be lifted in November, carriers saw an immediate 140% increase in ticket sales in a single week for European travelers.
This demonstrates the pent-up demand for travel, both leisure and business, and energizes us for the pace of recovery heading into 2022, as more borders open.
Historically, this market segment didn't have access to the best-of-breed, AI-powered revenue management solutions.
We designed our PROS RM Essentials edition on the PROS Platform to enable teams of any size to adopt to our industry-leading AI and grow with PROS over time.
With PROS RM Essentials, customers like Air Transat and Scoot can forecast demand and dynamically priced to maximize revenue.
Now, moving to B2B; in the healthcare space, we're seeing demand for our solutions, as companies look to digitize their selling motions.
We're also seeing momentum in transportation and logistics, where companies are looking to PROS to enable them to deliver a frictionless sales experience, as demand continues to rise.
This year, air cargo demand is expected to increase approximately 20% year-over-year.
In Q3, Emirates SkyCargo adopted our B2B Platform to empower their customers with a self-service buying experience, to drive a higher conversion of sales, using our omnichannel quoting capabilities and capacity-aware price guidance.
Similarly, Marken, a division of UPS Healthcare Logistics, that is essential in the delivery of vaccines globally, also adopted our B2B Platform to power digital selling across their enterprise.
Our latest innovations are also inspiring existing customers to expand their partnerships with PROS.
In Q3, TE Connectivity, a PROS customer of eight years, chose to migrate to our cloud platform, which allowed them to expand adoption across their business.
TE Connectivity is a leading manufacturer of electronic connectors and sensors that powers vehicles, factories, and homes across the globe.
With hundreds of billions of products manufactured annually, TE Connectivity is relying on the scale, speed, and precision of PROS' Price Optimization and Management capabilities to drive winning offers.
Honeywell also expanded adoption of our Price Optimization and Management solution.
Like many businesses today, Honeywell is experiencing the impact of rising commodity prices and the risk of inflation.
To effectively manage volatility and continue to produce winning offers, Honeywell named PROS as their global pricing solution vendor, and is actively rolling out our solution to all their strategic business units.
Sheila Jordan, Honeywell's Chief Digital Technology Officer, will be joining me in my keynote at Outperform, to share more on their success with PROS.
Now, I am excited to share that we have been named a Leader in the 2021 Gartner Magic Quadrant for Configure, Price and Quote Application Suites.
Our flexibility to support omnichannel selling, the combination of pricing and selling capabilities in a single platform, the performance, usability, and scalability of our platform were all cited as key strengths.
We also had the honor of once again being named a Leader in the 2021 IDC MarketScape Assessment of Worldwide B2B Price Optimization and Management Applications.
IDC emphasized the ease of use and transparency within our solutions as a key differentiator.
A core part of our strategy has been making our AI algorithms accessible, explainable, and extensible, which allows companies of all sizes to adopt our market-leading AI-powered platform.
As an engineer at heart, I'm incredibly proud of the market recognition we're receiving for our innovations, and I would like to express my deep gratitude to our amazing Product and Engineering teams.
With these most current designations, we're the only platform with a leadership position in both the CPQ and Price Optimization and Management markets.
In addition to our product awards, I am thrilled to share that PROS has been Certified by Great Places to Work for the second year in a row.
This year's designation extends the Company's original certification to all eligible countries, recognizing our inclusive, people-first culture on a global scale.
This award is based entirely on what current employees have to say about working at PROS, which is what makes this award so special to me.
Finally, in September, we announced Rob Reiner's intention to retire from PROS.
As Chief Technology Officer, Rob has been key in driving our culture of innovation forward.
Rob joined PROS in 2016 to lead our pivotal transition to the cloud.
With his leadership, we transformed our Travel and B2B solutions into the most comprehensive and innovative SaaS offerings in their markets.
Succeeding Rob, Ajay Damani has been promoted to the role of Executive Vice President of Engineering, and Sunil John has been promoted to the role of Chief Product Officer.
Ajay and Sunil each have over 15 years of experience with PROS, and have been a huge part of our success.
I look forward to working closely with them, and continuing to accelerate our innovation leadership.
In closing, I'm proud of how our team is executing to drive adoption in the market, deliver industry-leading innovations through our platform, and create a culture that empowers every employee to reach their full potential.
In the third quarter, we significantly outperformed our profitability and cash flow metrics and delivered revenue results that were in line with our expectations.
Our team continues to look for ways to drive efficiencies, as well as improve our customer satisfaction and collection processes.
As a result of our strong operational execution, our outlook for the full year is now much better on profitability and cash flow.
As Andres mentioned, the ongoing impact from COVID-19 and specifically the Delta Variant, did affect some of our travel customers in the third quarter.
Examples of the impact during the quarter include; a travel customer declaring bankruptcy, a small number of contract restructurings, and some of our new opportunities and implementations being pushed by a few months.
Individually, none of these items significantly impacted our revenues, but the combination of these items did impact our subscription and services revenues slightly in the third quarter.
These items will also impact our fourth quarter revenues, and we expect total revenue for the year to be at the low end of our previous annual guidance range.
All of these items impacting the second half of 2021 are temporary in nature.
We expect to recover most, if not all, of these amounts during 2022.
Now moving on to our results; subscription revenue in the third quarter was $44.1 million, up 5% year-over-year and total revenue was $62.7 million, up 2% year-over-year.
Our third quarter recurring revenue was 84% of total revenue.
Our gross revenue retention rate for the trailing 12 months was approximately 91%.
As a reminder, we disclose gross revenue retention rates, not net revenue retention rates.
Gross revenue retention does not include bookings from existing customers, which can mask real customer churn.
Our revenue retention rates have continued to improve throughout 2021 and we anticipate ending the year at approximately 93%.
This returns us to world-class gross revenue retention rates and demonstrates the value our customers see in our solutions.
Our non-GAAP total gross margins improved sequentially again to 61%, and our non-GAAP subscription gross margins were 72%, which are up sequentially from 71% and also up year-over-year.
We expect subscription margins to remain relatively constant in the fourth quarter of 2021.
We also continue to make steady progress on our services margins and were within $200,000 of breakeven in the third quarter.
As I mentioned before, we continue to make progress on adjusted EBITDA and were very pleased with our performance this quarter.
Adjusted EBITDA loss was $4.4 million as compared to $6.2 million last year.
Revenue growth and reduced operating expenses led to this improvement.
Total operating expenses declined by 5% in the quarter and 6% in the first nine months of the year.
I am proud of our team's strong operational execution and how we continue to look for ways to drive more efficiency into our business.
Our calculated billings decreased 5% for the quarter and for the trailing 12 months.
And as previously mentioned, we anticipate calculated billings will grow in the fourth quarter, which would result in full year growth of at least 10%.
Our free cash flow burn was $8.5 million in Q3 and $18.9 million year-to-date, a significant improvement over last year, driven by a combination of operating expense efficiencies, strong customer collections, and better gross revenue retention rates.
We exited the third quarter with $308.6 million of cash and investments.
We also made nice progress toward our year-end target of adding quota-carrying personnel, and we ended the quarter with 64.
We were able to hire ahead of plan, which allows our new team members to ramp up, so that they can be productive earlier in 2022.
We do not anticipate growing this metric further in the fourth quarter.
And as previously discussed, we expect to exit the year with 60 or more quota-carrying personnel.
Now turning to guidance; we expect Q4 subscription revenue to be in the range of $45 million to $45.5 million and total revenue to be in the range of $63 million to $64 million.
We expect fourth quarter adjusted EBITDA loss to be between $9 million and $10 million.
Using an estimated non-GAAP tax rate of 22%, we anticipate fourth quarter non-GAAP loss per share of between $0.22 and $0.24 per share, based on an estimated 44.4 million shares outstanding.
For the full year, we expect subscription revenue to be in the range of $176 million to $176.5 million and total revenue to be in the range of $249.5 million to $250.5 million.
We expect an adjusted EBITDA loss of between $27.3 million and $28.3 million, and a free cash flow burn between $22 million and $25 million.
We also expect our ending ARR on a constant currency basis to be between $214 million and $217 million.
 Assistant:

Chosen response:
qtrly total revenue $62.7 million versus $61.5 million.
sees q4 non-gaap loss per share $0.22 to $0.24.


