Prompt:
Human: The slides for today's call can be found on the Investors section of our website, along with the news release that was issued today.
These uncertainties include economic conditions, market demands and competitive factors.
Also, the discussions during this conference call may include certain financial measures that were not prepared in accordance with generally accepted accounting principles.
Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the slide deck for today's call, which is posted on the Investors section of our website.
Turning to slide three.
Also joining us on the call is Ram Mayampurath, who was announced earlier today has been appointed Rogers' Chief Financial Officer, effective May 1.
Rogers delivered another strong financial performance in Q1 driven by growth in advanced mobility markets, a strengthening market recovery and continued operational excellence.
First quarter net sales increased 9% to $229 million and exceeded the top end of our guidance.
Gross margin improved to 39% as a result of our strong operational performance.
EPS also exceeded the high end of our guidance, and we reported earnings of $1.66 per share on a GAAP basis and record adjusted earnings of $1.92 per share.
The increase in Q1 sales was broad-based, and nearly all of our markets increased at double-digit rate.
The impressive growth was enabled by both our strategic focus on fast-growing markets and the ongoing economic recovery.
We continue to realize the benefits of our multiyear investments in innovative technologies to capitalize on the accelerating opportunities in advanced mobility markets.
EV/HEV and ADAS sales increased at double-digit rates sequentially and grew more than 30% compared to Q1 of 2020.
Sales of compression pads and related solutions for EV batteries were especially strong and more than doubled year-over-year.
Sales of our power semiconductor substrate solutions were also higher.
We anticipate further top line growth as these markets continue to accelerate.
As announced last quarter, we are investing aggressively in additional capacity for our advanced battery compression pad and ceramic substrate technologies to take advantage of this opportunity.
We are also investing in additional resources and capabilities to support this growth.
We are at a growth inflection point, and these investments will position Rogers to capitalize on the significant momentum in these markets and add to our strong market positions in the near term and longer term.
Sales in the defense market increased at an impressive rate in Q1, similar to the EV/HEV and ADAS markets.
Our focused strategy and new product introductions continue to drive design wins and growth.
We saw a resurgence in industrial demand in Q1 as sales grew sharply versus the prior quarter and returned to pre-pandemic levels.
Our sales in the industrial market are closely tied to levels of capital investment, which continues to improve.
Demand was strongest for applications used in semiconductor equipment.
Other markets, such as clean energy and wireless infrastructure, also showed strong improvements in Q1 with sales growing at double-digit rates.
In the portable electronics market, sales were seasonally lower in the first quarter and consistent with our expectations.
The impact to sales from the disruption to our UTIS facility was minimal as a result of selling our undamaged finished goods inventory.
We continue to work closely with our customers during this time, and we remain on track to resume production in the fourth quarter of this year.
Q1 sales were largely unaffected by global supply chain disruptions, but we began seeing more impacts as we exited the quarter.
In the second quarter, the lack of availability of certain raw materials, primarily due to weather interruptions along the U.S. Gulf Coast, will somewhat temper our sales growth and gross margin.
However, we expect this headwind to moderate by the end of Q2.
Higher commodity costs reduced Q1 gross margin, while our copper hedging strategy largely offset the impact to earnings per share.
In Q2, we are continuing to offset the impact of higher commodity costs through hedging activities and commercial actions.
In summary, we had an excellent quarter delivering strong sales growth, improved profitability and robust cash generation.
Continuing on to slide five, I'll discuss the latest market outlook.
As mentioned, we are seeing broad strength across our market portfolio.
This is driven by two major factors.
First, we are benefiting from our strategic positioning in markets with long secular tailwinds, such as advanced mobility.
We are also seeing exceptional growth in this area, primarily driven by the accelerating adoption of EVs and HEVs.
Second, the global economic recovery continues to gain momentum.
Our expectation is that near-term economic activity will continue to improve, aided by stimulus measures and vaccine rollouts.
This should continue to support strong demand, and we are maximizing output at existing manufacturing facilities in response.
Turning to the long-term outlook for advanced mobility, estimates continue to point to an extremely strong growth outlook for the EV/HEV market.
Recent analysis from industry experts points to an acceleration in EV/HEV adoption.
In their updated report, BCG now expects that by 2026, EVs and HEVs will account for more than half of global light vehicle sales, four years earlier than previously expected.
Underscoring this trend is the ongoing investments and commitments by global automakers.
Some examples in recent weeks include commitments from Volvo and Honda to phase out internal combustion engines and announcements of sizable investments in battery capacity from VW, GM and others.
It's important to note that full electric vehicles are expected to be the fastest-growing segment of this market with a CAGR of over 40%.
This is significant for Rogers because our content opportunity increases with higher degrees of electrification.
For example, our ceramic substrate content opportunity in a full EV ranges from around $25 to $40 compared to a content opportunity of approximately $5 in a 48-volt mild hybrid.
The same concept applies to our battery compression pad solutions used in plug-in HEVs and EVs.
Our content can be greater than $30 per vehicle and rises meaningfully as the battery size increases.
Other solutions, which are used across the entire EV/HEV market, include vibration dampening pads and battery pack sealing solutions.
Also, we have secured design wins with several promising entrants to the EV market with our power interconnect solutions.
We continue to see a very strong mid-teens growth potential over the next five years driven by increasing penetration rates and higher levels of vehicle autonomy.
Near-term auto production faces some challenges from the limited supply of certain semiconductors, but the long-term outlook remains robust.
We are encouraged by our progress in this market, and we continue to expand our customer base with new design wins.
In addition to the opportunities in advanced mobility, we also see attractive growth potential in other markets, such as renewable energy and defense.
The renewable energy market is expected to grow at a 10% CAGR over the next five years, which we anticipate will continue to drive robust demand for our power semiconductor substrates.
Rogers has a very rich heritage of innovation and a proven track record of developing solutions that drive growth end markets with strong secular tailwinds.
We achieved these results by combining our deep expertise in material science with collaborative engineer-to-engineer customer relationships.
Our global innovation in R and D centers are key to maintaining a strong development pipeline.
They are staffed with world-class personnel who identify, develop and acquire the technology needed to enable the next-generation of products.
Through partnerships with universities and other research institutions, we can further expand our product development pipeline in an efficient and cost-effective manner.
The progress we've made in our EV/HEV business is a prime example of how innovation drives growth at Rogers.
For example, our advanced battery pad and battery pack sealing solutions and silicon nitride substrates were all developed through our innovation and R and D process in recent years.
These products form the core of our solutions for the EV/HEV market, which has now increased to more than 11% of total sales.
Our focus on innovation continues with a number of advanced solutions that are currently under development.
Some of these -- some of the products in our development pipeline include next-generation silicon nitride substrates with improved thermal performance, advanced battery compression pad solutions and high-performance antennas for next-generation auto radar.
Our ability to drive organic growth through innovation is a source of competitive advantage for Rogers and will continue to be a core element of our strategy.
Turning to slide seven.
I'll recap our key messages from today's call.
First, we delivered strong Q1 results driven by our strategic focus on advanced mobility markets and by continuing our market recovery.
We also continue to drive operational improvements and higher sustainable gross margins.
The growth opportunities in advanced mobility markets and especially the EV/HEV space continue to accelerate driven by powerful, long-term secular tailwinds.
This opportunity is extremely compelling, and we are investing aggressively to capitalize on this growth.
As a longtime Rogers employee and a seasoned senior finance leader, it gives me great confidence to have Ram step into the Chief Financial Officer role.
Ram has over 30 years of corporate finance experience and has held senior finance leadership positions at Rogers, where he has had responsibility for financial operations, financial planning and analysis, business transformation and treasury.
I have appreciated Mike's wise and insightful counsel, which has helped Rogers navigate through some difficult situations and has helped make Rogers a stronger and more resilient company.
Mike will remain with the company during the transition period to help facilitate a seamless transition with Ram.
Please join me in wishing Mike a long, healthy, happy retirement.
Your thoughts are truly appreciated.
I've enjoyed my time at Rogers immensely, and I'm appreciative of the opportunity to have made a positive impact on the results and culture of Rogers.
It's been my fortune to work with a tremendous senior management team, a supportive Board and a hard-working dedicated Rogers global community.
Let's jump back to the results.
On the slides ahead, I'll review our first quarter 2021 results.
Turning to slide nine.
As Bruce mentioned, Rogers delivered strong financial results in the first quarter.
Revenues increased sequentially in both our EMS and AES business segment.
As communicated in our Q4 earnings call, the AES business segment is comprised of the former ACS and PES business segments.
We delivered gross margin that was 70 basis points higher than Q4 through increased volumes and operating efficiency, despite a less favorable product mix and significantly higher commodity and freight costs.
In Q1, we delivered strong earnings through increased revenues, improved gross margins and increased other income.
