Prompt:
Human: By now, you have seen our announcement, and I think you would agree we had a great quarter.
Broad-based momentum drove significant improvement in key financial and performance metrics in this quarter.
Revenue grew more than 20% with double-digit gains in each business segment.
Lottery same-store sales rose 9% and were up 19% from the third quarter of 2019, demonstrating an improved underlying business growth profile.
Global Gaming revenues increased over 30% and the segment profit margin reached the highest level in seven quarters.
This was helped by our OPtiMa cost-saving program, which I'm pleased to report we completed during the quarter ahead of schedule.
We are now breaking out our digital and betting business, that will provide you with a more comprehensive view of those activities, which delivered the strongest growth in the quarter.
We recently announced some high-profile new hires underscoring our increased focus on the segment and willingness to invest in this fast emerging business.
We delivered a significant profit in the period.
Operating income was more than double than prior year's level.
Adjusted EBITDA of $407 million yielded a margin of 41%, which is among the strongest we have achieved.
Leverage improved to 3.8 times, the lowest level in the IGT PLC history and below the 4x threshold we have been targeting for some time.
On the heels of excellent year-to-date results and our solid financial condition, the board reinstated a quarterly cash dividend, signaling their confidence in the company's prospects.
It is an important milestone.
We are happy to be in the position of returning capital to shareholders.
Diving a bit deeper into Lottery.
Same-store sales were strongest in our main U.S. and Italy markets, both up double digits in the period.
Our lottery momentum remains strong with the same-store sales up over 50% compared to last year and more than three times Q3 '19 levels.
We recently won several new contracts, including a 10-year facilities management contract with the Connecticut Lottery, where IGT is displacing an incumbent.
We are excited to become their trusted growth partner with our suite of world-class lottery solutions.
We entered a seven-year agreement to upgrade FDJ's current lottery central system to IGT's advanced Aurora platform, featuring enhanced omnichannel capabilities.
This builds on our over 20 years partnership with the operator of the French National Lottery, the fourth largest in the world.
We also secured a new instant ticket service contract with WestLotto.
Germany is the largest lottery extending our 13-year partnership.
Our cloud-based eInstants platform, the first of its kind went live in Georgia during the quarter.
Building on that successful deployment, we intend to roll it out to our other high lottery customers over the next several months.
Our investments in digital are being recognized.
IGT's Mobile Lottery Solutions want Lottery Product of the Year at the 2021 International Gaming Awards.
It is a nice endorsement of our increased focus in this arena.
The year-over-year gains for our global gaming segment are impressive.
We also continue to see sequential improvement in many KPIs.
The global installed base were up, led by North American new and expansion activity and good progress with multilevel progressives.
Yields are also stronger.
On the product sales front, ASP were up nicely, helped by growing demand for our peak series of cabinets.
The improving KPIs are consistent with the overall recovery we are seeing in the market.
This, along with OPtiMa savings has driven substantial improvement in gaming profit margins.
Everyone was excited to be back at G2E this year.
While attendance wasn't that of previous [Inaudible] this year's attendees were serious in their intent and customer sentiment was quite good.
It was a productive show for us.
Among the key IGT highlights was the most robust offer of multilevel progressive we have ever showcased.
We had 18 in total at the show, a mix of both leased and for-sale games.
Haywire and Wolf Run Eclipse were among the most popular MLP titles at the show.
There was a lot of excitement around our new hardware.
We are expanding the high-performing peak family with a supersized Peak65 cabinet, launched in conjunction with the 25th anniversary of the Wheel of Fortune's launch.
The new DiamondRS mechanical reel cabinet was another standout, and we expect will extend our leadership in the Stepper category.
And there was tremendous interest in cashless.
Our resort wallet and IGT cashless and payment solutions received a lot of positive feedback from potential customers.
IGT is unique and well positioned in this area.
We are the only company offering a fully integrated turnkey cashless solution.
It marries convenience and ease of use, one wallet, one account, one step.
The strength of our offer received important industry recognition, recently being named Product Innovation of the Year at the Global Gaming Awards in Las Vegas, and Technology Provider of the Year at the International Gaming Awards.
The creation of a stand-alone digital and betting segment will help you all appreciate the scale, growth profile, and attractive margin structure of the business.
We are already a leader in the B2B ecosystem, and that is reflected in the results with revenue up over 50% year to date and reaching a 32% adjusted EBITDA margin.
Margins should strengthen as the business gains scale even as we increase investments to support growth.
Success in iGaming comes down to content.
Our ability to leverage proven land-based titles in the digital space provides a competitive advantage.
We are seeing success -- we are seeing success with long-standing franchises such as Wheel of Fortune, along with the newer titles like Fortune Coin and, we are increasingly focused on developing digital native content to differentiate and enhance our leadership position.
We are also bolstering our offer with third-party content and recently signed a multiyear content distribution agreement with Yggdrasil, a leading creator of digital games.
Earlier this week, we announced Gil Rotem joining the company as president of iGaming.
In the nearly two decades of industry experience with 888.com and bet365, will help drive the strong growth we expect over the next several years.
We have an equally impressive new hire in sports betting, where we recently appointed Joe Asher, a long-standing industry veteran, as president of the business.
His knowledge of the market will be a great asset as we focus on rolling out our third key retail in digital solutions across the U.S. Outdoor is an important part of the turnkey retail offer and interest in our CrystalFlex sports betting terminal and PeakBarTop is strong.
Players can watch their favorite sports while easily placing sports wagers, enjoying the slots, playing video poker and Keno all on the same machine.
It provides a very rich player experience.
The CrystalFlex won top prize in the Best Consumer-Service Technology category at the GGB Gaming & Technology Awards.
With the strength of our year-to-date results, we are raising our product outlook.
Revenue, profit margins, cash flows and leverage are all expected to be better than pre-pandemic levels.
And with a compelling growth outlook across business segments, we are all-well positioned to create significant value for all stakeholders.
Our results would not be possible without the tremendous dedication of the IGT team and their superb focus on our core values.
We asked a lot of our people during the pandemic.
Now it is the time for us to recognize them.
We intend to provide a special bonus to employees not covered by existing incentive compensation plans who were impacted by furloughs and salary reductions last year.
This will amount to about 5% of the annual base salary for our -- sorry, workforce.
Sustainability, good corporate citizenship and ESG matters and have always been important to AGT.
And our efforts were recently recognized with a reduced interest rate on our term loan facilities.
And with today's news of restating a quarterly cash dividend, we are also giving back to shareholders.
This is an important signal of management and the Board's confidence in our financial condition and business outlook.
We look forward to expanding on our long-term outlook and providing additional insight into our capital allocation plans at the next week's investor day.
We delivered another strong quarter of financial results in Q3 as demand for our products and services drove revenue higher across all segments.
Operating income increased more than 140% year-on-year on high profit flow-through of global Lottery same-store sales growth, including a positive mix impact from Italy lottery sales and strong operating leverage across business segments, primarily associated with savings from the OPtiMa program.
A high-level summary of our key financial results as shown here on Slide 11.
The year-over-year comparisons on a quarterly and year-to-date basis highlight the outstanding resilience of our business.
Year-to-date, cash from operations increased 78% to more than $600 million and free cash flow more than tripled to $445 million.
Our quarter and year-to-date results have been impressive across several key financial metrics, driven by solid revenue growth as well as disciplined cost management including the achievement ahead of schedule of over $200 million in OPtiMa structural cost savings.
During the quarter, IGT delivered nearly $1 billion in revenue, over $200 million in operating income and more than $400 million in adjusted EBITDA.
On a year-to-date basis, revenue and profit grew significantly over prior year levels and exceeded pre-pandemic 2019 levels.
We achieved operating income and adjusted EBITDA margins of 24% and 43%, respectively, bolstered by higher operating leverage.
Now let's review the results of our business segments in detail.
Sustained strength in player demand drove global Lottery revenue up 14% to $652 million.
Global same-store sales increased 9% year-on-year and 19% compared to Q3 2019, with growth across many geographies and games.
Italy lotteries continue to benefit from strong demand, generating 16% same-store sales growth even after other gaming alternatives gradually return with the reopening of gaming halls at the end of the second quarter.
This was primarily fueled by increased instant ticket sales.
We also saw nice growth in iLottery revenue as a result of an expanding customer base.
Same-store sales grew a solid 8% in North America and the rest of the world, driven by continued momentum and the benefit of higher jackpot activity.
Instant ticket product sales revenue was also up nicely.
Strong same-store sales as well as the higher mix of Italy business will generate more revenue per wager led to margins well above the normal range.
Operating income increased 19% to $234 million, and adjusted EBITDA was 12% and to almost $350 million with a strong 53% adjusted EBITDA margin.
The progressive recovery continued during the quarter with Global Gaming delivering the highest quarterly revenue and profit levels since 2019.
Revenue rose 34% to $289 million, driven by solid increases in active units, yield, number of machine units sold and ASPs.
