Prompt:
Human: Those risks include, but are not limited to, risks associated with pricing, volume, conditions of markets, adverse developments in the global economy as well as the public health crisis related to COVID-19 and resulting impacts on demand for new and used vehicles and related services.
Uncertainty regarding the duration and the severity of COVID-19 and its impact on U.S. and international authorities to ease current restrictions on various commercial and economic activities.
Uncertainty regarding the timing, pace and extent of an economic recovery in the U.S. and elsewhere from the unknown current and future impacts of COVID-19 and unknown future impacts of oil producers and the effects of such can have on travel, transportation, oil prices, which, in turn, will likely adversely affect demand for our vehicles and service.
Also, our ability to obtain an inventory desire for new and used vehicles and the impact of supply change disruptions, which may occur from time to time.
Also, our ability to maintain vehicle margins and implement and maintain expense controls and maintain sufficient liquidity to operate.
Those risks and other risks are described in the company's filings with the Securities and Exchange Commission over the last 12 months.
Copies of these filings are available from both the SEC and the company.
As required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.
I'd now like to take the time -- to take -- hand the call over to Earl.
I'm pleased to report that for the quarter, Group one generated adjusted net income of $103 million.
This equates to adjusted earnings per share of $5.57 per diluted share, an increase of 236% over the prior year and an increase of 170% over the pre-pandemic first quarter of 2019.
Our adjusted net income results exclude noncore items of $1.7 million of after-tax disaster pay provided to employees who couldn't work during our February Texas store closures partially offset by an $800,000 after-tax benefit from legal settlements and a $200,000 after-tax net gain on dealership and real estate transactions.
These profit results were particularly impressive given the fact that our Texas operations, which typically represent around 40% of our total revenues, were severely impacted due to a record-setting February winter weather event.
Our stores effectively lost about the equivalent of a full week of business.
It is likely that vehicle sales were largely deferred into subsequent months, but the available service shop hours were permanently lost.
Also the U.K. remained under lockdown throughout the entire first quarter.
With so many restrictions in all our markets in 2020, it was difficult to generate revenue growth.
This improvement was driven by new and used vehicle revenue increases in the U.S., of well over 20% in the first quarter.
Of course, we should remember that the pandemic did start to negatively impact traffic and sales during the second half of March last year.
But the important fact is that consumer demand for vehicles in the U.S. remains extremely strong and hit an even higher year in March.
It is true that sales have and will be hampered to a certain degree by low inventory levels.
But this continues to support above-average margin levels.
Daryl will speak more about our inventory situation shortly.
Our aftersales business has suffered throughout the pandemic from less driving and a variety of lockdown conditions in all our markets.
In particular, our U.S. business started 2021 very slowly in January and February, but exploded in March.
Again, Daryl, will provide more detail, but this gives us great confidence that we will enjoy very strong parts and service business this spring and summer in both the U.S. and also likely the U.K. as those facilities are now completely open.
In the U.S., we are especially pleased that our service results have now returned to pre-pandemic levels.
On a same-store basis, our U.S. total aftersales gross profit increased 3% versus the first quarter of 2019, and customer paid gross profit increased 14% over that same pre-pandemic time period.
These are very encouraging signs for continued aftersales improvement in 2021.
Daryl will provide more detail on our U.S. results in a moment.
Relative to the U.K., mandatory lockdowns began on November 5, 2020, and lasted through the entire first quarter.
They have since been lifted as of April 12.
Like the U.S., our U.K. operations have shifted heavily to online selling via our Acceleride platform since our showrooms have been closed for five months.
Despite not having the benefit of physical sales departments, or the ability to conduct test drives, we were able to deliver over 13,000 new and used vehicles during the quarter.
Limited new vehicle availability increased our same-store new vehicle margins by 160 basis points to 5.6% during the first quarter.
Our aftersales margin increased by almost 400 basis points to 58.4% as most service work at our dealerships was heavy repair work as customers chose to defer routine maintenance until after the lockdown.
The strong new vehicle and aftersales margins combined with strong cost discipline, evidenced by an 1,800 basis point same-store SG&A improvement over last year, enabled us to generate a meaningful level of profit in the U.K. despite closed showrooms.
As we were permitted to open showrooms again on April 12, we've seen very strong sales and service traffic levels back in our dealerships.
This gives us a high level of confidence in our U.K. business during the remainder of 2021.
A number of factors contributed to our outstanding U.S. first quarter results, namely, new and used vehicle sales growth, aftersales growth and continued strong cost discipline, all of which are a continuation of the trends from the second half of 2020.
Compared to the pre-pandemic first quarter of 2019, our same-store new and used unit sales increased by 11% and 5%, respectively.
This 11% increase in new outperformed the retail industry.
U.S. new vehicle inventory levels finished the quarter at 14,500 units, of 34 days supply.
We anticipate inventories remaining tight and we'll continue to adjust our operations as necessary.
Our same-store used vehicle unit sales improved sequentially by 14%, along with a 5% growth over the first quarter of 2019.
Used inventories remain constrained as well.
However, we've made a number of changes in our merchandising, sourcing, reconditioning and acquisition processes that have resulted in higher velocity and better inventory return.
Although we are around record high monthly levels of 90 units sold core rooftop, in the quarter, we continue to believe there is a great deal of opportunity in used vehicles in our dealerships going forward.
The second and most encouraging profit driver was our aftersales performance.
Warranty and collision sales were still very depressed in January and February, but we saw improvement in March.