In our GAAP results, we recognized $1.5 million in restructuring costs related to the footprint optimization activities communicated in our third quarter 2020 call and $1.3 million for the loss resulting from the fire at our UTIS facility, net of expected insurance proceeds.
Our effective tax rate for Q1 was 25.2%.
Turning to slide 10.
Our Q1 revenues of $229.3 million increased by $18.6 million compared to the fourth quarter, reflecting broad strength across our product markets.
AES revenues increased 10% to $131.9 million, while EMS revenues grew 6% to $91.8 million.
Currency exchange rates favorably impacted first quarter revenues by approximately 1.5% compared to Q4.
AES revenues grew sequentially due to strong demand in all three product lines: RF solutions, power semiconductor substrates and power interconnects.
Within RF Solutions, the Aerospace and Defense business accounted for 19% of the business segment revenues and grew 15% sequentially.
The ADAS business accounted for 18% of the revenues and grew 12%, and wireless infrastructure accounted for 17% of the revenues and grew 26%.
Defense applications continue to be a solid growth area for Rogers as customer programs continue to ramp.
Record ADAS revenues continue to benefit from the rebound in automotive manufacturing and, to date, have not been adversely impacted by the semiconductor chip shortage.
Wireless infrastructure revenues experienced a nice sequential increase due to 5G installations, both inside and outside of China.
Clean energy, which is comprised of the renewable energy revenues in both the power semiconductor and the power interconnect business as well as the variable frequency drive business in the power semiconductor business, accounted for 16% of the business and grew 15% sequentially.
The sequential increase in our variable frequency drive business was the first in several quarters and is reflective of the general economic recovery.
We believe the renewable energy demand will be uneven in the short term as this business is comprised of project opportunities but will have meaningful long-term momentum.
EV/HEV application revenues accounted for 12% of the segment revenues and increased 2% sequentially as order timing tempered the Q1 increase in ceramic substrate revenues.
EMS revenues grew sequentially primarily due to significant increases in nearly all applications, highlighted by a 41% increase in EV/HEV applications which accounted for 11% of the segment revenues and a 23% increase in general industrial applications, which accounted for 44% of the segment revenues.
The EV/HEV applications continue to gain momentum, consistent with the accelerated demands in the EV/HEV market.
And the increase in general industrial revenues continues a recovery trend that commenced in the fourth quarter and mirrors the general economic recovery.
As expected, revenues for the portable electronics, which accounted for 22% of the segment revenues, experienced a 31% sequential seasonal decline off a very strong second half of 2020.
Revenues from our UTIS factory were down just slightly compared to Q4 despite the fire that occurred in mid-February.
Turning to slide 11.
Our gross margin for the first quarter was $89.5 million or 39% of revenues, 70 basis points higher than Q4.
The increase in gross margin was due primarily to higher volume and improved manufacturing execution, more than offsetting the unfavorable product mix and increased raw material and freight costs.
While both the AES and EMS businesses had to overcome the aforementioned headwinds, the AES business was able to produce increased gross margin in all three product lines.
The EMS gross margin declined sequentially, even though manufacturing execution improved.
Although our gross margin percentage increased by 70 basis points sequentially, the significant increase in copper cost meaningfully dampened our gross margin percentage in the quarter.
To mitigate the higher cost of copper on our profitability, we enter into copper hedging contracts.
The gains and losses on these contracts are recorded in other income expense below our operating profit results.
In addition to hedging our copper purchases, we have taken commercial actions to mitigate the increased cost of commodity and other raw materials.
Also on slide 11, we detail the changes to adjusted net income for Q1 of $36 million compared to adjusted net income for Q4 of $29.7 million.
The adjusted operating income for Q1 of $43.5 million and 19% of revenues was 60 basis points higher than Q4.
Adjusted operating expenses for Q1 of $46 million or 20.1% of revenues were 20 basis points higher than Q4 expenses.
The higher adjusted operating expenses were due to higher performance-based compensation costs as well as higher benefit costs.
Other income expense was $1.2 million favorable compared to Q4.
Included in other income expense in Q1 are the realized gains on our copper hedging contracts, which offset the impact of higher copper costs included in the gross margin in the first quarter.
As discussed earlier, Rogers' effective tax rate for the first quarter was 25.2%, higher than our forecasted rate of 22% to 23%.
We now expect our effective tax rate for 2021 will be 23% to 24% due to the geographic mix of pre-tax income.
Turning to slide 12.
The first -- in the first quarter, the company generated strong free cash flow of $33 million and ended the quarter with a cash position of $199.1 million.
In the quarter, we generated $36.5 million from operating activities, net of an increase of $10.8 million in working capital and repaid $21 million on our credit facility.
We ended the first quarter with an outstanding balance on our credit facility of $4 million and a net cash position of $195.1 million.
In Q1, the company spent $3.6 million on capital expenditures.
Despite the low level of expenditures in the first quarter, we continue to guide capital expenditures of $70 million to $80 million in 2021, with over 50% of the expenditures to capture the accelerating advanced mobility market opportunities in both AES and EMS business segments.
The guided expenditures exclude the capital necessary to restore the UTIS operation, a significant portion which we expect to be reimbursed by insurance proceeds.
I've had the pleasure of working closely with Ram during my time at Rogers.
He is an excellent choice to continue driving the company's growth and profitability forward.
It is a privilege to be named as Chief Financial Officer at Rogers, and I'm extremely excited about the opportunity to serve in this capacity at such a pivotal time for the company.
Lastly, I look forward to becoming better acquainted with the members of our investment community.
Turning now to second quarter guidance on slide 13.
As Bruce discussed earlier, we see continued strength in many of our markets, particularly in advanced mobility, general industrial, defense and wireless infrastructure.
Based on the strong outlook, we are guiding our second quarter revenues to be in the range of $230 million to $240 million.
The effect of our UTIS factory being off-line and the lack of availability of certain raw materials will impact our second quarter growth.
Following several quarters of significant gross margin improvements, we expect Q2 to be flat sequentially before improving further in the second half of 2021.
To prepare for our strong second half, we will be stepping up our resources across the business in the second quarter.
Also in the quarter, we will continue to see challenges from mix, raw material cost increases and supply constraints related to the Gulf Coast interruptions mentioned earlier.
We have taken commercial actions to mitigate the increase in raw material costs.
These actions will have a positive impact on our gross margins in the second quarter, with full impacts benefiting the second half of 2021.
We expect to overcome the supply constraints by the end of the second quarter and see favorable impact from higher volume and better mix in the second half.
We guide our gross margins to be in the range of 38.5% to 39.5%, consistent with our first quarter.
The company will recognize higher operating expenses in the second quarter from timing of certain expenses, including performance-based compensation.
Costs incurred to support anticipated growth in the second half and to restore UTIS operations will also increase operating expenses in the quarter.
We are guiding GAAP Q2 earnings in the range of $1.58 to $1.73 per fully diluted share, and we guide fully diluted adjusted earnings in the range of $1.80 to $1.95 per share for the second quarter.
 Assistant:

Chosen response:
compname reports qtrly adjusted earnings per diluted share of $1.92.
qtrly diluted earnings per share$1.66.
qtrly adjusted earnings per diluted share $1.92.
qtrly net sales $229.3 million versus $198.8 million.
sees q2 net sales $230 million to $240 million.
sees q2 earnings per share $1.58 to $1.73.
sees q2 adjusted earnings per share $1.80 to $1.95.


Prompt:
Human: I'd like to start by taking a moment on behalf of our Board, our entire team and myself to recognize Henry Tippie for everything he's done for our organization over the last 68 years.
As many of you are aware, Mr. Tippie recently retired from our Board, leaving behind an incredible legacy of leadership and service to Rollins, its employees and customers.
Henry's financial knowledge and guidance helped shape Rollins to become the world's best and largest pest control company.
During his distinguished career, not only was Henry our longest-serving CFO through a period for over 17 years, he was the architect of Rollins' purchase of Orkin in 1964.
Incidentally, this is considered to be the country's first-ever leveraged buyout and was studied for years at the Harvard Business School.
Henry, along with Randall Rollins, our Chairman at the time, were the only two Rollins Directors present during our initial stock exchange listing in 1968, and again, on our 50th year New York Stock Exchange anniversary.
Additionally, in recognition of his broader impact to the business world, the New York Stock Exchange inducted Henry in 2018 into their exclusive wall of leaders.
Randall Rollins was inducted as well.
Rollins would not be the company it is today without Henry's numerous contributions.
We will continue to honor your legacy and the example of hard work and dedication that you provided.
Throughout his 12-year career with Rollins, Lee helped guide the company through several important technology advancements, while building a fantastic IT team.
He selected and developed a team to not only improve the company's performance presently, but will prevail well into our future.