Terminal service revenue increased 44% on a higher number of active machines and growth in total yield.
The installed base in North America increased over 500 units sequentially, driven by North America new and expansion activity and additional placements of multiyear progressive units.
In the rest of world, the installed base was up over 400 units year-on-year and stable sequentially.
Currently, over 95% of our U.S. and Canada casino installed base is active with closures still impacting some cruise ships and capacity restrictions still limiting the number of active machines in Canada.
We sold around 5,700 units globally in the quarter compared to about 3,700 units in the prior year.
Unit shipments were driven primarily by strong replacement demand from casino and VLT customers.
Profitability measures were significantly higher in the quarter as revenue growth and savings realized from the OPtiMa structural cost savings program propelled higher operating leverage.
Today, we are reporting the results of Digital & Betting as a dedicated segment for the first time.
We decided to create a stand-alone segment, given the leadership positions we hold as a B2B provider in the market, and in an effort to provide greater visibility to this high-growth business.
Digital & Betting results were previously included as part of Global Gaming.
We recently filed recast historical financial information related to this resegmentation with the SEC, which you can find on the Investor Relations section of our website.
In the third quarter, revenue increased 37% year-on-year to $43 million, driven by double-digit increases across both iGaming and sports betting.
Growth in iGaming was primarily driven by expansion to new markets, including Michigan, Alberta, Finland, and Sweden, but also saw a nice contribution from existing customers in jurisdictions like New Jersey and Pennsylvania.
While sports betting was mainly bolstered by existing customers in the quarter, we are rapidly expanding our footprint with many new customers recently announced.
High flow through of revenue growth drove profitability significantly higher, with operating income doubling over the prior year to $12 million and adjusted EBITDA increasing 66% to $15 million.
The Digital & Betting segment delivered 36% EBITDA margins in the quarter bolstered by lower jackpot funding and the timing of marketing spend.
This is an impressive achievement from an emerging business.
We delivered $113 million in cash from operations and $66 million in free cash flow during the third quarter.
Cash flow in the quarter were impacted by the timing of collection cycles in Italy and higher cash outlays as working capital items returned to more normal levels.
Very strong year-to-date free cash flow of almost $450 million, coupled with approximately $900 million in net proceeds from the sale of our Italy gaming business has allowed us to reduce our net debt by over $1.2 billion this year.
We received EUR 100 million payment on the Italy asset sale during the quarter, ahead of the December 2021 to date.
As a reminder, the final payment of EUR 125 million is due in September 2022.
The leverage has improved to 3.8 times, well below pre-pandemic levels and exceeding our target of four times.
And as Marco mentioned, IGT board of directors has reinstated a $0.20 per share quarterly cash dividend to be paid in early December.
Our credit profile has greatly improved over the last year due to a significant reduction in net debt increased liquidity and extended debt maturities.
During the quarter, we successfully amended and extended our term loan facility, adding the unique feature of an ESG margin adjustment.
This is a sound testament to our sustainability commitment.
I am proud and happy to say that we have already achieved an increase in our ESG rating, lowering our borrowing cost another $0.5 million on an annual basis.
In summary, I would like to highlight that we reached a significant milestone this quarter with the year-to-date revenue and profit exceeding pre-pandemic results during the same period in 2019.
The performance of each of our business segments has been impressive with Global Lottery achieving record results on strong player demand, global gaming delivering sequentially higher results each quarter since 2019 and Digital & Betting drives significant growth in a nicely profitable business.
We achieved our '21 goal of delivering over $200 million in OPtiMa structural cost savings ahead of schedule and expect more benefits to materialize as the Global Gaming segment continues to scale.
We'll talk a bit more about this next week during our investor day.
We generated record level of cash flow so far this year, which allowed us to significantly pay down debt and improve our leverage to 3.8x.
And lastly, IGT board of directors have instated a $0.20 per share quarterly cash dividend, signaling my confidence in our long-term outlook and providing a nice return of capital to shareholders.
On the back of very strong year-to-date results, we are raising our outlook as we currently expect to deliver revenue of approximately $4.1 billion, operating income of about $900 million and total depreciation and amortization of between $700 million and $725 million.
This outlook reflects our expectation that Q4 revenue and profit will be pretty much similar to Q3.
As a reminder, the first half of 2021 benefited from some discrete items in our Lottery business between gaming hall closures in Italy, elevated multi-stage app productivity and LMA performance in the U.S.
This represents a positive impact of about 300 basis points on our operating income margin for the full year.
Free cash flow for the full year is expected to reach record or near record levels with cash from operations expected to range between $850 million and $900 million and capex coming in below $300 million.
We also expect leverage to remain below four times, given the profit and cash flow guidance I just mentioned.
While it is unfortunate that we cannot be physically together next week for our investor day, we are still very much looking forward to the virtual event where Marco and I, along with other members of the IGT senior management team, will share the company's business strategy, long-term growth prospects and capital allocation plans.
Operator, would you please open line the questions.
 Assistant:

Chosen response:
raising 2021 operating income outlook on strong business trends.
reinstatement of $0.20 per common share quarterly cash dividend.
sees fy21 revenue from continuing operations of $4.1 billion.
sees fy21 capital expenditures below $300 million.
fy21 outlook does not factor in any additional impact from covid-19 restrictions.


Prompt:
Human: With us on the call today are Michael Kasbar, Chairman and Chief Executive Officer; and Ira Birns, Executive Vice President and Chief Financial Officer.
If not, you can access the release on our website.
Before I get started, I would like to review World Fuel's safe harbor statement.
A description of the risk factors that could cause results to materially differ from these projections can be found in World Fuel's most recent Form 10-K and other reports filed with the Securities and Exchange Commission.
As with prior conference calls, we have set members of the media and individual private investors on the line participate in listen-only mode.
This is Ira Birns.
Before Mike begins, operator, we've been informed that we still have music playing while Glenn was speaking.
Could you please ensure that, that's shut off ASAP before Mike begins?
We'll be with you in a few minutes.
Sorry for the delay.
Can you hear the music?
So I give us a couple more minutes.
Our sincere apologies, we're still try to work -- working how with the conference call [Indecipherable] shut off the music.
We'll be with you in a minute or two.
I'm not hearing music on my end.
Is anyone still hearing music?
Okay, we're back on.
Sorry for the delay.
So it's the music, but hopefully, everybody can hear.
If not please figure out a way to contact us.
So we're assuming everyone's hearing.
It's good to be here today.
As we all know, it's been a year like no other.
It was a year when our company, our country and the world were challenged in ways never before experienced.
It was also a year in which we learned a lot about ourselves and each other, about how we respond to emergencies, to rapid change, to having our personal and business lives turned upside down, and the health of our family and employees put at risk.
The pandemic impacted some businesses more than others.
Please support the industries that have been among the most impacted.
The World Fuel was the ultimate stress test, and I could not be more pleased with and proud of the incredible job our global teams did during this extraordinarily challenging year.
We did not miss a beat for our customers or suppliers in any part of our business activity or in all part of our global operations, not one.
We absorbed risk, performed our operations with excellence and improved our safety metrics along the way.
We maintained and enhanced our commercial, operational and financial position as the counterparty of choice to the global aviation marine and land-based industries.
I could not be more proud of the dedication and efforts of our team and the outcomes they drove in this difficult, risky and volatile year.
We have been fire-tested and are stronger for it.
Today, all of our businesses are strong, healthy employees to respond to the resurgence in passenger travel and commercial activity in aviation, marine and land as local and global markets reopen.
The work that we have done over the year on talent, leadership and culture has better positioned us to execute on delivering and scaling our existing diverse energy and last half-mile logistic solutions to end users.
Our aviation, marine and land businesses continue to refine and enhance their offerings and expand their global networks.
We have clearly demonstrated -- they clearly demonstrated there's strategic value in their markets during the most successful -- I'm sorry, stressful time in history.
Our energy management business continued to evolve its natural gas, power, wind, solar, carbon and renewables activities, and as I said last quarter, this business is breaking into stide.
We provided robust energy management advisory services to a broad base of locally rolled businesses in 55 countries.
We sourced renewable energy from our portfolio of 190 renewable power plants.
We concluded solar power agreements with various communities as well as agreements with utility-scale solar projects for Fortune 500 companies.
We've managed and sold growing volumes of electricity and natural gas.
Throughout all of our businesses, we were supporting our clients' pathways to lowering their carbon footprint and meeting their growing ESG agendas by procuring and selling carbon credits, sustainable aviation fuel and renewable diesel.
As I said last quarter, the reception from the market to our sustainability offerings did accelerate.
Society has passed the tipping point on climate action, and we are well positioned to serve the sustainability needs of the market.
Last quarter, I mentioned our generated military activity and the synergy of our commercial activities.
While our core in-theater business has experienced substantial declines as a result of troop withdrawals in Afghanistan, I am confident we will be building out a more diverse portfolio of business activities within this sector, which leverages our commercial, operational and expeditionary capabilities.