Our customer pay business is very strong.
As Earl mentioned, our same-store CP customer pay gross profit was up 14% versus the first quarter of 2019.
This allowed us to grow total aftersales gross profit by 3% versus pre-pandemic levels, despite the significant headwinds in warranty and collision, both of which will reverse in time.
We saw a significant expansion in gross profit per repair order in the quarter, offsetting RO declines.
In March, traffic counts increased and our same-store customer pay RO count grew 23% versus March of 2020.
We foresee aftersales continuing to ramp-up in the near term.
The third major factor driving our outstanding profit performance was continued cost discipline.
Our first quarter adjusted SG&A as a percentage of gross profit was 63%, down from 74% in the pre-pandemic first quarter of 2019.
Part of the decline is certainly due to higher vehicle margins, which we don't believe to be fully permanent, but a material part of the improvement is due to productivity gains.
For example, because of tools like Acceleride, our salespeople are more productive.
Because of our mix, the higher mix of flat rate techs, our techs are more productive.
These examples of permanent productivity gains will allow for us a significant ongoing reduction in our cost structure.
I would like to provide another quarterly update on Acceleride, our digital retailing platform.
We continued our upward trajectory in the first quarter by selling a record 4,000 vehicles through Acceleride, an increase of 124% over the prior year and 7% of total retail units sold.
Customers choosing Acceleride continue to close at a much higher rate than our other sources.
Additionally, I would like to share with you a number of enhancements we have made or will make soon to the Acceleride platform.
First, we've integrated real-time loan payoff quotes within the platform.
Second, we launched an Android App in addition to our existing Apple App.
Third, customers now have the ability to toggle between English and Spanish.
And fourth, in addition to be able to reserve a vehicle with a credit card, customers also now have the ability to process down payments for any amount directly through the app.
And fifth, over the next couple of months, we will introduce dynamic delivery fees live within the customer workflow.
This will introduce delivery fees earlier in the process and include them in the monthly payment calculation based on the customer's delivery address.
We're also working through numerous other enhancements and will provide future updates as appropriate.
We believe our digital retailing process is second to none in the industry, and we continue making improvements to remain at the forefront of this transformative technology.
Turning quickly to Brazil.
Despite a 7% decline in new vehicle industry sales driven by tight inventories and additional COVID lockdowns, our team did a tremendous job of growing margins and aggressively thinning the cost structure in order to realize a very strong quarterly profit in what is seasonally the weakest quarter of the year.
We easily set a record for the most profitable first quarter over the entire eight years of Group 1's ownership and are well positioned to benefit from a sales rebound coming out of the pandemic.
As of March 31, we had $83 million of cash on hand and another $245 million invested in our floorplan offset accounts bringing total cash liquidity to $328 million.
There was also another $283 million of additional borrowing capacity on our U.S. syndicated acquisition line bringing total immediate liquidity to over $600 million.
We also generated $157 million of adjusted operating cash flow in the first quarter and $134 million of free cash flow after backing out capex.
Our rent adjusted leverage ratio as defined by our U.S. syndicated credit facility which reduced to two times at the end of March, leaving plenty of flexibility for capital deployment.
On a net basis, which considers all U.S. cash on hand, our leverage was 1.6 times as of March 31.
Finally, related to interest expense.
Our quarterly floorplan interest of $7.6 million was a decrease of $5.3 million or 41% from the first quarter of 2020.
This decline was primarily driven by lower inventory levels and related borrowings.
Non-floorplan interest expense decreased by $4.3 million or 24% from prior year, primarily due to the last year's bond debt refinancing.
As a reminder, we continue to manage our interest risk conservatively.
We have floorplan swaps averaging $550 million in place through 2026.
We also considering our mortgage swaps on bond debt, over 75% of our debt is at fixed rates.
As a result, a 100-basis point increase in interest rates would only have an approximate $0.20 negative impact on our annual EPS.
Our balance sheet and liquidity position have never been stronger, and we look forward to growing the company through M&A.
We are seeing a strong flow of potential deals and anticipate closing or entering into contracts to acquire additional dealerships this year.
Related to our corporate development efforts, we previously announced the March acquisition of two Toyota franchises on Cape Cod that increased our new England platform to 10 stores and will contribute $120 million in incremental annual revenues.
We also previously announced the January dispositions of the Cadillac franchise in the Dallas-Fort Worth market area and a mini franchise in the El Paso market.
We've also since completed the termination of the U.K. Ford franchise in March and the disposition of a Mississippi Kia franchise in April.
As Daniel mentioned, we continue to prioritize external growth in our capital allocation process and we're optimistic that we will have beneficial opportunities as the year progresses.
 Assistant:

Chosen response:
compname announces record first quarter 2021 financial results.
q1 adjusted non-gaap earnings per share $5.57.
compname says q1 revenue increase driven by u.s. new and used vehicle revenue growth of more than 20 percent.
quarterly new vehicle revenue increased 15.0 percent, on a 4.3 percent increase in unit sales.


Prompt:
Human: These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2020, Form 10-Q for the quarter ended June 30, 2021, recent current reports on Form 8-K, and other Securities and Exchange Commission filings.
Our comments today also include non-GAAP financial measures that exclude the impact of special items.
Last quarter, we discussed a longer view of a recovering market and our confidence in a multi-year upcycle.
I am pleased that the steady march of activity and Halliburton's performance in the third quarter internationally and in North America, all reinforce our enthusiasm today and for what we expect in 2022 and beyond.