In the end, it all comes down to the many positive contributions of our employees continue to make every day.
They have risen again to the occasion, going above and beyond what they've ever accomplished before.
We're grateful for their extraordinary dedication and adaptability during the past year.
They truly are our most valuable asset.
While we faced many challenges over the past year, we continue to successfully improve our operations, and we are greatly encouraged by our first quarter performance.
I think we are benefiting from our technology investments and overall business momentum and are looking forward to another successful year.
As Gary mentioned, we are pleased with our first quarter results.
Revenue grew 9.8% to $535.6 million compared to $487.9 million for the same quarter in 2020.
Net income rose to $92.6 million or $0.19 per diluted share compared to $43.3 million or $0.09 per diluted share for the first quarter of last year.
Eddie will review the GAAP and non-GAAP results shortly as there was one adjustment impacting our financials.
It is not just the results we are pleased with, but the returns we are seeing in the business, highlighted by strong performance in our residential and termite service lines, growing 14.9% and 12.2%, respectively.
Further, our commercial business has improved every single quarter during 2020 and continued this steady progress once again this quarter, reaching 2.9% growth over the first quarter 2020.
I am grateful, greatly appreciative of his many years of leadership as part of our management team and as a Board member.
While it's never easy to follow in the footsteps of someone who made that type of impact, we are pleased with the distinguished executives that have agreed to join our Board of Directors over the past several months.
Many of you may recall that we have enhanced an already experienced and strong Board with the recent additions of Jerry Nix, Susan Bell, Patrick Gunning and Harry Cynkus.
They each bring a wealth of knowledge and diverse experience in many different areas that we believe will make us stronger as a company moving forward.
We have also recently announced the appointment of several new committee chairs and committee designations.
Jerry Nix was appointed as our new Lead Director and was selected to chair our Compensation Committee, as well as chair our Nominating and Governance Committee.
He is also now serving as a member on our Audit Committee and will be joining our Chairman, Gary Rollins, on our Executive Committee.
Additionally, Susan Bell was selected to chair our Rollins Audit Committee and to chair our Diversity Committees.
Patrick Gunning was also appointed to be a member of our Audit Committee.
As Gary just mentioned, Lee Crump has contributed significantly to Rollins' success during his tenure, and we wish him the very best as he retires.
Succeeding Lee is our new Chief Information Officer, is Thomas Tesh.
While we have spent the last six months working to ensure a seamless transition, Thomas has been a key part of the Rollins family since 2012, previously serving as the Vice President of Information Technology.
Thomas is extremely qualified, having led our technology improvement journey through several major rollouts over the years.
And we believe his deep experience and solid track record makes him uniquely qualified for this important position.
The first quarter business environment was extremely solid across all of our business lines.
And our total revenue, less significant acquisitions, grew 7.9% over first quarter 2020 as both our residential and termite segments presented double-digit growth of 12.8% and 11.2%, respectively.
These growth levels have exceeded anything we've recently experienced.
Commercial, ex fume revenue, less significant acquisitions, presented positive growth for the first time since first quarter 2020.
This segment has enjoyed sequential improvement since last April, reaching 1.3% growth over first quarter of 2020.
Our team's continued dedication in serving our commercial customers and their recovery has been outstanding.
We're pleased with the steady progress achieved over the past 12 months in this segment.
Turning to our mosquito service.
As families spend more time outdoors recreationally and with the continued threat of mosquito-borne disease, we're realizing significant growth in this segment of our business.
For the quarter, our mosquito revenue experienced growth of over 30%.
Additionally, the strength of our termite business remains solid, and we expect continued growth in the future.
Looking deeper at our results, we continue to attract customers to all of our services and brands.
We're particularly pleased with our international performance in the U.K. and Australia.
Domestically, Northwest Exterminating, which joined the Rollins family in 2017, continues to realize strong growth in the Southeastern U.S. HomeTeam has continued their consistent high-growth levels as they capitalize on a thriving residential home construction industry.
Similar to last quarter, we experienced tremendous growth in wildlife service offerings through our Trutech and Critter Control brands.
Also, we continued to selectively purchase Critter Control franchises and combine them together with our growing wholly owned wildlife operations.
Operationally, we remain focused on ensuring our residential and commercial customers receive the highest quality of services.
As part of our approach in 2015, we began the rollout of a new branch operating system, BOSS, at our largest brand, Orkin U.S. During 2020, we successfully deployed BOSS in two additional brands, Orkin Canada and Western Pest Services.
With this new system in place, we were able to add virtual route management software to improve our routing and scheduling processes.
Even though we're still in early stages, for Orkin Canada, we've achieved routing improvements of over 20% at this time.
Over the next few years, we expect additional improvements as the system gains maturity within these brands.
Looking ahead, we remain committed to investing and implementing technology improvements to other brands in order to improve operational efficiencies as well as enhance our customers' trust by continuing to deliver a worthwhile experience.
Overall, we are pleased with the progress we've made during the first quarter and as the economy continues to recover, we're encouraged about our prospects for further improvements for the rest of 2021.
I, too, have greatly benefited from Mr. Tippie's vast experience, wisdom and knowledge.
His guidance on cost containment, mergers and acquisitions and managing the balance sheet have been invaluable to me.
The results of this quarter are, in part, a testament to his steady guidance throughout his 68-year involvement with the company.
For the quarter, our residential pest control, commercial pest control, termite and ancillary service lines showed growth and key to the quarter included cost containment across all major categories throughout the organization, overall good weather conditions that helped with demand and customer retention rates improving across the board.
As John referenced, I will be reporting both GAAP and non-GAAP financials for the quarter, which were positively impacted by our gain on the sale of several of our Clark properties.
As a reminder, when we purchased the initial Clark business in 2019, we bought their pest control, distribution businesses and their owned properties.
Real estate is not a core competency of ours, and we decided to make the properties available to the market and secure branch leases.
The first group that sold netted a $31 million gain included in our numbers this quarter.
Looking at the numbers, the first quarter revenues of $535.6 million increased 9.8% over the prior year's first quarter revenue of $487.9 million.
Our GAAP income before income taxes was $119.9 million or 116.3% above 2020.
Our GAAP net income was $92.6 million, up 114.1% compared to 2020.
And our GAAP earnings per share were $0.19 per diluted share.
When removing the positive impact of the property gain on the sale of $31 million, our non-GAAP income before income taxes was $88.8 million compared to $55.4 million in 2020 or up 60.3%.
Our non-GAAP net income was $69.8 million, up 61.2% compared to Q1 of 2020.
This surge in customer demand again tested our new technology to see how we would be able to handle higher levels of both existing and new customer starts.
As we move from what we would call Stage two to Stage three of our five-stage routing and scheduling transformation, our latest changes have enabled our technicians to continue to improve the efficiency of their day and give the customer a better experience.
Specifically, our latest updates are helping to maximize our ability to be proactive with our customers instead of reactive.
Our operations support has added the use of a planning board, which enables them in real time to adjust for openings in the technician schedule.
If a customer needs to reschedule service for some reason, that opens up a time slot during the day, our support group is quickly able to fill that slot with a new customer or to support the changing needs of an existing customer.
This enables our technicians to be more efficient and our customers to have a better experience with their service needs.
These changes positively impacted our margins and our customer retention rates for the quarter.
Let's take a look through the Rollins revenue by service line for the first quarter.
Our total revenue increase of 9.8% included 1.9% from significant acquisitions and the remaining 7.9% was from pricing and new customer growth.
In total, residential pest control, which made up 44% of our revenue, was up 14.9% and commercial, excluding fumigation pest control, which made up 35% of our revenue, was up 3.6%.
Termite and ancillary services, which made up approximately 20% of our revenue, were up 12.2%.
Also, as Jerry mentioned, our wildlife service continued to see strong double-digit growth.
Again, total revenue, less significant acquisitions, were up 7.9%, and from that, residential was up 12.8%; commercial, ex-fumigation, increased 1.3%; and termite and ancillary grew by 11.2%.
Our residential business continues to perform well, and our commercial pest control business has seen steady improvements each month since April 2020.
We anticipate a continued steady improvement in our commercial pest control business for the remainder of 2021.
In total, gross margins increased to 51.2% from 49.5% in the prior year's quarter.
The quarter was positively impacted by lower service salary expense as well as a lower fleet expense through continued improvements from our routing and scheduling efficiencies.
Depreciation and amortization expenses for the quarter increased $2 million to $23.6 million, an increase of 9.3%.
Depreciation increased $920,000 due to acquisitions and planned IT upgrades, while amortization of intangible assets increased $1.1 million due to several acquisitions, including McCall Pest Control in December of 2020.
Sales, general and administrative expenses for the first quarter increased $4.3 million or 2.8% to $162.2 million or 30.3% of revenues.
