Prompt:
Human: The non-GAAP results exclude a number of items, including our Venezuela operations, the impact of Argentina's highly inflationary accounting, reorganization and restructuring costs, items related to acquisitions and dispositions, and costs related to an internal loss and certain accounting compliance matters.
Also providing our results on a constant currency basis which eliminates changes in foreign currency rates in the prior year.
We believe the non-GAAP results make it easier for investors to assess operating performance between periods.
Accordingly, our comments today will focus primarily on non-GAAP results.
Today we reported third quarter results above the guidance we provided in September with double-digit increases in revenue, profits, and earnings per share.
Importantly, despite slower-than-expected revenue recovery from the pandemic lows, third quarter revenue versus pre-COVID levels did grow sequentially over the second quarter.
And despite other operational issues that impacted the quarter including labor shortages and wage inflation in the US that is not yet been offset by price increases that have been enacted, operating profit margin improved by 50 basis points to 10.8%.
With continued revenue and margin improvement, this position is as well for 2022 and the future.
We are affirming our four-year 2021 guidance, which includes revenue in the range between $4.1 billion and $4.2 billion, with a bias to the higher end of the range due to the strong third quarter results.
Operating profit of approximately $465 million, which reflects a margin increase of close to 100 basis points versus prior year.
And adjusted EBITDA of approximately $660 million reflecting an EBITDA margin of approximately 16%.
We're also affirming our preliminary 2022 adjusted EBIT target range between $785 and $825 million.
After an expected margin improvement of approximately 100 basis points this year, we expect a similar operating profit margin increase next year with margins continuing to be driven by our Strategy 1.0 lean cost initiatives and further margin leverage driven by sustained fixed cost reductions and revenue growth.
We expect continued revenue improvement in 2022, driven by continued revenue growth from the pandemic lows, organic revenue growth, partially driven by higher than normal price increases that will offset wage inflation and further revenue growth driven by initial contributions from our digital solutions that will take-- that will be stronger next year.
Based on these revenue drivers and an expected higher 2021 year-end revenue run rate, we believe revenue in 2022 will exceed 100% of the adjusted pre-COVID revenue level of approximately $4.55 billion, which includes historical revenue acquired with G4S and PAI.
As a reference point, at 100% of the adjusted pre-COVID revenue level, we would expect 2022 adjusted EBITDA to be about $755 million.
And we'd expect continued margin and growth and margin leverage as revenue grows above this pre-COVID levels, which would support our initial 2022 targets as we've provided.
We're also pleased to announce today our plan to enter into a $150 million accelerated share repurchase agreement that would represent the repurchase of approximately 5% of the company's outstanding shares at the current share price.
Based on our current share price and projected earnings for 2021 '22, we believe the best investment for our shareholders is to buy Brink's shares.
We expect the $150 million ASR will be-- we are announcing today will be substantially completed by early November.
Our board has approved another $250 million authorization to be used from time to time over the next 2 years.
And finally, we're pleased to confirm that we'll host an Investor Day on December 15.
We'll hope you'll attend.
Turning to the next slide.
Our third quarter results came in, as I said, above September guidance with revenue, operating profit, and EBITDA, each exceeding our outlook and analyst consensus.
On a reported basis, revenue was up 11% with organic growth of 6%.
Well, not as strong as I said as originally expected, organic revenue grew sequentially from the second quarter and revenue as compared with the pre-COVID levels also improved.
Operating profit grew 16%, reflecting a margin increase of 50 basis points to 10.8%, and is demonstrating earnings leverage with our revenue increase.
Adjusted EBITDA was up 15% with a margin of 60 basis points to 15.8%, earnings per share grew 28% from $0.89 per share to $1.14.
We achieved these results despite the ongoing impact of the global pandemic in several key markets and wage and labor issues in the US.
As Mark will cover in a minute, we expect these conditions in the US to improve as we move into 2022.
On a global basis, we see encouraging trends indicating that revenue is recovering to pre-pandemic levels and above, as evidenced by the significant revenue recovery so far this year compared to pre-pandemic levels, though the rate of recovery may continue to be choppy and uneasy from country to country and region to region.
Please join me in welcoming Mark to Brink's.
I'm excited to join the Brinks leadership team and look forward to getting to know all of you over the next several months.
I'll start by adding some high level comments to our third quarter results at the segment level.
In North America, third quarter reported revenue grew 14%, while operating profit grew 4%, which includes the impact of the PAI acquisition we did last April.
These results were less than our expectations as we enter Q3, primarily driven by labor shortages across the US market.
The impact of this tight labor market reduced segment revenue by about 1% and reduced segment margins by approximately 300 basis points.
This came in the form of both lost revenue and higher labor costs.
In August, several of our branches didn't have enough drivers, and as many of you know, CIT revenue is largely based on a revenue per stop model.
When we're short on drivers, we can't service all our routes, so missing stops means missing revenue.
And then on the cost side, like many in the transportation and logistics industry, we've had to aggressively increase frontline hourly wages, not only to attract new associates, but also to reduce the attrition rates of the current Brink's workforce.
The good news is, we've recently seen improvements on both fronts, of both hiring and retention.
The expiration of the federal unemployment benefits seems to be driving a meaningful increase in job applications.
And while we're still slightly understaffed, but we are seeing sequential improvement week over week in the volume of new applications.
In fact, our staffing level is currently the highest it's been in five months, and our US HR teams are working diligently to resolve the ongoing labor shortages.
It's also important to note that rising fuel cost generally have not had a material impact on our profitability as most of our customer agreements have fuel surcharge clauses as a cost recovery mechanism.
To offset our rising costs that we've seen here in the US, we've announced and implemented several price increases in our business in Q3 that are well above the historical annual averages.
Additionally, we've announced this month that our upcoming 2022 annual general price increase will also be well above the historical average increases to account for the ongoing impact of the extraordinary 2021 wage inflation.
We anticipate meaningful lift in this price increase that will take us back in balance, relative to our price versus cost inflation ratio as we start 2022 and into the first quarter.
I want to make the point that we are confident in our ability to pass on inflationary cost pressures to the marketplace in the form of these type of price adjustments.
Now to Latin America, where revenue continued its double-digit growth trend with reported revenue up 13% and operating profit of 26%, reflecting a margin increase of 240 basis points to 22.3%.
Our lean transformation in Latin America, particularly in Mexico, continues to produce good results in both organic growth and strong earnings leverage despite the lingering impact of COVID across the region in Q3.
In Europe, while below our expectations, we saw modest organic revenue growth with strong profit growth.
Operating profit improved more than 300 basis points to 11.8%, a result of strong cost management and the benefits of prior-year restructuring actions coming through for the rest of the world segment, revenue grew 8% on a reported basis, accounting for the contribution of the G4S acquisition.
On organic basis, revenue and profits declined, reflecting the impact of government mandated COVID restrictions across the region, and tough 2020 comps in our precious metal logistics business.
Similar to Europe, we are beginning to see signs of improvement in September as economies begin to reopen.
Now let's move to slide 6.
Slide 6 presents the 2021 quarterly revenue by segment, showing the revenue recovery percentage versus pre-COVID levels We present comparisons, both on a US dollar and a local currency basis, both of which are important to us.
The local currency recovery percentage is helpful in understanding the underlying resiliency of cash usage in each region, and the US dollar recovery percentage is factor in the impact of foreign currency translation, which of course is how we report our results.
Beginning on the left side, we'll start with North America.
You can see modest sequential improvement from 93% to 97% from the first to second quarter.
We then saw a slight dip down to 96% in the third quarter, and we expect the 4th quarter recovery to be north of 100%.