Our results demonstrate the effectiveness of both our strategy and our execution as the market recovery accelerates.
Here are some highlights.
Total company revenue increased 4% sequentially, with top-line improvements across all regions, while adjusted operating income grew 6% with solid margin performance in both divisions.
Our completion and production division revenue grew 4%, driven by increased global activity.
Operating margin was essentially flat in the third quarter as we made operational choices to prepare for higher demand for our services in 2022.
Our drilling and evaluation division revenue grew 4%, with increased activity across multiple regions.
Operating margin of 11% was about flat sequentially.
North America revenue increased 3% as growth in US land was partially offset by a decline in our Gulf of Mexico business due to Hurricane Ito.
International revenue grew 5% sequentially, in line with the international rig count growth.
Our year-to-date free cash flow generation of almost $900 million puts us solidly on track to deliver our full-year free cash flow objective.
Finally, we retired $500 million of our long-term debt and ended the quarter with $2.6 billion of cash on hand.
As this upcycle unfolds in both the international and North America markets, Halliburton is executing on our strategy to deliver profitable growth and generate industry-leading returns.
In the international markets, third-quarter activity momentum continued, and I believe it will accelerate into year end and support mid-teens second-half revenue growth compared to the second half of last year.
This expected outcome is better than we anticipated a quarter ago.
In the third quarter, we started long-term projects across all regions in spite of COVID-19 interruptions.
While mobility restrictions and daily precautions remain in place, business activity around the world has adjusted and continues to improve.
In the Middle East, countries relaxed border restrictions and OPEC members prepared for activity increases.
We started to work on several rigs, offshore UAE, mobilized a workover project in Bahrain and completed multiple ESP installations on our artificial lift contract in Kuwait.
We expect the Middle East to exit the year with solid activity momentum.
In Asia Pacific, we launched operations on an integrated project offshore Malaysia, with full implementation of Halliburton's digital well construction capabilities.
We also ramped up for an increase in our Indonesia drilling operations, where the local NOC plans to boost production from its assets.
In Europe/Africa/CIS region, the start of operations on a 23-well offshore integrated development campaign for Woodside and Senegal marked a new country entry for Halliburton.
In Russia, we are mobilizing for a multi-year IOC-operated project on Sakhalin Island.
In the UK sector of the North Sea, work continues on several new development drilling and workover projects for local independent operators.
Finally, Latin America delivered its best quarterly performance since 2015.
We spudded the first well on a three-year integrated project in Brazil, deployed our new drilling technologies on multiple wells in Argentina and prepared to mobilize for new work in Ecuador and Colombia.
In addition to contract start-ups, our pipeline of new tenders continues to grow.
While large Middle East tenders and Latin America projects receive most of the headlines, Customers in Africa, Russia, and Southeast Asia, among others, are also issuing tenders for new work.
All of this points to increasing international customer urgency and demand for our services.
Let me describe what I am seeing that gives me this conviction.
Global supply and demand balance continues to tighten, resulting in a strong commodity price environment.
In response, asset owners are eager to reverse baseline production declines caused by multiple years of underinvestment.
We expect that NOCs and other operators with short-cycle production opportunities will commit additional capital and gain share to meet future oil demand.
Additionally, new fields are smaller and more complex where customers work harder to produce more barrels.
Finally, as mature assets change hands, new owners move quickly to revitalize the assets they acquire and unlock remaining reserves.
They require service partners who can deliver proven technology and decades of experience.
All of these things have one thing in common: they require higher service intensity, more dollars spent on the wellbore rather than on infrastructure.
As the international recovery accelerates, we remain committed to a clear strategic priority, deliver profitable growth.
And we had unique competitive advantages to deliver on this priority.
We have the established footprint, geographic presence, and customer and supplier relationships to capitalize on growth.
We have a strong presence in all major international markets.
The substantial majority of our workforce is local.
And within the regions where we operate, our supply chain spend is primarily with local suppliers.
We have proven capabilities to ramp up our services as customers enter new markets.
We demonstrated this in Guyana, Suriname and, most recently, in Senegal.
The Halliburton team mobilized personnel and built a multifunctional operational base to support Woodside as we embark together on a development campaign offshore Senegal.
We also engineer innovative solutions both digital and hardware to meet the complex reservoir challenges faced by our international customers.
For example, in well construction, this quarter, we introduced the iStar comprehensive measurement platform.
This next-generation intelligent platform provides multiple logging and drilling measurements that enabled reservoir evaluation, faster drilling, and consistent well delivery.
For multiple customers in the Middle East and North Sea, the iStar platform provides insight into the impact of drilling parameters on wellbore conditions and optimizes the drilling process in real time.
In completions, we are the global leader in downhole completion solutions.
As our customers increase their activity, our e-completions ecosystem integrates manufacturing, digital twins, and technology development processes to increase our speed to market for these long lead complex systems.
In many regions, as customers drive for better performance in the face of increasing operational challenges, I expect adoption of integrated and bundled contracts will continue to grow.
Halliburton has strong project management capabilities and a proven track record that deliver efficiencies and reduce total customer cost of ownership.
Our digital innovations reframe customer project economics through greater efficiencies and improved decision-making.
For example, in the third quarter, we deployed our Well Construction 4.0 digital solution to deliver further operational efficiencies for our customer in the Middle East.