This was down 6.5% compared to 2020, and the quarter produced savings in administrative salaries and benefits, travel and telephone savings from better negotiated contracts.
There's been a lot of inflation discussion related to the economy and what impact companies are seeing or will see as we move through 2021.
At this point, we do not see major inflation exposure that would materially impact our margins.
As you probably know, payroll, fleet and materials and supplies are our largest three expense areas.
At this time, payroll margins are mainly improving due to enhanced technology and efficiency.
Our fleet has been positively impacted by lower fuel costs and a mid-single-digit percentage reduction in our miles driven.
Finally, our materials and supply costs are lower as a percent of revenue, even with our continued personal protective equipment use by our customer-facing employees.
As for our cash, for the period ended March 31, 2021, we spent $17 million on acquisitions compared to $47.6 million during the same period last year.
We paid $39.4 million on dividends and had $7.8 million of capital expenditures, which was slightly higher compared to 2020.
We ended the period with $117.3 million in cash, of which $71.3 million is held by our foreign subsidiaries.
Yesterday, the Board of Directors approved a regular cash dividend of $0.08 per share that will be paid on June 10, 2021, to stockholders of record at the close of business on May 10, 2021.
 Assistant:

Chosen response:
q1 earnings per share $0.19.
q1 revenue rose 9.8 percent to $535.6 million.


Prompt:
Human: We begin with our Safe Harbor statement.
You should listen to today's call in the context of that information.
Today, we will discuss our results for the quarter primarily on an adjusted non-GAAP basis.
For the second quarter, the difference between our GAAP results and adjusted results consist of the following item: amortization of acquisition-related intangible assets; and purchase accounting adjustments to commission expense.
As usual we'll leave plenty of time to talk to all your question toward the end.
As we turn to Page five, we deliver an excellent second quarter with strength across all four of our segments.
Specific to the financial metrics, which Rob will detail shortly, revenue, EBITDA, DEPS and cash flow, all grew north of 20% in the quarter.
Also during the quarter, we are encouraged to see the post-pandemic recovery gain momentum and broaden at the same time.
Specifically, not only that we experienced continued improvement across virtually all of our businesses, the strength within each business was broad.
Our software businesses, which now make up over 55% of our revenue base performed very well in the quarter.
Specifically, on an organic basis, we grew our Application Software segment 9% and grew our software businesses within our NSS segment 10%.
Across our software businesses, we saw the acceleration of our recurring revenue growth, approximately 80% of our soft revenues from mid-singles to high-singles and a solid recovery of perpetual license activity.
Relative to our product businesses, a very similar pattern acceleration and recovery of our consumables revenue sources and very nice ordering patterns for our capital equipment type products.
In addition, our 2020 acquisition cohort led by Vertafore is performing very well.
Importantly, and consistent with our guidance over the last three quarters, we continue to delever our balance sheet at a rapid pace now under 4 times debt to EBITDA.
And finally before handing things over to Rob, just a great first half to the year.
Our teams have performed magnificently.
Given the great start in the positive momentum across our enterprise, we are once again increasing our full-year guidance.
Rob, let me hand it over to you.
And congrats again on the lightening winning [Indecipherable] go.
Turning to Page six, looking at some of the key financial highlights for Q2.
Total revenue increased 22% to $1.59 billion another record for any Roper quarter.
Q2 organic revenue growth was 7% versus last year's comp of minus 3.
All four segments performed well, with strong organic growth across our portfolio of software and product businesses.
Q2 EBITDA grew 26% to $579 million and EBITDA margin increased to 110 basis points to 36.4%.
Adjusted DEPS was $3.76, 28% above prior year and also above our Q2 guidance range of $3.61 to $3.65.
Free cash flow was $409 million, up a very strong 30% versus last year.
As a reminder, last year we adjusted our Q2 cash flow to account for the income tax payments that were deferred from Q2 to Q3, due to 2020 delayed tax deadlines.
Net working capital was negative 8%, we continue to benefit from Roper's transformation to a high recurring revenue, majority software business model that is structurally designed to consistently drive high cash conversion.
Lastly, we have been laser-focused on debt reduction this year after last year's record capital deployment and we continue to make great progress on that front with an additional $375 million paid down in Q2.
So in summary, an excellent second quarter wrapping up a very strong first half for Roper.
Turning to Page seven, an update to the charge we introduced last quarter, showing our rapid deleveraging.
Through the first half of 2021, we have now reduced our net debt by nearly $900 million, raising the total debt reduction to approximately $1.4 billion, since completing the 2020 acquisitions late last year.
Our debt reduction along with the meaningful contributions from our 2020 acquisitions has enabled us to rapidly lower our net debt to EBITDA ratio from 4.7 times to 3.8 times in only six months.
We expect this downward trend in leverage ratios to continue moving forward, which positions us well for a return to meaningful capital deployment in the coming quarters.
Let's turn to Page nine and walk through our Application Software segment.
Revenues in this segment were $592 million, up 9% on an organic basis.
As a reminder, this segment grew 1% organically last year aided by strong results from our lab software franchises that were critical to the COVID response.
EBITDA margins were 43.7% in the quarter.
Across the segment, we saw organic recurring revenue, which is a touch north of 75% of the revenue for the segment increased approximately 9%.
This recurring revenue strength is based on strong customer retention, continued migration to our SaaS delivery models, new products cross-selling activity and new customer adds.
To that end, the non-recurring organic revenue in this segment grew 9% as well.
Specific to business unit performance Deltek, our enterprise software business that serves the US federal contractor, architect, engineering and other services end-market had an excellent quarter.
Their strength was rooted in large scale GovCon customer wins and expansion activity.
Deltek was further benefited by the recovery in the professional services end markets, terrific job by Mike and the entire team at Deltek.
Aderant our legal software business continues its momentum and market share gains.
In addition and encouragingly, their customers are beginning the journey of migrating to Aderant's cloud solutions.
This will take many years for the entire customer base to migrate, but will result in increased customer intimacy and higher levels of recurring revenue.
CliniSys and data Innovations continue their long string of market share gains in the quarter and CBORD grew based on strength in healthcare and in particular their higher education product offerings.
Finally, our 2020 cohort of acquisitions continue to perform very well both at Vertafore and EPSi.
As we turn to the outlook for the balance of the year, we expect high single-digit organic growth for this segment based on strength in both our recurring and non-recurring revenue streams, a solid quarter here for sure.
And with that let's turn to our next slide.
Turning to Page 10.
Revenues in our network segment were $459 million, up 5% on an organic basis, and EBITDA margins were 42.5% in the quarter.
Our software businesses in this segment about 65% of the revenues were, up 10% on an organic basis.
This growth was broad-based among our software businesses and driven by organic recurring revenue growth of approximately 11%.
At the business level, our Freight Match businesses, both in the US and Canada, continue to be solid growers.
As a reminder, our Freight Match networks are critical and necessary elements to help organize interact and transact the trucking, shipping spot markets.
Strength in our businesses has been on both sides of the network; brokers and carriers, but with particular strength in this quarter on the carrier side of the network.
We also continue to see nice organic gains at ConstructConnect as their network enables commercial construction planning and bidding to occur in a more efficient and transparent manner.
Foundry, our media and entertainment software business, which enables the combination of live action and computer generated graphics to be combined into a single frame, recovered nicely in the quarter with particular strength in the mid-market.
Importantly, we continue to see very strong customer retention levels across each and every one of our network software businesses.
The strong growth in our software businesses was partially offset by project delays and our Transcore New York congestion pricing project.
These delays are based on pending federal environmental approvals, while we all believe the federal approval will be granted, the approval process to complete our work is taking longer than originally anticipated.
Conversely TransCore tag demand appears to be normalizing for the balance of the year.
As we look to our second half outlook, we expect to see high single-digit growth in this segment.
The growth will be underpinned by strength in our network software businesses, which we expect to grow in the low double-digit range in the second half of the year.
Based on the New York TransCore project pushing to the right, we now expect about $40 million of this projects revenue to push-out of the second half of the year and into 2022.
All in all, high single-digit organic increases in this segment for the balance of the year.
Please turn to the next slide.
As we turn to Page 11, revenues and our MAS segment were $397 million, up 7% on organic basis.
Organic growth in this segment excluding Verathon was north of 20%.
EBITDA margins for the segment were 33.4% in the quarter.
Verathon coming off unprecedented demand for their intubation family of products a year ago is roughly 40% larger today versus 2019.
The momentum within this business continues given the larger installed base of intubation capital equipment, which enables recurring consumable pull through volumes.
In addition Verathon continues to experience impressive growth within their Bronchoscope product family and the recovery in their bladder scan ultrasound product group.
EBITDA margins in the segment were lower due to Verathon's extraordinary prior-year quarter and the associated margin benefit.
