Prompt:
Human: Let's begin with the summary of the results on Page 3.
We expect Q2 to be challenging and in preparation, we reinforced our cost program earlier in Q1, so we were in some sense prepared for the battle.
We ended the quarter with a comprehensive set of actions to manage through the turbulent times and focused on what we can control, our operations, costs and importantly safety of our employees.
From an operational point of view, we are not out of the woods yet, but a significant majority of our facilities are up and running moving into Q3 which is positive to operating leverage as compared to this quarter.
Top line trends are very much in line with our expectations entering the quarter.
Revenue declined 16% organically and bookings declined 21%.
Trends have improved in the quarter and we saw a material sequential improvement in June.
We still carry a strong backlog across all segments and that increases our confidence for the second half.
Margin performance for the quarter was acceptable considering the state of business activity in April and May.
After profitability gains in Q1 on lower revenue, we targeted 25% to 30% decremental margin for the full year.
That puts us on track to exceed our initial full-year target.
In addition to the tight cost controls and variable costs, we took further structural cost actions in the quarter as part of our business realignment activities, which will benefit us in the second half.
Along with our cost actions, our proactive working capital management resulted in cash flow improvement in both absolute and conversion terms.
We generated $78 million more in free cash flow than the comparable quarter last year.
As a result of our first half performance and our solid order backlog, we are reinstating our annual adjusted earnings per share guidance to $5.00 to $5.25 per share.
To be clear, even with a strong backlog and positive recent trends, we still see demand uncertainty in our markets and are not back to business as usual, but our teams have proven their ability to manage costs and operations and we are prepared to operate and achieve results in a wide variety of scenarios that may be in store for the second half.
Let's take a look at the segment performance on Slide 4.
Engineered Products at a tough quarter particularly in the shortest cycle on capex-levered businesses like vehicle aftermarket, industrial automation and industrial winches.
Waste hauling and aerospace & defense were more resilient shipping against their strong backlogs.
Lower volumes led to margin decline versus a very strong margin that this segment posted in the comparable quarter last year, and we have taken structural cost actions in this segment, which will support its margin in the second half along with reconvering volumes.
Fueling Solutions saw continued strong activity in North America driven by demand of EMV compliance solutions.
Whereas, Europe and Asia declined due to COVID related production and supply chain interruptions as well as budget cuts and deferrals in response to the decline in oil prices.
Increased margin performance was commendable with 80 basis point increase on a better mix pricing and ongoing productivity actions.
The sales decline in Imaging & Identification was driven predominantly a steep decline in our digital textile printing business which we expected in the significant dislocation in global apparel and fashion markets due to the pandemic.
Marking & coding -- marking & coding showed continued resilience on strong demand for consumables and fast-moving consumer goods solutions.
This is our highest gross margin segment.
So decremental margins are challenging and require heavy lifting on cost containment, where marking & coding business did a good job, achieving a flat margin year-over-year and we have taken proactive actions to manage the cost base in the digital printing business.
As a result of these actions and a pickup in textiles consumable volumes, we expect performance to improve in the second half.
Pumps & Process Solutions demonstrated the resilience we expected.
It's top line decline the least among our segments despite a challenging comparable from last year.
Strong growth -- strong growth continued in biopharma and medical applications with colder products posting record growth in the quarter.
This was offset by a moderate decline in industrial applications and material slowing and energy markets.
Our Plastics Processing business revenue declined in the quarter as a result of shipment timing, we expect to -- for it to do well in the second half of a strong backlog.
As you can see this segment continued to deliver a solid margin performance posting improving margin on declining revenue for the second quarter in a row, we expect this segment to deliver flat or improved absolute profit for the full year.
Refrigeration & Food Equipment declined as food retailers continued to delay construction remodels due to peak utilization and the commercial food service market remains severely impacted by restaurant and school closures in the United States.
Our heat exchanger business showed resilience particularly in non-HVAC applications.
On the margin side, negative absorption on lower volumes drove the margin decline.
In Q2, we took structural cost actions in this segment, which paired with ongoing productivity and automation initiatives yield in a materially improved margin performance in the month of June.
We expect these benefits to continue accruing in the second half and expect this segment to deliver year-over-year growth in absolute earnings and margin in the second half of this year.
I'll pass it to Brad here.
Let's go to Slide 5.
On the top is the revenue bridge.
FX continued to be a meaningful headwind in Q2, reducing top line by 1% or $24 million.
We expect FX to be less of a headwind in the second half of the year.
Acquisitions were effectively offset by dispositions in the quarter.
The revenue breakdown by geography reflects relatively more resilient trends in North America and Asia versus the more significant impacts across Europe and several emerging economies like India, Brazil and Mexico.
The US, our largest market declined 10% organically, with four segments posting organic declines, partially offset by growth in retail fueling.
All of Asia declined 14%.
China representing approximately half of our business in Asia, showed early signs of stabilization posting an 11% year-over-year decline in the second quarter, an improvement compared to a 36% decline in Q1.
Imaging & Identification and Engineered Products were up in China while Fueling Solutions declined due to the expiration of the underground equipment replacement mandate and also slower demand from the local national oil companies.
Europe was down 19% on organic declines in all five segments.
Moving to the bottom of the page.
Bookings were down 21% organically on declines across all five segments, but there are reasons for cautious optimism as we enter the second half.
First, as presented in the box on the bottom, June bookings saw a significant improvement from the May trough, with all five segments posting double-digit month-over-month sequential growth.
Second, our backlog is up 8% compared to this time last year, driven by our longer cycle businesses and the previously mentioned intra-quarter improvement in our shorter cycle businesses.
We believe we are well positioned for the second half of the year.
Let's move to the bridges on Slide 6.
I'll refrain from going into too much detail on the chart, but the adverse top line trend drove EBIT declines, although our cost containment and productivity initiatives help offset overall margins to hold up at an acceptable decremental.
In the quarter, we delivered on the $50 million annual cost reduction program, which focuses on IT footprint and back office efficiency, and took additional restructuring charges that add to the expected benefits.
We also executed well in the quarter on additional cost takeout to offset the under-absorbed -- under-absorption of fixed cost previously estimated at $35 million to $40 million.
Some of these recent initiatives will continue supporting margins in the second half and into 2021.
Going to the bottom chart.
Adjusted earnings declined mainly due to lower segment earnings, partially offset by lower interest expense and lower taxes on lower earnings.
The effective tax rate, excluding discrete tax benefits is approximately 21.5% for the quarter, unchanged from the first quarter.
Discrete tax benefits in the quarter were approximately $2 million, slightly lower than the prior year's second quarter.
Rightsizing and other costs were $17 million in the quarter or $13 million after-tax relating to several new permanent cost containment initiatives that we pulled forward into 2020.
Now moving to Slide 7.
We are pleased with the cash generation in the first half of the year, with year-to-date free cash flow of $269 million, a $126 million or 90% increase over last year.
Our teams have done a good job managing capital more effectively in this uncertain environment.
We have seen strong collections on accounts receivables.
We continue to operate with inventories of supportive of our backlog in order trends.
Q2 also benefited from an approximately $40 million deferral of US tax payments into the second half of the year.
Capital expenditures were $79 million for the first six months of the year, a $12 million decline versus the comparable period last year.
Most of our in-flight growth and productivity capital projects were completed in the second quarter.
So we expect to see continued year-over-year capital expenditure declines in the second half.
Lastly now on Slide 8.
Dover's financial position remains strong.
We have been targeting a prudent capital structure and our leverage of 2.2 times EBITDA places us comfortably in the investment grade rating with a safety -- with a margin of safety.
Second, we are operating with approximately $1.6 billion of current liquidity, which consists of $650 million of cash and $1 billion of unused revolver capacity.
When commercial paper markets were fractured at the outset of the pandemic in March, we drew $500 million on our revolver out of an abundance of caution.
Markets have since stabilized and we reestablished our commercial paper program and fully repaid the revolver.
In Q2, we also secured a new incremental $450 million revolver facility to further bolster our liquidity position.
As of June, we have no drawn funds on either revolver.
Our prudent capital structure, access to liquidity and strong cash flow have allowed us to largely maintain our capital allocation posture.
We can -- we have deployed nearly a $250 million on accretive acquisitions so far this year and we continue to pursue attractive acquisitions.
Finally, we are lifting our recent suspension on share repurchase and we will opportunistically buyback stock should the market conditions dictate.
I'm on Page 9, which is an updated view of the demand outlook by business we introduced last quarter.
Here we are trying to provide you with directional estimates of how we expect segments to perform in the second half relative to the second quarter in lieu of full year revenue guidance.
I'll caveat that all of this is based on current reads of the markets and is subject to change as the situation remains fluid.
First in Engineered Products, shorter cycle businesses such as vehicle service and industrial automation have shown improvement late in the quarter and the trends are improving globally.
Additionally aerospace and defense continues operating from a large backlog of defense program orders.
Waste handling may see some headwinds driven by tightening of industry capex and municipal finances after several years of strong growth performance.
Bookings have slowed in late in Q2 as customers pause their capital spending to manage liquidity.
We are watching the dynamics closely, but we have started addressing the cost base in this business proactively.
Fueling Solutions is a tale of two cities, North America, approximately half the business remain resilient both on EMV conversion and also willingness of non-integrated retailers to continue investing in their asset base.
In Europe and Asia, integrated oil companies represent a larger share of the network and capital budget cuts resulting from oil price declines are having a more negative impact on investment in the retail network, plus recall we are facing a $50 million revenue headwind in China this year from the expiration of the underground equipment replacement mandate, despite some of the top line headwinds with robust margin accretion to date, we expect segment to hold its comparable full-year profit line despite a decreasing top line.