As I have said in the past, our military activity and expertise has positively influenced our commercial practices.
And the military veterans that work shoulder to shoulder within their organization continue to help us drive operational excellence.
We are grateful for your service and contribution to our success, and are committed to hiring and supporting military service members throughout our global organization.
In addition to participating in what is rapidly moving from an energy transition to an energy revolution, we are also participating in the digital transition.
We are digitizing more transactions, documents and communications every day and moving hundreds of suppliers and customers to our PPIs and portal solutions, all with the purpose of reducing costs, lowering ours and our customers' and suppliers' partner footprint and increasing the value by improving operational integration with the markets we serve.
We are taking our large and liquid analog transportation fuel marketplace and turning it into a digital energy ecosystem, and we're doing this with smaller teams and better performance as a function of focusing on diverse talent and thinking, and a collaborative culture.
In 2020, our global team showed great strength of character, tremendous resilience, uncountered grit and a relentless determination and burning desire to do well.
Ladies and gentlemen, I hope you enjoyed the extra music.
Sorry about that again.
But before I begin my financial review, I would also like to reiterate Mike's sentiments.
Last year was one that brought unforeseeable challenges to our business in the markets we serve.
But we couldn't be prouder of what our company has accomplished in the face of such extraordinary challenges.
While uncertainty still looms, the proverbial light at the end of the tunnel seems to be creeping a bit closer.
And we are very confident that our resilience business model will bounce back as the markets we serve begin to recover.
More positive news is coming out every day regarding vaccination rates and trends in COVID activity and the progress that is being made should be very encouraging to us all.
I'll provide additional details regarding what we have done to strengthen our company during 2020 as I give a more detailed review of our fourth quarter and full year financial results.
As usual, please note that the following figures exclude the impact of nonoperational items as highlighted in our news release.
The nonoperational income and expense items for the quarter and full year, principally relate to the gain on the sale of our multi-service business, most of which was recorded in the third quarter, as well as our acquisition, divestiture, impairment and restructuring-related expenses.
Now let's begin with some of the fourth quarter and full year highlights.
Consolidated volumes for the fourth quarter increased 3.5% sequentially to 3.5 billion gallons.
For the full year, our consolidated volume was 14.4 billion gallons, that's down approximately 26% compared to 2019, mostly related to the pandemic's impact on our commercial aviation business.
Adjusted fourth quarter net income and earnings per share were $1 million and $0.02 per share, respectively.
And adjusted full year net income and earnings per share were $74 million to $1.15 per share for seven weeks.
Adjusted EBITDA was $45 million in the fourth quarter and $261 million for the full year.
And lastly, we generated another $114 million of cash flow from operations during the fourth quarter which contributed to a record $604 million of cash flow from operations for the full year, further strengthening our balance sheet amid the ongoing and pandemic.
And now consolidated revenues for the fourth quarter was $4.7 billion, again, negatively impacted by the continued effects of COVID-19 on our segment volumes as well as a 25% decline in average fuel prices compared to 2019.
For the full year, consolidated revenue was $20.4 billion that's a decrease of $16.5 million or 45% when compared to 2019, with the decline driven by the same factors as the fourth quarter.
Our aviation segment volume was 1.1 billion gallons in the fourth quarter, to actually up 12% sequentially, but still well below pre-COVID activity levels.
Strength in cargo operations and business aviation was offset by continued weakness in global commercial passenger aviation activity.
Fourth quarter spikes in COVID activity led to a reinstitution of mandated quarantines and other forms of travel restrictions in much of Europe, the Americas and even Asia.
These restrictions are expected to remain in place for the balance of the first quarter.
However, COVID cases, hospitalizations and vaccination rates all seem to finally be trending in the right direction, which should begin to result in relaxed travel restrictions.
This is all leading to growing optimism for a reasonable recovery of commercial aviation activity, potentially beginning as early as sometime during the second quarter and into the third quarter of this year.
For the full year, volume in our aviation segment was 4.7 billion gallons, that's a 3.8 million gallon decline or 45% compared to 2019, again, for the same obvious reasons.
Volume in our earnings segment for the fourth quarter was 4.2 million metric tons and approximately 17% year-over-year and 3% sequentially.
The year-over-year declines were principally driven by weaker demand across the core resale in physical businesses.
For the full year, our segment filing was 17.5 million metric tons, that's a decline of 3.4 million metric tons or 16% compared to 2019.
Our land segment volume was 1.3 billion gallons or gallon equivalents during the fourth quarter.
That's a decrease of only 11% year-over-year and an actual increase of 2% sequentially, generally good results considering the broad economic impact of the pandemic on our markets our land business serves.
We experienced year-over-year COVID-related volume deployments in our retail, commercial and industrial and wholesale operations, which were partially offset by increases in our drilling power, natural gas and sustainability platform.
Our land team remains focused on expanding our C&I power and natural gas and sustainability platforms and has done a great job managing our land business through the pandemic over the course of 2020.
For the full year, volume on our land segment was 5.1 billion gallons, that's a decline of 390 million gallons or 7% compared to 2019.
And consolidated volumes for the full year was 14.4 billion gallons, down 5.1 billion gallons or 26% year-over-year.
Consolidated gross profit for the fourth quarter was $165 million, that's a 42% decrease compared to the fourth quarter of 2019 and a 23% decrease sequentially.
For the full year, consolidated gross profit was $852 million, down $260 million or 23%, both declines driven by the impact of the pandemic on our aviation and marine results.
Our aviation segment contributed $70 million of gross profit in the fourth quarter, down 50% year-over-year and 28% sequentially.
The reason for the year-over-year decline again is obvious, but we also experienced a sequential decline due in part to renewed travel restrictions in the fourth quarter, as mentioned earlier.
These restrictions most significantly impacted our iron ore volumes that are serviced by our physical operating network in Europe.
Also, our inventory business was negatively impacted by fuel price volatility during the quarter, and we also experienced a modest sequential decline in government-related activities related to well pump size Afghanistan troop withdrawals, mandated by the prior U.S. administration.
As we look ahead to the first quarter of 2021, we anticipate that aviation gross profit will remain flat sequentially, driven principally by continued lockdowns in many parts of Europe and other areas of the world, which, again, we expect will last through the balance of this quarter.
For the full year, aviation gross profit was $353 million, a decline of $188 million or 36% year-over-year.
The marine segment generated fourth quarter gross profit of $23 million, a 60% year-over-year decline and a 29% decline sequentially.
The COVID-related year-over-year decline in core retail activity, including the [Indecipherable] sector, was compounded by a comparison to a very strong fourth quarter in 2019, and which has benefited from the lead out to the January one very [Indecipherable] IMO regulations.
In addition to seasonality, the sequential decline related to lower margins we expected in our core retail activity and weakness in our physical business, impacted in part by COVID-19.
As we look ahead to the first quarter, based on what we've experienced year-to-date, we expect marine gross profit to increase sequentially, driven by a rebound in our higher-margin physical business and an increase in customer derivative-related activity.
For the full year, the marine segment generated $151 million of gross profit, which is down $30 million or 17% compared to 2019.
Our land segment delivered gross profit of $72 million in the fourth quarter, up 3% year-over-year and 11% sequentially when excluding profitability related to multi-service, which we sold at the end of the third quarter.
While core domestic activity declined, land experienced sequential increases in our power and gas business as well as the benefit of seasonality in the U.K., again, a good outcome for land considering the impacts of COVID-19 on the markets they serve.
Looking ahead to the first quarter, we expect land gross profit to be sequentially higher, principally related to the increase in activity in the U.K. as we expect people strength in our oil distribution activities, which began in the fourth quarter to continue through the first quarter, driven in part by assumed higher usage as a result of continuing pandemic-related lockdowns.
And some additional potential upside related to the recent volatility in the natural gas markets in parts in the U.S. For the full year, the land segment contributed gross profit of $348 million, after excluding the impact of multi-service, the land year-over-year decline was only $9 million or 3%.
Core operating expenses, which exclude bad debt expense, were $135 million in the fourth quarter, which is well below the range that we provided on our last quarter's call, as we remain focused on managing our variable costs during this period of continuing uncertainty.
Looking ahead to the first quarter, operating expenses, excluding bad debt expense, will likely be a bit higher in the range of $138 million to $142 million.
If we look at the full year 2020, core operating expenses were $613 million that stand at $152 million or 20% when compared to 2019.
By taking swift action to reduce our costs to better align the economic realities of 2020, we were able to mitigate more than 50% of the full year decline in gross profit.
This is another testament of our team's focused effort to manage through the challenges the pandemic.
Speaking of the challenges with pandemic, the debt expense in the fourth quarter was $5.8 million, returning to a more normalized level after two quarters of COVID-related elevated expenses.
We continue to navigate challenging markets well.
Our credit team continues to do a fantastic job underwriting risk with credit lines remaining well below historical levels.