Now moving to Latin America, you can see that on a local currency basis, recovery has been significantly stronger than North America with the third quarter at 108% of adjusted 2019 levels.
A large part of this recovery is attributed to the inflationary environment in Argentina.
But even excluding Argentina, local currency recovery was 19% in Q3 and is expected to be over 100% in Q4.
As we move to Europe, notice to the US dollar reported recovery percentages are greater than the local currency percentages.
As we've noted in previous disclosures, the impact of the Delta variant has had significant impact in this region, but forex has helped offset some of this impact.
We expect the fourth quarter be about 94% recovered in local currency.
And for the rest of the world, we saw a similar dynamic.
In local currency, we're seeing levels similar to North America in the mid 90% range.
Forex translation has been helpful in the region as well and we expect our fourth quarter to come in around 96% on a US dollar basis.
In total, we expect our consolidated results in the fourth quarter to be about 95% on a reported basis and around 100% on a local currency basis.
This suggests our business is back to pre-COVID levels as we exit the year.
This certainly supports the underlying resiliency of cash usage in the global economy and provides an ability for us to continue to grow in the future.
You really hit the ground running and are a great addition to the team.
On slide 7, please remember that we disclose acquisitions separately for the first 12 months of ownership.
After 12 months, there are mostly integrated and then included in organic results.
Included in acquisitions for this quarter are primarily PAI and about 20% of the former G4S businesses.
2021 third quarter revenue was up over 10% in constant currency, with 6% organic growth versus last year and 5% from acquisitions.
Reported revenue was $1,076,000,000, up $105 million or 11% versus the third quarter last year.
Third quarter reported operating profit was $116 million, up 16% versus last year.
Organic growth was 2%, acquisitions added 7%, and forex another 7%.
Our operating profit margin of 10.8% was up 50 bips versus 2020.
This is evidence that our 2020 cost realignment initiatives are holding and that wider and deeper is gaining traction.
Now to Slide 8.
Third quarter interest expense was $27 million, up $1 million versus the same period last year, as higher debt associated with completed acquisitions was partly offset by lower average interest rates.
Tax expense in the quarter was $31 million, $8 million higher than last year, driven by higher income.
Our full-year non-GAAP effective tax rate is estimated at 33% versus 32% last year.
$116 million of third quarter 2021 operating profit less interest expense, taxes, and one million dollars in minority interest in other, generated $57 million of income from continuing operations.
This is a 100%, $1.14 of earnings per share up $0.25 or 28% versus $0.89 in the third quarter last year.
The gain on marketable securities positively impacted earnings per share by about $0.03 this quarter versus minus $0.02 in the quarter last year.
Third quarter 2021 adjusted EBITDA which excludes $2 million in gains on marketable securities was $170 million, up $22 million or plus 15% versus prior year.
Turning to free cash flow on Slide 9.
Our 2021 free cash flow target is $185 million, which reflects our adjusted EBITDA guidance of $660 million.
We expect to use about $60 million of cash for working capital growth and restructuring, and another $35 million in 2020 deferred payroll and other taxes payable.
Cash taxes should be approximately $95 million, up $18 million, versus last year, due primarily to the timing of refunds.
Cash interest is expected to be about $105 million, an increase of $27 million due primarily to the incremental debt associated with the G4S and PAI acquisitions.
Our net cash capex target is around $180 million, an increase of $67 million over last year driven by acquisitions and a return to more normalized investment.
Our free cash flow target, excluding the payment of 2020 deferred taxes would be $220 million, generating an EBITDA to free cash flow conversion ratio of about 33%, up from the 28% achieved in the same basis last year.
While not included in cash flow from operating activities, in July we opportunistically sold all of our shares and MoneyGram for $33 million.
We purchased those shares in November 2019 for $9 million.
Our preliminary 2022 target is to increase our free cash flow, 50 plus percent, to a range of $350 million to $400 million, which equates to $7 to $8 per share.
Advancing to Slide 10.
This slide illustrates our actual net debt and financial leverage at year-end 2020 at September 30, 2021, our year-end 2021 estimate, and the 2022 year-end preliminary target.
The current year-end estimates include a $213 million acquisition of PAI, our adjusted EBITDA guidance, and our free cash flow target.
The shaded blue box on top of the 2021 year-end bar represents the impact of the planned $150 million accelerated share repurchase announced today.
Net debt at the end of 2020 was $1.9 billion.
That was up over $500 million versus year-end 2019 due primarily to the debt incurred to complete the G4S cash acquisition.
On December 31, 2020, our total leverage ratio was 3.3 turns At the end of 2021, given our free cash flow guidance and the completion of the G4S and PAI acquisitions, we're estimating a net debt of $2.175 billion or $2.325 billion, including the planned ASR.
This is expected to generate total leverage of 3.3 turns and 3.5 turns respectively.
Our 2022 EBITDA target range of $785 million to $825 million, combined with the estimated year-end 2022 net debt of $2,035,000,000 to $2,095,000,000 would reduce the total leverage ratio to approximately 2.5 to 2.7 turns.
Moving to Slide 11.
The last few quarters, I spoke to you about Brink's sustainability program.
It's a comprehensive program under my leadership and directed by the Brinks Board.
I discuss the significant progress we're making.
We are a signatory to the United Nations Global Compact, we pledged to support CEO Action for Diversity and Inclusion, we've hired dedicated leaders for diversity, equity, inclusion, and supplier diversity.
We've expanded the Brink's Women's Leadership Forum and created employee resource groups.
We've been reducing our environmental impact by modernizing our fleet, taking thousands of diesel trucks off the road, implementing dual fuel and alternate fuel vehicles, and continually optimizing routes to minimize miles driven.
Our Strategy 2.0 Solutions, which learn more about at our December 15 Investor Day, target not only increased customer service, but also a major reduction in weekly stops that could take many more trucks off the roads.
And while we're very proud of our progress in these areas, what I want to focus on today is Brink's social impact.
One of Brink's most compelling roles is that of facilitating economic inclusion.
In United States, 28% of in-person transactions are in cash, and approximately 18% of the population is unbanked or underbanked, doesn't have access to credit, and must rely on cash.
We estimate similar demographics for other developed countries, but the reliance on cash is much higher in developing markets.
Mexico, Brazil, and the Philippines are just three examples, where over half of the in-person transactions are in cash.
Importantly, cash use is often highest among many underrepresented groups, people of color, the elderly, immigrants, veterans, and the poor.
As the world's largest cash management company, Brink's has a critical role in facilitating the global cash ecosystem to serve everyone, but especially the most vulnerable.
For this reason alone, I believe that BCO belongs in every impact investing portfolio.
Turning now to Page 12.
As we reviewed during past earnings calls and plan to discuss in much more detail on the upcoming Investor Day, we have three layers that support our current multi-year strategy plan.
The first two represent an extension of our proven first strategic plan.
The bottom layer outlines our 1.0 strategic initiatives that drive core organic growth and cost reductions.
Our target is to achieve annual mid single-digit organic revenue growth, and this has been proven during our first strategic plan period of time, and improve operating profit margins by approximately 200 basis points over the next two years, over the two-year period that is of 2021 and '22.
We expect to drive cost reductions wider and deeper than we did over the last strategic plan, expanding into more countries, and expanding the number of lean initiatives.
We also expect to leverage the significant fixed cost reductions we've made over the last year and a half into higher margins, maintaining fixed cost levels as revenue increases.
The middle layer, Strategy 1.5, represents our acquisition strategy.
Including G4S and PAI which are acquisitions completed early in our current strategic plan, we've invested a total of $2.2 billion in over 17 acquisitions since 2017.