Imaging & Identification outlook is improving.
Our service and maintenance interventions resumed in market and coding as travel restrictions were lifted, and we are seeing a resulting pickup demand for printers.
Our integration activities with Systech acquisition are proceeding as planned.
We started seeing some green shoots on the digital textile printing side, but we are forecasting a difficult year as global textiles will take time to recover.
In Pumps & Process Solutions is expected to show improved trajectory from here.
First, our plastics and polymer businesses will ship against it's significant backlog in the second half.
Biopharma and medical is expected to continue its impressive growth.
Industrial pumps, a shorter cycle business is expected to start gradually recovering.
A material portion of demand in our pumps and precision components business is levered to maintenance and repair and aftermarket.
The oil and gas mid and downstream markets served primarily by precision components business continues to slow as a result of deferral of capex and refurbishment spending in refining and pipelined operators.
In Refrigeration & Food Equipment, we believe the worst is behind us for this segment.
Bookings were relatively resilient for this segment and we have improved in June, resulting in a robust backlog that we are prepared to execute against.
We also saw growth is restarting the construction and remodel projects resulting in us being fully booked for refrigeration cases into Q4.
Additionally Belvac is scheduled to begin shipments against it's significant backlog, which will be accretive to segment margins.
Recovery in volumes along with cost actions we've undertaken should result in positive margin and profit trend through the remainder of the year resulting in the segment posting a second half comparable profit increase.
Let's go to Slide 10.
As a result of the fluidity of the COVID situation, we are cautious about guiding top line trajectory at this time, but everything points to sequential improvement from here across most markets.
The proactive cost management stance we took in Q1 and continued in Q2 has positioned us from a margin performance standpoint, and today we are improving our target for annual decrementals margin to 20% to 25%.
We continue work in the pipeline of restructuring actions, including those targeting benefits in 2021, and we are positioned well to deliver on our margin objectives.
We remain confident in the cash flow capacity of this portfolio and reiterating a conversion target above 100% of adjusted net earnings and a cash flow margin target of 10% to 12% compared to 8% to 12% target we had last year.
I'll conclude with the following.
We have reinitiated earnings per share guidance as a result of our confidence in our ability to manage costs in an uncertain demand environment.
We have a good team, and they understand the playbook.
Having said that, make no mistake, we are on the front foot from here on driving revenue growth, both organically and inorganically.
We have strong operating companies and a strong balance sheet with which to support them.
This is not the time to hunker down and wait for the storm to pass, so we are equally focused on market share gains, new product development initiatives as we are on our main pillars of synergy extraction from our portfolio, all of which we continue to fund, despite the market challenges.
Inorganically we have available capital to deploy and I fully expect to be active in the second half.
And with that let's go to Q&A.
 Assistant:

Chosen response:
qtrly revenue of $1.5 billion, a decline of 17%.
in 2020, dover expects to generate adjusted earnings per share in range of $5.00 to $5.25.
looking forward, demand outlook for remainder of year remains uncertain.
remain positioned well for second half with a higher backlog compared to this time last year.
as we expected, activity declined across a majority of markets we serve.
dover -demand conditions in textile printing, foodservice, below-ground fueling, food retail and automotive aftermarket were particularly challenged.


Prompt:
Human: And we have prepared slides to supplement our comments today.
I'm Pankaj Gupta, Dow investor relations vice president.
Because these statements are based on current assumptions and factors that involve risks and uncertainties.
Dow's Forms 10-Q and 10-K include detailed discussions of principal risks and uncertainties which may cause such differences.
Unless otherwise specified, all financials, where applicable, excludes significant items.
We will also refer to non-GAAP measures.
On Slide 2, you will see our agenda for the call.
Jim will begin by reviewing our fourth quarter and full year highlights, and operating segment performance.
Howard will then share our outlook and modeling guidance.
And then Jim will discuss how we will continue to execute on our priorities to deliver value growth.
Beginning with Slide 3.
In the fourth quarter, Dow once again delivered top and bottom-line growth year over year, with sales growth and margin expansion in every operating segment.
Our results reflect the strength and resilience of our advantaged portfolio and the incredible efforts of the Dow team, as we continue to ensure well-being and safety of our team and our communities.
We delivered year-over-year sales growth of 34% with gains in every operating segment, business, and region.
While volume declined 4% year over year due to supply constraints from several factors, including our own maintenance, lingering effects of weather-related outages, and global logistics challenges, we continued to see robust underlying demand across our end markets, particularly for higher-margin downstream and sustainability-led applications.
Prices were up 39% year over year, reflecting gains in all operating segments, businesses, and regions.
Our discipline and agility enabled us to navigate the supply constraints and logistics challenges I just mentioned, dual control actions in China, and rising energy costs.
We delivered operating EBIT growth of $1.2 billion year over year with margin expansion in every operating segment.
Equity earnings were also up year over year with margin expansion at our joint ventures in Saudi Arabia, Thailand, and Kuwait.
These results translated into significant cash generation for the quarter, with cash flow from operations of $2.6 billion, up $901 million year over year, and cash flow conversion of 88%.
And we returned $912 million to shareholders in the quarter, including $512 million through our industry-leading dividend and $400 million in share repurchases.
Our performance in the fourth quarter capped a record year for Dow, which you will see highlighted on Slide 4.
In 2021, Team Dow capitalized on the economic recovery, achieving record sales and earnings performance despite pandemic-driven uncertainty and industrywide weather-related challenges.
Our focus on cash flow and disciplined capital allocation enabled us to continue to deliver on our financial priorities.
We achieved $7.1 billion of cash flow from operations, bringing our total cash flow from operations since spin to $18 billion.
We enhanced our balance sheet by reducing gross debt by another $2.4 billion in the year, bringing down gross debt by more than $5 billion since spin.
We have also no substantive debt maturities until 2026.
We proactively funded our U.S. pension plans and successfully executed Sadara's debt reprofiling, lowering Dow's guarantees by more than $2 billion.
Dow has returned a total $7.3 billion to shareholders since spin through our dividend and share repurchases, including $3.1 billion in 2021.
And we kept capex well within D&A as we continue to invest in our higher-return and faster-payback growth investments.
In 2021, we achieved a return on invested capital of greater than 22% on strong earnings growth.
As we turn the corner on the pandemic, we do so with a strong balance sheet and a deliberate and disciplined strategy to decarbonize and grow.
We achieved this record financial performance in 2021 while advancing our ESG leadership.
Importantly, we announced our disciplined strategy to decarbonize our assets while improving underlying EBITDA by more than $3 billion as we capitalize on our participation in attractive, high-growth end markets and sustainability-driven solutions.
Our ESG efforts continue to be recognized externally as we were recently recognized by JUST Capital for the third year.
Dow earns the top spot in the chemicals sector overall, as well as the No.
1 position in the workers and stakeholders in governance categories in the industry.
I'm extremely proud of Team Dow's dedication to deliver for our customers and drive value for all of our stakeholders.
We will build on these achievements in 2022 as we advance our ambition.
Moving to our operating segment performance for the fourth quarter on Slide 5.
In the packaging and specialty plastics segment, operating EBIT was $1.4 billion, up $662 million year over year, primarily due to margin improvement and partly offset by lower-supply volumes.
Sequentially, operating EBIT was down $512 million, and operating EBIT margins declined by 520 basis points on lower olefin and co-product pricing, combined with higher raw material costs and energy costs.
The packaging and specialty plastics business reported higher net sales year over year, driven by price gains in all regions, as well as in key applications, such as flexible food, industrial, and consumer packaging.
Volume declined year over year, primarily in Asia-Pacific, due to supply constraints.
Moving to the industrial intermediates and infrastructure segment, operating EBIT was 595 million, up 299 million year over year, primarily due to continued price strength.
Sequentially, operating EBIT was down $118 million, and operating EBIT margins declined 280 basis points, primarily driven by higher energy costs in Europe and our planned maintenance turnaround activity.
The polyurethanes and construction chemicals business increased net sales compared to the year-ago period on broad-based price gains in all regions.
Volume declines were primarily due to a planned transition, away from a low-margin co-producer contract and our planned maintenance turnaround activity.
The industrial solutions business delivered a net sales improvement compared to the year-ago period with local price gains in all regions.
Volume was flat year over year as higher volume from a renewable energy contract was offset by fewer licensing and catalysts sales.
And finally, the performance materials and coatings segment reported operating EBIT of $295 million compared to 50 million in the year-ago period, as margins increased 900 basis points due to strong price momentum for silicones and coatings offerings.
Sequentially, operating EBID improved $11 million as price gains were partly offset by our planned maintenance turnaround activity.
The consumer solutions business achieved higher net sales year over year, with local price gains in all regions and across end market applications.
Volume declined as strong demand, particularly for industrial, electronics, and personal care applications, was offset by lower supply availability due to our own decision to pull forward maintenance activity to coincide with dual-control actions in China.
The coatings and performance monomers business achieved increased net sales year over year, as higher raw material costs and strong industry demand led to price gains in all regions.
and Canada, was more than offset by lower merchant sales of acrylic monomers, partly due to Dow's own higher captive use.
Turning to Slide 6, our diversified portfolio continues to enable us to capitalize on attractive end market trends with higher-margin downstream products.
Our four primary market verticals are each growing at rates of 1.3 to 1.5 times GDP and benefiting from sustainability macro trends.
We are meeting this demand with higher-margin solutions, such as functional polymers, alkoxylates, surfactants, polyurethane systems, sustainable coatings, and performance silicones.