Prompt:
Human: Slide 2 contains our safe harbor statement.
For the fourth quarter, we had adjusted earnings of 1.3 billion or $2.94 per share.
For the year, adjusted earnings were 2.5 billion or $5.70 per share.
We delivered record results in midstream, chemicals and marketing and specialties, demonstrating the strength of our diversified portfolio.
For the third quarter in a row, we saw improved refining performance.
Looking ahead, we're optimistic about the outlook for our business.
In 2021, our employees exemplified the company's values of safety, honor, and commitment.
Our 2021 combined workforce total recordable rate of 0.12 was more than 25 times better than the U.S. manufacturing average.
Last year, our strong cash flow generation allowed us to invest $1.9 billion back into the business, returned $1.6 billion to shareholders, and paid down $1.5 billion of debt.
The 2022 capital program of $1.9 billion reflects our commitment to capital discipline.
Approximately 45% of our growth capital this year will support lower carbon opportunities, including Rodeo Renewed.
As cash flow improves further, we'll prioritize shareholder returns and debt repayment.
In October, we increased the quarterly dividend to $0.92 per share.
We remain committed to a secure, competitive, and growing dividend.
We'd like to resume share repurchases this year and on our path toward getting back to pre-COVID debt levels over the next couple of years.
We're taking steps to position Phillips 66 for the long-term competitiveness.
Across our businesses, we're assessing opportunities for permanent cost reductions.
Mark and Kevin are leading this initiative and will provide additional details on the first quarter call in April.
We're committed to a lower carbon future while continuing to deliver our vision of providing energy and improving lives around the globe.
We announced targets to reduce greenhouse gas emissions intensity last year.
By 2030, we plan to reduce Scope 1 and Scope 2 emissions by 30% and Scope 3 emissions by 15% compared to 2019 levels.
In the fourth quarter, we had strong earnings from midstream, chemicals, and marketing and specialties, and we saw a continued recovery in refining profitability.
We made progress advancing our growth projects as well as taking strategic actions to position Phillips 66 for the future.
In midstream, we began commercial operations of Phillips 66 Partners' C2G Pipeline.
At the Sweeny Hub, construction of Frac 4 is 50% complete, and we expect to begin operations in the fourth quarter of this year.
CPChem is investing in a portfolio of high-return projects, growing its asset base as well as optimizing its existing operations.
This includes growing its normal alpha-olefins business with a second world-scale unit to produce 1-Hexyne, a critical component in high-performance polyethylene.
CPChem is also expanding its propylene splitting capacity by 1 billion pounds per year with a new unit located at its Cedar Bayou facility.
Both projects are expected to start up in 2023.
CPChem continues to develop two world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar.
In addition, CPChem completed its first commercial sales of Marlex Anew Circular Polyethylene, which uses advanced recycling technology to convert difficult-to-recycle plastic waste into high-quality raw materials.
CPChem has successfully processed pyrolysis oil in a certified commercial scale trial and is targeting annual production of 1 billion pounds of circular polyethylene by 2030.
During the year, we began renewable diesel production at the San Francisco refinery and continued to progress Rodeo Renewed, which is expected to be completed in early 2024, subject to permitting and approvals.
Upon completion, Rodeo will initially have over 50,000 barrels per day of renewable fuel production capacity.
The conversion will reduce emissions from the facility and produce lower carbon transportation fuels.
In marketing, we acquired a commercial fleet fueling business in California, providing further placement opportunities for Rodeo renewable diesel production to end use customers.
Additionally, our retail marketing joint venture in the Central region acquired 85 sites in December, bringing the total to approximately 200 sites acquired in 2021.
These sites support long-term product placement and extend our participation in the retail value chain.
Our Emerging Energy Group is advancing opportunities in renewable fuels, batteries, carbon capture, and hydrogen.
We recently signed a technical development agreement with NOVONIX to accelerate the development of next-generation materials for the U.S. battery supply chain.
We own a 16% stake in the company, extending our presence in the battery value chain.
In December, we entered into a multiyear agreement with British Airways to supply sustainable aviation fuel produced by our Humber Refinery beginning this year.
For 2022, we'll execute our strategy with a focus on operating excellence and cost management.
We will do our part to advance the lower carbon future while maintaining disciplined capital allocation and an emphasis on returns.
Starting with an overview on Slide 4, we summarize our financial results for the year.
Adjusted earnings were $2.5 billion or $5.70 per share.
We generated $6 billion of operating cash flow or $3.9 billion excluding working capital.
These results reflect our highest annual earnings for the midstream, chemicals, and marketing and specialty segments.
Cash distributions from equity affiliates totaled $3 billion, including a record $1.6 billion from CPChem.
We ended 2021 with a net debt-to-capital ratio of 34%.
Our adjusted after-tax return on capital employed for the year was 9%.
Slide 5 shows the change in cash during the year.
We started the year with $2.5 billion in cash.
Cash from operations was $6 billion.
This included a working capital benefit of $2.1 billion, mainly due to the receipt of tax refunds as well as the impact of rising prices on our net payable position.
During the year, we paid down $1.5 billion of debt.
In November, both S&P and Moody's revised their outlooks from negative to stable.
We are committed to further deleveraging as we continue to prioritize our strong investment-grade credit ratings.
We funded $1.9 billion of capital spending and returned $1.6 billion to shareholders through dividends.
Our ending cash balance increased to $3.1 billion.
Slide 6 summarizes our fourth quarter results.
Adjusted earnings were $1.3 billion or $2.94 per share.
We generated operating cash flow of $1.8 billion, including a working capital benefit of $412 million and cash distributions from equity affiliates of $757 million.
Capital spending for the quarter was $597 million.
$265 million was for growth projects, which included approximately $100 million for retail investments in the marketing business.
We paid $403 million in dividends.
Moving to Slide 7.
This slide highlights the change in adjusted results from the third quarter to the fourth quarter, a decrease of $105 million.
Our adjusted effective income tax rate was 20% for the fourth quarter.
Slide 8 shows our midstream results.
Fourth quarter adjusted pre-tax income was $668 million, an increase of $26 million from the previous quarter.
Transportation contributed adjusted pre-tax income of $273 million, up $90 million from the prior quarter.
The increase mainly reflects the recognition of deferred revenue.
NGL and other adjusted pre-tax income was $284 million, compared with $357 million in the third quarter.
The decrease was primarily due to lower unrealized investment gains related to NOVONIX, partially offset by higher volumes at Sweeny Hub and favorable inventory impacts.
Our investment in NOVONIX is marked to market at the end of each reporting period.
The total value of the investment, including foreign exchange impacts, increased $146 million in the fourth quarter, compared to an increase of $224 million in the third quarter.
The fractionators at the Sweeny Hub averaged a record 417,000 barrels per day, and the Freeport LPG export facility loaded a record 45 cargoes in the fourth quarter.
DCP midstream adjusted pre-tax income of $111 million was up $80 million from the previous quarter, mainly due to favorable hedging impacts in the fourth quarter compared to negative hedge results in the third quarter.
The actual hedge benefit recognized in the fourth quarter amounts to approximately $50 million.
Turning to chemicals on Slide 9.
Chemicals' fourth quarter adjusted pre-tax income of $424 million was down $210 million from the third quarter.
Olefins and polyolefins adjusted pre-tax income was $405 million.
The $208 million decrease from the previous quarter was primarily due to lower polyethylene margins, reduced sales volumes, as well as increased utility costs.
Global O&P utilization was 97% for the quarter.
Adjusted pre-tax income for SA&S was $37 million, compared with $36 million in the third quarter.
During the fourth quarter, we received $479 million in cash distributions from CPChem.
Turning to refining on Slide 10.
Refining fourth quarter adjusted pre-tax income was $404 million, an improvement of $220 million from the third quarter, driven by higher realized margins and improved volumes.
This was partially offset by higher costs.
Realized margins for the quarter increased by 35% to $11.60 per barrel.
Impacts from lower market crack spreads were more than offset by lower RIN costs from a reduction in our estimated 2021 compliance year obligation and lower RIN prices.
In addition, we had favorable inventory impacts and improved clean product differentials.
Refining adjusted results reflect approximately $230 million related to the EPA's proposed reduction of the RVO, of which about 75% applies to the first three quarters of the year.
Pretax turnaround costs were $106 million, up from $81 million in the prior quarter.
Crude utilization was 90% in the fourth quarter and clean product yield was 86%.
Slide 11 covers market capture.
The 3:2:1 market crack for the fourth quarter was $17.93 per barrel, compared to $19.44 per barrel in the third quarter.
Realized margin was $11.60 per barrel and resulted in an overall market capture of 65%.
Market capture in the previous quarter was 44%.
Market capture is impacted by the configuration of our refineries.
Our refineries are more heavily weighted toward distillate production than the market indicator.
During the quarter, the distillate crack increased $3.10 per barrel, and the gasoline crack decreased $3.76 per barrel.
Losses from secondary products of $1.88 per barrel improved $0.10 per barrel from the previous quarter due to increased butane blending into gasoline.
Our feedstock advantage of $0.18 per barrel improved by $0.17 per barrel from the prior quarter.
The Other category reduced realized margins by $2.02 per barrel.
This category includes RINs, freight costs, clean product realizations, and inventory impacts.
Moving to marketing and specialties on Slide 12.
Adjusted fourth quarter pre-tax income was $499 million, compared with $547 million in the prior quarter.
Marketing and Other decreased $52 million from the prior quarter.
This was primarily due to lower marketing fuel margins and volumes as well as higher costs.
Specialties generated fourth quarter adjusted pre-tax income of $97 million, up from $93 million in the prior quarter.
On Slide 13, the corporate and other segment had adjusted pre-tax costs of $245 million, an increase of $15 million from the prior quarter.
This was primarily due to higher employee-related costs and net interest expense.
Slide 14 shows the change in cash during the fourth quarter.
We had another strong quarter for cash.
This is the third consecutive quarter that our operating cash flow enabled us to return cash to shareholders, invest in the business, pay down debt while increasing our cash balance.
This concludes my review of the financial and operating results.
Next, I'll cover a few outlook items for the first quarter and the full year.
In chemicals, we expect the first quarter global O&P utilization rate to be in the mid-90s.
In Refining, we expect the first quarter worldwide crude utilization rate to be in the high 80s and pre-tax turnaround expenses to be between 120 and $150 million.
We anticipate first quarter corporate and other costs to come in between 230 and $250 million pre-tax.
For 2022, we plan full year turnaround expenses to be between 800 and $900 million pre-tax.
We expect corporate and other costs to be in the range of 900 to $950 million pre-tax for the year.
We anticipate full year D&A of about $1.4 billion.
And finally, we expect the effective income tax rate to be in the 20 to 25% range.
 Assistant:

Chosen response:
compname posts q4 earnings per share $2.88.
q4 adjusted earnings per share $2.94.