As we look to 2021, we expect bad debt expense to return to levels at or below those experienced in 2018 and 2019, unless market conditions somehow deteriorate substantially from here.
Adjusted income in operations for the fourth quarter was $25 million, down significantly from 2019 and sequentially, again, due to the impact of the pandemic on our aviation and marine segments, most specifically.
For the full year, income from operations was $176 million, also down significantly, principally driven by the impact of COVID expenses.
Fourth quarter interest expense was $12 million, which is down 30% year-over-year.
While [Indecipherable] success continues to benefit from lower average borrowings and significantly low interest rates, interest expense increased sequentially as we ramped up our accounts receivable sales facility, which is further strengthening our liquidity profile.
At the end of the fourth quarter, we again had no borrowing with outstanding under our revolver, and we ended the year in a net cash position.
We expect interest expense for the first quarter to be in the range of $10 million to $11 million.
Other expenses were also elevated in the fourth quarter, principally related to foreign exchange losses driven by significant currency volatility during the quarter.
As a result of the impact of the pandemic on our operations, we were required to post a fairly significant amount of valuation allowances against our deferred tax assets in various foreign jurisdictions during the fourth quarter.
This resulted in a higher effective tax rate for the fourth quarter and even the full year.
These noncash adjustments are required under tax accounting standards and procurements from recording a tax benefit on certain legal equity loss results which, again, will continue to be driven principally by the decrease in demand associated with travel restrictions imposed globally due to COVID-19.
The recorded devaluation allowance has no cash flow impact and our net operating loss carryforward assets remain available to offset future taxable income from these legal entities once they become profitable to get close to identical since we did not be able to recognize any tax benefit, and so we start showing profitability in these jurisdictions, our effective income tax rate may remain higher than we would like in the short term.
If we normalize our rate for the impact of these allowances, our fourth quarter effective tax rate would have been somewhere in the low 30s.
Based on what we know today, we expect our effective tax rates to be in a very similar range in 2021, unless the local market conditions change materially.
Our total accounts receivable balance declined to about $1.2 billion at the end of the year, down more than 50% or approximately $1.7 billion from December of 2019, driven principally once again by volume declines and lower fuel prices.
Our continued focus on carefully managing working capital resulted in fourth quarter operating cash flow of $114 million.
For the year, we generated more than $600 million of cash flow from operations, which have enabled us to repurchase $68 million of our shares and pay $26 million of dividends while still strengthening our balance sheet substantially, again during the midst of the pandemic.
This provides us with a significant amount of available liquidity to invest in organic growth initiatives, a robust pipeline of strategic investments, additional share repurchases and dividends, all intended to drive greater shareholder value.
In closing, as we all know, 2020 is a very tough and unprecedented year, not only for us as a company, but for the markets we participate in just about everybody else.
While we do not control in business demand recoveries from COVID-19, operating remotely for almost the entire year now, our global team did an exceptional job focusing and executing on [Indecipherable] within our control.
Specifically, managing our expenses and cash flows and credit exposure to customers and other [Indecipherable] margins.
And while EBITDA was still significantly impacted by the pandemic, these prudent actions further strengthened our balance sheet, reducing net debt by more than 578 million -- $575 million, bringing us in a net cash position at year-end.
Looking forward, any state of crisis is a terrible thing to waste, and we worked very, very hard in 2020 to ensure we did not reach this horrible crisis.
I believe we will comment to much strong and efficient business.
With our balance sheet stronger than has been in a very long time, we are well positioned to hit the ground running as demand recovers post pandemic with significant capital available to invest to further strengthen multiple areas of our business with the greatest opportunities for growth and operating leverage.
 Assistant:

Chosen response:
q4 adjusted earnings per share $0.02.
qtrly revenue $4,702.1 million versus $9,358.1 million.


Prompt:
Human: With me on the call today is Intrepid's co-founder, executive chairman, president and CEO, Bob Jornayvaz.
These statements are based on the information available to us today, and we assume no obligation to update them.
These risks and uncertainties are described in our periodic reports filed with the SEC, which are incorporated here by reference.
During today's call, we will refer to certain non-GAAP financial and operational measures.
Solid cash flow and EBITDA highlighted our fourth quarter and put a positive end on a unique year.
The encouraging trends we saw emerging in the fourth quarter are continuing into spring as commodity markets show strength across both our fertilizer and oilfield segments.
The last couple of months, we have seen gradual yet sustained improvements in our ability to combat the COVID-19 pandemic, we are optimistic that the good news will continue as cities begin to relax restrictions now that significant portions of our most vulnerable populations are protected.
We wish the world well.
Our nutrient business ended the year with significant momentum and hasn't slowed down in the first quarter.
We called the bottom in the potash market on our November earnings call and recent pricing and demand has exceeded our expectations.
We announced another potash price increase in February, up $50 per ton, increasing our posted potash prices $140 per ton above summer fill levels.
Trio has also seen strong demand and has currently posted $60 per ton higher than the summer fill values.
Customers have been eager to secure product as prices continue to move up and have locked in some volumes through second quarter with additional spot buying occurring throughout the spring and farmers who are eager to replenish nutrients at today's crop prices.
Strong commodity pricing in soybeans, corn, wheat, palm oil, sugar, cotton and bottoms in the cocoa market in the coffee market, all in strength to a continuing global demand.
During the fourth quarter, we continue to position ourselves to capitalize on the return of the oilfield demand in the Delaware Basin, leading ESG initiatives with a clear emphasis on full cycle water management.
Full cycle water management means minimizing traditional source water use and produced water disposal with environmentally friendly treated produced water recycling.
With environmental and sustainability goals, front and center for so many oil and gas management teams, regulatory bodies and governments, the need for responsible and innovative use and reuse of water is the key to capturing the full potential of the Delaware Basin.
Intrepid is uniquely positioned with its variety of assets and water rights in Southeast New Mexico, to become a leader in the space, touching every aspect of the market from fresh and brine water delivery to recycled and produced water handling and disposal.
We are in the early stages of construction of a produced water disposal system adjacent to our South Ranch and should have our first produced water well drilled in the first half of this year.
As we finalize our capital plans, we are also working on minimum volume commitments with operators that will provide a solid base of demand to support our investments.
We expect to produce water well will cost approximately $2 million and will complete incremental capital for the surface facility at the appropriate time.
Total capital for our first well and surface facilities is estimated at $7 million.
We expect additional wells can be added as demand and volume commitments require at a cost of approximately $2 million each.
In addition to produced water, we're investing in recycling infrastructure and expanding our capabilities to deliver the services and products necessary to operate in an increasingly ES&G focused environment.
We are currently in talks with multiple companies about partnering in new and exciting areas of oilfield and full cycle water management business that will leverage our unique position and inherent optionality of our Intrepid freshwater and brine water assets across the Northern Delaware Basin.
The Northern Delaware is full of long-term-focused, well capitalized operators, and we are seeing many of these operators revisit their expectations for 2021 as oil prices have improved significantly in recent months.
Frac demand is increasing and source water demands per completion are higher than ever.
During the first quarter, we sourced water from third parties had positive margins to supplement our own water rights and existing infrastructure to meet the increasing volume requirements of operators.
Our strong relationships with those operators and our ability to meet significant refresh rights sets us apart from many other source water providers in the Delaware Basin.
The next few quarters are pivotal for Intrepid, as we will execute on our strategy to expand our oil and gas midstream business in the Delaware Basin and tap into the significant opportunity that full cycle water management offers.
Proper water management and the ability to provide operators with a single source capable of meeting both their operating and ESG goals will be essential in unlocking the potential value of this business over the coming months.
Our fourth quarter was highlighted by strong improvements in earnings and EBITDA compared to the third quarter as good fertilizer fundamentals and an improving oilfield outlook drove increased gross margin across all our business segments.
We recorded fourth quarter adjusted EBITDA of $9.7 million, an increase of over $8 million compared to the third quarter of 2020.
As Bob noted, the potash market really took off in the fourth quarter with three announced price increases, good weather across the country and rising commodity prices.
Customers look to replenish potash inventories after a strong fall application season that was evidenced by the 78,000 tons of potash sold in the quarter up significantly from the prior year.
Looking toward 2021, we still expect first half potash volumes to exceed prior year by about 5% to 10% despite the large volumes in the fourth quarter.
Average net realized sales price will continue to increase into the second quarter as we've layered in ag sales at varying price levels throughout the spring.
We have fully realized the fourth quarter price increases in our second quarter volumes and expect some additional spot tons at our current pricing.
All said, we expect our net realized pricing to increase from $248 per ton in the fourth quarter of 2020 to 300 to $310 per ton for the second quarter of 2021, with the first-quarter net realized sales price about halfway between the two.
Going forward, we continue to focus significant effort on expanding our specialty potash sales, specifically into the premium armory and feed markets, areas where we saw significant growth in 2020.
For the trio segment, our domestic market saw great early season demand in the fourth quarter as we continue to grow sales in key markets throughout the U.S., total fourth quarter sales volumes were down slightly compared to last year.