In the packaging vertical, demand for lower carbon emissions, recyclable, and circular materials are driving demand for Dow's industry-leading plastics portfolio and in-house application design capabilities.
Dow's broad suite of products and hybrid innovations targeting infrastructure will continue to benefit from government investments and incentives, with particular demand resiliency in the Americas, Europe, as well as in the Middle East, Africa, and India.
We see global demand across the diverse consumer market vertical remaining at elevated levels, particularly for applications like electronics, 5G, appliances, pharma, and home care, where several of Dow's growth investments are targeted.
And in mobility, Dow's portfolio of specialty silicones, polyurethanes, and elastomers is uniquely positioned to benefit from growing electric and autonomous vehicle trends.
Importantly, these attractive market verticals are supported by favorable balances across our key value chains, with continued strength across consumer and industrial end markets, which we'll see on Slide 7.
We expect the economic recovery to continue as forecasts call for above historical average global GDP growth in 2022.
While the omicron variant has resulted in some near-term disruption, we do not expect it to materially change the current recovery path, particularly as global immunization levels and treatment options continue to increase.
Several factors support continued strength across our end markets.
Consumer balance sheets remain healthy, with significant pent-up demand driven by more than $5 trillion in additional savings accumulated through the pandemic.
Manufacturing growth is expected to remain robust, supported by increasing investments in infrastructure and accelerated adoption for 5G, EV, and sustainability trends.
And with retail inventories remaining low and backlogs elevated, easing supply chain issues should unleash additional volume growth in 2022, as manufacturing activity increases to meet strong consumer demand.
This will certainly be a focus for Dow as we work closely with our customers to fill order backlogs and replenish inventories to meet the robust demand and increased service levels.
Turning to Slide 8.
In the first quarter, we expect these demand trends to drive growth, particularly following the Chinese Lunar New Year.
Demand remains resilient in packaging and specialty plastics.
Although domestic polyethylene supply improved through the fourth quarter, comonomer supply remains constrained.
And trade sources are predicting another year of higher-than-average turnaround activity.
These factors, coupled with improvements in shipping logistics that will help meet demand in the export market, are leading to more constructive supply and-demand balances domestically.
Equity earnings are expected to be lower sequentially due to rising feedstock costs impacting Asian olefin margins.
And we anticipate higher raw material and energy costs, particularly in Europe and Asia.
Altogether, we anticipate an approximately $200 million impact versus the prior quarter for this segment.
Utilizing our best-in-class feedstock flexibility and our differentiated portfolio, Dow will continue to be agile to mitigate potential volatility and meet demand.
In industrial intermediates and infrastructure, strong demand for our high-value materials in appliances, construction, pharma, home care, and energy applications, combined with tight supply and increased global infrastructure investment, are supporting a constructive demand outlook.
We anticipate approximately a $100 million benefit in this segment from completed turnarounds in the fourth quarter, including Sadara's isocyanate facility and several in our core polyurethane business.
And we expect the elevated energy costs in Europe will be a $75 million impact versus the prior quarter for this segment.
In performance materials and coatings, increasing industrial activity and consumer demand for electronics and construction continues to outpace supply for our differentiated silicone products.
The industry also anticipates resilient demand for architectural coatings as rebuilding from low inventory levels in preparation for the Northern Hemisphere spring and summer months.
The completion of our turnaround in the fourth quarter at our siloxane facility in China will allow us to take advantage of tight global market conditions as silicon metal supplies improve and energy curtailments in China continue to ease.
We will also be executing a turnaround at our methacrylates facility in Deer Park.
All in, we expect a $25 million net tailwind versus the prior quarter from turnarounds for this segment.
Turning to the full year.
We're continuing to provide our best estimates of several income statement and cash flow drivers.
Notably, we expect lower equity earnings sequentially due to margin compression versus the tighter conditions in 2021, particularly in Asia as oil remains constructive, putting upward pressure on the naphtha-based feedstock costs in the region.
Total turnaround spending for the year will be up approximately $100 million versus 2021 as we have another heavy turnaround year with three crackers slated for maintenance activity and increased inflationary pressure on materials and labor.
Net interest expense is expected to be approximately $600 million, benefiting from our proactive deleveraging actions since spin.
For cash flow, we anticipate higher joint venture dividends from increased earnings in 2021 and a $1 billion tailwind toward pension-related items following our actions last year.
Continued investment in our digital initiatives will drive efficiency and enable us to achieve our $300 million EBITDA run rate on the program by 2025.
We will also complete the spending portion of our restructuring program which is now delivering a full $300 million EBITDA run rate as we enter 2022.
And finally, as we highlighted at our investor day, we anticipate increasing our capital expenditures to $2.2 billion, well within our DNA target, as we continue to advance our higher return, faster payback projects, and execute on our decarbonize and grow strategy.
Overall, the macroeconomic backdrop remains favorable in 2022.
And Dow is well positioned due to our global footprint, feedstock flexibility, productivity programs, and sustainable solutions for our customers.
We will continue to leverage these advantages as we navigate higher oil prices and continue to deal with inflation and logistics challenges.
And as the year progresses, we intend to drive operating rates and service levels higher and do expect widening oil to gas spreads.
Turning to Slide 10.
At our investor day in October, we laid out our disciplined strategy to decarbonize and grow the company, supported by a series of inflight earnings growth programs that will drive over $3 billion in underlying EBITDA growth.
In 2022, our capital and operating investments are on track to deliver $200 million to $300 million in run-rate EBITDA and will serve higher-margin, differentiated applications where demand is accelerating, as customers work to reduce their own carbon footprint.
In packaging and specialty plastics, our Fort Saskatchewan expansion completed last year will deliver a full year of earnings growth to support increasing polyethylene demand.
And our FCDh pilot plant in Louisiana will start up this year to produce propylene for coatings, electronics, and durables end markets.
Notably, the technology enables lower capex, opex, and CO2 emissions compared to conventional PDH technologies.
These projects serve faster-growing, more sustainable market segments, such as renewables, to drive lower carbon emissions for our customers.
For example, our endurance compounds for cable systems support next-generation, longer-life, and lower-carbon emissions infrastructure, including on and offshore wind farms, by reducing the cable manufacturing carbon emissions footprint by 80%.
And our ENGAGE elastomers deliver 35% improved performance and efficiency for solar photovoltaic applications.
In industrial intermediates and infrastructure, our alkoxylates and PU systems expansion projects are closely linked with brand owner demand for higher value, differentiated downstream applications across home and consumer care, agricultural, and infrastructure end markets.
For example, our surfactants offer an improved environmental profile for leading brand owner laundry and home care products.
And our polyurethane system, PASCAL technology, enables up to 10% greater energy efficiency and appliances without raising manufacturing costs.
In performance materials and coatings, we're expanding capacity in formulated solutions for coatings and silicones through incremental debottlenecking projects.
Our products enable higher-performing, more sustainable solutions, targeting mobility, consumer, and infrastructure end markets.
For example, FASTRACK coatings enable autonomous mobility infrastructure and have approximately 45% lower greenhouse gas emissions.
And our DOWSIL technology enables higher-density, lower-cost battery packs for the fast-growing electric vehicle market.
Finally, as Howard mentioned, our restructuring program and digital investment will continue to support our low-cost operating model and top-quartile cost structure.
Turning to Slide 11.
The increasing demand for sustainable products represents a significant growth opportunity for Dow with attractive pricing that will support longer-term, higher-quality earnings.
Our customers are looking for opportunities to enhance their sustainability.
And we are meeting those needs with lower-carbon emissions solutions beginning with our own operations.
Our Alberta project will decarbonize approximately 20% of Dow's global ethylene capacity while growing our global polyethylene supply by about 15%.
We are also working with our suppliers to reduce our Scope 3 carbon emissions.
To date, we have more than 150 supplier agreements in place and have adopted third-party frameworks like CDP, together for sustainability and EcoVadis to drive tangible improvements in environmental performance along the value chain.
We continue to advance a circular economy for plastics and see a consistent trend across our brand owner customer base toward redesigning packages to be recyclable and incorporating 30% post-consumer recycled content in their packaging by 2030.
Six of our largest sites have now received International Sustainability and Carbon Certification PLUS recognition for tracking the use of sustainable feedstocks.
We're advancing our partnership with Mura Technology to scale advanced recycling solutions and secure circular product supply.
Mura broke ground on the new plant with an expected start-up around the end of the year.
Earlier this month, we announced an investment in Mr. Green Africa, the first recycling company in Africa to be a Certified B Corporation, which includes socially responsible waste collection and plans to codevelop new flexible plastic packaging that will enable more sustainable packaging solutions.
A first-of-its-kind investment for Dow in Africa, this business model will be scaled to other developing regions around the world.
We continue to grow our recyclable offerings, recently doubling sales with Chinese laundry brand, Liby, and increasing our addressable market opportunities.
And like the partnerships, Dow recently announced to source pyrolysis oil from Gunvor and New Hope Energy.
These investments in circularity are examples of our progress and solid foundation as we grow and scale circular solutions.
To close, on Slide 12, 2021 was an outstanding year for Team Dow.
We delivered record financial performance and continued our disciplined execution of our strategic priorities.
Building on this foundation, we're focused on advancing our plan to decarbonize our assets and grow earnings.
Our competitive advantage enables us to meet the increasing needs of our customers and consumers who are demanding more circular and sustainable products while we work to achieve zero carbon emissions in our own operations.
And as we look ahead, our priorities remain consistent.
Our focus on profitable growth, while maintaining a low-cost position and best-owner mindset, will enable us to deliver on our earnings growth levers.