Prompt:
Human: Today, we will be discussing Pioneer's strong second quarter results and our enhanced return of capital strategy.
We will also present our continued strong execution, underpinning our low reinvestment rate and best-in-class breakeven oil price.
This is all accomplished while maintaining our focus on safe operations and environmental stewardship in the field.
Obviously, we're very excited after talking about it for 18 months to announce that we are both accelerating our first variable dividend payment into the third quarter this year as well as increasing the payment to reflect 75% of second quarter free cash flow.
After payment of the base dividend as our balance sheet continues to strengthen due to higher strip pricing as a result of improved oil demand and a successful vaccine.
In addition, we had two highly accretive transactions that also led us to making this decision and accelerating.
When combined with the base dividend, total dividend payments in the third quarter will be greater than $2 per share, or a total of approximately $490 million return to shareholders during the third quarter alone.
The initiation of our variable dividend payments marks a significant milestone in our investment framework as shareholders will begin receiving material cash return through eight dividend checks per year.
Pioneer's strong execution continued during the second quarter, with production near the top end of guidance, delivering over $600 million of free cash flow, driving estimated 2021 free cash flow up to about $3.2 billion.
Lastly, Pioneer is the largest producer in the Permian, with the largest inventory of Tier one locations, over 15,000, and the lowest breakeven price in the Lower 48.
Both recent acquisitions were highly accretive and added significant Tier one inventory.
We were not looking at any more Midland Basin large acquisitions.
We bought the best two available.
Apollo, who was the largest shareholder from DoublePoint, our largest shareholder from DoublePoint has sold out from 13 million shares to about two million shares and now less than 1% of the outstanding of the company.
Going to slide four.
Pioneer's execution remains strong as total production and oil production were in the upper half of our guidance ranges as we successfully integrated DoublePoint's operations into our program.
Horizontal lease operating expense dropped by nearly $0.25 per BOE when compared to the first quarter.
In total, Pioneer generated approximately $1 billion in free cash flow in the first half of '21.
We go on to slide five.
Our strong balance sheet underpinned by improved oil price outlook supports both the acceleration and increase of our inaugural variable dividend.
The first variable dividend will be paid during the third quarter, and accelerated from 22%, will be based on second quarter free cash flow.
Additionally, we are increasing the third quarter variable dividend payment to 75%, post base dividend free cash flow from the previous 50%.
The increase up to 75% in our variable dividend program is approximately 18 months sooner than previously planned.
These changes result in over $1 billion of incremental cash to be returned to shareholders in 2021, with total dividends to exceed $6 per share.
On slide six, we remain committed to our core investment thesis, predicated on low leverage, strong corporate returns to average over the next five years in the mid-teens, low investment rate, around 50% over the next five years and generating significant free cash flow.
This durable combination creates significant value for our shareholders delivering a mid-teens total return through our stable and growing base dividend, compelling variable dividend program and high-return oil growth up to 5%.
Obviously, when you look at 2022, the turn on return is much higher because the oil strip over the next five years is about $10 in backwardation.
When including the base dividend, approximately 80% of the company's free cash flow is expected to be returned to shareholders through eight separate dividend checks per year, inclusive of both the base and the variable dividend.
We will continue to maintain our pristine balance sheet as we allocate the remaining portion of free cash flow to the balance sheet.
Going to slide seven.
As you can see on slide seven, the product of Pioneer's high-quality assets and top-tier capital efficiency drive significant free cash flow generation amounting to greater than $23 billion through 2026.
Again, I want to remind you that the strip is in backwardation.
It drops about $10 in backwardation over the next five years.
Let's get into free cash flow, which is based on current strip pricing, represents greater than 50% of our enterprise value and more than 65% of our market cap.
Considering the greater than $23 billion of cumulative free cash flow, this program generates over $18 billion of total dividends through 2026, with the remaining free cash flow allocated toward strengthening our balance sheet, driving net debt to EBITDA to less than 0.5.
Going to slide eight, positioning a leading dividend yield across all sectors, the combination of Pioneer's expected free cash flow and return on capital framework creates a compelling investment opportunity with a total dividend yield that will exceed all S&P 500 sectors as well as companies and the average yield of the major oil companies and all other energy companies in the S&P 500.
Annualized expected dividends paid in the second half of 2021 leads to a dividend yield of approximately 8%, which increases '22 to '26 time period to an average greater than 9% due significant free cash flow.
Again, when you look at you just focus on '22, the dividend yield is about 12%.
Again, a reminder, the strip with these numbers is about $10 in backwardation.
This highly competitive yield is underpinned by the greater than $18 billion of cumulative cash returned to shareholders outlined on the previous slide and speaks to the power and underlying quality of Pioneer's assets.
While we have a few small items left on DoublePoint, the teams have worked extremely hard and have done a tremendous job and seamlessly integrating these operations in a very short period of time.
Turning to and looking at slide nine.
You can see on the slide here, there's no change to our full year oil production guidance range of $351,000 to $366,000 barrels of oil per day and total production of 605,000 to 631,000 BOEs per day.
Similarly, on capital, it's unchanged at $2.95 billion to $3.25 billion, but we are seeing some inflationary pressure, although most of it is being offset by our efficiency improvements by the great work power of drilling and completions and facilities teams.
Looking at cash flow.
You can see with the increase in commodity prices, our forecasted Operating cash flow has increased to $6.45 billion, and free cash flows increased to $3.2 billion that Scott talked about.
Both of those are up $500 million from what we forecasted in our May call related to Q1 earnings.
Turning to slide 10.
Our plan remains unchanged and is set to average between 22 and 24 drilling rigs for the full year.
We are currently running 24 rigs and eight frac fleets in the Midland Basin.
In terms of our Delaware plans, we are moving multiple rigs into the Delaware Basin this quarter, and the team is looking forward to bringing the same efficiency gains that we've achieved in the Midland Basin to the Delaware with the goal of further improving well returns, especially given the higher oil cut and lower royalty burden in our Delaware acreage.
Just for reference, the Delaware production was 70% oil during Q2.
As you can see here, with over one million acres in the Permian Basin, we have a significant inventory.
So we will continue to evaluate opportunities to monetize portions of our longer-dated inventory.
As we've done in the past, these monetization opportunities will include small noncore acreage packages as well as evaluating other DrillCo opportunities.
Turning to slide 11 and talk about synergies.
You can see here from the slide that we have realized $275 million synergy target related to G&A in interest and on both the Parsley and DoublePoint transactions.
On the operational synergies, we've made great progress with over 50% of the target synergies being identified and being incorporated into future plans.
For instance, we have leveraged our supplier relationships, we're seeing savings on pressure pumping, wirelines, cement, casing, among other items.
Joey will talk more about it.
We've successfully tested our simul frac and have incorporated a second simul frac fleet into our program, which benefits mainly Pioneer, partially in DoublePoint acreage, given our -- leveraging our significant water system that we have across the Midland Basin.
The teams are also continuing to optimize future development plans to take advantage of existing facilities and infrastructure, including tank batteries, water disposal, reuse facilities, just to name a few.
Obviously, this reduces the need for future new builds.
And lastly, just as examples which is significant, the team has identified over 1,000 locations that we can drill additional 15,000-foot laterals across our contiguous acreage position that are being incorporated into our future development plans, providing significant improvement in capital efficiency going forward.
Why don't I stop there, and I'll turn it to Neal.
On slide 12, you'll see Pioneer's high-quality asset base, which yields a peer-leading oil percent that drives our high-margin barrels, positioning Pioneer as the only E&P among our peers to realize a corporate breakeven below $30 a barrel WTI.
This peer-leading oil mix, combined with our unparalleled breakeven oil price in the high 20s, not only underpins our operational and financial strength, it enables Pioneer's low reinvestment rate and drive significant and durable free cash flow and return of capital to shareholders well into the future.
I'm going to be starting on slide 13, where our drilling and completions teams have continued their continuous improvement journey.
As you can see, since 2017, these two teams have seen more than 75% improvement in their completed feet per day and more than 65% improvement in their drill feet per day.
This journey is even more impressive when considering our increased activity levels, including the integration of Parsley and DoublePoint.
As Rich mentioned, we've also seen the continued success of our simul frac operations.
Consequently, we're in the process of starting up our second simul frac fleet.
Our capital projects and production operations teams are working diligently to upgrade partially in DoublePoint facilities to our operational and environmental standards.
And our teams are progressing our ESG initiatives by trialing new low-carbon technologies to power our operations.
As in the past, we're only noting the improvements in drilling and completions, but I want to emphasize that we continue to see tremendous performance in our production operations, construction and water management teams.
And as always, none of this will be possible without the great effort from our development planning team, our robust supply chain and other groups that support our operations.
We continue to remain focused on keeping our employees and contractor partners safe, delivering peer-leading performance and reducing our environmental footprint.
Congrats to the entire Pioneer team for our safe and efficient execution in Q2.
I'm now going to move to slide 14.
Here, you can see the results of Pioneer's long-standing commitment to meeting high environmental standards by our top-tier flaring intensity and best-in-class CO2 intensity compared to U.S. peers and majors.
This was only made possible through years of thoughtful planning and investments to minimize our emissions at our facilities, coupled with our comprehensive leak detection and repair program, which includes routine aerial surveys.
Despite our leadership position, Pioneer's goal of reducing greenhouse gas emissions intensity by 25% and methane emissions intensity by 40% through 2030, demonstrates our commitment to further increasing our environmental standards.
And now moving to slide 15 and continuing the storyline from the previous slide.
Pioneer also produces extremely low emission intensity oil on a global scale.
This, combined with our low breakeven results and exceptionally resilient production that we expect, will have a place in the global marketplace for a very long time.
On slide 16, Pioneer continues to hold all pillars of ESG of great importance.
I think one of the most important points with the recent Rystad report, the Permian Basin has declined over the last 18 months as we've been talking about it from about $1 billion a day to less than 200 million a day in regard to flaring.
So people are focused on reducing flaring to less than 1% for most oil companies.
We continue -- the biggest flares continue to be the private companies in the Permian, and we need to continue to ask you in regard to if you find your private equity, we got to put pressure on the private companies in the Permian Basin.
We continue to promote a diverse workforce, which reflects the community in which we live and work.
As you can see, when you look at our top 15 individuals that run the company, we're at 47%.
Lori is an officer of D&I with Coca-Cola.
We're very excited to have her experience and her leadership play a pivotal role in navigating the changing global energy landscape.
Our 2021 sustainability report is scheduled for release in the third quarter, which will include Pioneer's progress on the environmental targets outlined in the left portion of the slide.
And finally, on slide 17.
Pioneer is committed to driving all of these values for our shareholders.
Now we'll open it up for Q&A.
 Assistant:

Chosen response:
expects its 2021 drilling, completions and facilities capital budget to range between $2.95 billion to $3.25 billion.
during 2021, company plans to operate an average of 22 to 24 horizontal drilling rigs in permian basin.
in fy co expects its capital program to be fully funded from forecasted 2021 cash flow5 of approx $6.45 billion.
in 2021 company expects its capital program to be fully funded from forecasted 2021 cash flow of about $6.45 billion.


Prompt:
Human: Before we begin our call today, I want to remind you that in order to talk about our company, we're going to mention a few things that are not historical facts.
These non-GAAP measures are adjusted net loss, adjusted loss per share, EBITDA and adjusted EBITDA.
We're using these non-GAAP measures today because they allow us to compare performance consistently over various periods without regard to nonrecurring items.
In addition, RPC is required to use EBITDA to report compliance with financial confidence under our credit facility.
Please review these disclosures if you're interested in seeing how they are calculated.
During the third quarter of 2021, oilfield drilling and completion increased as exploration and production companies responded to higher commodity prices.
RPC was ready to meet increased demand with equipment and crews.
Our revenues increased and RPC generated quarterly net income for the first time in more than two years.
As the quarter progressed, commodity prices continued to increase and near-term industry forecasts predicted supply/demand dynamics favorable to our industry.
We began the fourth quarter of 2021 with a new state-of-the-art pressure pumping fleet and net pricing tractions in most of our service lines.
Offsets to these favorable dynamics include supply chain constraints and increasing cost pressures, which we will continue to manage as we move forward in this industry up cycle.
Our CFO, Ben Palmer, will discuss this and other financial results in more detail, after which I will provide some closing comments.
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.
Revenues increased due primarily to higher activity levels and improved pricing compared to 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.
Cost of revenues increased primarily due to expense -- increases in expenses consistent with higher activity levels, such as materials and supplies expense, maintenance and repairs costs and fuel costs.
Cost of revenues as a percentage of revenues decreased primarily due to the leverage of higher revenues over direct employment costs that increased to the lower rate than the increase in revenues.
During the quarter, RPC recorded a CARES Act tax credit that was largely offset by the resolution of a long-term contractual dispute defender.
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.
This was due to activity increases in all of our service lines as well as slight net pricing improvement in several of our larger service lines.
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.
During the third quarter, RPC operated seven horizontal pressure pumping fleets.
Also during the quarter, we made the strategic decision to add a Tier four dual-fuel fleet.
Heavily influencing this decision was an opportunity to partner with Caterpillar in the testing of new controls technology aimed at optimizing fuel burn, minimizing emissions and lowering maintenance costs.
In addition, we are working the fleet for a large E&P on a dedicated contract.
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.
It became clear this quarter that many E&Ps, including those among our customer base who are private operators, are beginning to respond with conviction to higher commodity prices and forecast of global energy shortages.
Our calendars are filling up.
And we are optimistic about the fourth quarter in spite of the traditional holiday-related slowdown at this time of the year.
We are also looking forward to a stronger 2022.
As we operate in this improving environment, we are closely watching emerging challenges in our business.
Chemicals, components and labor shortages, together with cost increases and third-party logistics, are all developing as operational issues.
In addition, we are also monitoring reports of shortages of tubular goods and other items used by our customers which could cause delays in the need for our services.
The continued volatile environment in which we operate makes forecasting difficult.
But I'm pleased that our financial strength has allowed us to remain competitive as we begin to realize the benefits of higher commodity prices and an improving operating environment.
At the end of the third quarter, RPC's cash balance was approximately $81 million, and we remain debt-free.
 Assistant:

Chosen response:
compname reports q3 earnings per share of $0.02.
q3 earnings per share $0.02.
q3 revenue rose 93.3 percent to $225.3 million.


Prompt:
Human: But first, I'll review the safe harbor disclosure.
As such, actual results may vary materially from expectations.
I have joining me on the call today, Stuart Rose, Executive Chairman of the Board; and Zafar Rizvi, Chief Executive Officer.
Sales for the quarter increased approximately 6.7%, primarily reflecting higher year-over-over ethanol pricing.
Sales were based upon 65.9 million gallons this year versus 72.6 million gallons in the prior year fourth quarter.
Sales for the full year were based upon 235.3 million gallons this year versus 285.8 million gallons in the prior year.
The reduced ethanol gallons were primarily at the NuGen plant due to the impact of the wet weather interrupting rail service in the spring and ultimately fewer corn acres planted near the facility and the resulting impact on affordable corn in that area.
Gross profit for the ethanol and by-products segment increased for the fourth quarter from $5.4 million to $8.1 million, primarily due to improved crush spreads in the early part of the fourth quarter, which fell off as the quarter progressed.
The refined coal segment had a gross loss of $1.5 million for this year's fourth quarter versus $3.2 million for the prior year with the decrease reflecting lower demand at the facility.
SG&A expense increased for the fourth quarter from $4.5 million to $5.6 million, largely due to higher ethanol freight charges recorded in SG&A due to certain contract terms.
The Company recorded income from its unconsolidated equity investment of $1 million for the fourth quarter of this year versus the loss of $646,000 in the prior year.
This improvement is consistent with ethanol industry conditions during those quarters.
We recognized tax benefit of $3.4 million in this year's fourth quarter versus a benefit of $4.6 million in the prior year's fourth quarter.
The refined coal segment contributed a benefit of $1.5 million this year versus $4.8 million in the prior year fourth quarter, reflecting the aforementioned lower demand at the facility.
This resulted in net income for the fourth quarter increasing from $1.4 million to $4.4 million and the diluted earnings per share increasing from $0.17 to $0.70.
During the current quarter, ethanol, the whole operation is running at a loss, mostly caused by ethanol.
Among the reasons that ethanol is running at a loss was a bad harvest in part of the country, as Doug explained.
Low oil prices, low ethanol prices, COVID-19 outbreak -- resulting in low crush spread.
In terms of refined coal, the plants are running -- currently running idle.
We believe that's due to low natural gas prices and lower-than-expected demand.
The price of coal now in our opinion is making it uneconomical to run the refined coal operation.
On the good side of that, we have no need for the tax credits at this time.
So, it's not something that would definitely need running.
In terms of our Company itself, we saved our cash, which currently looks like a very, very good move.
Consolidated cash is about $205 million.
Uses of this cash, which we're now -- we're certainly now actively looking at include possible buybacks, about 350,000 shares remain authorized.
Right now, our stock is selling at a price that possibly makes that attractive, depending where it is on any given day.
We're also looking at carbon capture possibilities in Illinois.
We're still always looking at new businesses.
This is the same company that 10 years ago sold TVs.
So, we're certainly capable if this is prolonged in the ethanol business of making a pivot.
And we're looking if an ethanol plant -- a very good word comes along at a very bargain price, we would consider it.
Zafar Rizvi, our Chief Executive Officer, will now discuss further the ethanol business and the overall business.
As I mentioned in our previous three calls, a challenging environment has continued throughout the last year.
The Company faced several issues due to weather-related problems, which delayed the planting of corn and resulted in an unexpected delay in the harvest.
Commodity prices in 2019 was subject to significant volatility.
We've struggled to obtain an adequate supply of corn at NuGen facility in South Dakota, where production has fallen off historic levels and resulted in the higher last corn basis.
Our production at this plant was interrupted, including no operation in October due to corn availability.
We entered fiscal 2020 facing continued challenges, including the recent decline in the crude and ethanol market, a decline in the price, and the emergence of the COVID-19 pandemic, all of which resulted in decrease in the fuel demand and the negative impact on the crush margins.
The federal government and various state governments are issuing advisory for social distance and working remotely from home, if possible.
We are taking every steps to keep our employees safe and are following Center for Disease Control and Prevention and state and federal guideline.
As I mentioned previously, our NuGen plant faced many challenges last fiscal year in response to COVID-19 and the challenging industry environment, we decided last week to keep the plant [Indecipherable] until the threat of COVID-19 is reduced and the crush margin increased.
We are in the process of evaluating further to take similar steps for One Earth Energy since the Governor of Illinois has issued stay at home orders and the crush margin has declined.
That's largely we are expecting a loss in the ethanol segment in the first and probably second quarter of 2020, if the threat of COVID-19 is not diminished and market conditions will not improve.
On top of these challenges, we are experiencing continued uncertainty because of the trade disputes and the small refinery exemption.
In 2019, ethanol export decreased to [Phonetic] 1.5 billion gallon compared to 1.7 billion gallon in 2018.
Total ethanol production in 2019 was 15.8 billion gallons compared to 16.1 billion gallons in 2018.
U.S. export of distiller grains in 2019 was 10.79 million metric tons, down 9.23% from 2018.
Let me discuss a little bit about what else we are doing as Stuart mentioned earlier.
We are working with the University of Illinois to explore a carbon sequestration project at One Earth Energy.
The plant produces approximately 500,000 ton of very clean carbon dioxide.
Geologically mapping characterization and modeling have been demonstrated that storage potential in the Mt. Simon storage complex in the density [Phonetic] of the One Earth Energy facility is expected to have excellent reservoir quality.
The Mt. Mt. Simon Sandstones are a proven storage reservoir according to University of Illinois analysis.
We have completed a feasibility study, conducting seismic testing, and have purchased extra land for the project.
However, we are in the very early stage of this project.
The University of Illinois has applied for the grant, and we are in the process of removing state and federal laws for bonding [Phonetic].
At this very beginning stage, we cannot predict yet whether we will be able to implement this carbon sequestration project.
In summary, in spite of very difficult and challenging environment, we were still able to produce a net profit for the year as well as the fourth quarter for the ethanol segment.
I will give back the floor to Stuart Rose for his additional comments.
In conclusion, we're going through difficult times.
It's probably as bad as I've ever seen in the ethanol business.
With corn prices and corn availability, oil going down, COVID-19, a lot of things hitting us at the same time, but we have an experienced management team.
We know how to pivot when we have to.
We have lots of cash.
We have what we feel is the best people to handle these times and we will do our best to handle these times.
We hope to come out it better than ever.
We should -- but we'll see in these uncertain times.
It's like I said, very difficult right now.
Now, I'll leave the floor open to questions.
 Assistant:

Chosen response:
compname reports fourth quarter diluted earnings per share of $0.70.
q4 earnings per share $0.70.
operating environment remains severely challenged at this time.


Prompt:
Human: But first, I'll review the Safe Harbor disclosure.
As such, actual results may vary materially from expectations.
I have joining me on the call today, Stuart Rose, Executive Chairman of the Board; and Zafar Rizvi, Chief Executive Officer.
Sales for the quarter increased approximately 4.2%, primarily reflecting higher year-over-year production in the ethanol segment and increased distillers grain pricing.
Sales were based upon 67.7 million gallons this year versus 65.9 million in the prior year fourth quarter.
Gross profit for the ethanol and by-products segment increased for the fourth quarter from $8.1 million to $8.3 million, primarily due to improved distillers and corn oil pricing.
The refined coal segment had a similar fourth quarter loss of $1.4 million for this year versus a $1.5 million for the prior year.
SG&A decreased for the fourth quarter from $5.6 million to $4.4 million, largely due to lower ethanol freight charges recorded in selling, general and administration due to certain contract terms.
The company recorded income from its unconsolidated equity investment of $332,000 for the fourth quarter of this year versus $1 million in the prior year.
We recognized a tax benefit of $1.8 million in this year's fourth quarter versus a benefit of $3.4 million in the prior year's fourth quarter.
The refined coal segment contributed a benefit of $1.7 million this year versus $1.5 million in the prior year fourth quarter for the tax benefit.
The above factors led to net income for the fourth quarter of fiscal 2020 of $3.5 million compared to $4.4 million in the prior year, while diluted earnings per share decreased from $0.70 to $0.59.
Going forward, ethanol now is currently profitable, and we're up against a period last -- COVID-related closure period last year.
In terms of corn and ethanol prices, they are both up as virtually all commodities are up, and crush spreads remained challenging.
DDG is up with the price of corn.
The new Biden administration appears to have appointees that are favorable to the ethanol industry.
RIN pricing is still -- RIN pricing, although up right now, we are still waiting to see how they will treat RIN pricing.
In terms of the COVID, the COVID news is with the opening up of different states, it should help drive RIN, which should improve demand for our product, especially versus last year.
In terms of refined coal, remains profitable on an after-tax basis.
We plan on ending that operations by year end this year.
In terms of going forward with our cash, we have about $180 million in consolidated cash and equivalents, no debt, our plants are continuing to explore investing in carbon and carbon capture, we've made progress there and have spent a fair amount of time on working on that project.
We also are looking -- continue to look for a high quality ethanol plants.
The ethanol plants we would hope to find if we -- should we find ones to buy would be in our opinion something that is the best -- has good technology, good locations, good people.
As I mentioned in the last three calls, 2020 started in a challenging environment due to the COVID-19 pandemic.
We temporarily shutdown our plants during the first and part of the second quarter and we struggled to find corn for our NuGen facility.
We saw a decrease in the fuel demand and that negatively impacted the ethanol industry.
During the third quarter, condition improved.
We received a steady flow of corn at both of our majority-owned as well as a minority-owned locations.
This resulted in improved crush margin and a very profitable third quarter.
These improved conditions continued through the beginning of the fourth quarter.
Later we began to see a decline in the crush margin in addition to the price of ethanol failed to keep up with increase in corn price.
Farmers lost interest in selling their corn because they were receiving a direct payment from the federal government under the CARES Act.
When China stepped up its corn price -- stepped up its corn purchases, that led to the higher corn prices.
Behind these factors, we experienced political uncertainty and trade disputes.
In addition, the EPA continue to consider and grant small refinery exemption from RFS compliance year.
We expect the crush margin in the near future to continue to be under pressure, but we also expect it to improve once the threat of COVID-19 declines with the progress in vaccination and people began to drive more again.
March 9th report of the USDA showed that carry-out stayed at 1.5 billion bushels with export at 2.6 billion bushels.
The estimated corn yield is 172 bushels per acre and ethanol plants are expected to consume approximately 5 billion bushels in 2021 crop year.
Export of the distillers grains in 2020 was approximately 10.96 million tons compared to 10.8 million in 2019.
We saw considerable improvements in export during the last quarter of the year.
January 2021, Mexico, South Korea and Indonesia were the top three importers in January 2021.
Ethanol export during 2020 totaled of 1.3 billion gallons compared to 1.46 billion gallons of 2019.
January 2021 export totaled 164.7 million gallons compared to 151.3 million gallons in January.
India, China and Canada were the top three importers.
So we saw that India suddenly is on the top of the list compared to generally either -- normally the Brazil or Canada.
So we see some improvements coming out from India also.
Let me give you some progress in the carbon sequestration project.
As I discussed in our previous calls, we are working with the University of Illinois to drill a carbon sequestration test well to determine suitability for an injection well at our One Earth Energy facility.
The University of Illinois is in the progress of evaluating a permit application determined 2D seismic survey to select a test well location and contracting a front end engineering and design, FEED study of the CO2 capture system.
The data will be analyzed to make sure the location is suitable for test characterization well.
The university expect to start drilling a test well.
Once the drilling permit is granted and the design is completed, we expect to start drilling the characterization well in early September.
It would take approximately six weeks to drill and another several weeks of testing.
It will require extensive modeling and computer stimulation to predict the behavior of the CO2 when it is injected.
These stimulation models will determine how much CO2 can be injected at the location and what rate, and it is eventual distribution in the sub-surface area.
This project is still at a preliminary stage and we cannot predict yet that we will be successful.
Our target is to achieve net zero emission.
In summary, we are pleased to announce a profitable quarter and year in spite of a very difficult environment for the ethanol industry and other businesses last year.
And I will give back the floor to Stuart Rose for his further comments.
In conclusion, the economy is starting to open up.
We have great plans, great people, great locations.
We have high hopes that when the economy does open up that our business will improve as demand improves.
Most importantly and the biggest thing that we have going forward is our people.
They've stuck with us through thick and thin.
And they are what we feel makes a difference and what separates us from the rest of the industry and who will continue to allow us to outperform the industry.
I'll now leave it open to questions.
 Assistant:

Chosen response:
compname reports q4 earnings per share $0.59.
q4 earnings per share $0.59.