Since we added acquisitions as a part of our overall strategy, we have proven that we can acquire and integrate such businesses with strong returns and strategic benefits.
As demonstrated by our recent PAI acquisition, future acquisitions may focus more on supporting the Strategy 2.0 and our digital initiatives.
We'll also be considering smaller tuck-in core acquisitions that offer going returns.
What's new in our current strategy strategic plan is the top layer of our strategy, which introduces digital cash management solutions.
We've created an integral platform of services, technologies, and devices, leveraging our core CIT and money processing capabilities.
These new digital cash management solutions will be as easy to use as debit and credit card payments.
We believe our existing operations form a strong foundation that by themselves will drive mid-single digit revenue growth and double-digit profit growth well into the future.
This strong base of growth is expected to be supplemented by additional revenue growth and margin improvement as our digital solutions gain traction beginning in 2022 and well into the future.
As we said before, we'll provide more detail in Investor Day coming up.
I'd like to close with a slide that summarizes our recent performance and our outlook going forward.
For 2021, again, we're targeting revenue growth of 12%, operating profit growth of 22%, reflecting a margin increase of almost 100 basis points over last year.
Adjusted EBITDA growth of 17%, reflecting an EBITDA margin of 16%, and EBIT-- earnings per share growth of 21%.
We expect substantial improvement in 2022 and beyond as we've discussed with strong increases in revenue, operating profit margins, EBITDA, and EPS, as our existing operations continue to grow and we layer on our new strategies.
The right hand side of this slide, Slide 13, provides additional perspective of our 2022 outlook.
Our 2021 revenue as compared to adjusted pre-COVID levels as Mark pointed out, has improved from 89% in the first quarter of this year to 93% in the third quarter that we just reported.
This trend supports our expectation of continued revenue recovery and strong year-end-- and a strong year end jumping-off point, expected to be least 95% which is a great starting point for next year.
So we need just an approximately additional 5% revenue recovery from the fourth quarter run rate throughout full year '22 to reach 100% of our pre-COVID revenue levels.
We expect our 2022 revenue recovery will also be supported by additional organic growth, including higher than normal price increases in the US that will offset wage inflation that we've seen this year.
These higher than historical increases will also help improve our margins.
And we expect further growth in 2022 will be driven by initial contributions by our digital solutions.
All these indicators support our belief that 2022 revenue will exceed adjusted pre-COVID 2019 revenue at level of corresponding to our preliminary EBITDA range of $785 million to $825 million.
Brink's is a stronger company today than it's ever been, and is clearly stronger as we transition to the other side of the pandemic.
We have substantial growth opportunities and are well positioned to capitalize on a large under-penetrated global cash payments market.
We have a proven global management team, a strong balance sheet, ample liquidity, an expanded global footprint, and a realigned cost structure, and a compelling strategic plan to expand our presence in the cash ecosystem with digital solutions.
We look forward to disclosing more information on our future strategy when we host our Investor Day, hopefully for all of you, on December 15.
 Assistant:

Chosen response:
qtrly non-gaap earnings per share $1.14.
co intends to enter into an accelerated share repurchase ("asr") agreement to acquire $150 million of company's common stock.
company expects asr will be substantially completed by early november.
full-year guidance remains unchanged.


Prompt:
Human: Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved.
Well, this is no ordinary time, and first and foremost, all of us at Brandywine sincerely hope that you and yours are safe, healthy, and sheltering in places happily and as productively as possible.
The pandemic has disrupted everything and presented a new landscape for everyone and every business.
While the duration of the crisis remains unclear, we have assessed the crisis's impact on every element of our business, employee, tenant, vendor safety and security, a return to save building operations, construction schedule delays, forward leasing pipeline and renewal activity and of course, all the related financial implications.
Additional details on these and other topics are outlined in our COVID Insert, found on Pages 1 to 13 of our supplemental package.
Looking at the first quarter, we opened the year strong.
Our first quarter results were among the best we've had in recent years.
We had excellent leasing activity.
Rental rate mark-to-market was almost 16% on a GAAP basis and 8% on a cash basis.
Same-store numbers were tracking slightly ahead of our original plan.
Capital costs were at the low end of our targeted range.
Our retention rate was 76% and we posted FFO of $0.35, which was in line with consensus.
Our leasing pipeline was building nicely, including some excellent forward leasing activity on several of our development projects.
That strong start is of course in the rear view mirror and all somewhat irrelevant given the circumstances, and our entire focus is on the path forward.
And as we turn our attention to the impact of the virus, it's important to reflect on where we are and how to extrapolate the current situation to the near and intermediate-term future.
So several observations from our team before we outline our '20 strategy.
First, we have a 25-year track record of building strong employee culture and establishing lasting relationships with our tenants, vendors and communities.
Never has the time for having built those bridges been more important than today.
So, we've erred on the side of over communicating with all of our stakeholders.
Second, the paraphrase and number of behavioral scientists and economists, how people behave in a pandemic is not really a great guide to how they will act or live their lives in normal times.
As one person put it, we're living in the middle of a grand forced experiment and we really don't know how that experiment is going to play out.
So while we've stayed in close touch with our tenants, vendors, political and community leaders, the path forward and the pace we walk down that path is somewhat uncertain.
Please note that in developing our 2020 COVID revised business plan, we've pragmatically assessed forward risk, and incorporated all those assumptions into our plan.
Given the current circumstances, this plan is as accurate as we can make it.
Third, every crisis embodies elements of both danger and opportunity.
Our clear priority has been to assess every element of risk and institute plans to effectively mitigate or anticipate its effect.
We're also, however, focused forward on the opportunity set to anticipate situations where we can enhance our business plan execution, whether that be through extending lease terms, improving the pricing of our current supply chains, we're working with institutional partners to seek opportunities where market position, talent base and capital can create growth opportunities.
So in looking at the risk factors in our COVID-19 business plan, our first priority is the safety and security of all of our employees, tenants and buildings.
We are very happy to report that no Brandywine employee has contracted the virus, and consistent with applicable state and CDC guidelines, we've maintained a doors open lights on approach to all of our building operations, and maintained close communication with our tenants, vendors, and local health and municipal officials.
Secondly, we focused on the stability of our economic platform with particular attention to each of the following items.
Given that these are no ordinary times and the stay at home orders in effect, we did receive requests from tenants for rent deferrals.
Full details of those efforts are found on Page 9 of our SIP.
Bottom line, we've about 1.6% of our rents coming from retail tenants.
Normal monthly billings run about $500,000.
We received $150,000 in April.
29 tenants or 45% of leases have been or in the process of documenting rent deferrals.
About 2.1% of our rents come from co-working and conferencing tenants.
Normal monthly billings are $675,000.
During April we received $580,000.
For April, we received 95% of overall rents, 96% collection rate from our office tenants, and 100% collection rate from our Top 30 tenants.
The vast majority of rent relief requests are from our retail and co-working tenants.
At this point, there have been no rent abatements granted.
Rent deferral situations are paid back to us either in 2020 or '21 or via lease extensions.
Just a point as well.
Our leases were clear and that our tenants have a legal obligation to pay us rents.
While we certainly recognize every company wants to preserve cash, the legal obligation to pay us rent is clear.
And as we have done over our history, we'll certainly work with those companies that truly need bridge assistance.
From an insurance standpoint, it's also clear that we can't rely on our standard property policy to reimburse us for rent not paid by tenants in default of their contractual obligations.
We did, however, have the foresight to procure a $5 million of coverage sublimit for interruption by communicable diseases under our property policy, which we believe will be operative where we have force majeure majeure, such as in the case where you have hard head work stoppages due to government mandates.