Our other medical product businesses accelerated nicely in the quarter based on hospitals and hospital equipment OEMs resuming normal levels of activity.
Demand at Neptune was very strong as well.
The Northeast opened up and the balance of the country experienced normalizing levels of activity.
Our industrial businesses were strong.
As I mentioned in the opening the strength was buoyed by improving consumables activity and solid returns to capital equipment spending.
Our businesses within this segment have done a nice job navigating the difficult supply environment.
And supply environment like the one we are in right now are decentralized, highly nimble organization tends to perform quite well.
This quarter was no exception.
For the balance of the year, we expect double-digit growth for this segment.
This is based on broadly improving conditions both in medical and industrial markets and easing prior year comps for Verathon.
Now let's turn to our final segment Process Tech.
As we turn to Page 12, revenues in our Process Tech segment were $140 million, up 13% on an organic basis.
EBITDA margins improved by over 500 basis points to 32.8% in the quarter.
The short story here is we're seeing improving end market conditions across virtually every one of our businesses in this segment after over nearly two years of declines.
Our upstream oil and gas business is starting to recover nicely.
Cornell continues to perform well for us.
This is partially based on market conditions, but also based on Cornell's product innovation as they are seeing very nice demand pickup for their IoT connected pumping solutions.
And finally at CCC, we're seeing the resumption of previously deferred projects and the demand for field services to come back online.
Also greenfield bidding activity is back in full swing, especially on an international basis.
As we turn to the outlook for the balance of the year, we expect 20%-plus organic growth based on improving market conditions and continued easing comps.
Now please turn to Page 14 and I'll highlight our increased guidance for 2021.
Based on strong first half performance improvement to our recurring revenue growth rates and improving market conditions, we are raising our full-year adjusted DEPS to be in the range of $15 and $15.20 per share.
Of note, our prior high-end DEPS guidance was 15% now the bottom end of our range.
Also, we are increasing our guidance notwithstanding pushing roughly $40 million of the TransCore New York City project into next year, providing everyone a good sense of how strong the balance of our portfolio is performing.
Our full-year organic growth is expected to be 7% or a touch higher.
This full-year growth outlook implies low double-digit organic growth in the second half.
Our tax rate should continue to be in the 21% to 22% range.
For the third quarter, we're establishing adjusted DEPS guidance to be between $3.80 and $3.84.
Turning to Page 15, and our closing summary.
This is a very strong quarter for enterprise with softer revenues growing on an organic basis 9% in our Application Software segment and 10% for our software businesses and our NSF segment.
In addition, the recovery pattern is characterized as gaining momentum and being broad, strength in product and software, strength in recurring and non-recurring.
We performed very well virtually in every financial metric, growing 20% plus in revenue, EBITDA, DEPS and cash flow.
EBITDA margins expanded by 110 basis points and free cash flow increased 30%, to $409 million in the quarter.
As promised, we continue to delever our balance sheet, reducing debt by $375 million in the quarter and by $1.4 billion, since completing our 2020 acquisitions in Q4 of last year.
As we look forward, positive momentum continues to build.
Over the last decade, we have worked to improve the quality of our portfolio to be more software base resulting in enterprise having higher levels of recurring revenue and be increasingly asset light.
In addition to having this improved quality within our business portfolio, we're seeing our recurring revenue growth rates improve from mid-singles to high-singles.
Finally, our businesses will benefit from improving end market conditions.
Given each of these improved portfolio quality, improving recurring revenue growth rates and improving market conditions we expect to see double-digit organic growth in the second half of the year.
Also, our 2020 cohort of acquisitions continue to perform very well and solidly contribute to and improve the quality of our enterprise.
Given all of these factors, we are increasing our outlook for the full-year.
Finally while we continue to focus on deleveraging our balance sheet, we also remain committed to our long-term capital deployment strategy.
To this end, our pipeline of M&A candidates is active, robust and has many high-quality opportunities.
As our balance sheet becomes more offensive toward the end of the year, our active pipeline of M&A targets will enable us to resume capital deployment and our usual process oriented and disciplined manner.
 Assistant:

Chosen response:
sees fy adjusted earnings per share $15.00 to $15.20.
sees q3 adjusted earnings per share $3.80 to $3.84.
q2 adjusted earnings per share $3.76.
q2 revenue $1.59 billion versus refinitiv ibes estimate of $1.58 billion.


Prompt:
Human: Mike was previously the CFO of our Specialty Products Operating and Specialty Products Group operating segment.
He succeeds Keith Smiley who will be retiring at the end of the month.
After nearly 30 years of distinguished service to RPM.
I'll begin by sharing broad commentary on our performance for the quarter.
Michael then provides details on our financial results and Rusty will conclude our former remarks with comments and our outlook for the second quarter of fiscal 2022.
Our comments will be on an adjusted basis unless otherwise indicated.
For the first quarter of fiscal '22, three of our four operating segments are the Construction Products Group, Performance Coatings Group, and Specialty Products Group generated solid sales and adjusted EBIT growth.
Combined sales in these three segments increased more than 15% and their adjusted EBIT was up more than 40%.
This performance was especially notable in light of the raw material shortages, supply chain disruptions, and inflation all of our segments and businesses are facing.
During this supply disruption, we lost the equivalent of nearly 300 production days across RPM facilities around the globe during the 2022 first quarter.
More days that were lost due to COVID-related shutdowns in last year's first quarter.
We estimated the negative impact and consolidated sales during this first quarter was about $200 million due to these challenges and disruptions.
Over half of which occurred in our consumer segment.
This was about double the negative sales impact we experienced in the fourth quarter of fiscal '21.
Sales and earnings for our consumer group decreased during the quarter as a result of these factors, as well as a difficult comparison to the prior-year period when sales increased on an organic basis by 34% and adjusted EBIT was up 122%.
These growth rates in the prior-year period were largely driven by extraordinary DIY demand during the pandemic.
All indicators suggest that the underlying demand for our consumer products is still strong and that supply and material disruptions, the segment is currently experiencing are temporary.
During the first quarter and early in the second quarter we made strategic growth investments in our businesses.
And as you can see on Slide 4, among these were the recent acquisitions of Dudick, Pure Air, and a recent purchase of a large manufacturing facility in Corsicana, Texas.
Acquired in June Dudick will allow our carboline business to strengthen its position in the secondary containment linings market in established and trusted product lines while simultaneously opening the door to expanded sales and future growth opportunities around the globe.
Pure Air was acquired in August and provides indoor air quality service and is complementary to our Tremco Roofing and Tremco WTI business.
We intend to swiftly scale Pure Air by leveraging Tremco's North America sales force, strategic partnerships, and operational infrastructure.
Also on this slide, you'll see an image from 178,000 square foot plant we purchased 120 acres in Texas.
This will serve as a manufacturing center of excellence for multiple RPM businesses.
The plant is fully operational has an experienced operating team that will allow us to add long-term resilience in our supply chain, improve fill rates, and more easily expand production of a number of our high-growth product lines in the coming quarters and years.
From a more long-term macro viewpoint, there are a number of market opportunities in industry trends that we are well-positioned to capitalize on for continued growth and success among the market opportunities on Slide 5 are the following: The increasing need for investment in infrastructure with spending estimated to be $2.8 trillion globally.
Our Performance Coatings Group and Construction Products Group have a vast array of products and services to meet this need.
The new DIYers born from the pandemic who continue to tackle home improvement projects with both our core product ranges and expanding sales in relatively new categories like abrasives and architectural coatings.
The continued growth and more holistic connected building envelopes, such as those provided by our Construction Products Group, which make structures more airtight, weather tight, and energy-efficient.
And the demand for wall systems like those it can be constructed using insulated concrete forms made by our new Nudura business.
They make building stronger, and more energy-efficient, and reduce construction cycle time and labor.
Industry trends benefiting RPM include nesting by consumers who are making more home improvements, school reopening is requiring more maintenance to repair, a need for building owners and facility managers to consolidate their construction management to a single source, and a greater desire for energy-efficient driven by both the cost benefits as well as a desire to minimize environmental impacts.
RPM is well-positioned to meet and grow with all of these trends.
Turning to Slide 6, on a consolidated basis, our sales increased to a record $1.65 billion up 2.7% over a strong fiscal 2021 first quarter, which grew 9.1%.
Largely, due to the unprecedented demand for our consumer groups home improvement products during the pandemic.
The growth was 2.1% from recent acquisitions and 1.6% due to foreign currency translation tailwinds.
More than offsetting in organic sales declines of 1%.
Adjusted diluted earnings per share of a dollar rate decreasing 25% compared to the prior-year periods extraordinary adjusted diluted earnings per share growth approved 52%.
Our consolidated adjusted EBIT of 206.8 million decreased 23.2% due to supply chain challenges, inflation, and consumer groups' tough comparison against the prior year.