We'll continue to maintain our balanced and disciplined approach to capital allocation, driving higher returns for the company and our shareholders while retaining the financial flexibility that has served us well.
And we'll continue to advance our leadership in ESG with a clear path to achieve our zero carbon circularity and sustainability targets.
The world and our customers are demanding a more sustainable future.
As we execute our ambition, I am confident that we will create significant, long-term value for all of our stakeholders.
Operator, please provide the Q&A instructions.
 Assistant:

Chosen response:
q4 sales rose 34 percent to $14.4 billion.
industrial intermediates & infrastructure segment net sales in quarter were $4.5 billion, up 30% versus year-ago period.
qtrly net sales up 34% versus year-ago period, with improvement in every operating segment, business and region.
performance materials & coatings segment net sales in quarter were $2.6 billion, up 26% versus year-ago period.
in 2022, we expect continued demand strength across our end markets.
logistics constraints are expected to ease throughout year to fulfill elevated order backlogs and pent-up customer demand.
in 2022, expect continued demand strength across end markets, supported by growing industrial production and sustained consumer spending.
logistics constraints expected to ease throughout year to fulfill elevated order backlogs and pent-up customer demand.


Prompt:
Human: These risks and other factors could adversely affect our business and future results.
For more information about those risk factors, we would refer you to our 10-K or 10-Q that we have on file with the SEC and the company's other SEC filings.
If you did not receive a copy, these documents are available in the Investor Relations section of our website at dukerealty.com.
The fundamentals in our business continue to be the best we've ever seen.
We now have had three successive quarters of demand at or near all-time records, and projected market level rent growth has risen from the 10% range to the mid-teens percent nationally and in some submarkets as high as 35%.
During the quarter, we began roughly $350 million of new developments with expected strong value creation and IRRs, and we raised our full year guidance on starts once again.
Cap rate compression and rent growth continued to outpace material cost increases, allowing us to drive improved margins.
The margins on our development pipeline are now over 60%, and our core portfolio achieved record rent growth of 22% on a cash basis from second-generation leasing activity.
These quarterly results and our improved outlook for the balance of the year resulted in our raising key components of our 2021 guidance, including year-over-year core FFO growth now expected to be at 13.8% and growth in AFFO per share of 11.6%.
Based on these results and our optimism about the balance of the year, we have raised the dividend by almost 10%.
Mark will go over these changes in detail momentarily.
I'll first cover market fundamentals and then review our overall operational results.
Industrial net absorption registered 121 million square feet, which is only one million square feet less than the all-time record.
This was more than enough to offset the new supply as completions came in at about 79 million square feet.
This positive net absorption over deliveries for the quarter reduced vacancy down to 3.6%, setting yet another record low.
The strong fundamentals increased nationwide asking rents during the third quarter by 10% compared to the previous year.
CBRE now projects demand for the full year in the mid-300 million-square-foot range and likely to break the all-time 2016 record of 327 million square feet.
Completions for the year are projected to be about 270 million square feet.
National asking rents for the full year are expected to be in the mid-teens with some markets like Northern New Jersey and Southern California likely to see increases of 30% to 35%.
The reaction to supply chain bottlenecks continues to be in the early stages of a long-term boom for our sector, with CBRE reaffirming roughly 1.2 billion square feet of projected aggregate demand over the next five years.
Increasing inventory levels, safety stock, consumer spending and online shopping trends are driving much of this demand.
Demand by occupier type remains broad-based with e-commerce and logistics services companies continuing to make up roughly 60% of our activity, with the e-commerce contribution about 10% lower compared to 2020 and the 3PL contribution about 10% higher than this time last year.
It is also noteworthy that Amazon's share of demand this year is about 10% of overall total demand compared to 18% of demand in 2020.
Turning to our own portfolio.
We executed a very strong quarter by signing 9.5 million square feet of leases.
The strong lease activity for the quarter resulted in continued growth in rents within our portfolio as we reported 35% on a GAAP basis and 22% cash, notably, with only 25% of our transactions occurring in coastal Tier one markets.
We now project our mark-to-market on a GAAP basis within our portfolio to be 28%.
We started $349 million of new development totaling two million square feet that consisted of six speculative projects and two build-to-suits in the quarter.
80% of this volume was in our coastal Tier one markets.
Our team has continued to lease our speculative projects successfully as evidenced by stabilizing seven new developments during the quarter and increasing the development pipeline to 60% leased.
To put our track record of leasing speculative projects in context, the $897 million of projects that we placed in service this year through September 30 increased from 39% leased when the construction started to 90% leased when they were placed in service.
For all of our speculative developments we've started since the beginning of 2019, our average lease-up time is less than two months from the dates the projects were placed in service.
Our team's continued ability to quickly lease up speculative development projects will be a key contributor of our future growth.
Sticking with the development pipeline.
At quarter end, we totaled $1.1 billion with 86% of this allocated to Tier one markets and 60% preleased.
We now expect value creation from this pipeline of over 60%, which is primarily due to rapid appreciation of rents and land.
We are also very proud to remind everyone that we target only developing the lead certified standards.
We expect the lead percent of our total NOI to trend toward 25% by the end of 2022.
On the construction cost side of things, our teams have taken steps to mitigate schedule risk related to materials such as contracting for steel nearly a year out, and we've only had minor delays in a few of our projects.
The outlook for new starts is strong and is reflected in our revised guidance of our midpoint being up $175 million.
On a longer-term basis, we either own or control land, primarily in coastal infill markets that can support roughly $1 billion of annual starts over the next four years if the supply/demand picture remains robust, which we believe it will.
It is also important to note the market value of the land we own is about 2 times our book basis, and on average, we've only owned this land for about two years.
Land we control and will be closing over the next few quarters is also well below market.
The favorable land value, we will continue to support high development margins and very good IRRs long term.
And overall, we believe we are very well positioned to continue to lead the sector and grow through new development.
For the quarter, disposition proceeds totaled $738 million, including outright sales and contributions to joint ventures.
The outright sales comprise our entire remaining portfolio in St. Louis, three buildings in Indianapolis and one building in Chicago.
The activity also included the first two tranches of the Amazon property contributions to our newly formed joint venture with CBRE Global Investors.
The pricing in aggregate was at an in-place cap rate of 4.8%, which was inflated a bit by a high 5% cap rate for the St. Louis portfolio in which pricing was impacted by expected rent roll-downs on looming tax abatement expirations.
We acquired one facility in the third quarter totaling $24 million, a 63,000-square-foot facility in the San Gabriel Valley submarket of Southern California.
This third quarter activity has further shifted the geographic position of our portfolio on an NOI basis to approximately 40% in the coastal Tier one market.
Let me also note that just after quarter end in very early October, we closed on the sale of a 517,000-square-foot Amazon facility in Columbus, Ohio.
This sale represents our final property disposition for the year.
I will now turn our call over to Mark to discuss our financial results and guidance update.
Core FFO for the quarter was $0.46 per share, which represents 15% growth over the $0.40 per share from the third quarter of 2020.
AFFO totaled $151 million for the quarter compared to $135 million in the third quarter of 2020.
Same-property NOI growth on a cash basis for the three and nine months ended 2021 compared to the same periods of 2020 was 3.8% and 5.3%, respectively.
The growth in the same-property NOI for the third quarter of 2021 compared to the third quarter of 2020 was mainly due to rent growth, partially offset by an 80 basis point decrease in occupancy in our same-property portfolio due to an extremely high occupancy comp of 98.6 in 2020.
Our balance sheet is in great shape with plenty of dry powder to fund our growth.
We had $273 million of sale proceeds in 1031 escrow accounts at the end of the quarter that will be used to fund near-term building and land acquisitions.
We finished the quarter with reduced leverage as a result of the significant disposition activity during the quarter, but intend to return to recent leverage levels by the end of the year as we continue to grow through development.
As a result of our continued strong operating results, we announced revised core FFO guidance for 2021 in a range of $1.71 to $1.75 per share compared to the previous range of $1.69 to $1.73 per share.
The $1.73 midpoint of our revised core FFO guidance represents a nearly 14% increase over 2020.
For same-property NOI growth on a cash basis, we have increased our guidance to a range of 5% to 5.4% from the previous range of 4.75% to 5.25%.
We continue to outperform our underwriting assumptions for speculative developments, both in the timing of lease-up and in the rental rates we're achieving, while we have maintained a solid list of build-to-suit prospects as well as land sites in various stages of due diligence and entitlements.
Based on these prospects, our revised guidance for development starts is between $1.3 billion and $1.45 billion compared to the previous range of $1.1 billion to $1.3 billion.
We've updated a couple of other components of our guidance based on our more optimistic outlook as detailed in a range of estimates exhibit included in our supplemental information on our website.
In closing, I'm incredibly proud of our team's execution in leasing, capital deployment and development starts.
We started the year with very solid growth expectations and have exceeded every one of them, resulting in a nearly 14% growth in core FFO at the revised midpoint.
Our shareholders should be very pleased with our dividend increase of $0.025 per share.
This 9.8% increase marks our seventh straight year of annual dividend increases, representing a growth of over 65% over that period.
Looking out to the next few years, our operating platform is perfectly positioned to take advantage of the numerous growth drivers benefiting the logistics sector.
These drivers, combined with the undersupply of new available warehouse product, will allow us to maintain our high occupancy rates and rent growth while creating substantial profit margins on our $1 billion-plus development pipeline.
The net result of these factors is our belief we can continue to grow earnings at approximately 10% pace for the foreseeable future.
[Operator Instructions] Sean will now open it up and take our first question.