Due to the uncertainty of the recoverability of these announced, we've not included any insurance proceeds in our revised business plan.
We also were impacted by some construction work stoppages.
The vast majority of our construction operations remained shut down, with the exception of Austin, which was shut down for a period of time, and some of our operations in MetDC.
In our 2020 plan, we're assuming that construction gets back to work in the next 30 days.
In fact, in Pennsylvania, our governor last night announced plans to restart the opening of our economy on May 8, and has accelerated the restart of construction, obviously compliant with safe distancing and CDC guidelines on May 1.
But the impact of this temporary work stoppage in our '20 plan is $2.3 million of GAAP NOI, 218,000 [Phonetic] square feet of lower occupancy, which reduces our year-end occupancy by 1.4%.
We also spend a significant amount of time looking at our leasing pipeline, which stands right now 1.3 million square feet.
Our leasing team and executive directors have been in extensive and repeated touch with every prospect and tenant rep of our 1.3 million square foot pipeline.
To the best we can determine as of today, we believe that about 52% of that pipeline or 670,000 square feet are deals that are progressing, but clearly with the shutdown, the execution timing is uncertain, but we would anticipate within the next 90 to 120 days.
We have about 45% of the deals in our pipeline on hold due to the virus.
Of that, based upon the information we have, we think that 10% of those will likely progress to execution, about 70%, it's just simply too early to tell as a lot of our prospects are focused on their own businesses versus their office space requirements and we believe about 15% is mostly likely dead requirements because of the virus and we expect to lose the balance of about 7% to another competitor.
We also spend a great deal of time looking our capital spend.
And as Tom will walk through in more detail, we've done a thorough review of our expected spend for the balance of the year, and have reduced that spend by $50 million or about 20%.
More detail on that can be found on Page 11 of our SIP.
We did make some adjustments to spec revenue as you might expect.
And primarily due to slower projected leasing and the impact of construction work stoppages, we're reducing our spec revenue target by $5 million to $26 million.
Our redevelopment project at 1676 International Drive in Northern Virginia experienced both of these conditions totaling almost 60% of this slide or $2.9 million.
The timing of our major tenant in that project has slid until the first part of '21, and the additional lease up that we had projected for the balance of '20, we have also shifted till next year.
Overall, leasing delays totaled about $2.7 million of GAAP revenue, and the previously mentioned work stoppage of $2.3 million accounts for the balance.
From a dividend coverage and liquidity standpoint, the company is in excellent shape.
We're projecting to have between $400 million and $480 million available on our line of credit by the end of the year, that number depends on whether we refinance or pay off an $80 million mortgage securing one of our Philadelphia CBD properties.
We only have one $10 million mortgage maturing in 2021, no unsecured bond maturities until '23.
We generate $85 million of free cash flow after debt service and dividend payments, and that dividend is extremely well covered with a 54% FFO and a 70% CAD payout ratios.
And looking at our guidance, we set our new range at $1.37 to $1.45 per share.
To do a very quick reconciliation, our previous midpoint was a $1.46 per share.
We did increase and Tom will talk about during his conversation, our project reserves, which reduced that by $0.02.
We did a building sale that cost us $0.01.
Our office leasing slides are close to $0.02 a share, the construction slides will cost us $0.01.
We anticipate losing a $0.01 through our joint ventures and we anticipate losing another $0.01 through lost parking revenue, and the hotel component of our AKA project at the FMC tower.
The share buyback, which we also announced, added $0.03 back, so our new midpoint is $1.41.
So with those components addressed, we'd like to take a look at the development opportunity set quickly.
First of all, on the development front, all four of our production assets, that is Garza, Four Points, 650, and 155 King of Prussia Road are all fully approved, all work is paid for.
The pricing has been finalized and they're ready-to-go subject to leasing.
As we have noted previously, each of these projects can be completed within four quarters to six quarters and cost between $40 million to $70 million.
Pre COVID-19, we had a strong pipeline of deals that could have kicked off one or more of these projects.
As we look at the crisis now, clearly starting any development is an elective decision, and will be evaluated on a case-by-case basis.
And as such, you'll note in our revised business plan, where we have reduced our two projected 2020 starts down to one, which we achieved with the start of our 3000 Market Street project.
In looking at our existing development projects, at 405 Colorado, as we identified in our supplemental, we did have a disappointment post quarter close.
Our lead 70,000 square foot tenant terminated their lease pursuant to a one-time Right-to-Terminate, if we did not meet an interim milestone delivery date.
Based on the original construction schedule, we had a significant cushion built-in to meet that milestone.
The general contractor, while still being able to complete the project on time, missed that milestone date.
We will naturally have a claim against that contractor, but right now our focus is on getting the project built and leased.
So that project now stands at 18% leased with 160,000 square feet to lease, and what we know will be a very exciting addition to Austin skyline.
We had great pipeline of deals before the crisis, and we expect that pipeline to reemerge and I've been in touch with a number of those prospects.
Due to the short construction shutdown we did have in Austin, we did slide the completion date back to Q1 '21, and due to this tenant event moved the stabilization date back to Q4 '21.
On the Bulletin Building, due solely to the mandated construction work stoppage, we are moving the completion date back one quarter to Q3 '20.
Given that that building is fully leased, we did move the stabilization date up to the Q4 of '20, so that will be fully stabilized.
This is a renovation project within Schuylkill Yards.
This 64,000 square foot building is being fully converted into a life science facility.
And we're very fortunate to have recently signed a lease with a life science tenant, where they will take the entire building on a 12-year lease commencing in the third quarter of '21, and deliver a development yield of 8.5%.
So, we're really excited.
This is truly a great exclamation point to our emerging life science push in University City.
Just quick updates on Broadmoor and Schuylkill Yards.
On Broadmoor, we're advancing Block A, which is a combination of 360,000 square foot office building, and 340 apartments through final design and pricing.
At Schuylkill Yards, we continue design development process for a dedicated life science building, and anticipate that with the schedule we have in place, market conditions permitting that could start in the first-half of year.
On our Schuylkill Yards West project, which is our office residential tower, as you know from previous calls, that's fully approved, priced and ready-to-go, subject to finalizing our debt and equity structure.
Certainly, the virus had a big impact on the timing of this project start.
We continue to work with our preferred QOZ equity partner, but the crisis has certainly slowed the pace of procuring financing.
We do remain optimistic that we'll get that across the finish line, when the situation returns to some level of normalcy.
On the investment front, we sold one property during the quarter for $18 million.
We also repurchased, net after dividends savings, $55 million of our own shares.
Those shares were purchased at a 10.5% cap rate and 8% dividend yield, and an imputed value of $203 per square foot.
As we assessed regardless of trading price of our stock, this was a good investment, delivering both immediate and better returns on our targeted developments, and was paid for via the asset sale and the capital spending reduction of $50 million.
To provide a frame of reference, the average cap rates in our markets on asset sales since the great financial crisis has been 6.4% and an average price per square foot of $350.
Both of those metrics more than supporting this investment, as well as when you compare that to current replacement costs between $400 and $600, it further amplifies the validity of making that investment in our own shares.
There are a tremendous number of private capital sources actively looking for high-quality investments, particularly with well-capitalized partners.
We continue to have an active dialogue with several institutional investors and private equity firms.
We are exploring several asset level joint ventures that would improve our return on invested capital, enhance our liquidity and provide growth capital.
While these discussions are active, constructive and ongoing, there's no certainty as to their outcome, but we continue to pursue and look forward to continued improvement in the debt markets.
The last opportunity I'd like to spend a moment on is the opportunity set embedded in the future of office market demand drivers post the virus.