Due to large international sales in the fourth quarter of 2019.
Our posted price is now up $60 per ton compared to the summer fill levels, and we are seeing good subscription at current pricing into the spring.
We expect our net realized sales price will increase to approximately 220 to $230 per ton in the first quarter and 230 to $240 per ton in the second quarter of 2021.
The oilfield segment improved significantly over Q3 as water sales increased from our higher-margin sources and contracts, benefiting the bottom line.
Total water sales, including byproducts, were $5.8 million in Q4 an increase of $2.2 million compared to the third quarter of 2020.
Operators are adding more crews than they expected just a few months ago and commodity pricing is clearly supportive of the world-class reserves in the Northern Delaware Basin.
Our debt position is unchanged since the third quarter with $55 million outstanding, of which $10 million relates to the PPP loan.
Our forgiveness application is being reviewed by the SBA with our 90-day review period ending in April.
Availability under our credit facility was $20 million at year-end.
Cash flow from operations was $12.7 million in the fourth quarter and $31 million for the full year.
2020 capital investment ended the year at $16.4 million.
We estimate 2021 capital investment of 25 to 35 million, of which 12 to 15 million will be sustaining capital with the remainder as potential opportunity capital projects.
We have significant discretion over our opportunity capital investments in 2021, and we may adjust our investment plans as our expectations for 2021 change.
With a strong early start to the spring season, our cash position today is $28 million with no change in our outstanding debt from year-end.
Operator, we're ready to take questions.
 Assistant:

Chosen response: q4 sales $5.8 million.


Prompt:
Human: We apologize for this error.
We will review how we closed 2020 and discuss 2021 financial guidance.
I'm pleased to report, we finished the year with a very strong quarter.
We delivered double-digit growth in all key financial metrics, and once again reported results above our financial targets.
This is all the more remarkable since last year's fourth quarter was so strong.
As you know, [indecipherable] this difficult year and as we navigated through the pandemic, we tried to be as transparent as possible and provide you visibility to our expected financial performance.
In such highly unusual circumstances, the default reaction would normally be to draw guidance and watch from the sidelines.
But as you know, we tried our best to share with you what we saw.
So we did the same at the end of the third quarter when we decided to provide 2021 outlook as soon as we had some visibility, which was a full quarter earlier than usual.
Today, this outlook has become clearer and we've decided to update and raise the guidance.
Let's start by reviewing our fourth quarter results.
The revenue for the fourth quarter came in at $3,298 million, which was $108 million above the high end of our guidance range.
A little over 70% of this beat came from strong organic performance, less than 30% from favorable foreign exchange.
Revenue growth was 13.9% on a reported basis and 12.2% at constant currency.
Fourth quarter adjusted EBITDA of $735 million grew 14.5% reflecting our revenue growth and productivity measures.
The $25 million beat above the high end of our guidance range was entirely due to the stronger organic revenue performance.
Fourth quarter adjusted diluted earnings per share of $2.11 grew 21.3%.
The beat here entirely reflects the adjusted EBITDA drop through.
Our strong fourth quarter financial results were driven by numerous operating achievements during 2020.
And a little bit more color on those achievements, starting with technology.
Demand for our technology offerings remain strong in 2020.
60 new clients decided to deploy OCE last year, bringing our total number of OCE client wins to 140 since launch.
As you know at the beginning of 2020, a top 15 global pharma client begun deployment of OCE in the US.
This client has now decided to begin global OCE deployment for their medical teams mainly their almost 2,000 medical science liaisons worldwide.
The same client is also expanding its use of IQVIA technologies through our HCP Engagement Management platform.
We launched this platform during 2020.
HCP Engagement Management works in conjunction with OCE to ensure global commercial activities are executed in compliance with all global regulations.
In addition to HCP Engagement Management, you would have seen that during 2020 we also launched OCE Optimizer.
OCE Optimizer is a real-time map-based territory and sales rep alignment solution, which helps our clients plan their sales rep activity and improve their marketing plans.
Switching to our Real World business.
Our Real World business has been relatively well insulated from the impact of the virus, and it has strong growth for the year.
The business is advanced in the use of secondary data, remote monitoring and virtual research approaches, which helped the team pivot quickly to working in the new remote world at the onset of the pandemic.
Our rich clinical data assets are key to our real world differentiation.
The team has continued to invest in these rich clinical data assets and these assets now include over 1 billion active non-identified patients globally.
And the team is busy integrating these rich clinical data into research.
In 2020, we launched CARE, our COVID Active Research Experience registry to help communities and public health authorities better understand the impact of COVID-19 on the population.
We are leveraging this platform along with our vast experience of registries and analytics, to partner with the FDA, to support a better understanding of how people are affected by exposure to COVID.
This work will help identify which symptoms individuals experienced, the length and severity of symptoms, and were there any medications or supplements they are taking affect the severity of those symptoms.
It's a perfect application of our real world capability.
Similarly, we have become the partner of choice around the world to receive various governments and healthcare authorities with large scale diagnostic testing and monitoring of COVID patients.
These new series of offerings which leverages our connected capabilities, contributed incrementally to the strong sequential growth in our TAS segment.
As you know the R&DS team responded quickly in 2020 to support our clients with the development of vaccines and therapies for COVID-19.
We've been involved in more than 300 clinical trials and studies for the virus, including four of the five vaccine trials that made it through Phase III and were funded by the US Government in Operation Warp Speed.
To help speed recruitment, we leveraged our direct-to-patient solutions, which include the use of patient registries and IQVIA sponsored advertisements.
To-date, we recruited over 100,000 patients to COVID trials.
The pandemic has accelerated the need for remote and risk-based monitoring in clinical research, which in turn has accelerated the adoption of our Virtual Trials technology.
In total, we've won over 60 new studies using our Virtual Trials solutions across 10 therapeutic areas, including awards with five top 10 pharma clients.
The technology suite combined eConsent, telemedicine, eCOA and digital communication, and its platform on health cloud, the Salesforce platform that is purpose-built for healthcare and life sciences.
This technology has been deployed to speed vaccine development, and was an important factor in helping the team secure the two Phase III full-service COVID trials that we are working on.
The environment for R&D and outsourcing remains very healthy.
Biotech funding remains strong, with the National Venture Capital Association reporting a record number of deals for the year.
The pipeline of late-stage molecules continues to expand, and is at an all-time high.
It is these healthy environment combined with our differentiated capabilities that has resulted in strong new business awards for the R&DS team.
Our contracted backlog, including pass-throughs grew 18.5% year-over-year to $22.6 billion at December 31, 2020.
As a result, our next 12 months revenue from backlog increased to $5.9 billion, up 13.5% year-over-year.
We continue to build on our strong momentum in the fourth quarter, with the team delivering a contracted net book-to-bill ratio of 1.41, including pass-throughs and 1.42 excluding pass-throughs.
We exited the year with an LTM contracted book-to-bill ratio of 1.53 including pass-throughs and 1.44 excluding pass-throughs.
We expect continued strong activity going forward as our pipeline of R&DS opportunities is growing double-digits in both volume and dollars across a very wide range of therapy.
As Ari mentioned, this was a strong quarter to close the year.
Let's start by reviewing revenue.
Fourth quarter revenue of $3,298 million grew 13.9% on a reported basis and 12.2% at constant currency.
Revenue for the full year was $11,359 million, which was up 2.4% reported and 2.3% at constant currency.
Technology & Analytics Solutions revenue for the fourth quarter of $1,425 million increased 17.4% reported and 15.1% at constant currency.
The sequential bump in growth this quarter versus the 9.2% growth in the third quarter was due to the COVID related work that Ari mentioned.
Full year Technology & Analytics Solutions revenue was $4,858 million, up 8.3% reported and 8.1% at constant currency.
R&D Solutions fourth quarter revenue of $1,684 million was up 14.5% at actual FX rates and 13.2% at constant currency.
Pass-throughs were a tailwind of 220 basis points to fourth quarter R&DS revenue growth due entirely to COVID work.
But you should note that R&DS delivered double-digit organic growth on both the services and a fixed FX basis.
Again, strong performance, especially considering the tough comparison to the fourth quarter of 2019, when organic service revenue also grew at a double digit rate.
For the full year, R&D Solutions revenue was $5,760 million essentially flat on both the reported and constant currency basis.
Excluding the impact of pass-throughs, R&D Solutions' full year reported revenue grew 2.2%.
CSMS revenue of $189 million were down 10% reported and 11.9% on a constant currency basis in the fourth quarter.
For the full year, CSMS revenue of $741 million was down 9% at actual FX rates and 9.2% at constant currency.
Demand for field reps continues to be soft in the current environment.
As a result, business development activity has slowed but the businesses performed modestly better than we expected as the clients have largely retained existing field reps.
Now moving down to P&L, adjusted EBITDA was $735 million for the fourth quarter, which was growth of 14.5%.