Finally, our customers calling us for collaboration from an IOC looking to reduce emissions on its operations in Mexico to a European independent working to remotely monitor and control all of its global drilling operations.
Halliburton's value proposition to collaborate and engineer solutions to maximize asset value for our customers is working for both our customers and Halliburton.
Now turning to North America.
The bifurcation between public and private company activity continued in the third quarter.
Public E&Ps remain committed to their spending plans for 2021 while private operators continue to take advantage of a strong commodity price environment.
As expected, completions growth moderated in the third quarter as operators shifted their focus from completions to drilling activity.
Just like in the international markets, customer urgency and demand for our services keep growing in North America.
Drilled but uncompleted well counts reached the lowest level since 2013 as operators depleted the surplus of DUCs accumulated in 2020.
We expect customers to drill and complete more new wells to offset steep base decline rates and deliver production into an anticipated attractive market next year.
Completions equipment availability is tightening.
Customers have responded by starting the 2022 tender process earlier in an attempt to lock in access to quality services for next year's programs.
Private companies now operate about 60% of the US land rig count, and current commodity prices provide a strong incentive for their activity to expand.
Our market-leading position in North America is rooted in the groundbreaking technologies we put to work in this market.
We are the only fully integrated service provider in North America, and this gives us a unique competitive advantage.
We combine the full breadth of our technology disciplines, geosciences, physics, chemistry, material science, and mechanical, electrical, and software engineering to deliver innovative solutions at scale around the world and uniquely in North America to maximize production and minimize costs.
Our SmartFleet intelligent fracturing service has transitioned from pilot to campaign mode.
Several large operators today have SmartFleet working on multi-pad completion programs.
SmartFleet, for the first time, allows operators to measure treatment placement in real time, which, among other things, has demonstrated up to 30% improvement in cluster uniformity.
In the third quarter, we introduced the IsoBond Cement System and pumped it for multiple customers in the DJ Basin and in the Marcellus Shale.
By removing liquid additives, this dry blended cement provides significant operational efficiencies and lowers capital requirements for land operations.
Taking advantage of the increasing demand for our services require strategic execution on many fronts, particularly in the current environment of stretched supply chains, tight labor, and inflationary pressures.
Against that reality, I believe that Halliburton is best prepared to provide reliable execution for our customers.
Our sophisticated supply chain organization translates Halliburton's size and scale into real savings for us and our customers.
We are seeing that in action as our supply chain delivers what our customers require for their projects.
The labor market is tight today.
We have seen this situation before, and our human resources team knows how to navigate it.
Over the last few years, we compressed our onboarding time, strengthened our national recruiting network and use digital solutions to significantly reduce our field personnel requirements.
Despite real challenges, we have the scale, speed, and systems to recruit talent nationally and quickly deploy it for our customers.
In logistics, we have ready access to a fleet of drivers to make deliveries to the job site.
We expanded our collaboration with Vorto, an artificial intelligence supply chain platform.
Our early adoption of Vorto's platform that connects drivers, asset owners, and maintenance yards, allows us to effectively manage trucking inflation and availability constraints.
Now let me spend a few minutes on our activity and pricing outlook for 2022.
First, in the international markets and then in North America.
Next year, we expect international activity momentum to accelerate an international leading-edge pricing to move upward in pockets as a result of higher activity.
This is what we are seeing today.
Large tenders remain competitive, but we are already seeing modest price increases on discrete work in underserved markets.
We see increasing customer demand for Halliburton's high-end technology and a recognition of its value.
Finally, as a result of lower spending by service companies for more than half a decade, international markets face tightening equipment supply.
To meet these demands, we are strategically reallocating assets to drive improved utilization and returns.
Let me be clear.
Halliburton prioritizes profitable growth internationally, and this will drive our capital allocation decisions to the best returning product lines, geographies, and contracts.
In North America, we expect customer spending to increase in and around 20% next year, including solid net pricing gains.
Many factors drive that spending and pricing, including customer urgency, equipment tightness, and the desire to align with a reliable and differentiated service provider like Halliburton.
Last quarter, we highlighted the pricing traction that exists for low emission equipment.
Today, as we tender for 2022 work, we're seeing price increases for the rest of our fracturing fleet as well.
Net pricing has also increased across different nonfrac product service lines: drilling, cementing, drill bits, and artificial lift.
To generate the highest returns as this market grows, we are taking steps to maximize the value of our North America business.
Specifically, we are repositioning our fracturing fleets to customers in areas where we can maximize returns in 2022, securing longer-term premium pricing contracts for our existing and planned electric fleets and accelerating fleet maintenance and deployment of the next-generation fluid end technology, which extends the life of our equipment.
Halliburton is committed to North America, and I expect we will benefit more than others as activity and pricing momentum accelerates across the board.
Next, let me turn to how we are executing on our strategic priority to advance a sustainable energy future.
As we are witnessing now and saw in the third quarter, the world requires a greater supply of oil and gas.
As an oilfield services company, we have the core competency to help our customers to deliver the supply in the most efficient and technologically advanced ways possible.
With our customers, we are bringing our technical expertise and over a century of industry experience to actively participate in the transition to a cleaner economy.
One of the most meaningful contributions we can make today to this transition is to help our customers reduce emissions from their existing production base.
Emissions reduction is a critical part of our technology development process, and our innovative low-carbon solutions are helping oil and gas operators reduce their carbon footprint.
Halliburton's electric fracturing solution delivers results now for our customers.