Prompt:
Human: The Everest executives leading today's call are Juan Andrade, President and Chief Executive Officer; Craig Howie, EVP and Chief Financial Officer; and John Doucette, EVP and President and CEO of the Reinsurance division.
We are also joined today by other members of the Everest management team.
Management comments regarding estimates, projections and similar are subject to the risks, uncertainties and assumptions as noted in its filings.
Management may also refer to certain non-GAAP financial measures.
First and foremost, I hope you, your families, your friends and your neighbors are all staying healthy and safe.
On behalf of our company, I want to offer our heartfelt condolences to all of those, including many in the Everest Re family who have lost loved ones during this difficult time.
We took early, proactive and decisive actions to protect the health and safety of our employees, their families and our stakeholders.
As a result, Everest continues to successfully operate remotely.
We are doing our part in support of the global economy by serving all of our customers and stakeholders without interruption.
Our move to remote work was planful with a well-executed organizational resiliency plan and an underlying technology infrastructure that performs seamlessly and an information technology organization that has performed admirably.
Our employees have been flexible, resilient and productive.
We have received accolades regarding our responsiveness and our stability.
We also continue to support our local communities around the world in their pandemic relief efforts.
These are leadership moments for people and companies.
Our culture of collaboration, thoughtful assumption of risk, humility and relentless execution are at the bedrock of our performance.
I am incredibly proud of our people and our company.
Our diversified global platform, with its broad mix of products, distribution and geography, remains an important source of stable capacity to our broker partners and customers.
Our capital position remains a source of strength with high-quality invested assets, significant liquidity and low financial leverage.
Despite the pandemic and the economic downturn, Everest remains profitable, as reflected in our reported 98.6% combined ratio or 89.9% excluding catastrophe losses and the pandemic IBNR loss provision.
Additionally, Everest remains resilient, as reflected by both our 21% growth rate in gross written premium and by our capital position.
We have built a strong capital foundation over the years, holding $8.6 billion of shareholders' equity at March 31, 2020.
While this is a decrease from year-end 2019, this decrease primarily results from: one, the sharp decline in the fair value of the investment portfolio, which has now substantially recovered since the end of the quarter; two, share repurchases and dividends paid; and three, the pandemic loss IBNR provision.
Most importantly, our capital position continues to exceed what we need to run the business with excess capital relative to rating agency and regulatory requirements.
We have substantial liquidity from the cash we hold, and the cash flow from operations, which was over $0.5 billion for the quarter, were up 10% from 2019.
We have significant access to capital markets, including plenty of debt capacity as we carry very little debt compared to all of our peers at less than 7% of our capital when most of our peers typically carry upwards of 20% to 30%.
Lastly, our industry-leading expense ratio also gives us operating flexibility, which is particularly critical in times of uncertainty.
Turning to the first quarter of 2020.
Everest remains strong and is well positioned with broad capabilities and top talent.
And we remain focused on solving our clients' most critical risk transfer needs in a disciplined and profitable way.
We demonstrated excellent momentum across both of our Reinsurance and Insurance businesses with gross written premium growth of 16% and 33%, respectively.
We also continued to benefit from improved market conditions during the quarter, which I will discuss in a moment.
Excluding catastrophes and the pandemic IBNR loss estimate, our underlying combined ratios for the group at 89.9% and each of our divisions, Reinsurance at 87.7% and Insurance at 95.6%, are reflective of the strong underwriting performance across the group and the earnings generating power of the franchise.
Underwriting profitability remains at the core of everything we do.
Our Reinsurance division had a strong January one renewal season.
We continue to judiciously deploy capital, and we underwrote a high-performing book that is focused on strong economic returns while improving the diversification and balance of our overall portfolio.
We also saw stronger opportunities in several areas such as retro and facultative risk.
As the quarter progressed, we saw continued momentum across the portfolio.
John Doucette will provide additional details on market conditions and the underlying growth.
Our Insurance division's growth remained strong and consistent with recent quarters.
The drivers for this growth were: number one, strong and widespread rate momentum.
Excluding workers' compensation, the rate increase was plus 24% or plus 17% net of a handful of large deals booked in the quarter and over 12% including workers' compensation.
This is an improvement from the fourth quarter of 2019 where the rate increase was almost plus 12% excluding workers' compensation and plus 4% all in.
We also saw continued strength in the E&S space with strong submission flow and market conditions continuing to tighten in property and casualty in both primary and excess lines.
We also had strong renewal retention in both our retail and wholesale businesses.
And we had increased productivity resulting from additional underwriters hired in 2019 that are now fully onboarded and providing capacity to address the increased submission flow.
The insurance growth was also balanced and diversified across our many lines of business.
Strong rate and tightening terms drove the growth in the long-tail line.
Despite the impacts of the pandemic in the quarter, our underlying insurance portfolio continues to perform well, and we are seeing the benefits of our various investments in portfolio optimization efforts, all of which position us well for this environment.
Net investment income of $148 million was up 5% from the first quarter of 2019.
Our investment portfolio had been and is defensively positioned with over 75% in investment-grade fixed income bonds and less than 4% allocated to public equities.
Most of our risk is bond risk, and we also have the ability to hold bonds until they mature.
In addition, we have continued to further reposition our portfolio, moving up in fixed income credit quality and reducing equity exposure.
As per our April 23 announcement, we have taken $150 million IBNR loss provision in the first quarter related to the COVID-19 pandemic.
These losses relate to event cancellation, business interruption and other coverages such as accident and health and workers' compensation.
Our estimate was based on an analysis completed during the first quarter.
This analysis was a thorough cross-functional review of the in-force portfolio by line of business, industry and geography.
The review was completed by a team of professionals representing every area of the company.
Given the fluid and continuing nature of this pandemic, this is an ongoing event and so is our analysis.
While our analysis looked at all aspects of our global portfolio, our estimate does not take into account legal, regulatory or legislative intervention that could retroactively mandate or expand coverage provisions.
As stated in our release, our philosophy is to recognize and react to expected future losses on a timely basis.
We will be tracking pandemic losses separately from our attritional losses and as an ongoing event.
With regard to our specialty insurance business, we have limited exposure to event cancellation, accident and health, workers' compensation and business interruption.
Our property policies have unambiguous policy language that requires direct physical loss for business interruption coverage to be triggered.
Additionally, the majority of the property policies in force contain a virus exclusion.
Only a very small number of policies have endorsed sublimits typically less than $25,000 and with short-duration caps that would offer BI for a notable notifiable human disease.
These exposures have already been recognized as part of the overall IBNR loss estimate for the quarter.
The majority of the IBNR loss provision was for the Reinsurance business given the relative size of this portfolio compared to our Insurance businesses.
It is important to note that as a reinsurer, we have contractual terms and conditions, such as retentions, limits, event definitions, hours clauses and other coverage provisions that will apply to this ongoing event.
Thus, we do not simply follow the fortunes.
It will be very fact-specific.
We have also done a thorough review of our mortgage reinsurance contracts.
Based on our view of the economic situation that is aided by both external information and our own proprietary internal modeling, we currently believe that our loss picks and reserves remain adequate.
We will continue evaluating this business as the economic situation unfolds.
In summary, Everest showed forward momentum, resiliency and profitability in the first quarter of 2020.
We effectively transitioned to running our company remotely.
And as always, we'll remain a consistent and trusted provider of capacity to our customers.
Given the uncertainties in the current public health and economic environment, there could be an adverse impact on results for the property and casualty industry and Everest for the remaining part of the year.
The impact is clearly dependent on the shape and length of the recovery.
While the economic environment has changed, Everest remains a high-quality franchise with broad capabilities, a global platform and top talent.
We remain focused on solving our clients' most critical risk transfer needs in a disciplined and profitable way.
We have the right culture, the right platform and relevance with our clients and trading partners and the capital base to see us through this time.
Everest reported net income of $17 million for the first quarter of 2020.
This compares to net income of $355 million for the first quarter of 2019.
Net income included $172 million of net after-tax realized capital losses compared to $74 million of capital gains in the first quarter last year.
The 2020 capital losses were primarily attributable to fair value adjustments on the public equity portfolio.
Operating income for the quarter was $164 million driven by strong underwriting results across the group, stable net investment income and lower catastrophe losses, offset by a COVID-19 pandemic IBNR loss estimate of $150 million.
The overall underwriting gain for the group was $29 million for the quarter compared to an underwriting gain of $196 million in the same period last year.
In the first quarter of 2020, Everest saw $30 million of catastrophe losses related to fires and hailstorms in Australia and a tornado in Nashville, Tennessee.
This compares to $25 million of catastrophe losses reported during the first quarter of 2019.
Overall, our prior year catastrophe loss estimates continue to hold.
The combined ratio was 98.6% for the first quarter of 2020 compared to 88.7% for the first quarter of 2019.
Excluding the catastrophe events and the impact of the COVID pandemic, comparable combined ratios were 89.9% for the first quarter of 2020 and 87.4% for the first quarter of 2019.
Excluding the pandemic IBNR loss estimate, the attritional loss ratio was 61.5%, up from 60.2% for the full year 2019 primarily due to the continued change in business mix.