For the full year, adjusted EBITDA was $2,384 million.
Fourth quarter GAAP net income was $119 million and GAAP diluted earnings per share were $0.61.
For the full year GAAP net income was $279 million and GAAP diluted earnings per share was $1.43.
Adjusted net income was $411 million for the fourth quarter and $1,252 million for the full year.
Adjusted diluted earnings per share grew 21.3% in the fourth quarter to $2.11.
Full year adjusted diluted earnings per share was $6.42.
Now as Ari highlighted, R&DS new business activity remains strong, backlog grew 18.5% year-over-year to close 2020 at $22.6 billion.
We expect $5.9 billion of this backlog to convert to revenue over the next 12 months, which represent a year-over-year increase of 13.5%.
And this provides the basis for our 2021 guidance, which I'll be discussing shortly.
Now let's go to the balance sheet.
At December 31, cash and cash equivalents totaled $1.8 billion and debt was $12.5 billion.
So, our net debt was $10.7 billion.
Our net leverage ratio at December 31 improved to 4.5 times trailing 12 month adjusted EBITDA and that compares to a peak of 4.8 times at the end of the second quarter and 4.7 times at the end of the third quarter.
And you'll recall that we've committed to deleveraging between 3.5 times and 4 times net leverage as we exit 2022 and you can expect that we'll make good progress toward this target in 2021 due to our double-digit adjusted EBITDA growth and improved free cash flow conversion.
The cash flow continues to be a bright spot, cash flow from operations was $750 million in the fourth quarter, up 29% year-over-year.
Capex was $176 million, resulting in free cash flow of $574 million.
For the full year free cash flow was $1.34 billion, up 61% year-over-year.
We resumed share repurchase activity during the fourth quarter, repurchasing $102 million of our shares.
Full year share repurchases were $423 million.
We ended the year at 194.8 million diluted shares outstanding, and currently have $918 million of share repurchase authorization remaining under our program.
As a result of our strong free cash flow performance actions we took at the onset of the pandemic to access capital markets and capital allocation decisions during the year, we now have $3.3 billion of dry powder on our balance sheet between the undrawn revolver of $1.5 billion and the cash balance of $1.8 billion.
We will continue to be judicious in how we use it for liquidity, consistent with our goal of reducing net leverage.
Let's turn to guidance now.
We're raising our full year guidance by $250 million for revenue at the low end of the range and by $300 million at the high end of the range.
The new revenue guidance is $12,550 million to $12,900 million, a little under half of that increase is driven by a stronger outlook for the business and the remainder is from favorable FX new events versus the guidance we provided on our third quarter call.
I note that the revised guidance includes about 200 basis points of FX tailwind versus the prior year.
We're also raising our full-year profit guidance.
We've increased our adjusted EBITDA by $35 million at the low end of the range and by $40 million at the high end of the range, resulting in full-year guidance of $2,760 million to $2,840 million.
The change in FX versus our prior guidance actually had a slightly negative impact on profit due to the unusual mix of currency fluctuations versus the historic norm.
So the adjusted EBITDA increase that you see in our guidance is more than entirely the result of the stronger organic revenue outlook.
We're raising our adjusted diluted earnings per share guidance by $0.12 at the low end of the range and by $0.13 at the high end of the range to $7.77 to $8.08.
This represents year-over-year growth of 21% to 25.9%.
And let me go little deeper to provide you with a color to help you with your models.
First, when you're modeling quarterly revenue, keep in mind that the second quarter will be easiest comparison and the fourth quarter will be the toughest comparison.
And within our adjusted diluted earnings per share guidance we've assumed interest expense of approximately $415 million, operational depreciation and amortization of slightly over $400 million, other below the line expense items such as minority interest of approximately $50 million and a continuation of share repurchase activity.
Our guidance also assumes that the effective tax rate will remain largely in line with 2020.
Our full-year 2021 guidance assumes that current foreign exchange rate remain in effect for the balance of the year.
Now, before turning to first quarter guidance, let me give you a look at the segment growth rates for 2021.
We currently expect Tech & Analytics Solutions reported revenue growth to be between 9% to 12%; R&D Solutions reported revenue growth to be between 14% and 17% which includes a 100 basis point headwind from pass-throughs; and CSMS reported revenue growth is expected to be down about 2% weaker earlier in the year and recovering later in the year.
Now, as in the past, we're also providing guidance for the coming quarter and this assumes that FX rates remain constant through the end of the quarter.
On that basis, first quarter revenue is expected to be between $3,150 million and $3,200 million representing reported growth of 14.4% to 16.2%.
All three segments should deliver similar constant currency growth rates to what we saw in the fourth quarter.
Adjusted EBITDA is expected to be between $660 million and $675 million representing reported growth at 17.4% to 20.1%.
And finally, adjusted diluted earnings per share is expected to be between $1.81 and $1.87 up 20.7% to 24.7%.
So to summarize, we delivered strong fourth quarter results with double-digit growth in all key financial metrics, and that's on top of a strong fourth quarter in 2019.
We posted mid-teens revenue growth for both our TAS and R&DS segments.
R&DS backlog improved to $22.6 billion, up 18.5% year-over-year.
We posted strong free cash flow for the fourth quarter and the full year of $574 million for the quarter and $1.34 billion for the year.
We closed 2020 with net leverage of 4.5 times trailing 12 month adjusted EBITDA in a very healthy liquidity position, including an undrawn revolver and $1.8 billion of cash.
And as we look to 2021, we see double-digit revenue growth, margin expansion, adjusted diluted earnings per share growth of over 20%, continued robust R&DS bookings activity and a further reduction in our net leverage ratio.
And with that, let me hand it back over to our operator for the Q&A session.
 Assistant:

Chosen response:
compname posts q4 adjusted earnings per share $2.11.
q4 adjusted earnings per share $2.11.
q4 gaap earnings per share $0.61.
full-year 2021 guidance raised for revenue, adjusted ebitda and adjusted diluted eps.
sees fy adjusted diluted earnings per share $7.77 - $8.08.
sees fy revenue $12,550 million - $12,900 million.
sees q1 adjusted diluted earnings per share $1.81 - $1.87.
sees q1 revenue $3,150 million - $3,200 million.


Prompt:
Human: We have provided the user-controlled slides on our Investor Relations website.
We are joined here today by Bill Meaney, president and CEO; and Barry Hytinen, our EVP and CFO.
Today, we plan to share a number of key messages to help you better understand our performance, including how we have successfully navigated the COVID-19 pandemic, how we continue to execute on Project Summit and the resulting transformation across the organization, how we have accelerated momentum in our data center business, and how we are increasing our commitment to diversity and inclusion and other sustainability initiatives.
In addition, we use several non-GAAP measures when presenting our financial results.
We have included the reconciliation to these measures as required by Reg G in our supplemental financial information.
With that, Bill, would you please begin?
Let me start by saying I hope you and your families are safe and well.
As we close out a year, which has been marked by a first quarter, delivering near record growth growth to a remaining year where we had to manage headwinds from COVID, I want to take a few minutes to reflect on where we've been and where we're also going.
Whilst we are optimistic of the positive impact the rollout of vaccines will have, we continue to believe that 2021 will look similar to 2020, albeit in reverse in terms of the macroeconomic landscape.
However, 2020 was also a year where there was much to celebrate now, which came out of the creativity and resiliency demonstrated by our teams.
I couldn't be more proud of my fellow mountaineers around the world in terms of the way we responded to the COVID-19 pandemic.
In a phrase, we managed the crisis, the crisis didn't manage us.
We continue to serve our customers where throughout the depths of the crisis, more than 96% of our facilities remained open.
We maintained our focus on Project Summit, where we have increased our targeted sustained annual cost savings from $200 million to $375 million, and have already achieved over $200 million on an annual run rate by the end of 2020.
We accelerated our growth in data center with 58.5 megawatts of new leases announced in 2020 versus 16.9 megawatts in 2019.
We continued our investment in new products and innovation with a focus on supporting our customers' remote workforces.
These services led to growth in some of our digital solutions year on year of 8%, excluding FX.
And we continue to see good returns from our global strategic accounts organization and maintained our focus on shifting our culture as part of Project Summit to be one more in-tune with accelerating our revenue growth through new services and solutions.
This continued focus on expanding our service offerings to our customer base of 225,000 customers and organizations, in spite of COVID, has allowed us to guide to organic revenue growth of 2% to 6% in 2021, the highest level of our growth in the past decade.
This significant investment in innovation and new product development is supported by our purpose to be our customers' most trusted partner for protecting and unlocking the value of what matters most to them in innovative and socially responsible ways.
Our strategy is highlighted by an important balance between accelerating growth, driven by developing end-to-end solutions to help our customers unlock value from their content as well as sustaining growth in physical storage and data center.
In other words, being both the lock and this is key to many of our customers' physical and digital data assets.
The strategy is underpinned by our high-performance, customer-obsessed culture and our strong customer connection with not only 225,000 customers, but over 950 of the world's largest 1,000 companies.