In the third quarter, Halliburton completed an all-electric pad operation on a multi-year contract with Chesapeake Energy in the Marcellus Shale.
We deployed our electric fracturing spread with electric blending, wireline and ancillary equipment and an advanced power generation system from VoltaGrid.
This high-performing solution reduced Chesapeake's emission using over 25 megawatts of lower-carbon power generation from Chesapeake's local field gas.
We are collaborating with an IOC in Mexico on their total carbon footprint reduction because we provide both well construction services and logistics services on this contract.
We changed supply boat fueling mechanisms and optimized usage to achieve emissions reductions in the first year of operations.
We are now using a similar contract structure to collaborate with this IOC on its other projects in Latin America.
We are also advancing renewable energy solutions through Halliburton Labs, our clean energy accelerator.
In the third quarter, we doubled our size by increasing the number of Halliburton Labs companies from four to eight, welcoming Alumina Energy from California, Ionada from Ontario and Parasanti and SurgePower Materials from Texas.
We help these companies scale their exciting technologies from innovative energy storage solutions to modular carbon capture systems.
In September, Halliburton Labs hosted its third finalist pitch day featuring nine early stage companies and an audience of several hundred entrepreneurs, investors, academics, and other professionals looking to engage with companies that advance cleaner, affordable energy.
The Halliburton Labs participants are achieving results.
Enexor Bioenergy completed a $10 million Series A round of financing.
Enexor's patented modular system uses locally sourced organic or plastic waste to generate clean on-site energy even in the most remote and inaccessible location.
Other accelerator participants achieved important scaling milestones in the third quarter.
With both current and expected demand increases, Halliburton remains committed to the priorities we set in 2020.
We prioritized profitable growth and returns, remain focused on capital efficiency and are keeping our overall capital investment in the range of 5% to 6% of revenue.
I'm excited about the multi-year upcycle we see in front of us.
I believe our value proposition, technology differentiation, digital adoption, and capital efficiency will allow us to deliver profitable growth internationally and maximize value in North America.
Halliburton will continue to execute our key strategic priorities to deliver industry-leading returns and strong free cash flow for our shareholders.
Let me begin with a summary of our third-quarter results compared to the second quarter of 2021.
Total company revenue for the quarter was $3.9 billion and adjusted operating income was $458 million, an increase of 4% and 6%, respectively.
During the third quarter, Halliburton closed the structured transaction for our North America real estate assets that I described earlier this year, which resulted in a $74 million gain.
We also discontinued the proposed sale of our pipeline and process services business leading to a depreciation catch-up related to these assets previously classified as assets held for sale.
As a result, among these and other items, we recognized a $12 million pre-tax charge.
Now let me take a moment to discuss our division results in more detail.
Starting with our completion and production division, revenue was $2.1 billion, an increase of 4%, while operating income was $322 million or an increase of 2%.
These results were driven by increased activity across multiple product service lines in the Western Hemisphere, higher cementing activity in the Middle East/Asia region as well as increased well intervention services in the Europe/Africa/CIS region.
These improvements were partially offset by reduced completion tool sales in the Eastern Hemisphere, lower stimulation activity in the Middle East/Asia region, and accelerated maintenance expenses for our stimulation business in North America, which related to upgrading our fluid end technology in preparation for the anticipated market acceleration that Jeff described earlier.
In our drilling and evaluation division, revenue was $1.7 billion or an increase of 4%, while operating income was $186 million or an increase of 6%.
These results were due to improved drilling-related services internationally and in North America land, additional testing services, and wireline activity across Latin America, along with increased project management activity in Mexico and Ecuador.
Partially offsetting these increases were reduced drilling-related services in Norway and the Gulf of Mexico.
Moving on to our geographic results.
In North America, revenue increased 3%.
This increase was driven primarily by higher well construction, artificial lift and wireline activity in North America land, increased completion tool sales in the Gulf of Mexico and additional stimulation and drilling activity in Canada.
Partially offsetting these increases were reduced drilling-related, wireline, and stimulation activity in the Gulf of Mexico as a result of the impact from Hurricane IDA.
Turning to Latin America.
Revenue increased 17% sequentially.
This improvement was driven by increased activity in multiple product service lines in Argentina, Mexico, and Brazil as well as higher well construction services in Colombia and improved project management activity in Ecuador.
These increases were partially offset by reduced fluid services in the Caribbean.
In Europe/Africa/CIS, revenue was essentially flat sequentially.
These results were driven by higher well intervention services across the region, increased well construction services and completion tool sales in Nigeria, additional pipeline and fluid services in Russia and increased activity across multiple product service lines in Senegal.
These improvements were offset by decreased activity across multiple product service lines in the North Sea and Algeria and lower completion tool sales in Angola.
In the Middle East/Asia region, revenue increased 2%, resulting from improved well construction activity in the Middle East and Australia.
These improvements were partially offset by lower completion tool sales across the region, along with reduced wireline and stimulation activity in Saudi Arabia, lower project management activity in India and lower stimulation activity in Malaysia.
In the third quarter, our corporate and other expense totaled $50 million.
For the fourth quarter, we expect our corporate expense to moderately increase.
Net interest expense for the quarter was $116 million.
In the third quarter, we retired $500 million of 2021 senior notes using cash on hand.
As a result, our net interest expense in the fourth quarter should decline modestly.
Our effective tax rate for the third quarter came in at approximately 24%.