Whether you believe there'll be more or less demand, more square feet per employee, more work from home, the immutable constant will be that high quality office space will be a recipient of any demand drivers.
Tenants clearly want safe, secure, healthy environments.
We do believe that owners of best-of-class product like Brandywine, will be beneficiaries of these future demand drivers.
And I'd ask you to note the building access, security, HVAC, elevator items that we have identified in our COVID supplemental package insert.
And we're also keeping all these potential changes in consumer preferences in mind as we finalize our development planning.
Tom will now provide an overview of our financial results.
I wanted to start off with a review of the net income.
We came in at $7.9 million or $0.04 per diluted share.
FFO totaled $61.4 million or $0.35 per diluted share.
Some general observations of the first quarter.
Operating results were generally in line with our fourth quarter guidance.
Operating expenses from lower G&A expense was a $1 million as compared to the forecast.
That's due to some timing of some compensation and professional fee recognition.
Interest expense lower due to the lower rates that we had forecasted and slightly higher capitalization of interest.
First quarter fixed charge and interest coverage ratios were 3.7% and 4%, respectively.
Both metrics improved, as compared to the first quarter of 2019.
Consistent with prior years, our first quarter annualized net debt-to-EBITDA did increase as G&A increased to 6.7 times.
It was primarily due to higher sequential G&A, cash used for our stock repurchase, and this is partially offset by nice proceeds from the sale of our non-core asset not included in our 2020 business plan.
Looking at 2020 guidance, as Jerry outlined earlier, we're reducing the midpoint of our guidance by $0.05 per share.
The combined $5 million reduction in spec revenue is $0.03 per share.
In light of the increased economic concerns from our tenants, we increased our forecasted reserves by $0.02 per share.
We did that on a general basis, so not included in our revised same-store for now.
The non-core asset sale in the first quarter also including the JV in the fourth quarter, which we didn't adjust guidance for, is about a $0.01 a share.
We anticipate similar leasing slides at MAP, our JV, where we're 50% owner, and some slides as well at 4040, which did open -- get its CO in February of this year.
In addition to that, we believe our parking and FMC operations will be negatively affected in the near-term, and we're putting a tiny share for that reduction, and then the reduction to partially offset that is the buyback which is $0.03 accretive.
Looking forward to the second quarter of 2020, we have the following general assumptions.
Portfolio level operating expenses will total about $80 million.
This will be sequentially $3.3 million below the first quarter, primarily due to the $1.8 million increase in some operating expenses, its timing of R&M, $600,000 due to the loss GAAP income for the non-core asset sale that was there in the first quarter, not there in the second quarter, and $1 million due to March move out of SHI, Barton Skyway, and the lower hotel revenue that we expect to happen in AKA.
FFO contribution from unconsolidated joint ventures will total $2 million for the first [Phonetic] quarter, which is down $700,000, primarily do the MAP and bringing in 4040 online which will incur some initial start-up losses.
For the full year the FFO contribution is estimated to be $9.5 million.
G&A, our second quarter G&A expense will be $8.5 million, very similar to first quarter.
Full year G&A expense will total about $32 million.
Interest expense will be $21 million for the second quarter with 95.3% of our balance sheet debt being fixed rate.
Capitalized interest will approximate $1 million and full year interest expense is approximately $82 million.
Capitalized interest will continue to approximate $3.2 million for the year as we continue building 405 Colorado.
We extended our mortgage at Two Logan Square for an additional maturity date from May 1 to August 1.
That mortgage payoff is about $80 million at a 3.98% rate.
This loan is very well covered based on the current NOI that's in place which has grown overtime, and we're considering an extension or a refinance of that loan.
Termination, other income, we anticipate termination fee and other income to be $2.5 million for the second quarter and $11.5 million for the year.
Net management leasing and development fees, quarterly NOI will be $2 million, that will approximately $8 million for the quarter.
Land sales and tax provision will net to zero.
Our buyback activity as Jerry mentioned, we executed on a stock buyback in March of 2020, at excellent economic terms and then implied 8% cash dividend yield.
Since the shares were purchased late in the quarter, the weighted average share count did not have any impact on our first quarter results.
In addition, the weighted average share count for the year will be reduced to about $174 million, and for the second quarter will be roughly $172 million as our weighted average share count.
We have no anticipated ATM or additional share buyback activity in our plan.
For investments, we have no other incremental sales activity in our plan.
On the acquisition side, we do have the Radnor land purchase, which did occur this quarter.
And we still have the only -- the building acquisition at 250 King of Prussia Road for roughly $20 million.
And that will be bought later in the year and that will go into redevelopment, so no earnings increase or NOI in 2020.
As outlined, we took a hard look at our capital spend and have reduced 2020 capital by $50 million.
While we reduced our earnings, we have saved on the capital for 1676.
The reduced development capital is based on only one development start and 3000 market being our only development start, and that will have just lower the amount of prospective capital we had on the other two development starts.
Based on above, our CAD range will remain at 71% to 78%, as the lower capital may be offset by deferred rent that will be repaid in 2020.
Uses are outlined as on Page 12.
We have $91 million of development capital, that's being spent.
We have common dividends of $97 million.
Revenue maintain of $36 million.
And then we have a $40 million of revenue create.
And then $6 million of mortgage amortization.
Loan pay off if we do it is $80 million and the acquisition of a King of Prussia Road.
Primary sources will be cash flow after interest of $182 million.
Line use of $150 million, which would bring us up to the $200 million we've projected, and cash on hand of a $33 million, and some land sales that we still expect to have happen later in the year.
Based on this capital plan, we would have $200 million outstanding on our line, or a $120 million if we refinance the mortgage.
We projected our net debt-to-EBITDA will range between 6.3 times and 6.5 times.
So it's a little higher than where it's been, where our range had previously been, 6.1 times to 6.3 times.
The main reason is the leasing slides that have been talked about, a lot of those affect EBITDA in the fourth quarter.
When you annualize that EBITDA, it results in a higher net debt-to-EBITDA.
The lower capital spend offsets the share buybacks, so that's not affecting it.
In addition, our debt to GAV will approximately be 43%.
As Jerry mentioned, we have a well-covered dividend, both from FFO and AFFO metric of 54% and 70%, respectively.
In addition, we anticipate our fixed charge ratio will continue to approximate 3.7 times and our interest coverage to approximate 4.1 times.
We're sorry, we ran a few minutes over our normal time in our prepared comments, but that was important to frame out the thought process and the new business plan.
And as we always do, we'd ask that in the interest of time, you limit yourself to one question and a follow-up.
 Assistant:

Chosen response:
sees fy 2020 ffo per share $1.37 to $1.45 .
q1 ffo per share $0.35.


Prompt:
Human: Our first quarter net income totaled $6.8 million or $0.04 per diluted share and FFO totaled 60.2 million or $0.35 per diluted share and in line with consensus estimates.
Some general observations for the first quarter.
While the results were in line, we did have a number of moving pieces in several variances to up to our fourth quarter guidance.
Portfolio operating income totaled about 68.5 million and was below our fourth quarter estimate.
The main reasons for that was lower parking revenue as work guidelines restricted people coming back to work and recommended working from home.
Residential was below our expectations.
Our operations, primarily FMC, remains soft, primarily from the results of both UPenn and Drexel being primarily virtual.
Also snow, we had some snow removal costs that were above-forecast.
While we do get very good recovery, we do experience higher -- we did experience higher net operating costs.
Termination and other income totaled 2.1 million or 1 million -- 1.9 million below our fourth quarter guidance.
The results were never -- were negatively impacted by one transaction that we anticipated to be classified in other income was actually recorded as a reduction to G&A expense.