It is not simply investment in products that has given us accelerated revenue growth but a deliberate focus on shifting our culture as part of Project Summit.
This shift in culture is also marked by a singular focus on our customers as our north star; an acceleration in our commitments around diversity and inclusion, not just because it is just, but also because it is a key to our strategic success in being a more creative and dynamic organization, which can deliver more value in tune with our customer needs; and an increase in our commitments to carbon neutrality.
2020 stars continue to secure renewable energy to meet the power needs of 100% of our data centers, even with the rapid increase in bookings in new facilities operating.
Some examples of our laser focus on how we have responded to our customers' needs in more creative ways, including processing these unemployment benefits to get them into the hands of people in need during the crisis and setting up 12 digital mail rooms around the globe for customers who didn't know how they were going to stay connected with their remote workforce.
In a phrase, we helped our customers when they needed it most.
What that all means to me is that we came out of 2020 stronger than ever, a company with a new sense of momentum that will also fuel both our top and bottom line growth.
For the next few minutes, allow me to illustrate for you what I mean by momentum.
If resilience was the word for 2020, growth is the word for 2021.
We're already seeing evidence of this growth in data centers, for example, and then expect this to continue.
As we have discussed before, we are also seeing good growth in digital solutions as well as physical storage, both from the continued durability of our records management business, together with an expanding consumer business and believe this growth should continue.
This change in revenue growth trajectory is a direct result of the investments we have made in new product areas, coupled with changes we have made in our commercial engine.
One of the fundamental changes we have made in our commercial approach is that we have invested in creating more time for our salespeople to engage differently with our strategic customers.
This extra time with customers has allowed us to uncover new revenue opportunities, not just for additional physical storage and new data center customers, but for digital services, which provides both greater visibility for doc data as well as driving much more value from data both physically and digitally.
As a result, you can see, both from our performance last year as well as the guidance we have provided today for 2021, our company is more and more seen by our customers as a real partner who, yes, protects and manages all their physical and digital assets, but also gives our customers the key to integrating their information, unlocking its value as well as accelerating their own digital transformation journey.
For 70 years, we've offered protection for the assets our customers value most.
We now more and more catalog, index, govern and manage complete information across physical and digital domains, securely storing what customers need, disposing of what they down and helping them unearth the insights that drive business transformation.
Let's now explore some exciting growth opportunities ahead of us.
These are areas where we see great opportunities for growth as we position ourselves to unlock greater value for our customers and include data centers, fine arts and entertainment services, consumer storage, secure IT asset disposition or SITAD, small and medium business, content service platform, or CSP, think of this as electronic content management or ECM on steroids and to secure offline storage for a highly secure air gap data storage for cost-effective protection against ransom attacks.
Let's go into a little bit more detail about a couple of these areas.
In data center, we have built a strong global platform with 15 operating facilities across three continents since 2017.
And we just announced an agreement, which once closed, will mark our entry into the very fast-growing Indian market through some of our investment in the Web Werks.
The total addressable market for our data centers globally is $20 billion, and is growing at over 10% for co-location or retail customers in over 40% for our hyperscale segment.
If you look at fine art storage and entertainment services, it's roughly a $2 billion market for both together.
And just two months ago, the L.A. Times wrote an article about our entertainment services business.
They called us the Fort Knox of Hollywood.
The article highlighted how we are driving a different level of growth in that business through not just storage, but how we facilitate more opportunities for the studios and artists in distributing their assets to viewers and listeners.
In consumer, we've grown the business in one year from about 2 million cubic feet of storage to more than 7 million cubic feet of storage, so 3x as big in just 12 months.
The total addressable market for consumer storage is more than $35 billion, and it is growing at about 5% to 6% per year.
I'd note that our segment focus is on valet storage, where our logistics expertise gives us strong competitive advantage as well as being a nice submarket, which represents a significant opportunity for future growth.
Our SITAD business has an addressable market of $10 billion, and we have seen strong growth in this business over the course of 2020.
More importantly, we have found that our strong heritage around data security and chain of custody is proving a differentiator as we recently took on the global responsibility for SITAD on behalf of two large financial institutions.
So hopefully, this helps you appreciate now why we are so excited about the growth opportunities as we look to 2021 and beyond.
Taken together, the seven areas I highlighted earlier represent a significant market opportunity for us.
Let me put some context around that.
If you look back to 2015, the total addressable market we competed in was $10 billion.
And on average, those markets had low growth rates.
Over the last five years, as we've listened to customers, built expertise and developed new products and solutions, the addressable market that we now compete in is over $80 billion, yes, $80 billion.
Additionally, those products and services that we've developed expertise in are growing at a 13% organic growth rate.
So not only has the addressable market for our expanded service has grown by over eight times, but these new areas have double-digit industry growth rates, which helps facilitate our entry.
Let me now shift gears and briefly review our performance in the fourth quarter and throughout 2020.
At a high level, we couldn't have been more pleased with the way our mountaineers navigated the challenging environment in 2020 brought on by COVID-19.
Throughout the pandemic, we were laser-focused on execution and then controlling those factors that we could, leading to outperformance against our own internal expectations through the last 3 quarters of 2020.
This resulted in continued strength in total storage rental revenue, which grew nearly 4% on a constant currency basis and 2.4% organically.
While service revenue declines continued to offset the solid storage growth, we grew adjusted EBITDA 1.3% when adjusting for some currency, and our margin expanded 110 basis points in 2020.
This, all in spite of total revenue being down $115 million due to service activity declines.
Our success is a reflection of our mountaineers' dedication, and most importantly, I have been inspired by the way our teams looked after both the physical and the mental health of each other as they also navigated the threats from COVID, both at work and at home.
Turning now to our physical storage business.
Total global organic volume was essentially flat compared to the third quarter.
Contributing to this was a 1.9 million cubic foot increase in consumer and adjacent businesses, offset by a similar decrease in records and information management volume.
For the full year, total global organic volume was also flat, which is a good outcome considering the environment in which we were operating.
This year, we expect total global organic volume to be flat to slightly up.
Looking more specifically at RIM organic volume, this was down 1.9 million cubic feet sequentially.
For the full year, organic volume declined 1.1%.
In our Global Digital Solutions business in 2020, and we were actually able to grow service revenue 8% year over year, excluding FX.
Despite the pandemic, our team grew revenue.
This goes back to the different mindset I mentioned earlier.
We see a further acceleration in our digital solutions business going into 2021 and expect to exceed about $300 million in revenue for the year.
Turning now to our Global Data Center segment.
The team had a phenomenal year, blowing its leasing targets out of the water quarter after quarter.
For the full year, we leased more than 58 megawatts remember, our target coming into 2020 was 15 to 20 megawatts.
I want to underscore that, that success was not just the result of leasing to hyperscalers.
We had very good commercial momentum in our core enterprise retail location business, which represented 12 megawatts of the 58 megawatts or close to 40% of our bookings, excluding Frankfurt.
We attracted 73 new logos to our platform during 2020, adding to our broad and diverse base of more than 1,300 data center customers.
This should enable us to strengthen our network ecosystem and increase the stickiness of our deployments.
We also had this busy year in terms of development with more than 10 megawatts commissioned across multiple data centers and geographies increasing our leasable megawatts to 130.
Our team is actively adding to our development pipeline to ensure we have the right capacity in the right markets to meet robust customer demand, and we are excited for the opportunities we see ahead of us in 2021, where we expect to end the year with over 170 leasable megawatts.
One of those opportunities is further expanding our data center footprint into our new fast-growing markets.
The data center market in India is projected to grow rapidly in the coming years, and India is the second largest telecommunications market in the world.
We are very excited to be an early mover into an emerging market where the demand is high and the supply is low.
Turning to Project Summit, we generated adjusted EBITDA benefits of $165 million in 2020, consistent with our most recent expectations and significantly ahead of our initial estimates of $80 million, reflecting strong execution in swift and decisive actions activity and I think -- that actions are early initiatives.
This gives us an exit rate of annual savings of over $200 million heading into 2021.
As you will hear from Barry in more detail, we are fully on track to recognize the estimated $375 million of adjusted EBITDA benefiting this year, and we are expecting as this -- and we are excited for the tangible benefits we will experience this year as we continue to enhance our technology and processes.
Before I wrap up, I'd like to provide a little more detail about our continued commitment to cut our carbon emissions I referenced earlier.
We were one of the first 100 or so corporations worldwide to have an ambitious carbon reduction goal approved by the science-based targets initiative as being aligned with the Paris Climate Accord.
Already then in 2019, we reported that our goal to cut 25% was more than doubled by delivering a 52% reduction six years sooner than our 2025 commitment.
As we did this while growing our global data center business, one of the most energy-intensive industries in the world.
We will continue to flex our innovation muscle around energy consumption as well as having introduced the Green Power Pass to our customers.