If you look at our consolidated results on a double stack basis that compares the first quarter of fiscal 2022 to the pre-pandemic first quarter fiscal 2020.
Our sales, EBIT, net income, and diluted earnings per share all show strong growth.
This indicates that last year's results were a bit of an anomaly created by the pandemic.
That we are now getting back to a more steady level of performance across the business.
Raw material shortages and inflation continue to be serious challenges.
In order to protect their margins, we are continuing to implement price increases where appropriate across all our segments.
We also continue to benefit from incremental cost savings resulting from our recently concluded Map to Growth operating improvement program.
It continues to pay dividends as we generate further operational efficiencies in our manufacturing, procurement, and administrative business functions.
Moving on to Slide 7, our construction products group with our fastest-growing segment in the first quarter generating record sales and record adjusted EBIT.
Its organic growth at 15% was particularly impressive given that non-residential construction put in place a relevant market indicator for the segment is down 11.6% this calendar year.
Nearly all of the CPG businesses experienced strong top-line performance.
Partially by focusing on growing markets such as technology and distribution.
CPG businesses that performed particularly well were those that provide commercial roofing systems, concrete add mixtures and repair products, and insulated concrete forms.
The segments' European operations generate a double-digit top-line growth.
Due in part to the comparison to last year's first quarter when the shelter in place requirements were most severe.
Earnings increased due to market-share gains, operational improvements, cost controls and selling price increases, which offset production and efficiencies due to supply chain disruptions and cost increases.
On Slide 8, you'll see that sales recovered at our performance coatings group as they increased at nearly all of its major business units.
Partially aided by comparisons to last year's first quarter once pandemic restrictions did not allow contractors on worksites and former energy market conditions led to deferrals in industrial maintenance spending.
Sales are strong at the recently acquired Bison which is a manufacturer of raised flooring systems.
We also experience strong growth in emerging markets and in industrial maintenance outside of the energy sector.
It was encouraging to see EBIT growth outpacing sales in spite of inflation because CPG has been the segment that has been most heavily impacted by the pandemic.
Earnings were boosted by improved pricing, incremental savings from operating improvement initiatives, and two recent acquisitions.
Turning to Slide 9, our Specialty Products Group produced record top-line growth largely driven by its businesses providing marine coatings, powder coatings, wood stains and sealers, and disaster restoration equipment.
Earnings increase due to higher sales volumes and incremental operating improvement program savings, which were partially offset by high raw material inflation inefficiencies associated with supply chain disruption and investment and SG&A for future growth initiatives.
In response, SBD businesses are continuing to institute price increases.
Next on Slide 10, our consumer group faced a tough comparison the prior year for the reasons Frank mentioned earlier.
During the first quarter of fiscal 2022, this segment experienced a negative sales impact of roughly $100 million from production outages due to supply constraints and disruptions.
However, the consumer groups' fiscal 2020 to first-quarter sales were 12.3% above pre-pandemic levels of the first quarter of fiscal 2020 in spite of the negative sales impact from supply chain challenges during the current year.
There is pent-up demand for our products and inventory and many of our channels are low.
We expect to recover the lost sales when conditions normalized.
Earnings declined during the first quarter of fiscal '22, as a result of inflation in materials for labor as well as the unfavorable impact of supply shortages on productivity.
These factors were partially offset by price increases and savings from our operating improvement program.
We are proactively building resiliency in our supply chain to secure raw materials required today and in the future.
In addition, we are adding manufacturing capacity to serve new DIY demand.
While this additional capacity is being established in the near term we are using contract manufacturing at a higher cost to meet customer demand.
I'll now move on to Slide 11, as we look ahead to our fiscal 2022 second quarter we anticipate that raw material, trade, and wage inflation will persist.
As well the raw materials shortages and supply chain challenges we have been experiencing.
In addition, we face another difficult comparison to the prior year when sales on a consolidated basis increased 6% and adjusted EBIT increased nearly 30%, driven by a 66% increase in the consumer segments adjusted EBIT.
We anticipate these factors to be partially offset by price increases, operational improvements, and new manufacturing capacity.
We expect our fiscal 2022 second-quarter consolidated sales to increase in the mid-single digits.
Our Construction Products Group, Performance Coatings Group, and Specialty Products Group are anticipating double-digit sales growth.
Our consumer group is anticipated to experience a double-digit decrease in sales due to continued raw materials shortages and a difficult comparison to the prior-year period when pandemic fuels demand rapidly drove organic growth up 15%.
However, in a similar manner to the first quarter, we expect the consumer segment's second-quarter sales to be above its pre-pandemic level, which is a fair comparison.
While underlying demand remains strong for our products and services, we still face material shortages and inflationary pressures.
So adjusted EBIT is expected to be down 15% to 25%.
The Q2 results will be directionally similar to Q1 with significant year-over-year declines again in our consumer group, which is still lapping tough comparisons and double-digit sales and earnings increases for our other three segments in aggregate.
Turning to Slide 12, moving forward we intend to maintain the positive momentum created by our operating improvement program as we complete its remaining projects.
Such as the one plant closure completed during Q1 of F '22 leverage resources across RPM to manage supply chain issues and meet customer demand.
Identifying new opportunities for efficiencies through our continuous improvement culture and make investments and growth opportunities including capacity expansions.
This concludes our formal comments.
 Assistant:

Chosen response:
q1 sales $1.65 billion versus refinitiv ibes estimate of $1.64 billion.
looking ahead to our fiscal 2022 q2, we expect raw material, freight and wage inflation to persist.
expect our fiscal 2022 second-quarter consolidated sales to increase in mid-single digits.
expect that second-quarter results will be directionally similar to q1.


Prompt:
Human: Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made.
Certain of these factors are described as risk factors in our Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the first quarter 2020.
Ultimately, our success through the pandemic lies in ample liquidity, excellence in the operations, business continuity and a strategic outlook for the future.
These four principles have driven what we have done and will continue to do throughout this pandemic and in the post-pandemic environment.
Led by an operationally hands-on, proactive, motivated and crisis-tested management team, we sit in a position of relative strength following a two-year transformation of our organization, our predominantly grocery anchored and value orientated portfolio and our flexible balance sheet.
Combined with recent actions, we believe that RPT will be able to weather the current storm and thrive once it passes.
In short, the actions we took increased our cash to over $320 million at the end of the first quarter, which should allow us to weather the downturn created by COVID-19.
As a management team, we see tremendous opportunity ahead and are in this for the long-haul and we felt that the salary adjustments were a proactive step that created alignment with our employees and our shareholders.
Combined, we expect to save about $1 million in cash from these actions.
Lastly, the Board recently made the decision to temporarily suspend the quarterly common dividend, preserving roughly $18 million per quarter.
No decisions regarding dividend payments beyond second quarter 2020 have been made.
Future dividend decisions will be made based on liquidity needs and REIT taxable income distribution requirements.
Management and the Board did not take the decision to suspend the dividend lightly.
And we are committed to providing investors with a healthy and sustainable dividend as cash flow visibility improves and the longer term impacts of COVID-19 are more apparent.
Currently, all 49 of our properties are open and operational.
As of May 7, 53% of our tenants by ABR are open.
As of May 8, we collected 58% of our April rent and reimbursements, largely from open tenants.
Of our top 25 tenants based on ABR, over 86% have paid or have agreed in principle to some form of short-term deferment.
The majority of April uncollected rent was tied to the non-essential and experiential tenant categories with whom we are in active conversations with.
Not surprisingly, these categories comprise the vast majority of our tamp relief requests that we have received today.
In terms of May collections, it is too early to comment given the fluidity of tenant negotiations.
While the segmenting of our portfolio has importance and provides transparency into our business, the single best predictor of collections remains whether or not the store is open for business.
As such, we are encouraged that some states have begun to lift lockdown orders, allowing more tenants to reopen their doors.
That said, every tenant has different circumstances, each rent deferment negotiation has different considerations and there are still elements of uncertainty in all cases given the rapidly changing health environment we are experiencing today.
In order for us to clearly evaluate our cash flows by risk level, we have classified our tenants into four tiers based on our assessment of their ability to pay rent near term and the sustainability of their rent payments long term.
In Tier 1 are tenants who have both good long-term business models and have largely been able to remain open through the pandemic.
These include essential businesses as well as QSR and fast casual restaurants remain open, even if only a takeout, drive-through or delivery basis.
87.9% of this tier remains open and 83.9% paid April rent as of May 8.
In Tier 2 are tenants with solid long-term business models and good balance sheets pre-COVID, but that sell more discretionary items.
The discount apparel retailers like T.J. Maxx and Ross fall into this category along with other investment grade quality tenants not included in Tier 1.