Based on our anticipated geographic earnings mix, we expect our fourth quarter effective tax rate to be approximately 22%.
Capital expenditures for the quarter were approximately $190 million.
In response to higher demand for our services in both international and North America markets, we are pulling forward spending on long lead time items for our premium equipment and now expect our full-year capital expenditures to be closer to $800 million for the full year.
Turning to cash flow.
We generated approximately $620 million of cash from operations and almost $470 million of free cash flow during the third quarter.
I am very pleased with our working capital performance this quarter as we delivered net cash proceeds from working capital despite our revenue growth.
Now let me describe our near-term outlook.
In North America, we expect moderate pricing and activity improvements in drilling and completions to drive sequential growth.
In the international markets, we expect continued improvement in rig counts, the pace of which will vary across regions.
As a result, for our completion and production division, we anticipate mid-single-digit revenue growth sequentially, with operating margins expected to expand by approximately 50 basis points.
The higher year-end completion tool sales will be partially offset by seasonal North America land activity impacted by the holidays and lower efficiency levels typically experienced in the winter months.
In our drilling and evaluation division, we anticipate sequential revenue growth of 5% to 7% and a margin increase of 150 to 200 basis points due to seasonal software sales and higher overall global activity.
To summarize our discussion today, Halliburton is on track to deliver strong results and our financial commitments for this year.
We see customer urgency and demand for our services increasing internationally and in North America.
We expect to benefit from the accelerating recovery and deliver profitable growth in the international markets and maximize value in North America.
We prioritize our investments to the highest returns opportunities and are committed to capital efficiency.
As our forward outlook unfolds, we expect to deliver strong free cash flow and industry-leading returns for our shareholders.
 Assistant:

Chosen response:
q3 revenue $3.9 billion versus refinitiv ibes estimate of $3.92 billion.
completion and production revenue in q3 of 2021 was $2.1 billion, an increase of $88 million, or 4%, when compared to q2 of 2021.
drilling and evaluation revenue in q3 of 2021 was $1.7 billion, an increase of $65 million, or 4%, when compared to q2 of 2021.
north america revenue in q3 of 2021 was $1.6 billion, a 3% increase when compared to q2 of 2021.
international revenue in q3 of 2021 was $2.2 billion, a 5% increase when compared to q2.


Prompt:
Human: Last night, we reported results and posted all of the earnings-related materials on our website.
For the call today, our speakers are Chris Swift, Chairman and CEO of The Hartford; Beth Costello, Chief Financial Officer; and Doug Elliot, President.
Just a few final comments before Chris begins.
These statements are not guarantees of future performance, and actual results could be materially different.
A detailed description of those risks and uncertainties can be found in our SEC filings.
Our commentary today include non-GAAP financial measures.
Explanations and reconciliations of these measures to the comparable GAAP measure are included in our SEC filings as well as the news release and financial supplement.
Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without The Hartford's prior written consent.
Last quarter, I shared that I had never been more excited about the future of The Hartford.
Our second quarter results support that optimism.
All the components of our strategy are coming together to deliver growth, margin expansion and operating efficiencies.
In the second quarter, we reported core earnings of $836 million or $2.33 per diluted share; 8% growth in year-over-year diluted book value per share, excluding AOCI; and a trailing 12-month core earnings ROE of 13.1%.
In addition, we returned $694 million to shareholders in the quarter from share repurchases and common dividends.
The outstanding financial performance of The Hartford reflects strong execution and success of our strategy to focus on high-return businesses where we have market leadership and sustainable competitive advantages.
Economic growth, as measured by GDP, reached a record level in the second quarter.
And while moderation is expected, the overall trend will remain elevated through 2021.
This economic expansion will grow the premium base of our employment-centric businesses and other lines as they benefit from job creation and new business formations.
Meanwhile, we are closely monitoring the recent elevated inflation data and remain confident that our loss ratio assumptions are sufficient against this backdrop in 2021.
At the same time, we are considering pricing actions as we gauge inflation trends going forward.
Finally, our investment portfolio is well diversified and positioned for the evolving macroeconomic environment.
As we enter the second half of '21, while watching developments with COVID-19 and inflation, I am very confident that The Hartford franchise has never been better positioned to continue to generate industry-leading returns and enhance value for all our stakeholders.
Let me now make some high-level comments about the results within the business.
In Property & Casualty, improved results were driven by higher investment income and a very strong contribution from Commercial Lines with double-digit top line growth, underlying margin expansion and reduced COVID impact.
For nearly 40 years, we have been a leader in the small commercial market and have consistently generated highly profitable margins.
Results continue to be exceptional.
Our differentiated products and digital capabilities are driving a superior customer experience, which contribute to higher written premium levels as we capture more profitable market share.
For the second consecutive quarter, our next-gen Spectrum, new sales reached record levels.
In Middle & Large Commercial, our team has done a tremendous job improving margins while growing the top line, as demonstrated by new sales and written premium levels.
As the country invests in new infrastructure over the next decade, our specialized verticals are well positioned as a go-to-market for risk products and services.
In Global Specialty, we are growing in targeted lines that provide very attractive risk-adjusted returns.
Cross-selling within The Hartford's retail distribution has been very successful, and the feedback from our distribution partners has been exceptional regarding product breadth and teamwork.
As Doug will discuss further, we expect to exceed our cross-sell targets a year ahead of plan.
I am extremely pleased with what the team has accomplished in a short period of time since the strategic transaction of Navigators closed.