 Assistant:

Chosen response:
compname reports q3 core ffo per share $0.46.
q3 ffo per share $0.40.
q3 core ffo per share $0.46.


Prompt:
Human: For more information about those risk factors, we would refer you to our December 31, 2019 10-K that we have on file with the SEC.
We hope all of you joining us today as well as your families are safe and healthy.
Let me start by saying that 2020 was another outstanding year for Duke Realty.
Even amid the global pandemic and a major US recession, we exceeded all of our 2020 goals, including our original pre-pandemic operating and financial guidance metrics.
We also capped off the year with fourth quarter leasing volume being the strongest quarter of the year, and just after quarter end, executed a significant debt transaction to bolster our balance sheet, which sets us up for a great start to 2021.
Let me recap the highlights of our outstanding year.
When the pandemic hit, we engaged our business continuity plan to ensure the health and safety of our employees, our customers and our construction work sites.
This was executed extremely well and I'm happy to resort cases at Duke Realty were very minimal.
We signed nearly 21 million square feet of leases, we maintained the occupancy of our stabilized portfolio between 97% and 98% throughout the year, and our total portfolio which includes our under development pipeline ended the year at 96% leased, the highest level we've ever achieved.
We renewed 70% of our leases for 83% when including immediate backfills and attained 29% GAAP rent growth and 14% cash rent growth on second generation leases throughout the year.
We grew same property NOI on a cash basis 5%, which included -- which exceeded our revised guidance expectations.
We commenced $795 million in new developments that were 62% pre-leased, 67% of which were in coastal Tier 1 markets.
We placed $730 million of developments in service that are now 94% leased.
We completed $322 million of property dispositions and $411 million of property acquisitions.
We raised $675 million of debt at an average -- at a weighted average term of 20 years and an average coupon of 2.4%.
We increased our annual common dividend by 9.1%.
And finally, we've continued to run our Company in the most responsible manner with our ESG culture and numerous ESG achievements.
I'll first touch on overall market fundamentals.
The fourth quarter demand was exceptional in logistics sector with 104 million square feet of absorption, which was the highest on record.
Demand exceeded supply for the quarter by about 30 million square feet which nudged national vacancy rates down to 4.6%, which is still roughly about 200 basis points below long-term historical averages.
For the full year, demand was 225 million square feet, compared to a sly number of 265 million square feet.
Even when adjusting for the significant amount of activity we saw from Amazon this year, the full year 2020 net absorption was still 12% higher than 2019.
For transactions larger than 100,000 square feet, e-commerce users comprised 22% of total demand and 3PLs about 26%.
Comparatively, e-commerce demand in our own portfolio represented about 20% of our total leasing square footage volume for the year.
This segment of the demand market, users over 100,000 square feet, continues to be the most active subset.
To that end, we signed 29 deals in the fourth quarter over 100,000 square feet in our portfolio.
Asking rental rates rose again in the fourth quarter, up 8.3% over this time last year.
This rate of growth is about 100 basis points higher than the five-year historical average of 7.1%.
We see this trend continuing in 2021 with macro rent growth levels in the mid-single digits.
In our own portfolio, we had our strongest quarter of the year with 9.7 million square feet of leases executed, which is our second highest quarter ever in our Company's nearly 50-year history.
Our average transaction size was 104,000 square feet.
In addition, the average lease term signed during the quarter was 7.5 years.
On the rent collections side, we averaged 99.9% for the fourth quarter and 99.9% for the full year, arguably best-in-class in the entire REIT sector.
These figures include a very small amount of deferral agreements and credit enhancement collections as detailed in the supplemental package.
Looking forward, our overall tenant credit quality is very strong.
We do have a handful of tenants and industries most acutely impacted by COVID that are in financial difficulty, which Mark will touch on in a moment as to their minor impact on our 2021 financial numbers.
We do have a strong prospect list of backfills for most of these spaces.
So the longer term impact in the situation we believe will be positive.
At quarter end, our stabilized in-service portfolio was 98.1%.
The lease activity for the quarter combined with the strong fundamentals I touched on led to another great quarter of rent growth of 13% cash and 27% GAAP.
We also had a very strong quarter in first-generation leasing, in our speculative developments on our construction, we executed two significant leases in the quarter.
The first was a 622,000 square foot lease in Northern New Jersey to a leading national home furnishings retailer looking to expand its supply chain network for inventory redundancy, often referred to as safety stock or referred to as increased inventory levels, for them to take 100% of the facility -- 100% of the space in that facility.
The second notable lease transaction in the spec project was 290,000 square feet lease we signed in the South Bay submarket of Southern California.
This lease was a major -- was to a major national beverage distributor to take 100% of the space as well.
It's important to note both these buildings are still under construction and not scheduled to be completed until the second and third quarters of this year.
Turning to development, we had a tremendous quarter starts, breaking ground on eight projects totaling $420 million in cost and 69% pre-leased.
In total, nearly 70% of our fourth quarter development starts were in coastal Tier 1 markets and five of our eight projects were redevelopments of existing land and site structures.
Our development pipeline at year-end totaled $1.1 billion with 80% of this allocated to coastal Tier 1 markets.
This is a larger pipeline than we had a year ago and the allocation to coastal Tier markets is also higher than a year ago.
The pipeline is 67% pre-leased and we expect to generate margins in the 30% to 40% range.
Looking forward, our prospect list for new starts in 2021 is very strong, and our land balance at year-end totaled $297 million, with nearly 80% of this allocated to coastal Tier 1 markets, setting us up very well for future growth.
We had a very active quarter on both dispositions and acquisitions.
Consistent with our strategy to increase our exposure to coastal Tier 1 markets, we sold $276 million of assets in the fourth quarter, comprised of two facilities in the far Northwest submarket Indianapolis, one in the far Northeast market of Atlanta, one facility in the Western portion of the Lehigh Valley and an asset leased to Amazon in Houston.
In turn, we used these proceeds to acquire two assets in Southern California and a portfolio in Seattle for $305 million, that in aggregate are 74% leased, with an expected initial stabilized yield in the mid-4s and long-term IRRs -- unlevered IRRs in the mid-6s.
The Seattle portfolio encompasses three buildings that are 69% leased in aggregate located in the DuPont submarket and adjacent to an existing facility we developed several years ago.
For the full year, our capital recycling encompassed $322 million of asset sales and $423 million of acquisitions.
Combined with the development previously mentioned by Steve, this activity moves our coastal Tier 1 exposure to 41% of GAV and our overall Tier 1 exposure to 67%.
We expect this recycling to continue in 2021 with dispositions primarily from the monetization of some of our Amazon assets, allowing us to manage our tenant exposure as well as some Midwestern assets to further refine our geography.
I am pleased to report the core FFO for the quarter was $0.41 per share compared to core FFO of $0.40 per share in the third quarter and represented a 7.9% increase over the $0.38 per share reported for the fourth quarter of 2019.
Core FFO was $1.52 per share for the full year 2020 compared to $1.44 per share for 2019, which represents a 5.6% annual growth rate.
FFO as defined by NAREIT was $1.40 per share for the full year 2020 which is lower than the core FFO due mainly to debt extinguishment charges.
We grew AFFO by 6.2% on a share adjusted basis compared to 2019.
Same property NOI growth on a cash basis for the three months and 12 months ended December 31, 2020 was 3.3% and 5% respectively.
Same property growth for the quarter was driven by continued strong rent growth and a 20-basis point increase in average commencement occupancy within our same property portfolio from the fourth quarter of 2019.
Net operating income from non-same-store properties was 17.3% of total net operating income for the quarter.
Same property NOI growth on a GAAP basis was 3.1% for the fourth quarter and 2.8% for the full year 2020.
Bad debt expense for the year was primarily related to non-cash straight-line reserves, which negatively impacted GAAP same property NOI.
We finished 2020 with $295 million outstanding on our unsecured line of credit, which we refinanced earlier this month with a $450 million, 1.75% 10-year green bond issuance which will bear interest at an effective rate of 1.83%.
The pricing on this transaction was very attractive with our effective rate incorporating a 70-basis point spread over treasury rates which at the time was the lowest credit spread ever on a 10-year REIT bond offering.
We intend to continue a robust pace of growth in 2021, which we anticipate to fund with the combination of asset dispositions, internally generated cash flow, short-term use of our line of credit and a potential unsecured bond issuance later in the year.
Also, if additional growth opportunities arise, it's possible we issue a modest amount of equity through the ATM on an opportunistic basis.
From a macro outlook perspective, we expect the 2021 environment to be overall relatively strong and improving each quarter in light of the expected federal stimulus and vaccinations.
Supply and demand are relatively in balance.
The overall fundamentals picture is quite supportive of continued market rent growth and thus a positive setup for pricing power and new development starts.
With this as a backdrop, yesterday, we announced the range for 2021 core FFO per share of $1.62 to $1.68 per share with a midpoint of $1.65, representing an 8.6% increase over 2020.
We also announced growth in AFFO on a share adjusted basis to range between 5.8% and 10.1% with the midpoint at 8%.
Our average in-service portfolio occupancy range is expected to be 95.7% to 97.7%.
Same property NOI growth on a cash basis is projected in a range of 3.6% to 4.4%%.
Our guidance for same-property NOI includes the negative impact from a few tenants Steve mentioned that we expect to terminate in early 2021.
We expect proceeds from building dispositions in the range of $500 million to $700 million, which we will use to fund our highly accretive development pipeline.
Acquisitions are projected in the range of $200 million to $400 million with a continued focus on infill coastal markets and facilities with the repositioning or lease-up potential.