Our Tier 2 tenants paid 78.7% of April rent, but only 27.2% by ABR were opened in April.
Tier 3 tenants offer more commodity like products like full-line apparel and accessories.
And Tier 4 tenants are more experiential in nature, including full service restaurants and in many cases were key drivers of traffic pre-pandemic.
Collectively, Tier 3 and Tier 4 tenants paid 36.1% of April rent, 35.6% by ABR remained open.
Turning now to tenant negotiations.
I would characterize our approach as firm but fair.
Our size is an advantage right now as our top executives are directly involved in negotiations.
We understand that many of our tenants are in an extremely difficult position relative to their businesses and sales channels being turned off overnight.
We are working in good faith with them to get through the current turmoil in a way that both the tenant and landlord can be successful beyond the crisis.
To assist our tenants, we started the RPT Tenant Concierge Service to support our small business partners and gaining access to various government assistance programs by hosting educational webinars and providing and paying for direct access to legal resources.
Of the 275 tenants that we targeted, nearly two-thirds have told us they applied for the PPP loan.
Application for an SBA loan for eligible tenants is a prerequisite for consideration of any form of deferral.
That said, let me be clear.
While we are empathetic to our tenants' current situations, we are actively pursuing collections and will pursue all remedies where we believe tenants have the capacity to pay rent.
What we are not doing is sacrificing long-term cash flow just for short-term April-May rent gain.
April rent is still coming in and as I said earlier, we will continue to pursue collections aggressively.
Getting through this will take the collective efforts of the entire ecosystem.
There is no place for bad actors.
For our part, we continue to service our debt to pay our real estate taxes and insurance, and are maintaining the assets to operate safely during the mandated shutdowns while preparing for the reopening of the economy.
As we negotiate any form of rent relief, we are using our tiering process to guide our decision making process and focus on deferrals to support tenants in need or granting rent relief abatements judiciously.
To this point, while only 127 rent relief requests have been approved, 121 have been in the form of deferrals totaling $3.8 million and only six abatements have been granted totaling less than $71,000.
Typical deferral terms call for repayment by the end of 2020 and range from one month to three months.
Please know that neither deferrals nor abatements are being granted for free, and we're using them as currency to improve lease terms that will add significant value down the road.
Some examples include cleaning up co-tenancy clauses, eliminating no builds, and extending term to name a few.
We have proven to be exceptional on the operational side of the business and we will navigate this storm through that exact same lens.
Although much of this focus has been on who is not paying rent, I think it's important to keep in mind that the pandemic is also highlighting the importance of key tenant categories and specifically the grocery channel.
We are seeing incredible demand at our non-grocery anchored centers from grocers and are currently in negotiations with seven top tier grocers at non-grocery anchored centers in our portfolio that would improve the durability of cash flows at these centers if we -- if closed and increase the number of our centers with a grocer or grocery components by 14%.
Turning now to RPT's response to the pandemic at the organizational and community levels, which I believe is a strong reflection of the caliber and quality of the company.
At the organizational level, we responded quickly and definitively in response to what was a rapidly escalating situation to ensure the safety and health of our employees and to provide uninterrupted service to our tenants.
We shut down our New York office in early March, followed shortly by the closing of our Michigan office.
Our employees have now been working safely and efficiently from home for almost 10 weeks, but a year ago, we established an option to work-from-home day program, which made the transition to full work-from-home environment quite smooth.
Our technology, tools and processes allowed us to rapidly evolve with the situation real-time and with limited disruption.
While we are all looking forward to the day we can return to the office, we are prepared and ready to continue to work remotely as long as it takes to ensure the health and safety of our people.
In addition to our work-from-home programs, we have also been working diligently to protect the ongoing health and well-being of our employees through weekly wellness emails, COVID-related seminars and weekly companywide virtual happy hours.
At the tenant and community level, RPT has been actively engaging with and supporting both our tenants and those on the frontlines of the pandemic.
Today, we have donated over 20,000 meals to support school lunch programs, at-risk populations, essential workers and nursing home employees and local communities.
We have also matched employee contributions to support hospital workers and volunteers.
In anticipation and preparation of the reopening of many of our tenants in the coming weeks, we have developed plans for several key initiatives at our shopping centers to keep customers and tenants safe.
The current health crisis has caused us to reshape our business plans quickly and to refocus our efforts in the near term.
Our response to the pandemic has been focused on the health and safety of our employees and their families, our tenants and our shopping center customers, maintaining business continuity during and after the pandemic and increasing liquidity to withstand the near-term financial impact of the health crisis, while positioning the company for long-term success after the crisis passes.
Though the pandemic is having a profound impact on how we think about the business, we remain confident that at its core, the value and service-orientated as well as the grocery anchored shopping center model is one that will stand the test of time as we all seek out common ground, upon which to gather experience life and yes, shop.
Over the last several weeks since the pandemic gained force, many of our key decisions have been through the land of liquidity.
Our goal is simple: focus on what you can control and prepare for what you cannot.
A significant contributor to this was our recent borrowings on our line of credit.
Out of abundance of caution and after analyzing our potential cash need, we drew down $225 million from our line during the quarter, bringing our total cost position to over $320 million at the end of March.
Based on all the steps we have taken over the last two years to solidify our balance sheet, we are fortunate to not have any debt maturing in 2020, only $37 million maturing in '21, and just $53 million in '22.
If our cash collections remained at the April level of 58%, we would be able to fund our ongoing operations without utilizing much of our cash on hand.
Our breakeven cash collection rate is roughly 61%.
In short, we believe we have more than enough liquidity to withstand the impacts of COVID-19 despite the severity of the situation.
While we have no material use for cash today, we will continue to balance our future cash needs and debt covenant compliance requirements to ensure we have optimal liquidity and flexibility to operate our business.
It is also important to note that 46 of our 49 properties are unencumbered, providing us with the optimal operational flexibility to make decisions quickly without the burden of servicers or lenders.
Quickly on our first quarter results.
Operating FFO for the first quarter was $0.26 per share, which was in line with our internal projections.
During the quarter, we recognized about $800,000 in costs related to the suspension of our acquisition and disposition program, which have been excluded from operating FFO as they are non-recurring in nature.
Same-property NOI growth for the first quarter 2020 was 2.3%, which included a 120 basis point drag from rent not probable of collection reflecting the initial impact from COVID-19 attributable to a conservative approach we took with an entertainment tenant that had a substantial open AR balance that we deemed uncollectible.
Absent this, same-property NOI growth for the quarter was in line with our expectation.
We ended the quarter at an occupancy rate of 93.3%, down 100 basis points sequentially given typical seasonality and recapture of an expected anchor space but up 150 basis points year-over-year.
On a leasing front, volume faltered in early March due to COVID-19, impacting our new lease volume.
As a result, we had a much higher mix of renewal activity during the quarter.
In total, we signed 46 leases comprised of 558,000 square feet of which 60,000 square feet were new leases and 490,000 were renewal leases.
We experienced blended releasing spreads of 6.2% and 36 comparable leases, including a 6.2% renewal spread and a 5.2% new lease spread.
Turning now to our outlook for the remainder of the year, in late March, we pulled our 2020 guidance given the lack of visibility created by the coronavirus.
While we are not reintroducing guidance today, we want to provide some additional points to think about as you attempt to model the balance of the year relative to our previously provided guidance.
We entered the quarter with signed not open ABR of about $2.1 million.
Despite the pandemic, we have been able to continue most of our construction activities associated with these leases.
While we have seen a slight delay with rent commencement dates, we expect the rents to commence over the next 12 months.
Regarding near-term rent expirations, we only have 3.4% of our ABR expiring over the balance of 2020, mitigating some near-term tenant retention risk.
From a capital perspective, we have only $14 million of remaining committed capital spend in 2020, of which $11 million is related to our signed not open backlog and residual capital for recently opened tenants, with the balance largely related to essential maintenance capital.
Turning to the common dividend, as Brian mentioned, once the dust settles from the current disruption and longer term implications for the market become more clear, subject to Board approval, we expect to reinstitute a sustainable dividend that will again provide a stable income stream for our investors.
Extrapolating the $18 million per quarter common dividend we were paying would equate to $54 million in potential capital preservation through the next three quarters.
Lastly, in the spirit of transparency, it's worth noting that we provided additional details on our tiers that Brian discussed earlier, in addition to more information on our merchandising mix and performance as it pertains to rent collections in our quarterly investor deck posted on our website.
 Assistant:

Chosen response:
q1 operating ffo per share $0.26.
temporarily suspended payment of the common dividend.
withdrawn all previously provided guidance for 2020 as disclosed in q4 earnings press release.


Prompt:
Human: Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made.
I hope you and your families are all well.
2020 will be a year not soon forgotten.
The health and economic impacts from COVID-19 have been unprecedented.