This is the first solution of its kind and allows us to pass the benefits of 100% renewable energy data center platform to our customers for them to use to meet their sustainability targets.
We are confident based upon the momentum we are building in this area that we can achieve 100% carbon neutrality well before 2050 in spite of our very rapidly growing data center business.
To summarize, I've never been more optimistic about our opportunities for growth at any other time in our history, even with the anticipated continued headwinds due to COVID impacting our traditional service areas.
And I've never been more proud of how we've behaved as an organization over the course of 2020 and through the pandemic.
We also went above and beyond for our customers and our teams and embrace new collaboration tools and change how we work.
Our mountaineers truly lived our values day in and day out.
I'm excited to be on this journey with you all, and I can't wait to see the future together.
In a challenging macro environment, our team delivered solid performance across each of our key financial metrics.
For the full year, revenue of $4.1 billion declined 2.7% on a reported basis, which includes a 100 basis point impact from foreign exchange.
Total organic revenue declined 3.3%.
Organic service revenue declined 12.8%, reflecting the continued COVID impact on some of our activity levels.
Despite the macro headwinds, total organic storage rental revenue grew 2.4%, driven by more than 2 points of revenue management.
On a constant currency basis, adjusted EBITDA increased 1.3% year on year to $1.48 billion.
Reflecting the team's strong progress with Project Summit and revenue management, EBITDA margin expanded 110 basis points to 35.6%, representing the best margin performance in the company's history.
Importantly, we see opportunity for profitability to continue to expand this over time.
AFFO increased 2.4% to $888 million or $3.07 on a per share basis.
We have made some refinements to our non-GAAP measures, spurred by feedback from the investment community that some of our non-GAAP measures are difficult to compare to peers.
This includes changes to how we account for unconsolidated ventures, stock-based compensation and a portion of growth capital.
To ensure comparability and transparency, we have provided this -- our results on both the former and new methodology.
Of course, the prior method will be comparable to current consensus estimates.
For example, under our former methodology, full-year 2020 adjusted EBITDA was $1.45 billion, which compares to the current consensus of $1.446 billion.
More detail is available in our earnings slides and on our Investor Relations website.
And now turning to our results for the quarter, which are based on our updated non-GAAP definitions.
On a reported basis, revenue of $1.1 billion declined 1.8%, which includes a 40 basis point impact from foreign exchange.
Total organic revenue declined 3.4%.
Organic service revenue declined 12.1%.
Overall, we continue to see service declines moderate with the fourth quarter reflecting a modest improvement in service trends.
Our total organic storage rental revenue grew 1.7%, driven by revenue management.
Adjusted EBITDA was $374 million under both our new and former definition.
We exceeded the projections we shared on our last call as revenue trends, both in storage and service, were better than planned.
Fourth-quarter EBITDA reflects progress on our Summit transformation, revenue management, and favorable mix, offset by COVID-driven impacts to the business.
AFFO was $191 million or $0.66 on a per share basis, in line with our prior projections.
AFFO reflects an increase in recurring capex that have been deferred earlier in the year in higher cash taxes.
Turning to the segment performance, in the fourth quarter, our global RIM business had strong storage revenue growth, driven by volume growth in our faster-growing markets and revenue management.
This was offset by declines in service revenue, albeit at moderating levels compared to earlier in the year, leading to total organic revenue decline of 3.6%.
In our shred business, the combination of lower tonnage and an 8% decline in the paper price versus last year resulted in a net $3 million reduction in adjusted EBITDA.
While there's been a slight step-up in the index prices in January, recycled paper prices have remained low.
At recent levels, we anticipate paper prices will result in EBITDA headwind of slightly over $10 million in 2021.
We are pleased with the continued momentum in consumer storage business as it becomes a more meaningful contributor to our overall physical storage volume growth.
Global RIM adjusted EBITDA margin expanded 40 basis points, driven by revenue management and the Project Summit.
So, in the fourth quarter, we continue to see fixed cost deleverage as we ensure we are staffed to the appropriate level to fully support our customers.
We also had a step-up in facility expense as we invested in maintenance that we had delayed over the prior two quarters.
Taking a look at headline numbers for our Global Data Center business, full year bookings came in at 58.5 megawatts.
Excluding the full building lease in Frankfurt, we leased 31.5 megawatts, representing bookings growth of 26%.
Total revenue grew 9% year over year.
In 2021, we expect to lease 25 to 30 megawatts, which, at the midpoint, would result in more than 20% annual bookings growth.
We feel good about the state of our pipeline, both from a hyperscale perspective as well as our core retail colocation.
We project full year revenue growth in the range of low double digits to approaching mid-teens.
With our strong prior year bookings, we have good visibility to revenue.
For the first quarter, we expect growth rates similar to the fourth quarter as the bulk of our 2020 bookings commence in the second quarter and beyond.
Turning to Project Summit, as a reminder, we expect total program benefits of $375 million, of which we delivered $165 million in 2020.
We expect an additional $150 million benefit in 2021 with the balance in 2022.
This quarter, the team delivered $52 million of adjusted EBITDA benefit.
As to capital expenditures, in the fourth quarter, we invested $163 million, bringing the full year to $446 million, in line with our prior expectations.
In 2021, we expect total capital expenditures to be approximately $550 million, consisting of approximately $410 million of growth capex, of which we plan to allocate approximately $300 million to data center development.
We expect $140 million of recurring capex.
Turning to capital recycling.
In the fourth quarter, our program generated approximately $451 million of proceeds, which includes the Frankfurt data center joint venture we have mentioned last quarter.
And for the full year, our capital recycling program generated approximately $475 million.
I would like to call out the sale-leaseback transaction we announced in December, in which we sold a portfolio of 13 industrial facilities, generating gross proceeds of $358 million.
This portfolio was sold at a cap rate slightly below 4.5%.
This was a compelling opportunity for us to monetize a small portion of our owned industrial assets while effectively maintaining long-term control of the facilities through an initial 10-year lease with multiple renewal options, among other favorable terms.
So, on a leverage-neutral basis, this transaction freed up approximately $260 million of investable capital that we intend to redeploy into faster-growing areas, including our data center business.
We plan to make these investments in 2021, so our year-end net debt balance reflects these proceeds.
With a highly favorable market backdrop in the strong data center development pipeline, we are planning to continue the -- to recycle industrial assets.
In 2021, we are planning for $125 million of recycling.
Turning to the balance sheet.
At year-end, we had approximately $2 billion of liquidity.
We ended the year with net lease-adjusted leverage of 5.3 times, down from 5.7 times at year-end 2019.
The pro forma, excluding the investable proceeds from our leaseback, leverage would have been just slightly under 5.5 times.
As we have said before, we are committed to our long-term leverage range of 4.5 to 5.5 times.
For 2021, we expect to end the year within our target range near the high end.
With our strong financial position, our Board of Directors declared a quarterly dividend of $0.62 per share to be paid in early April.
As we have said before, we are fully committed to some of our dividend at this sustainable level.
Our long-term target for payout ratio is low to mid-60s as a percentage of AFFO.
Now to give you more details as to our outlook for 2021, we are pleased to reinstitute financial guidance reflecting the strength of our business, our team's strong execution and improved visibility.
And for the full-year 2021, we currently expect revenue of $4.325 billion to $4.475 billion.
We expect adjusted EBITDA to be in a range of $1.575 billion to $1.625 billion.
At the midpoint, this guidance represents revenue growth of 6% and EBITDA growth of 8%.
At the midpoint, our guidance implies about 75 basis points of EBITDA margin improvement year on year.
We expect AFFO to be in the range of $945 million to $995 million or $3.25 to $3.42 per share.
At the midpoint, this represents 9% growth for both metrics.
Our guidance assumes global physical volume will be flat to slightly positive, revenue management will be a significant benefit for us in 2021.
And I will note the majority of our actions have already been taken as we speak to you today, and nearly all of them will be in place by the end of the quarter as we are seeing in digital solutions, combined with a slight recovery in our service activity that's across the year.
In terms of EBITDA, our expectations include the benefit from revenue management and top line growth as well as Project Summit savings.
Partially offsetting those benefits is a prudent outlook for inflation, a step-up in cost from prior COVID-driven discretion, rent from some sale-leaseback transactions and innovation spend.
While we do not typically guide quarterly, with the pandemic, we felt it would be helpful to share our expectations for the first quarter.
And on a dollar basis, we expect revenue and adjusted EBITDA to be consistent to slightly up from the fourth-quarter results.
In summary, our team is executing well, visibility is improving, and our pipeline across our business has been strengthening over the last several months.
We feel well-positioned as we move into 2021.
I am confident in the team's ability to really continue to build our momentum.
And with that, operator, please open the line for Q&A.
 Assistant:

Chosen response:
q4 revenue fell 1.8 percent to $1.06 billion.
qtrly affo per share $0.66.
continues to expect project summit to generate $375 million of adjusted ebitda benefits exiting 2021.
sees fy 2021 affo per share to be $3.25 - $3.42.