Development starts are projected in the range of $700 million to $900 million with a continuing target to maintain the pipeline at a healthy level of pre-leasing.
Our pipeline of build-to-suit prospects continues to remain robust and the $800 million midpoint of our 2021 guidance is consistent with our actual development starts for 2020.
More specific assumptions and components of our guidance are available in the 2021 range of estimates document on the Investor Relations website.
In closing, I'd like to reiterate what a great year 2020 was for Duke Realty amid the pandemic and a recession.
As we look ahead into 2021, the demand drivers remain exceptionally strong.
Supply and demand remain in balance and we anticipate another year of strong results.
This is evidence that our 2021 guidance of $700 million to $900 million of expected new development starts, strong occupancy expected to remain elevated and most of all evident with our expected growth in FFO per share and AFFO of 8.6% and 8% in the midpoints respectively.
This level of growth is what we believe should be achievable on a consistent basis going forward.
Our performance is the result of a decade of portfolio repositioning with a steadfast focus on quality, investing in selective submarkets and strengthening our balance sheet.
We will continue to see added value created by our dominant development platform and we believe we can continue this level of growth well into the future.
Also, please remember the prompt for our system is now one-zero.
Sean, you may open up the lines for our first question.
 Assistant:

Chosen response:
q4 core ffo per share $0.41.
q4 ffo per share $0.40.
introducing 2021 guidance for core ffo of $1.62 to $1.68 per diluted share.
sees 2021 guidance for ffo, as defined by nareit, of $1.58 to $1.68 per diluted share.


Prompt:
Human: As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those implied by our comments today.
Since our last earnings call, we have made outstanding progress on multiple fronts.
I'll highlight just four.
First, we increased our total liquidity and decreased our total debt through a successful preferred equity offering.
Second, we reduced our monthly burn rate, significantly beating our prior expectations.
Third, we reopened five additional hotels.
And fourth, we struck a sweeping deal with Marriott that not only increased the NAV of our portfolio by $50 million but distinguishes DiamondRock's portfolio as the least encumbered by long-term management agreements among all full service public lodging REITs.
Now, while we have made good progress and remain optimistic about the future of travel, the pandemic we are living through has obviously created tremendous dislocation in near-term demand.
In the third quarter, there were some encouraging early signs of a recovery in travel demand.
The relative bright spot has been in leisure travel, which of course is elective travel.
Guests have been checking into the drive-to resorts DiamondRock is known for.
In contrast, business travel and group business demand has only marginally improved and is likely to remain very constrained until there is a healthcare solution such as a vaccine, effective therapy or a massive national testing program.
Interestingly, we are seeing signs of pent-up demand.
So, we believe there is a chance for a meaningful snap back on the other side of the healthcare solution.
Personally, this is my fourth downturn, and we know how to manage through these environments.
That experience is why DiamondRock has always embraced a low-leverage and conservative balance sheet strategy.
We currently have more than enough liquidity to carry the Company until such time as we are cash flow positive once again.
History shows that travel demand always eventually surpasses the peak of the prior cycle, and we remain optimistic that this recovery ultimately will be no different.
But make no mistake, this is the most difficult operating environment of modern times and requires almost herculean efforts to ensure guest and employee safety first, while trying to preserve cash flow.
Although the environment required significant reductions in staffing, we were able to soften the blow to hotel associates with nearly $8 million in severance paid out this year.
Rest assured that we are doing everything possible to be responsible fiduciaries and community citizens while making certain that DiamondRock is set up for future success.
Let's turn specifically to DiamondRock's third quarter.
Hotel adjusted EBITDA in the quarter was a $17.4 million loss, a marked improvement from the $30.4 million loss in the second quarter.
Corporate adjusted EBITDA was a $24.4 million loss as compared to a $37 million loss in the second quarter.
Third quarter adjusted FFO per share was a loss of $0.22 as compared to a loss of $0.20 in the second quarter.
Two items worth noting with these results: one, they exclude $7.4 million in onetime severance costs; and two, this one is important, adjusted FFO per share was negatively impacted by a non-cash income tax valuation allowance recognized in the quarter of $12.4 million or $0.06 per share.
In other words, our third quarter AFFO would have been a loss of only $0.16 per share without that tax adjustment.
Moreover, in the quarter, we successfully reopened five more hotels and had nearly 90% of our rooms available to sell at the end of the third quarter.
To illustrate the progress, that 90% figure compares to just 58% at the end of the second quarter.
Furthermore, portfolio occupancy jumped over 1,000 basis points from the second quarter to 18.6%.
Recall that we ended the second quarter with just 22 hotels open and operating.
We opened a 23rd hotel, our Lodge at Sonoma Resort, on the first day of the third quarter.
Those 23 hotels saw occupancy rise from 26% in July to 28% in August, and finally, to 31% in September.
In July, we reopened two other hotels besides The Lodge at Sonoma that included Hilton Boston Downtown and the Hilton Burlington on Lake Champlain.
Our decision to reopen hotels has been and continues to be dynamic and data-driven.
We reopen hotels if we can lose less money doing so.
Based on this approach, the data led us to keep three of our New York City hotels closed but to reopen our two big box hotels, the Chicago Marriott and the Boston Waterfront Westin in early September.
Now, as you'd expect, nightly occupancy is comparatively lower at these two big box hotels than the balance of the portfolio.
But a resilient base of contract business and aggressive cost controls has thus far confirmed that reopening was the right decision.
For the entire portfolio, total revenue decreased 79% in the quarter as a result of an 81% decline in RevPAR, that was partially offset by a smaller decline in food and beverage revenue.
Total revenues were $50 million in the quarter as compared to just $20.4 million in the second quarter.
Over the summer, monthly revenues showed steady progress, rising from slightly over $11 million in June to over $14 million in July, to over $16 million in August, and finally, reaching almost $20 million in September.
Encouragingly, revenue in October looks to be coming in even a little bit better at over $22 million.
Okay, let's talk about profitability.
To maximize absolute profit, our asset managers are working closely with our operators to aggressively drive revenue while implementing strict expense controls.
In the third quarter, every department, rooms, F&B and other, saw material improvement in profitability as compared to Q2 with sequential acceleration in flow-through that surpassed internal forecast.
For example, the rooms department margin rose from 45% in the second quarter to 64% in the third quarter, driven in large part by a 25% sequential reduction in the cost per occupied room.
Over the course of the quarter, we saw the number of hotels achieving breakeven profitability continue to expand.
In June, we had 10 hotels generating positive gross operating profit, or GOP, and this figure rose to 18 hotels by the end of September.
Over that same period, GOP margin moved from a negative 35% to a positive 9% margin as a testament to our ability to drive revenue while constraining costs.
On an EBITDA basis, six hotels in June were operating profitably, and that figure rose to 10 hotels by September.
What you cannot see, however, is an additional 10 hotels were, on average, approximately $100,000 from breakeven EBITDA in September.
Here's one other additional data point I think you'll find interesting.
If we exclude the two big box hotels, the Chicago Marriott and the Westin Boston, from the 27 hotels we had open in September, the remaining 25 hotels collectively would have been within $200,000 of breakeven EBITDA.
Clearly, the portfolio is near a favorable tipping point for profitability, and much of the source of that strength is DiamondRock's drive-to resort portfolio.
Our resorts are performing very well and generated positive and growing EBITDA every month in the quarter.
Let me share with you a couple of highlights from just two of our resorts to give you an idea of the pockets of strength we are seeing.
The Landing in Lake Tahoe saw a 19% increase in RevPAR over the third quarter 2019 with an ADR of nearly $500 per night and total RevPAR approaching nearly $560 per night.
EBITDA margins at this hotel increased nearly 1,400 basis points as compared to the third quarter in 2019.
The L'Auberge de Sedona saw a 21% increase in RevPAR over the third quarter in 2019 with total RevPAR approaching nearly $675 per night.
Moreover, we are taking steps to ensure this success continues.
For example, subsequent to the quarter-end, we completed a new Michael Mina restaurant in Sonoma as part of the larger ROI up-branding of that resort from a Renaissance to an Autograph.
The restaurant opened strong, and in just the first month of operation, generated nearly $325,000 in revenue.
We also expect the restaurant to create a halo effect at that resort, which will allow us to increase room rates.
Another example of strength is likely to come from the almost complete renovation of the Barbary Beach House in Key West, which will be done before year-end.
This former Sheraton has been reimagined into a very special lifestyle boutique that is already getting rave reviews.
And we are optimistic about our ability to drive rate this winter season.
Switching gears, let's look at each of our segments of demand in the quarter.
Leisure is unquestionably the strongest performing segment in the portfolio.
The resort portfolio performance increased strongly and steadily over the quarter from 36% occupancy and $141 in total RevPAR in July to over 43% occupancy and nearly $191 in total RevPAR in September, a $50 per night jump.
For the third quarter, ADR at our resorts increased 2.2% as compared to last year with September showing good strength and up 5%.
The resilience of rate at our resorts tells us price is not a gating issue in making the travel decision.
This is an encouraging data point that the same people will ultimately be prepared to travel when their employers feel comfortable letting them get back on the road.
As for business transient, our current thinking is that we will not see a material change until there is an announcement of a vaccine or broad distribution of a therapy.
For our portfolio, business transient remained soft but it did improve.
In the 3rd quarter, business transient revenue and rooms more than doubled from their contribution in the second quarter.
In fact, business transient rooms were 23% of total rooms sold in the third quarter, up from only 19% in the second quarter.
Similarly, the group segment remains a relative soft spot.
Outside of social gatherings such as weddings, we continue to expect that large corporate group events will be the final segment to recover.