The timing was ideal given the growth in this market segment and the robust pricing environment.
Just two years ago, this business was generating combined ratios above 110%.
We thoughtfully developed a plan to improve the financial performance and the results are self-evident, and we believe there is more improvement to come.
We have nearly $2.5 billion of annual premium in Global Specialty, and I am very optimistic about the future as we realize the full potential of the products and capabilities of this business.
Across Commercial Lines, our technology investments have improved the speed and effectiveness of the underwriting process.
We continue to further leverage data and analytics to make more informed underwriting decisions and respond to the needs of our distribution partners and our customers.
Overall, our Commercial Lines businesses are well positioned to compete and win in the marketplace.
Turning to Personal Lines.
We are the fifth largest direct writer of personal auto through our partnership with AARP, one of the largest affinity groups in America.
Over the next decade, this mature market demographic is estimated to grow three times as fast as the rest of the U.S. population.
To capitalize on this growing segment, we are modernizing our products in both home and auto and further enhancing our already strong digital capabilities.
This transformation provides greater ability to grow in the 50-plus demographic that has become more reliant on digital technologies in the way they live and work.
Before turning to Group Benefits, I would like to briefly comment on the bankruptcy of the Boy Scouts.
Earlier this month, the Boy Scouts filed an amended plan, which included a request to be released from its settlement agreement with The Hartford.
We are vigorously contesting this request and have filed strong opposition with the bankruptcy court.
That said and consistent with our policy regarding active litigation, I am not going to comment further on this matter.
Turning to Group Benefits.
We posted solid results for the quarter, driven by excellent investment returns as well as continued favorable disability trends, offset by elevated excess mortality.
Higher year-over-year earned premiums, excluding buyouts, reflect expanding payrolls as well as new sales and strong persistency.
The group life industry has been impacted by excess mortality over the past five quarters.
During the second quarter, our excess mortality losses have dropped significantly versus the first quarter.
U.S. COVID-19 deaths have declined rapidly since peaking in January, but continue to drive elevated mortality in our book of business and across the industry.
Consistent with U.S. trends, the average age of our COVID-19 life claimant has decreased.
Since younger age cohorts tend to carry higher face amounts, the average claim severity has increased relative to earlier periods in the pandemic.
We are optimistic about the efficacy of vaccines.
However, we are closely monitoring variant strains and the slowing rate of vaccinations, particularly among the younger age cohorts.
That said, we do expect lower excess mortality in the second half of '21 compared to the first half of this year.
We are a top three carrier in the group benefits industry with strong market share, a diverse product portfolio and capabilities across customer segments from small business to national accounts.
We continue to invest in our technology platform to extend our service offerings, including digital access for employers and employees to improve the overall customer experience.
The workplace remains an important access point for many people to obtain desired protection products, and we see that relationship growing stronger in the years ahead.
In addition, the pandemic created new focus on the products and services we provide.
We are confident that our innovative mindset positions us well to maintain our competitive advantages and grow in Group Benefits.
To conclude, we are executing with confidence and precision.
Our top line is benefiting from strong macroeconomic tailwinds.
Margins are expanding with a positive renewal rate environment, and excess mortality losses are expected to decline.
With enhanced underwriting capabilities, broad product offerings and strong distribution partnerships, we are positioned to grow and capture more profitable market share.
Last quarter, we shared our target of a core earnings ROE of 13% to 14% in 2022 and into 2023 driven by top line growth across the businesses, margin improvement with strong earned pricing trends in excess of loss costs, operating efficiencies and proactive and prudent capital management.
I am optimistic and confident we will continue to deliver on our financial objectives and enhance value for all stakeholders.
Overall, we are very pleased with the results for the quarter and our progress on our priorities to enhance value creation for shareholders.
Second quarter core earnings were $836 million or $2.33 per diluted share and up 91% from last year.
We had strong performance across all our businesses, excellent investment results and significantly lower COVID losses as compared to the prior year period.
In P&C, the combined ratio of 88.5 improved 8.4 points from the second quarter of 2020, including improvements in both the loss and expense ratios.
The expense ratio in the quarter improved by 220 basis points to 31%, reflecting earned premium growth as well as cost savings from Hartford Next and a lower provision for doubtful accounts.
In Commercial Lines, we produced an excellent underlying combined ratio of 89.4, which included ex COVID loss ratio improvement in Middle & Large Commercial and in Global Specialty and expense ratio improvement across all businesses.
Results in Commercial Lines also improved year-over-year due to lower direct COVID losses of $3 million compared to $213 million or 9.9 points in second quarter 2020.
Written premium was up 15% with growth in all lines of business, including the effect of higher audit and endorsement premiums reflecting the economic rebound.
Personal Lines generated an underwriting gain of $96 million and an underlying combined ratio of 88.2%.
Results were down from second quarter 2020 as last year benefited from significantly lower auto frequency due to the pandemic.
Across Property & Casualty, catastrophes were $128 million in the quarter, $120 million lower than second quarter 2020, which included $110 million for civil unrest.
P&C prior accident year reserve development within core earnings was a net favorable $188 million, including an $82 million reduction in catastrophe reserves as well as decreases in workers' compensation, personal auto liability, package business and bond.
This compared to $322 million of net favorable reserve development in second quarter 2020, which included a $400 million decrease in catastrophe reserves, including the subrogation benefit from PG&E.
In second quarter 2021, we ceded an additional $39 million of unfavorable Navigators reserve development to the adverse development cover primarily related to U.S. financial lines.