For the Reinsurance segment, the attritional loss ratio, excluding the pandemic loss estimate, was 59.8%, up from 58.2% for the full year of 2019.
This increase was related to the continued business mix shift toward more pro rata premium, which carry a higher loss pick but allow us to benefit directly from the firming primary market.
Pro rata premium is less volatile than excess premium, and we will see the benefit earn into our results as we lap the loss tax season over time.
For the Insurance segment, the attritional loss ratio, excluding the pandemic loss estimate, remained very steady at 66.1%, essentially flat compared to 66% for the full year 2019.
As you can see in the financial supplement, we also experienced more growth in areas that typically carry a higher loss pick and but a lower overall combined ratio.
Our U.S. insurance franchise, which makes up the majority of our global insurance business, continues to run an attritional combined ratio in the low 90s, excluding the pandemic loss estimate.
The group commission ratio of 22% was down slightly compared to prior year.
The group expense ratio remains low at 6.3% and was higher than last year due to an increase in nonrecurring incentive compensation, benefits and payroll taxes in the first quarter, which will normalize during the rest of the year.
Before moving to investments, I'd like to point out that we are now reporting two segments: Reinsurance and Insurance.
This is consistent with the way the business is managed and the way management views the company's results.
For investments, pre-tax investment income was $148 million for the quarter from our $20 billion investment portfolio.
Investment income was 5% above the first quarter of last year.
This result was primarily driven by the increase in investment-grade fixed income portfolio, which had a higher asset base this year, and higher limited partnership income quarter-over-quarter.
Since we report most partnership income on a quarter lag, the global equity market performance in the first quarter will be reflected in the limited partnership investment results in the second quarter.
Pretax yield on the overall portfolio was 2.9%, about flat compared to one year ago.
For our investment-grade portfolio, the new money rate was 2.7% for the quarter.
Other income included $21 million of foreign exchange gains in the quarter.
On income taxes, the $60 million tax benefit for the quarter included a $31 million tax benefit related to the CARES Act, which extended the carryback period for cat losses to five years.
Excluding this benefit, the effective tax rate on operating income was 12%, in line with our expected tax rate for the full year.
Positive cash flow continues with operating cash flow of $506 million compared to $460 million for the first quarter of 2019.
This increase reflects a lower level of paid catastrophe losses in 2020 compared to 2019 and an increase in cash flow from our ongoing growth in insurance and reinsurance premiums.
Shareholders' equity for the group was $8.6 billion at the end of the first quarter, down from $9.1 billion at year-end 2019.
The movement in shareholders' equity since year-end 2019 is primarily attributable to the sharp decline in the fair value of the investment portfolio and by capital return for $200 million of share buybacks and $63 million of dividends paid in the quarter.
The reduction in investment portfolio valuation came from the realized losses in the equity portfolio and the $248 million mark-to-market impact on the fixed income assets resulting from the widening of credit spreads.
These mark-to-market adjustments have substantially recovered since the end of the quarter.
During the first quarter, we made some tactical adjustments to reposition the portfolio by moving up in credit quality and further reducing our equity exposure.
As Juan said, our capital position remains a source of strength with high-quality invested assets, significant liquidity and low financial leverage in addition to our robust cash flow.
The strength of our balance sheet is critical to the success of our business.
And now John Doucette will provide a review of the reinsurance operations.
As Juan did at the start of the call, I would like to add my sympathies to our reinsurance trading partners and their families affected by the Coronavirus pandemic.
Like the rest of the group, the Reinsurance division, supported by our dedicated IT colleagues and our newly completed next-generation global underwriting platform was able to transition to 100% work from home without missing a beat.
We are reviewing submissions, quoting and binding facultative and treaty business and settling claims.
Now I will review the quarter.
During Q1, the Reinsurance division increased our gross written premium to a record of $1.8 billion, up 16% from last year.
Q1 growth was driven by January rate increases in loss-exposed areas and retro and writing more PURPLE products and casualty business due to improving conditions there.
Growth was widespread, spanning territories and lines, including the U.S., international, casualty and property and short- and long-tail facultative reinsurance.
Excluding COVID-19 losses, our underlying reinsurance loss ratio was up by two points largely due to more pro rata premium written over the last year.
Pro rata business directly benefits from an improvement in original rates while ceding commissions have generally been stable and, in some cases, improved.
Those improved original rates will take some time to be recognized in our loss picks.
Note that the volatility associated with $1 of pro rata premium is generally lower than $1 of excess premium, and combined ratio alone can obscure risk-adjusted returns.
We are pleased both with our progress at building a more diversified, profitable, sustainable gross portfolio and that we are seeing some tailwinds in the reinsurance market in casualty, property, retro, specialty and fac to help us achieve a stronger, more profitable portfolio.
Everest's facultative operations continue to see an increase in demand.
In the U.S. and international, we are continuing to see significant double-digit rate increases in short-tail and long-tail fac, with dramatic increase in submission count.
Given that facultative renews on multiple inception dates, it is a good forward indicator of reinsurance demand and pricing.
For our casualty business, original rates on certain lines have shown some increases, which will earn through on our pro rata premiums.
As always, we are deploying our shareholders' capital judiciously, seeking to build the strongest reinsurance portfolio possible while maximizing returns, while limiting our downside risk through increased diversification and balance.
Now to comment on recent and upcoming renewals.
April renewals showed continued rate momentum in loss-affected and capacity-constrained segments.
Japanese wind and retro rates showed strong increases, consistent with the need to maintain appropriate returns.
Looking near term, particularly the upcoming June Florida renewals, we expect rates will be affected by limited capacity, recent losses and the market's heightened sensitivity to risk due to climate change and social inflation.
Also, there is a strain on alternative capital, traditionally large players in Florida.
Therefore, we continue to see upward pricing momentum in Florida along with improved terms and conditions.
Now turning to mortgage.
With the ongoing economic disruption, primary mortgage insurers could see increased losses along with regulatory capital pressure.
However, housing fundamentals are stronger today than they were heading into the financial crisis with higher credit scores, tighter housing supply and lower-risk products.
Our reinsurance mortgage book is seasoned and pegged conservatively.
To give you some color on our mortgage book.
By limit, our book is roughly 80% GSEs and 20% mortgage insurance.
Virtually all business we write is on a QM basis.
The underwriting box we participate in is very controlled and tightly underwritten, meaning our portfolio has no exotic products and has high FICO scores particularly on the GSE business.
From the beginning of Everest entering the mortgage space, our pricing assumptions were and remain more conservative than the external vendor models that we use to validate our pricing assumptions.
Regarding the MI treaties we reinsure, we effectively play in an excess position, thus avoiding the working layer losses and resulting in a meaningful buffer in gross loss ratio deterioration before we suffer any economic loss to our reinsurance treaties.
Deterioration in this buffer range decreases the size of the profit commissions we would typically pay to the MIs but at no economic cost to us.
Regarding our GSE business.
Given our more conservative view of underwriting, pricing and capital modeling, we preferred higher layers over lower layers in these programs, and we have weighted our book to higher attachment points accordingly.
Much of our exposure has been seasoned for several years, which benefits from home price appreciation.
Going forward, credit standards at nearly all stages of mortgage origination are tightening and improving, therefore increasing the credit quality of borrowers in our book.
Additionally, early government intervention in the economic crisis to support borrowers and lenders, including the broad offering of forbearance, will mitigate potential losses and help keep people in their homes and avoid default.
We are continually reevaluating the dynamics of this economically sensitive line to prudently manage our mortgage exposures now and on a go-forward basis.
Now I will give some comments on the overall market ahead.
Despite the uncertainty the industry faces, we cautiously anticipate that the reinsurance markets will remain healthy for the highly rated traditional reinsurers who can deploy capacity in multiple lines of business around the world while also meeting clients' increasing counterparty credit requirements.
This view is based on current reinsurance industry dynamics and the supply demand curve.
Starting with the market supply.
More stable capital remains in place while some of the opportunistic capital is exiting.
Alternative capital investors are reevaluating the thesis that reinsurance is a non-correlated asset class.
Potential uncertainty from COVID-19 and the possibility of more trapped capital compounds frustrations of these investors from the last three years of cats and subsequent loss creep from several events.
This is in addition to higher relative return hurdle requirements given the increased price of risk across virtually all risk asset classes.
On the demand side, clients have increased reinsurance purchases for risk management and capital support particularly as some of them come under capital or earnings pressure given the volatile markets.
The flight to quality continues as reinsurance buyers and brokers are increasingly focused on the stability and quality of counterparties to protect program continuity and mitigate counterparty credit exposures in these volatile times.
The length of the economic downturn will ultimately be a key factor impacting reinsurance demand.
These market dynamics benefit Everest as we deliver stable capacity with strong security as a long-standing client-focused partner.
Regardless of where the market turns, we will focus our capacity on those clients that align with our philosophy of prudent underwriting and sound claims handling practices.
In summary, Everest is built to withstand volatility and uncertainty such as we are seeing now.
We continue to prove our resilience, our solution-driven partnerships with long-standing clients and our ability to execute through these unprecedented times.
Nadia, could you please open up for Q&A?
 Assistant:

Chosen response: co wrote nearly $2.6 billion in gross written premiums for quarter, an increase of 21% as compared to a year ago.


Prompt:
Human: John and David will provide high level commentary regarding the quarter.
We kicked off 2021 on a solid note.
Our ability to continue to deliver value this quarter is a testament to both the investments we've made, as well as our associates' unwavering commitment to our customers and communities.
Our credit metrics continue to improve and reflect the good work we've done with our clients, coupled with the expected benefits from government stimulus.
Based on this quarter's credit performance and the improving economic outlook, we reduced our allowance for credit losses by $142 million more than net charge-offs, while still maintaining one of the strongest allowance to loan ratios in the industry at 2.44%.
Although, we continue to deal with the effects of the pandemic, our ongoing conversations with customers reflect optimism about further economic recovery and growth.
Vaccine distribution is improving in our footprint and businesses for the most part have reopened.
The majority of our largest deposit states are experiencing unemployment rates significantly below those of the US, as a whole and our loan pipelines are improving as we are seeing more activity in the marketplace.
We are increasingly optimistic this momentum will continue.
Throughout this recovery and beyond, we will maintain our focus on deepening relationships with our customers, while providing personalized financial guidance combined with excellent technology solutions that continue to make banking easier.
Now, David will provide you with some details regarding the quarter.
Let's start with the balance sheet.
Average and ending adjusted loans declined 1% from the prior quarter.
New and renewed commercial loan production increased 5% compared to the prior quarter.
However, balances remain negatively impacted by excess liquidity in the market, resulting in historically low utilization levels.
As of quarter end commercial line utilization was 39% compared to our historical average of 45%.
Just a reminder, each 1% of line utilization equates to approximately $600 million of loan growth.
Commercial loan balances continue to be impacted by the company's ongoing portfolio management activities and PPP forgiveness timing.
Average consumer loans again reflected strong mortgage production offset by run-off portfolios.
Overall, we expect full year 2021 adjusted average loan balances to be down by low single digits compared to 2020.
Although, we expect adjusted ending loans to grow by low single digits.
With respect to deposits, balances continued to increase this quarter to new record levels led by growth in the consumer segment, reflecting recent government stimulus payments.
The increase is primarily due to higher account balances.
However, we are also experiencing new account growth.
We expect near term deposit balances will continue to increase, particularly as recent stimulus is fully disbursed and corporate customers maintain higher cash levels.
Let's shift to net interest income and margin, which remain a significant source of stability for Regions.
Net interest income decreased 4% on a reported basis or 1% excluding the impact from day count and PPP.
PPP related NII declined $14 million from the prior quarter, as the benefits from round two were offset by slower round one forgiveness.
Two fewer days also reduced NII by $12 million.
The decline in core NII stems mostly from lower loan balances and remixing out of higher yielding loan categories.
Net interest margin declined during the quarter to 3.02%.
Cash averaged over $16 billion during the quarter.
And when combined with PPP reduced first quarter margin by 38 basis points.
Excluding excess cash and PPP, our normalized net interest margin remained stable at 3.40% evidencing our proactive balance sheet management despite the near zero short term rate environment.
Similar to prior quarters, the impact from historically low long term interest rates was offset by our cash management strategies, lower deposit costs and higher average notional values of active loan hedges.
Cash management, mostly in the form of a December long term debt call contributed $6 million and 1 basis point of margin.
Interest bearing deposit costs fell 2 basis points in the quarter to 11 basis points contributing $4 million and 1 basis point of margin.
Loan hedges added $102 million to NII and 31 basis points to the margin.
Higher average hedge notional values drove a $3 million increase compared to the fourth quarter.
At current rate levels, we expect a little over $100 million of hedge related interest income each quarter until the hedges begin to mature in 2023.
Within the quarter, we repositioned a total of $4.3 billion of cash flow swaps and floors targeting less protection in 2023 and 2024.
While there may be additional adjustments in the future, we believe the resulting profile allows us to support our goal of consistent sustainable growth.
Specifically, we are positioned to benefit from the steepening yield curve and increases in short term interest rates in the future, while protecting NII stability to the extent that Fed is on hold longer than the market currently expects.
A potential for loan growth only enhances our participation in a recovering economy.
Looking ahead to the second quarter, we expect NII excluding cash and PPP to be relatively stable.
While recent curve steepening has helped asset reinvestment levels, long term rates will remain a modest near term headwind.
Deposit cost reductions, one additional day and hedging benefits will support NII in the quarter, while loan balances are expected to remain relatively stable.
Over the second half of the year and beyond, a strengthening economy, a relatively neutral impact from rates and the potential for balance sheet growth are expected to ultimately drive growth and NII.
Now, let's take a look at fee revenue and expense.
Adjusted non-interest income decreased 2% from the prior quarter, but reflects a 32% increase compared to the first quarter of 2020.
Capital markets delivered another strong quarter, as customers continue to respond to interest rate changes and potential regulatory and tax headwinds.
Fees generated from the placement of permanent financing for real estate customers and securities underwriting both achieved record levels.
And M&A advisory services also delivered solid results.
While we expect capital markets revenue to remain solid over the remainder of the year, some activity was pulled forward.
Looking ahead, we expect capital markets to generate quarterly revenue in the $55 million to $65 million range on average.
Excluding the impact of CVA and DVA.
Mortgage delivered another strong quarter, as we continue to focus on growing market share and improving our customer experience.
Mortgage income increased 20% over the prior quarter, driven primarily by agency gain on sale and favorable MSR valuation.
Production for the quarter was up 89% over the prior year, setting the stage for another strong year of mortgage income.
Service charges were negatively impacted by both seasonal declines and increased deposit balances.
While improving, we believe, changes in customer behavior as well as customer benefits from enhancements to our overdraft practices and transaction posting are likely to keep service charges below pre-pandemic levels.
Although, we expect the impact of these changes will be partially offset by continued account growth, we estimate 2021 service charges will grow compared to 2020, but remain approximately 10% to 15% below 2019 levels.
Card and ATM fees have recovered, up 10% compared to the prior year, driven primarily by increased debit card spend.
Given the timing of interest rate changes in 2020 combined with exceptionally strong fee income performance, we expect 2021 adjusted total revenue to be down modestly compared to the prior year, but this will be dependent on the timing and amount of PPP loan forgiveness and loan growth.
Let's move on to non-interest expense.
Adjusted non-interest expenses decreased 1% in the quarter, driven by lower incentive compensation, primarily related to capital markets and mortgage, which was partially offset by a seasonal increase in payroll taxes.
Of note, paid salaries were 4% lower compared to the fourth quarter, as we remain focused on our continuous improvement process.
Associate headcount decreased 2% quarter-over-quarter and 4% year-over-year.
And excluding the impact of our Ascentium Capital acquisition that closed April 1st, 2020, headcount was down 6%.
We will continue to prudently manage expenses, while investing in technology, products and people to grow our business.
In 2021, we expect adjusted non-interest expenses to remain stable compared to 2020 with quarterly adjusted non-interest expenses in the $880 million to $890 million range.
And while we face uncertainty regarding the pace of economic recovery, we remain committed to generating positive operating leverage over time.
From an asset quality perspective, overall credit continues to perform better than expected.
Annualized net charge-offs were 40 basis points, a three basis point improvement over the prior quarter, reflecting broad-based improvement across most portfolios.
Non-performing loans, total delinquencies, business services criticized loans all declined modestly.
Our allowance for credit losses declined 25 basis points to 2.44% of total loans and 280% of total non-accrual loans.
Excluding PPP loans, our allowance for credit losses was 2.57%.
The decline in the allowance reflects charge-offs previously provided for, stabilization in our economic outlook and improved credit performance, including the impact of the $1.9 trillion stimulus bill approved in March.
The allowance reduction resulted in a net $142 million benefit to the provision.
Our allowance remains one of the highest in our peer group, as measured against period end loans or stress losses, as modeled by the Federal Reserve.
Future levels of the allowance will depend on the timing of charge-offs and greater certainty with respect to the path of the economic recovery.
As we look forward, we are cautiously optimistic regarding our credit performance for the year, while net charge-offs can be volatile quarter-to-quarter.
Based on current expectations, we believe the peak is behind us, and we expect full year 2021 net charge-offs to range from 40 basis points to 50 basis points.
With respect to capital, our common equity Tier 1 ratio increased approximately 50 basis points to an estimated 10.3% this quarter.
As you are aware, the Federal Reserve extended their restrictions on capital distributions through the second quarter of 2021.
The Federal Reserve also indicated these restrictions are expected to be lifted beginning in the third quarter subject to capital remaining above required levels in the ongoing 2021 CCAR cycle for firms participating.
We have opted in to this year CCAR and assuming capital levels remain above required levels in the Fed stress test, we should be back to managing capital distributions against the SCB requirements beginning in the third quarter.
However, our plan is to begin share repurchases in the second quarter subject to the Fed's earnings based restrictions.
Based on our internal stress testing framework and amount of capital we need to run our business, we are updating our operating range for common equity Tier 1 to 9.25% to 9.75% with a goal of managing to the midpoint over time.
So wrapping up on the next slide, our 2021 expectations, which we have already addressed.
In summary, we feel really good about our first quarter results and anticipate carrying the momentum into the remainder of 2021.
Pre-tax pre-provision income remained strong.
Expenses are well controlled.
Credit quality is outperforming expectations.
Capital and liquidity are solid.
And we are optimistic about the prospect for the economic recovery to continue in our markets.
 Assistant:

Chosen response:
qtrly total revenue of approximately $1.6 billion decreased 5 percent on a reported basis and 3 percent on an adjusted basis.
qtrly average loans and leases decreased approximately 2 percent compared to prior quarter.