Nevertheless, there are some encouraging data points to share with you.
The first data point is that DiamondRock saw approximately 250,000 room nights of leads generated each month during the quarter, with most of the inquiries for 2021 and 2022.
Interestingly, RFP conversion ratios to awarded business are at near normal rates.
Also, sports teams are playing.
DiamondRock has arrangements with seven professional football and baseball teams, Several NCAA sports teams and even a PGA golf tournament.
Another good data point is that according to Cvent, September was the strongest month of RFP activity since March.
September volume is up 18% versus August, and October is on pace for a strong performance, too.
Cvent also reports that overall group rates are down approximately 5% to 10% in 2021 but up 5% to 10% in 2022.
Looking at 2021, rates are softer earlier in the year when uncertainty is the highest and quickly approach pre-pandemic levels by late 2021.
Group rate integrity in RFPs has been relatively more resilient in New York City, Boston and Chicago than it has been in San Francisco.
Again, an encouraging trend, given our geographic mix.
Before handing the call off to Jeff, I did want to touch on our capital investments.
We held capex spending to $8.6 million in the quarter, which is inclusive of approximately $0.5 million for Frenchman's Reef.
Outside of life safety projects or emergency repairs, our primary focus remains conserving capital.
However, we did prioritize projects that can produce a near-term earnings benefit and high return on investment.
These projects include the F&B repositioning initiatives at our hotels in Sonoma and Charleston, as well as completing the conversion renovation at the Barbary Beach Resort in Key West.
We expect these investments will be measurable earnings contributors in 2021, and the average IRR for these projects is expected to exceed 30%.
Before leaving capex, I did want to remind everyone that we have paused the reconstruction of Frenchman's Reef.
Our current plan is to look for a joint venture partner for this project over the next year before restarting construction in order to preserve our balance sheet capacity.
Let me start by talking about our liquidity.
We improved our liquidity in the quarter by nearly $71 million as a result of the successful preferred offering -- preferred equity offering.
At the end of the third quarter, we had approximately $435 million of total liquidity, including corporate-level cash, hotel-level cash and undrawn revolver capacity.
I'm pleased to report, we are beating our original estimates for monthly cash burn rates, and we continue to make significant gains.
Before capex, our average monthly burn rate in the third quarter, pro forma for the preferred dividend, was $14.7 million.
Let me walk through the sources of the $2 million improvement.
The net operating loss at the corporate NOI level was $10 million per month in the quarter, as compared to our earlier estimate of $11.5 million, a $1.5 million per month improvement, owing, among other reasons, to improving top line, strict cost controls and the decision to reopen additional hotels.
Debt service was $4.1 million per month in the quarter, as compared to a prior estimate of $4.5 million.
The $3,000 to $4,000 per month savings is a result of forbearance that will reverse in the coming months.
The straight line capital expenditure budget in both cases is $3 million per month.
Including capex, our total Company burn rate was $17.7 million during the quarter and implies a cash runway through late 2022.
As Mark mentioned at the start of the call, we strongly believe that we have more than enough liquidity to carry us through to a point where we are cash flow positive, and that is why we took the step of issuing preferred equity last quarter so that we would not be pressured into a common equity offering in the future.
As it relates to the outlook for our burn rate, we are not providing specific guidance.
However, remember that Q4 and Q1 historically see weaker demand levels, and there is a risk that the recent increases in COVID cases throughout much of the US could lead to municipalities rolling back the operating guidelines that have allowed us to reopen.
While we will continue to do everything within our power to minimize loss and maximize profitability, I encourage you to consider that sequential revenue and profit growth could prove challenging in the next two quarters.
We updated our analysis of breakeven profitability and estimate that on whole, the portfolio will achieve breakeven profitability at 25% occupancy on a gross operating profit basis and 40% on a net operating income basis.
This is about 500 basis points lower occupancy than our original -- or I should say, our earlier estimates of breakeven occupancy.
The average daily rate assumed in this analysis is approximately 20% to 25% decline from 2019 levels.
Individual hotels can, of course, vary from the average.
We ended the third quarter with $111 million of cash and over $300 million of undrawn capacity on our revolver.
We executed a $119 million, 8.25% Series A preferred offering in August and elected to use $50 million of the proceeds to pay down our revolver, which remain available to us, and retain the remaining net proceeds from the offering in cash.
At the end of the quarter, we had $605 million of non-recourse mortgage debt at a weighted average interest rate of 4.2% and $500 million of bank debt, comprised of $400 million of unsecured term loans and just under $100 million drawn on our unsecured revolving credit facility.
As you've heard me say many times in recent months, our debt composition and maturity schedule is perhaps our balance sheet's greatest strengths.
In general, banks are reluctant to commit new capital at this time, and they are keenly focused on: one, curtailing over-reliance on bank debt; and two, addressing 2020 to 2022 maturities without meaningfully impairing existing liquidity.
Not surprisingly, these factors are the impetus for many travel and leisure companies entering the high-yield bond market, and I expect those conditions will remain a driver for capital markets activity in the industry in 2021.
For DiamondRock, bank debt is less than 50% of our net debt and net debt is just 22% of our estimated replacement cost of our hotels.
We have just one mortgage maturity in early 2022, which has an extension option.
More critically, our revolver matures in 2023 and our term loans mature in 2024.
Each has extension options, too.
In short, we are not seeking new debt capital commitments from our lenders at this time.
We believe these facts, in combination with our strong liquidity and declining burn rate, greatly improve the likelihood DiamondRock can avoid the issuance of dilutive capital and pivot to offense at the appropriate time.
With that, I will turn the floor back over to Mark.
In late August, we announced a sweeping transaction with Marriott International that has several features.
Let me hit the highlights of that deal.
Most significantly, we converted five of our managed hotel contracts to franchise agreements.
These conversions were completed in September, and we have engaged a variety of leading third-party managers that are uniquely suited to each asset.
In addition to the 50 basis point to 100 basis point improvement in residual cap rate for the five hotels that generally [Indecipherable] to franchise properties, we believe the change will produce approximately $2 million of incremental profit on stabilized cash flows.
We've already started reaping benefits from the change, as we consolidated finance and management roles in Alpharetta, Denver, Sonoma and Charleston that will yield almost $400,000 of annual savings.
The second biggest value creator from the deal is a new franchise agreement to up-brand the Vail Marriott Resort to a Luxury Collection brand upon completion of the renovation next year.
As you recall, we had undertaken the renovation of this hotel to a luxury standard over the past few years, and the lobby renovation next year is the final phase.
We expect it to be done in late 2021 in time for the ski season.
Consistent with prior expectations, we estimate this repositioning and sale could result in $3 million of incremental EBITDA, given the significant rate differential that exists today between the resort as a Marriott and the luxury competitive set.
The third benefit of the deal is that we have the right, but not the obligation, to convert the JW Marriott Cherry Creek to a Luxury Collection brand with a small renovation.
We are currently reviewing the ROI on this opportunity.
The final benefit to us is that we secured an explicit right to terminate the Autograph Collection franchise agreement encumbering the Lexington Hotel for a termination fee.
We believe that this improves the residual cap rate of the property by greatly expanding the universe of potential buyers.
In the aggregate, we calculate that the sweeping agreement adds at least $50 million of net asset value to the DiamondRock portfolio.
No cash payment was associated with this agreement.
Instead, DiamondRock agreed to standard renovation scopes that will be completed over the next three to five years for the converted hotels at cost generally consistent with our normal internal expectations.
In addition, we provided franchise extensions at our Westin D.C. and Westin San Diego properties at market terms, ensuring that these hotels will remain dominant hotels in their respective markets.
The second announcement we made in late August was the addition of Mike Hartmeier to the Board of Directors, effective October 2020.
Mike is one of the most experienced lodging M&A bankers in the industry, and we believe he will be a valuable, unbiased voice in the boardroom to pursue options that maximize value for shareholders.
Turning to our outlook, while we saw improvement in the third quarter, we do not expect the industry to significantly rebound until there is a healthcare solution to the pandemic.
Our current view is that at least one of the 11 vaccines in Phase III trials could announce positive findings in the next 90 days with broad distribution by mid-2021.
This, in combination with improved patient outcomes and broader acceptance of safety protocols such as social distancing and wearing masks, should lead to increasing travel activity and improving financial performance.
Once profitability is restored, we expect to see a handful of well-capitalized lodging platforms pivot to exploit what could be an extended period of accretive investment opportunities.
We have a solid balance sheet to allow us to withstand the substantial downturn and then pivot to offense at the right time.
We have great assets, strong industry relationships and an experienced management team that has successfully weathered numerous prior downturns over the prior 30 years.
 Assistant:

Chosen response:
q3 adjusted ffo loss per share $0.22.
is not providing updated guidance at this time.


Prompt:
Human: Joining me on the call today are Gene Lee, Darden's Chairman and CEO; Rick Cardinas, President and COO; and Raj Vennam, CFO.
Any reference to pre-COVID when discussing second quarter performance is a comparison to the second quarter of fiscal 2020.
This is because last year's results are not meaningful due to the pandemic's impact on the business and the limited capacity environment that we operated in during the second quarter quarter of fiscal '21.
We plan to release fiscal 2022 third quarter earnings on Thursday, March 24 before the market opens followed by a conference call.
Gene will share some brief remarks, Rick will give an update on our operating performance and Raj will provide more detail on our financial results and an update to our fiscal 2022 financial outlook.
Sales trends remained strong throughout the quarter, as all our brands stayed laser focused on creating memorable guest experiences.