Land gain and tax provision totaled about $2 million or $1.5 million above our fourth quarter guidance.
We recorded a land gain associated with our contribution of our interest to the Schuylkill Yards West joint venture and that was not forecasted.
We had a forecasted land gain of $0.5 million that didn't occur and it was delayed and will now we anticipate occurring in the second quarter.
G&A expense totaled 6.6 or 1.4 million below our $8 million fourth-quarter guidance.
Decrease was primarily due to the reduction in our other income guidance, which I just mentioned, and that was partially offset by higher professional fees at year-end.
FFO contribution from our unconsolidated joint ventures totaled $6.3 million, slightly below our fourth quarter guidance.
And our cash and GAAP same-store yields, as Jerry mentioned, came in below our targeted range, partially due to a tenant move-out in the suburbs, but also due to the reduced parking.
That tenant has been backfilled and will take occupancy later this year.
Our first quarter fixed charge and interest coverage ratios were 4.1 and 3.8 times respectively.
Both metrics remain consistent with the fourth quarter.
Our first quarter annualized net debt-EBITDA increased to 6.5 and is above our current 6.1to 6.3 range, and the increase is due to lower NOI, sequential NOI from the fourth quarter.
We do expect this metric to improve with increasing NOI during the second half of the year.
As far as other reporting items, Jerry did mention collections has been excellent at roughly 99%.
Less than 100% of deferrals was in our results for the first quarter.
Portfolio changes 2340 Dulles Corner, as previously discussed, with Northrop move out, we have placed this property into redevelopment.
And we will include it on our redevelopment page in the second quarter supplement as we complete our final plans and underwriting.
905 Broadmoor, with the expiration of the IBM lease, we have taken this building out of service and it will be demolished at a future date as part of our overall Broadmoor Master Plan.
As a result of that, we did have Broadmoor taken out of our same-store and leasing statistics as of 1-1 of this year.
We have some general assumptions.
Portfolio operating income will be about $68 million.
It will be sequentially flat from the first quarter while primarily due to lower occupancy -- operating expenses including snow, which will be offset by the Broadmoor building being taken out of service.
FFO contribution from our unconsolidated joint ventures will total $5.5 million for the second quarter.
1.3 sequential decrease primarily due to some leasing at Commerce Square and our MAP joint venture.
Our second quarter G&A expense will total 6.0 -- will increase from $6.6 million to $8.2 million.
The sequential increase is primarily due to the one-time first quarter decrease.
Interest expense will approximate $16 million and capitalized interest will approximate $1.7 million.
Termination fee and other income will total about $1 million for the second quarter.
Net management and leasing and development fees will be about $3 million.
The $7 million -- the $700,000 decrease from the first quarter is primarily due to the timing and volume of the leasing commission.
Income interest and investment income will total $1.7 million consistent with the first quarter.
Land sale and tax provision will be about $1.1 million generating proceeds of about $12 million.
The '21 business plan also assumes no new property acquisition or sales activity, no anticipated ATM or share buyback activity and no finance or refinance activity.
Our capital plan remains fairly straightforward.
Our CAD remains unchanged at 75% to 81% range and we have -- we have 100 -- and then we have a common dividends of about 98 million, revenue maintain capital of 30 million, revenue create 35 million.
Based on the capital plan outlined above, our line of credit balance will be approximately $132 million, leaving a 168 million of line availability.
The increase in our projected line of credit is partially due to the build-out and the remaining -- from last quarter, our reduced -- our increased line of credit is primarily due to the announced incubator of Cira Center.
We also project that net debt-EBITDA will remain at a range of 6.3 to 6.5, main variable between timing is the development activity.
In addition, our debt to GAV will be in the 42% to 43% range and we anticipate our fixed charge ratios will remain at 3.7 and our interest coverage around 4.
So the key -- the key takeaways -- our portfolio and the operational platform is really in solid shape and our team has done a really a wonderful job of getting excellent visibility into what our tenants are thinking, how they're reacting to the return to work timeline, and we're doing everything we can to aid them in that process, including, as we've mentioned on previous calls, doing a number of pro-bono space planning exercises to make sure that they have the option of kind of evaluating how they want to reconfigure their space.
Our leasing pipeline does continue to increase as tenants start to reemerge from the work from home mentality.
Safety and health, issued both in design and execution, are really becoming tenants top priorities.
We're hearing that from more and more prospects.
And we really do believe that new development in our trophy level inventory will benefit from this trend.
A good -- a good data point, as the pipeline in our development projects increased by 23% during the quarter, evidencing that real focus of flight to quality.
And I think strategically, we look at our, we have some very robust forth growth drivers that remain very much on target.
We have two fully approved mixed use master plan sites that can double our existing inventory, diversify our revenue stream and drive significant earnings growth.
Our planned 3 million square feet of life science at development can create a real catalyst to accelerate the overall pace of the development of Schuylkill Yards.
We have a very -- a very attractive CAD growth over the last five years and have created a very well covered and attractive dividend that's poised to grow as we increase earnings.
Private equity is abundant and the debt markets are incredibly competitive evidenced by the 65% loan to cost of Schuylkill Yards West.
And strong operating platforms like Brandywine are gaining significant traction for project level investment as evidenced by the really strong activity we had in our Broadmoor marketing campaign.
Our partnership with Schuylkill Yards West reinforces that more and more smart investors are beginning to focus on the emerging life science market here in Philadelphia.
And again, as usual we'll end where we started, which is we hope you all are doing well and you and your families are safe.
So with that, Sara, we're glad to open up the floor to questions.
We do ask that in the interest of time you limit yourself to one question and a follow-up.
 Assistant:

Chosen response:
compname announces q1 earnings per share $0.04.
q1 earnings per share $0.04.
qtrly ffo $0.35 per diluted share.


Prompt:
Human: These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them.
We refer you to B&G Foods' most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our company's future operating results and financial condition.
Bruce, will then discuss our financial results for the second quarter as well as expectations for 2021.
We are pleased with the company's performance in the second quarter and our prospects for the remainder of the year.
As we expected, the second quarter was the most challenging to lap from a comparative perspective, given that Q2 2020 occurred at the height of pantry loading and stocking during the COVID-19 pandemic.
However, performance remained elevated relative to 2019.
As many of you know, this is my first earnings call at B&G Foods.
I've now been in the role as CEO for about six weeks.
So for the folks on the line that I haven't met yet, it is a pleasure to meet you today over the phone.
I'm certainly looking forward to meeting many of you in person over the coming months as we get back into the cadence of in-person investor conferences, industry events and trade shows.
While I am mostly in listen mode for now, I will be happy to share some of my observations so far, and then come back over the coming quarters with a more detailed discussion around strategy, the portfolio as well as our opportunities and challenges at B&G Foods.
Obviously, one of the biggest drivers of industry performance over the past 1.5 years has been the COVID-19 pandemic.
In many cases, this is a matter of portfolio DNA, what are the brands, what are the categories, coupled with management's effectiveness in keeping employees safe, mitigating business risk, maintaining supply and maximizing opportunity.
Here at B&G Foods, we have done a pretty good job.
At the height of the pandemic in Q2 last year, we generated some of the largest growth numbers in the packaged food industry.
Today, COVID continues to be a concern in everyday life across the country and around the world.
But with the passage of time and the increasing proportion of the population that has been vaccinated, we expect gradual, if uneven, recovery in normal economic activity.
We do have opportunities coming out of the pandemic though.
When I look at the consumer trends that accelerated during the pandemic, e-commerce, comfort brands, baking, cooking, enhancers, flavorings and seasonings.
There are lots of opportunities for the B&G portfolios at the center of these trends.