Add to this, the social and political unrest our country has experienced, and 2020 will no doubt go down as one of the most historic and difficult years in our lifetime.
While the issues facing an open-air shopping center REIT are small in comparison to 2020's broader challenges, I am proud of RPT's response and execution this past year.
From our tenant assistance program and charitable donations to our property-level safety and curbside pickup initiatives, RPT demonstrated its commitment to our purpose of turning commercial ground into common ground.
We also took swift and decisive actions to shore up our liquidity and preserve our access to capital with our first-time investment-grade credit rating from Fitch.
In addition, I was very pleased with the team's tireless effort in pursuit of rent collections, which improved to 91% in the fourth quarter.
Following the payoff of our remaining $100 million balance on our revolver, we have over $100 million of cash and a fully undrawn $350 million revolver and are now positioned to take full advantage of our unique and valuable partnership with GIC and opportunistically execute on our external growth plans.
We continue to track a healthy pipeline of acquisitions and have started to see some improvement in activity in recent weeks.
Let me just reemphasize that the underlying real estate is the primary driver of our acquisition strategy.
What we then look for is growth.
That could come in a variety of ways from under-market rents and mismanaged assets to redevelopment opportunities.
It could also come in a variety of different retail formats from grocery anchored, lifestyle centers, power centers to community centers.
As previously reported, we had five deals in our GIC venture either signed or in negotiations in February of 2020.
Once the pandemic hit, we and our partners made the decision to get out of all of them.
We are now fortunate to have the liquidity and the deep pipeline within our core markets and believe the widening value gap between property types, tenant categories and markets is creating differentiated opportunities that we hope to take advantage of in 2021.
One thing we pride ourselves on is skating to where the puck is going, not to where it's been.
Last year, we entered the Austin market with our off-market acquisitions of Lakehills Plaza.
Since our acquisition, Tesla announced a new $1.1 billion assembly plant.
Google, Oracle and Digital Realty, to name a few, each announced relocation or expansion plans to Austin.
And Barshop & Oles announced plans for a new $1 billion mixed-use development directly across the highway from our property.
It's been a little over a year since our acquisition.
And we are more convinced than ever about this dynamic market that truly represents where the puck is going.
From a leasing perspective, we continue to make good progress on our grocery negotiations and are also in negotiations with tenant categories such as home improvement, wholesale club stores, off-price, QSR and medical-use tenants.
This quarter, we signed a total of 120,000 square feet, up 10% year-over-year.
Notable signings this quarter included two new deals with a modern, tech-enabled healthcare provider.
These deals exemplify our enhanced focus on health and wellness tenants.
We also have good activity on the two Stein Mart boxes that we took back in the quarter, where we have an opportunity to significantly improve the tenancies of both boxes.
At under $11.50 of ABR per square foot, we also see a solid mark-to-market opportunity upon release of these spaces.
One Stein Mart box is already in lease and the other has multiple LOIs that are being negotiated with some very strong national brands.
We ended the fourth quarter with a signed but not open backlog of $3.2 million, up from $3 million last quarter.
We are currently tracking roughly $2 million of ABR that is currently in lease negotiation, up from about $1.5 million last quarter, giving us some visibility on offsets to potential future fallout.
The leasing pipeline is robust, and we are encouraged by the impact it will have on our future cash flows.
Additionally, we have a number of remerchandising opportunities that we are pursuing that are listed in our supplement.
These 11 projects consist of redemising, expanding or combining spaces similar to the 18 targeted remerchandising opportunities that we completed in 2019.
As we did on those projects, we expect to earn attractive returns on our capital of high single to low double digits on this next set of deals.
Despite the end of year increase in reported COVID cases, our suburban portfolio was less impacted by additional lockdown measures taken since this summer.
94% of our portfolio by ABR remains open, unchanged from last quarter, with 4% of our closures tied to our theaters.
The reopening of our theaters remains fluid.
Our exposure is almost entirely tied to Regal, whose parent company, Cineworld, recently obtained additional financing they expect to provide liquidity through 2021 and beyond, which is a positive milestone for this tenant.
While we continue to place a high premium on our cheapest source of capital, retained cash flows, we understand how important the dividend is as a component of our total return to shareholders.
With that in mind, we established a $0.075 per share common dividend for the first quarter of 2021.
The quarterly rate reflects a purposeful analysis of our expected taxable income and our liquidity needs.
We believe the new rate is sustainable and could be grown in conjunction with earnings while allowing us to preserve cash to support our growth opportunities and providing sufficient cushion to weather periodic future downturns.
Today, I will discuss our fourth quarter results, our strong balance sheet and liquidity position, and end with commentary to help everyone understand our expectations on how our business will trend in 2021.
For the fourth quarter, our bad debt and abatements were $4.4 million, about the same as the third quarter.
We reserved about 89% of our uncollected fourth quarter recurring billings, leaving limited downside from these categories relative to our fourth quarter run rate.
As of year-end, $18.1 million of recurring billings for the period of April through December 2020 remain outstanding, of which $11.9 million have been reserved.
We expect most of the unreserved amount of $6.2 million to be paid back over the course of 2021 and 2022.
We continue to be quite pleased with the resiliency of our portfolio and our limited bankruptcy exposure as our leased rate of 92.8% held up well in the quarter, down just 50 basis points sequentially, primarily driven by the recapture of our two Stein Mart leases that I noted last quarter.
Blended rent spreads for the quarter remained positive at 3.4%, impacted by a few flat strategic renewals.
Also, it's important to note that the releasing spread is just one factor in the organic growth profile.
The other factor that we heavily weigh in lease negotiations are the annual contractual rent increases.
The leases that we signed during the quarter, annual contractual rent increases, were about 150 basis points, which is a key contributor to creating a long-term sustainable NOI growth profile.
As we have noted consistently, we expect some volatility in our quarterly statistics given the size of our portfolio but see a continued mark-to-market opportunity as we cycle legacy leases over the next few years.
And as Brian noted in his remarks regarding dividend policy, we have placed a premium on free cash flow, allowing us to utilize our cheapest form of capital to take advantage of these opportunities as we restabilize our portfolio to pre-COVID leased rate levels of nearly 95%.
We were very pleased with our first-ever investment-grade credit rating from Fitch, highlighting our balance sheet strength and flexibility.
Couple this distinction with an increased confidence in our business and in our access to low-cost debt capital, we no longer felt the need to maintain an outsized cash balance and repaid the remaining revolver balance of $100 million last week.
We will also continue to mine our portfolio for additional capital-raising opportunities to further bolster our liquidity position and fuel our external growth plans.
We ended the fourth quarter with trailing 12-month net debt to pro forma adjusted EBITDA of 7.4 times, up slightly from 7.2 times last quarter as another COVID-impacted quarter entered the calculation.
We remain committed to bringing leverage into our long-term target range of 5.5 to 6.5 times and expect to see steady improvement in EBITDA as we return to more normalized reserve levels and as our signed leasing backlog begins to kick in over the course of 2021.
We are establishing 2021 operating FFO per share guidance of $0.77 to $0.87, which is an expected improvement over the annualized 2020 fourth quarter operating FFO per share of $0.72.
Key drivers from there are a favorable impact of $0.03 from interest expense, primarily due to the repayment of our revolving line of credit, and $0.02 from our signed not open backlog that we expect the vast majority to open ratably in 2021.
Further upside is based on favorable bad debt reserves, which we expect to be heavily influenced by the reopening of our theaters, which is a function of the trajectory of the vaccine rollout and movie productions.
While our assumption is that these circumstances will improve over the course of '21, we felt establishing a wider range was appropriate given the potential varying outcomes for our theater exposure, which represent about $0.10 per share of earnings.
If our theaters remain closed and do not pay their contractual rent, our operating FFO could be at the low end of the range.
And conversely, if they are open and paying, we should be near the high end, all else equal.
It is important to note that our guidance does not include the net impact of changes to 2020 estimates for bad debt and straight-line rent reserves.
Also, while acquisitions are not assumed in our guidance range, we intend to redeploy $100 million of cash on the balance sheet into opportunistic acquisitions that meet our strict underwriting standards, representing upside to our range.
While the near-term COVID trajectory remains uncertain, we are cautiously optimistic that the worst is now behind us.
As we move closer to a more normalized environment and given the conflicting impacts of permanent move-outs and rent collection statistics, we hope to return our focus to more traditional measures of REIT operating performance like occupancy, rent spreads and same-property NOI growth.
As part of our ongoing efforts to improve our disclosures, this quarter we added a net asset value page to our supplemental on page 14 to help facilitate your analysis of our real estate value.
 Assistant:

Chosen response:
rpt realty reinstates quarterly common dividend.
initiated 2021 operating ffo per diluted share guidance of $0.77 to $0.87.