Despite the toughest inflationary environment we've seen in years, we achieved strong profitable sales growth.
Our ongoing success navigating the pandemic is a testament to the power of our strategy, driven by our back to basics operating philosophy and the strength of our four competitive advantages.
Our disciplined commitment to our strategies allow us to manage this environment well, while returning significant cash to our shareholders.
People and product will continue to be our focus and Rick will share more details about that in a minute.
Additionally, our teams have done a great job managing inflation effectively and Raj will provide more color on that during his remarks.
Holidays are the busiest time of year for our restaurant teams as they delight our guest and help create lasting holiday memories.
This time of year is also a great reminder that being of service is at the heart of our business, which is why we're committed to serving our guests, our team members and our communities.
One of the ways we serve our communities is by helping fight hunger, this fiscal year, through our foundation, Darden provided $2.5 million to help our partners at Feeding America add refrigerated trucks for 15 food banks to support mobile pantry programs and distribution in communities facing high rates of food insecurity.
We are uniquely positioned to help and by leveraging our scale and relationships with partners like Penske Truck Leasing and Lineage Logistics, we're proud to do our part to help get food into the hands of people who need it.
Finally, earlier today, we announced that effective May 30th, Rick will succeed me as Chief Executive Officer and will join Darden's Board of Directors.
This is the right time for this transition and I look forward to continuing to serve as Darden's Chairman.
Our company is in a clear position of strength and this is also the right time for me and my family, I'm excited for Rick, who has been a tremendous partner over the last seven years and is one of the best strategic thinkers I've worked alongside.
Our brands have tremendous opportunity ahead of them and Rick is the perfect person to lead Darden into the next chapter.
It is an honor to be appointed Darden's next Chief Executive Officer and I'm grateful to Gene and the Board for their confidence in me.
It is humbling to lead 170,000 outstanding team members, who nourish and delight everyone we serve.
I was incredibly fortunate to work with each of Darden's CEOs.
So, I have a strong appreciation for the legacy of leadership I'm inheriting.
By upholding our commitments to operational excellence and maximizing the power of the Darden platform, we will continue to execute our strategy to drive growth and shareholder value.
Turning to the quarter.
Our restaurants continue to execute at a high level.
Our focus on simplifying operations to drive execution remains our top priority, which is why we once again paused any new initiatives during the quarter in order to eliminate distractions and allow our operators to focus on running great shifts.
This pause also ensures they can zero-in on people and product as we navigate through the current staffing and supply chain challenges.
From a people perspective, we feel good about the progress we've made on the staffing front.
Across our brands manager staffing levels are above historical norms and team member staffing levels continue to improve.
Our new hiring system has made it easier to source talent, giving our management teams more time to focus on successfully onboarding and training new team members.
We also continue to invest in our team members further strengthening our industry leading employment proposition.
Earlier this year, we committed to increasing the minimum hourly earnings for our restaurant team members to $12, which includes income earned through gratuities by January 2023.
However, given the strength of our performance, we are accelerating that timing to January 2022.
This primarily impacts entry level roles, such as hosts, busters [Phonetic] and dishwashers.
And with this change, we expect our restaurant team members will earn on average approximately $20 per hour.
Our people are the key to our performance.
We work hard to be the employer of choice in our industry and we're proud that our retention rates for managers and team members are both in the top quartile.
And we will continue to invest in them to retain and attract the best talent in the industry.
On the product side, our supply chain team continues to do a great job making sure our restaurants have the products they need to serve our guests.
Our inventory levels are strong and the team's ability to meet the needs of the business can be seen in the fact that we shipped more cases in the last two quarters than at any time during Darden's history.
The ability to maintain supply continuity for our restaurants minimizes distractions and allows our operators to focus on executing at the highest level, whether our guests or in our dining rooms or enjoying the convenience of to-go.
During the quarter to-go sales continued to benefit from the strength of our digital platform.
This platform not only makes it easier for our teams to execute, it makes it more convenient for our guests to visit, order, pay and pick up.
Off-premise sales accounted for 28% of total sales at Olive Garden and 15% of total sales at LongHorn Steakhouse.
Digital transactions accounted for 60% of all off-premise sales during this quarter and 11% of Darden's total sales.
Finally, we successfully opened 12 new restaurants during the quarter, including a flagship Yard House in Time Square with minimal staffing challenges.
The time to build a new restaurant is longer today than it has been historically and we are also beginning to see longer lead times for kitchen equipment and technology hardware.
Regardless, we remain on track to open approximately 35 to 40 new restaurants this fiscal year.
I also want to recognize our team members in our restaurants and our support center for your tireless efforts in creating exceptional experiences for our guests.
I wish you all a safe and happy holiday season.
Total sales for the second quarter were $2.3 billion, 37% higher than last year, driven by 34.4% same restaurant sales growth and the addition of 34 net new restaurants.
Average weekly sales grew by more than 7% compared to pre-COVID.
Diluted net earnings per share from continuing operations were $1.48.
Total EBITDA was $335 million, resulting in EBITDA margin of 14.7%.
The significant business model improvements we made over the past year and half combined with strong sales resulted in margin growth of 270 basis points compared to pre-COVID.
We expect this to be the highest quarterly EBITDA margin growth this fiscal year as this quarter has the most opportunity given its low seasonality.
We continue to return significant cash to shareholders paying $143 million in dividends and repurchasing $266 million in shares, totaling over $400 million of cash returned to investors in the quarter.
And while we're happy with our performance, cost pressures continue to exceed our expectations on both commodities and labor with total inflations of 6% this quarter.
Our teams continue to demonstrate agility in managing through this environment.
This quarter we implemented several mitigating actions to preserve the strength of our business model, while balancing the impact of our guests and team members.
One of these actions was taking additional pricing.
For the second quarter, total pricing was 2% and we expect back half pricing to approach 4%, resulting in total pricing of just under 3% for the full fiscal year.
We continue to execute our strategy of pricing significantly below our overall inflation to strengthen our value leadership position by leveraging our scale.
This level of pricing covers most of what we consider to be the structural and long lasting impacts of the current inflationary environment and absorbing what we consider to be more short-term fluctuations, while providing future flexibility should there be a need.
For the rest of the fiscal year, we expect commodity and labor inflation to peak in our third quarter and then start to slow down as we enter the fourth quarter and lap commodities inflation of 4.3% in the fourth quarter of last year.
Now turning to our P&L and segment performance for the second quarter.
We're comparing against pre-COVID results in the second quarter of 2020 which we believe are more comparable to normal business operations and with how we've been framing our margin expansion opportunity.
For the second quarter, food and beverage expenses were 220 basis points higher, driven by elevated commodity inflation of 9%, as well as investments in food quality, portion size and pricing significantly below inflation.
Restaurant labor was 90 basis points favorable, driven by sales leverage and efficiencies gained from operational simplifications and was partially offset by elevated wage pressures.
Hourly wage inflation during the quarter was almost 9%.
Restaurant expenses were 130 basis points lower due to sales leverage, which more than offset higher utilities costs.
Marketing spend was $44 million lower, resulting in 230 basis points of favorability.
As a result, restaurant level EBITDA margin for Darden was 18.8%, 230 basis points better than pre-COVID levels.
G&A expense was 40 basis points lower, driven by savings from the corporate restructuring in fiscal 2021, a decrease in mark-to-market expense and sales leverage.
Turning to our segment performance.
Second quarter sales at Olive Garden increased 5% versus pre-COVID, strong performance, especially as we were wrapping against nine weeks of never-ending possible.
This sales growth combined with the business model improvements at Olive Garden helped drive a segment profit margin increase of 320 basis points even while offsetting elevated inflation.
LongHorn continued its strong sales growth with an increase of 22% versus pre-COVID.
However, inflationary pressures including double digits for commodities were at their highest level in the second quarter, resulting in reduction of segment profit margin by 80 basis points.
Sales at our Fine Dining segment increased 22% versus pre-COVID as this segment continues to see a strong rebound in performance.
Segment profit margin grew by 140 basis points, driven by strong sales leverage and operational efficiencies, which more than offset double-digit commodities inflation.
Our other segment grew sales by 7% versus pre-COVID and segment profit margin by 250 basis points.
This segment continues to perform well and we're pleased to see the business model transformation persist.
Finally, turning to our financial outlook for fiscal 2022, we updated our outlook for the full year to reflect our performance year-to-date and our expected performance for the remainder of the year.
We now expect total sales of $9.55 billion to $9.7 billion, representing growth of 9% to 11% from pre-COVID levels, same restaurant sales growth of 29% to 31% and 35 to 40 new restaurants.
Capital spending of approximately $425 million, total inflation of approximately 5.5% with commodities inflation between 7% and 8%, total restaurant labor inflation between 6% and 6.5% which includes hourly wage inflation approaching 9%.
EBITDA of $1.55 billion to $1.6 billion and annual effective tax rate of approximately 14% and approximately 130 million diluted average shares outstanding for the year.
All resulting in diluted net earnings per share between $7.35 and $7.60.
This outlook implies EBITDA margin growth versus pre-COVID similar to our previous outlook of 200 to 250 basis points with flow-through from pricing and higher sales helping offset elevated inflation.
 Assistant:

Chosen response:
darden restaurants q2 earnings per share $1.48 from continuing operations.
q2 earnings per share $1.48 from continuing operations .
sees 2022 total sales of approximately $9.55 to $9.70 billion.
sees 2022 same-restaurant sales versus.
fiscal 2021 of 29% to 31%.
sees 2022 diluted net earnings per share from continuing operations of $7.35 to $7.60.
qtrly blended same-restaurant sales increase of 34.4%.