We clearly aren't going to match 2020's net sales on our base business, but we are a larger business than we were in 2019, driven by continued growth and interest in cooking, baking and eating at home.
B&G's base business is up 7% on a two year stack from 2019.
Within the portfolio, our spices & seasonings baking and meals brands are up 20% versus Q2 2019.
And specifically on spices & seasonings which is about 20% of our total company portfolio and aggregates to be the number two spices and seasonings business in the United States, net sales are up more than 20% from Q2 2019 and remains well positioned coming out of the pandemic as more consumers continue to cook more often at home.
Also, the spices and seasonings portfolio is about 15% to 20% foodservice, so we are also benefiting as restaurants and eating establishments reopen, and more Americans are dining out again.
Our baking portfolio is also seeing positive trends in the post-pandemic world.
Recent studies show that even in spring 2021, approximately 65% of consumers were baking at home at least once per week, lifting the prospects of our growing list of baking brands that includes B&G Foods stalwarts such as Brer Rabbit and Grandma's Molasses as well as more recent additions such as Clabber Girl and Crisco.
We will spend more time talking about Crisco, but so far after eight months of ownership, we are very encouraged by the category trends and the top line performance of this business.
Another significant impact coming out of the pandemic is inflation and at unprecedented levels.
We are seeing inflation on key cost inputs across the portfolio, particularly in many tradable commodities, packaging material and freight.
The impact on our base portfolio is approximately 3% to 4%, but much higher on the Crisco business where soybean oil costs have doubled from last year.
At B&G Foods, we identified the risks of inflation early and acted to raise prices to recover higher input costs.
We will see more impact from both inflationary costs and pricing moving into the P&L through Q3 and Q4, with some lag effect on the timing of pricing implementation with customers.
Finally, I wanted to give you my perspective on B&G Foods overall and some thoughts on how we move forward.
This company has grown net sales and adjusted EBITDA at a greater than 10% compound annual growth rate over the last 17 years since its IPO in 2004.
The company was built upon a successful track record of acquisition-related growth.
We have successfully acquired and integrated more than 50 brands into our company since it was established in 1996.
For sure, some of the brands are a little old and stodgy, but many of these generate significant cash.
Many other brands and businesses that we have acquired, including spices, baking and meals, still have incredible opportunities in front of them.
Our goals are to continue to increase sales, profitability and cash flows through organic growth and disciplined acquisitions of complementary branded businesses.
Going forward, what you should expect from me is stronger focus within the portfolio on where we will grow, invest, acquire and create value.
Much more to come on that in future meetings and calls.
As Casey mentioned, we had a strong financial performance during our second quarter despite some very challenging comparables.
A year ago at this time, we were still, for the most part, sheltering at home, had little hope of an effective vaccine in the near future and saw the majority of the away-from-home eating industry shutdown, other than a budding recovery of takeout dining that began midsummer last year.
April, May and June of 2020 were the peak months of COVID-19, and Americans were still eating the majority of their meals at home, creating unprecedented demand for shelf-stable and frozen packaged food products, the types of products that we sell.
In fact, when we reported our second quarter results last year at this time, we were discussing net sales growth that was up nearly 40% and adjusted EBITDA growth that was up nearly 45% from the prior year.
Margins were also up significantly.
This year, as we lap those pandemic-enhanced results, I think it is also important to view the second quarter in the context of its comparisons to Q2 2019.
While sales were lower than March, April and May months of last year, net sales finished nicely ahead of pre-pandemic levels for the quarter, and we continue to track to the mid-single-digit increases over 2019 levels that we had been talking to for some time.
We are seeing many of the consumer behaviors that we witnessed last year persist, driving a sustained increase in the numbers of Americans preparing their meals at home and eating at home on a daily basis.
As Casey said earlier, we are seeing consumers cooking, baking and eating at home more frequently than they had prepandemic.
Another factor worth mentioning before we get deeper into our results is inflation.
At the beginning of this year, when we were delivering our Q4 results and outlook for the year, we raised our concerns about inflation as the broader economy restarted, and we began to more fully adapt to the impact of COVID-19.
I hate to use the word unprecedented too loosely, but we are certainly seeing inflation with little recent precedent.
While our conversations about inflation may have seemed early at the time, it is now hard to read, watch or listen to the news without hearing about inflation.
Inflation is here, and it appears that it will likely be here for some time.
In some cases, that means costs are up marginally.
And in other cases, particularly for tradable commodities, cost may be up as much as double digits from last year's pandemic-depressed levels.
At B&G Foods, we acted quickly to take price across large parts of our portfolio to help offset inflation and preserve our margin structure.
We have now executed list price increases in approximately 80% of the brands in our portfolio.
While we were covered with many forward purchases in many cases throughout portions of the year, this mitigates the damage, but the cost increases still hurt.
And while we are taking price, it largely comes with a lag effect setting up a fairly common phenomenon where the margins may be compressed a little bit more than we would like to see them in the short term, but are expected to remain fairly stable in the long term.
We expect these inflationary pressures to persist and that conversations about inflation and price increases will continue well into 2022.
And now for the 2021 Q2 highlights.
We reported net sales of $464.4 million; adjusted EBITDA before COVID-19 expenses of $85 million; adjusted EBITDA of $83.8 million; and adjusted diluted earnings per share of $0.41.
Adjusted EBITDA before COVID-19 expenses as a percentage of net sales was 18.3%.
Adjusted EBITDA as a percentage of net sales was 18%.
Net sales of $464.4 million were down $48.1 million or 9.4% from the peak of COVID Q2 2020, but up $93.2 million or 25.1% from pre-COVID Q2 2019.
Crisco, which we acquired in December 2020, generated $58.4 million of net sales in Q2 2021.
Base business net sales, which primarily exclude Crisco and approximately 1.5 months of Clabber Girl net sales, were up $26.4 million or 7.1% compared to 2019.
As a reminder, we acquired Clabber Girl in May 2019.
We continue to believe that we will see a material lift say, mid-single digits in net sales, over the levels that we experienced in 2019.
Comparisons to 2020 are obviously driven by a decline in volumes, but we are also seeing a benefit from price, which includes list price increases, trade spend optimization and a little bit of mix.
For the recent quarter, price/mix was a benefit of approximately $6.2 million, bringing us to approximately $12.8 million of benefit for the first two quarters combined.
We generated adjusted EBITDA before COVID-19 expenses of $85 million in the second quarter of 2021, a decrease of $21.9 million or 20.5%.
During the second quarter of 2021, we incurred approximately $1.2 million in incremental COVID-19 costs at our manufacturing facilities, which primarily included temporary enhanced compensation for our manufacturing employees, compensation we continue to pay manufacturing employees while in quarantine and expenses related to other precautionary health and safety measures.
We expect to see continued reduction in these costs, which averaged about $1.5 million per month during the height of the pandemic and have averaged a little less than $0.5 million per month in the second quarter of 2021.
Inclusive of these costs, we reported adjusted EBITDA of $83.8 million, which is a decrease of $18.8 million or 18.3% compared to last year's second quarter.
Adjusted EBITDA as a percentage of net sales was 18% in the second quarter of 2021 compared to 20% in the second quarter of 2020.
Adjusted EBITDA as a percentage of net sales was 19.1% in the second quarter of 2019.
Adjusted diluted earnings per share was $0.41 compared to $0.71 in Q2 2020 and $0.38 in Q2 2019.
Spices & seasonings continues to be one of the key drivers in the portfolio.
Net sales of our spices & seasonings including our legacy brands such as Ac'cent and Dash, and the brands we acquired in 2016 such as Tone's and Weber were approximately $99.3 million, a little bit more than 21% of our total company net sales for the quarter.
Net sales of spices & seasonings were up by approximately $0.7 million or 0.7% compared to Q2 2020.
Net sales of spices & seasonings were up approximately $18.1 million or 22.2% compared to Q2 2019.
Spices & seasonings sales remain elevated across all of our brands and channels, and we are seeing a real benefit as consumers repeatedly demonstrate their interest in trying new recipes while cooking and eating at home.
Among our other large brands, Maple Grove Farms, which generated $20.2 million in net sales for the quarter, was up $2.2 million or 11.7% compared to Q2 2020, and up $2.4 million or 13.4% compared to Q2 2019.
Maple Grove Farms benefited from both strong retail demand as well as a recovery in its food service business.
Ortega generated net sales of $40.9 million and was down $5.9 million or 12.7% compared to Q2 2020, but was up $6.9 million or 20% from Q2 2019.
Ortega is a callout brand that is still benefiting from COVID-like demand, but we are selling products as fast as we can make them, particularly taco shells, taco sauce and chili peppers.
And unfortunately, due to internal and external supply chain constraints, we are still not able to capitalize fully on the demand opportunity.
Ortega is a brand that we are very much leaning into and our operations team is working hard to expand capacity and maximize this opportunity.
We have a similar story with Las Palmas.
Las Palmas generated net sales of $8.8 million, was down $3.4 million or 27.7% compared to Q2 2020, but was up $1.2 million or 15.2% compared to Q2 2019.
Similar to Ortega, Las Palmas was not able to fully capture the continued demand opportunity with supply constraints of chilis due to crop issues.
Cream of Wheat which has been one of our largest beneficiaries of the consumer patterns emerging from the pandemic, generated $14.2 million in net sales for the quarter.
And while down $3.8 million or 20.8% from Q2 2020, Cream of Wheat was up $2.5 million or 21.9% from its pre-pandemic Q2 2019 levels.
Green Giant had a tough quarter that combined the most challenging COVID comparison in our portfolio with the most challenging supply chain constraints as we wait for the new vegetable pack.
Green Giant generated $105.7 million in net sales, down $58.4 million or down 35.6% compared to Q2 2020, and down $7.2 million or 6.4% compared to Q2 2019.
Green Giant will continue to face tough comparisons and supply chain constraints until the year will largely get through the pack season in the third quarter of this year.
However, we do expect a strong fourth quarter once we are fully loaded on inventory.
We generated $111.6 million in gross profit for the second quarter of 2021 or 24% of net sales.
Gross profit was down when compared to Q2 2020 gross profit of $134.1 million or 26.2% of net sales.
But margins were up almost 100 basis points sequentially and when compared to Q1 2021 gross profit, which was 23.3% of net sales.
As we discussed earlier, we are seeing low to mid-single-digit input cost increases in our base business coupled with double-digit increases for Crisco.
These increases also include low- to mid-single-digit increases in factory regions, low single-digit increases in packaging and double-digit increases in freight.
These costs were largely offset in part by our pricing initiatives as well as an aggressive forward purchasing strategy by various cost savings initiatives in our manufacturing facilities.
Gross margin was also negatively impacted by the inclusion of Crisco in our results.
Crisco comes with a higher depreciation rate than the base business, thus margining us down nearly 100 basis points for the quarter.
Although this impact is netted out for adjusted EBITDA and adjusted EBITDA margin purposes.
These pressures were offset in part from a lapping of COVID-19 expenses, which were just $1.2 million for the quarter compared to $4.3 million during Q2 2020.
Selling, general and administrative expenses were $47.1 million for the quarter or 10.1% of net sales.
This compares to $44.3 million or 8.7% for the prior year and 10.7% in the second quarter of 2019.
The dollar increase in SG&A compared to last year ago levels is almost entirely driven by a $4.6 million increase in warehousing costs, coupled with $1.9 million in incremental acquisition-related and nonrecurring expenses, which primarily relate to the acquisition and integration of the Crisco brand, as well as $0.3 million in increased advertising and marketing spend.
The increase in warehousing costs was primarily driven by the Crisco acquisition and customer fines related to COVID-19 shortages and delays.
These costs were partially offset by decreases in selling of $2.5 million and decreases of general and administrative expenses of $1.5 million.
As I mentioned earlier, we generated $85 million in adjusted EBITDA before COVID-19 costs and $83.8 million in adjusted EBITDA in the second quarter of 2021.
This compares to adjusted EBITDA of $102.6 million in Q2 2020 and $71 million in Q2 2019.
Interest expense was $26.7 million compared to $24.8 million in the second quarter last year.
The primary driver of the increase in interest expense was the acquisition of Crisco.
As a reminder, we financed the entire $550 million acquisition price with debt, a combination of revolver draw and new term loan.
The revolver currently costs us a little less than 2% in interest and the term loan a little bit less than 2.75% in interest.
Depreciation and amortization are also up year-over-year, driven primarily by Crisco.
Depreciation expense was $14.8 million in the second quarter of 2021 compared to $10.6 million in last year's second quarter.
Amortization expense was $5.4 million in the second quarter of 2021 compared to $4.7 million in last year's second quarter.
We are still expecting an effective tax rate of approximately 26% for the year, but taxes were a little higher than that in this year's second quarter due to some discrete tax events at an effective rate of 26.8% for the quarter compared to 26.2% in last year's second quarter.
We generated $0.41 in adjusted diluted earnings per share in the second quarter of 2021 compared to $0.71 per share in Q2 2020 and $0.38 per share in Q1 2019.
We remain encouraged by these trends.
Despite the tough comparisons against 2020, and the continuing challenges of COVID, we still expect to achieve company record net sales for the year, reflecting a mid- to high single-digit increase in the base business net sales compared to 2019 and coupled with the addition of Crisco, in line with the $2.05 billion to $2.1 billion net sales guidance that we provided in March.
And despite the continued inflationary pressures that we face, we are continuing to target the 18%-plus adjusted EBITDA margins that we have generated in recent years.
However, because we are not fully able to estimate the impact of COVID-19 cost inflation and our cost inflation mitigation efforts will have on our results for the remainder of fiscal 2021, we are unable at this time to provide more detailed earnings guidance for the full year of fiscal 2021.
A couple of quick callouts from a modeling perspective.
As I mentioned earlier, interest expense, depreciation and amortization are continuing to trend higher than last year as a result of the Crisco acquisition.
We expect full year interest expense of $105 million to $110 million including cash interest expense of $100 million to $105 million; depreciation expense of $60 million to $62 million; amortization expense of $21 million to $22 million; and an effective tax rate of approximately 26% for the full year.
Finally, as a reminder, last year's third quarter included an extra week as a result of our 53rd week during the fiscal calendar of 2020.
At the time, we estimated that the extra week was worth approximately $35 million in extra net sales.
As I said at the beginning of the call, we had a fairly strong quarter despite lapping Q2 2020, which benefited from peak COVID-19 demand.
The quarter played out pretty much as management expected.
And the company remains on track to deliver the mid- to high single-digit growth ahead of 2019 that is set as a target for this year.
I am digging in and enjoying my early days at B&G Foods, and I look forward to sharing more of my perspectives on the company's performance, strategy and portfolio in the time ahead.
This concludes our remarks, and now we would like to begin the Q&A portion of our call.
 Assistant:

Chosen response:
b&g foods q2 adjusted earnings per share $0.41.
q2 adjusted earnings per share $0.41.
q2 earnings per share $0.38.
q2 sales $464.4 million versus refinitiv ibes estimate of $444.5 million.
reaffirmed its net sales guidance for full year fiscal 2021.