Although these losses are economically ceded, the reserve development resulted in a deferred gain, representing a charge against net income in the quarter.
Group Benefits core earnings were $149 million, up 46% over prior year.
Earnings for the quarter reflect strong investment results, the lessening effect of excess mortality related to COVID-19 and an increase in fully insured ongoing premium as our customers emerge from the pandemic.
Sales were nearly $100 million in the quarter, and we experienced a continuation of strong persistency at 91.1%.
All-cause excess mortality in the quarter was $25 million, which includes $88 million for second quarter death dates, offset by $63 million of favorable development for prior period excess mortality estimates, predominantly related to the first quarter.
Through the first six months of the year, our results include excess mortality of $210 million.
As Chris mentioned, although we were encouraged by the trend of declining excess mortality from first quarter to second quarter, we continue to watch a variety of factors, including vaccination rates and the impact of variants.
While uncertainty remains, we would expect excess mortality trends in the second half of 2021 to improve significantly.
Disability loss trend for the quarter remained favorable, though up slightly from the prior year quarter.
The disability loss ratio for the quarter was 64.2%, up 1.6 points as the prior year benefited from favorable short-term disability claim frequency due to the deferral of elective medical procedures at the beginning of the pandemic.
Long-term disability claim incidence was favorable to prior year.
And claim recoveries, although down from the prior year, remain strong.
At Hartford Funds, core earnings for the quarter were $51 million compared with $33 million for the prior year period, reflecting the impact of daily average AUM increasing 36%.
Mutual Fund net flows were very strong at $2.4 billion of net inflows for the quarter.
The Corporate core loss was higher at $52 million in second quarter 2021 compared to a loss of $6 million in the prior year quarter due to income from our investment in Talcott in the second quarter of 2020 of $68 million before tax.
On June 30, 2021, we received $217 million from the sale of our ownership interest in Talcott, resulting in a realized capital gain of $46 million before tax in the quarter.
As a reminder, within core earnings, the Corporate category primarily includes interest expense on debt and investment management fees and expenses related to managing third-party business, including management of the invested assets of Talcott.
Net investment income was $581 million for the quarter, up 71% from the prior year quarter, benefiting from very strong annualized limited partnership return of 33%, driven by higher valuations and sales of underlying investments within private equity funds.
The total annualized portfolio yield, excluding limited partnerships, was 3.1% before tax compared to 3.4% in the second quarter of 2020.
The portfolio credit quality remains strong with no credit losses on fixed maturities in the quarter and a $10 million gain from the partial reduction of the valuation allowance for credit losses on mortgage loans due to improved economic scenarios.
Net unrealized gains on fixed maturities before tax were $2.8 billion at June 30, up from $2.3 billion at March 31 due to lower interest rates and tighter credit spreads.
Improving operating efficiencies and a lower expense ratio from Hartford Next have been a contributor to margin expansion.
The program delivered $195 million in pre-tax expense savings in the six months ended June 30, 2021, compared to the six-months period in 2019.
We continue to expect full year pre-tax savings of approximately $540 million in 2022 and $625 million in 2023.
Book value per diluted share, excluding AOCI, rose 8% since June 30, 2020, to $49.01.
And our trailing 12-month core earnings ROE was 13.1%.
During the quarter, The Hartford returned $694 million to shareholders, including $568 million of share repurchases and $126 million in common dividends paid.
For the 6-month period, we returned $933 million with $691 million of share repurchases and $242 million in common dividends paid.
From July one to July 27, we repurchased 1.9 million shares for $116 million.
There remains $1.7 billion available under our $2.5 billion authorization through 2022.
Resources at the holding company as of June 30 included a total of $1.7 billion in cash and investments.
During the quarter, we received $337 million in dividends from subsidiaries and expect approximately $725 million to $900 million over the second half of 2021.
All in all, we had very strong results for the second quarter, which puts us well on our way to achieving the financial goals we shared with you in April.
Six months into the year, I couldn't be prouder of our performance.
Within Property & Casualty, we're meeting or exceeding expectations on nearly all our key financial metrics.
In the second quarter, Property & Casualty produced an outstanding underlying combined ratio of 89.2.
Premium growth accelerated in commercial.
Pricing remains [Technical Issues] The yield on bindable business is particularly strong, and the efficiency leverage is equally important.
The sophistication of our proprietary pricing model gives us confidence in the quality of our bindable business and is reflected in Small Commercial's underlying profitability.
Middle & Large Commercial accelerated into the second quarter, producing superior written premium growth of 20%.
Middle Market new business of $147 million, up 48%, was at its highest level in two years.
I'm particularly pleased we achieved this result while maintaining underwriting discipline as measured by our pricing metrics and risk scores.
Policy retention in Middle Market increased four points to 82% while maintaining disciplined risk-by-risk underwriting decisions using our increasingly refined segmentation tools.
Like Small Commercial, increased payroll and rising wages contributed to the second quarter Middle & Large Commercial written premium growth of 20%.
Global Specialty produced another strong quarter with written premium growth of 16%.
New business growth of 27% was equally impressive, and retention is up significantly from prior year.
In the quarter, the breadth of our written premium growth was led by 25% in wholesale and 18% in U.S. financial lines.
Global Reinsurance also had an excellent quarter with written premium growth of 26%.
As I've mentioned previously, cross-sell activities are an important component of our growth strategy.
During the quarter, cross-sell new business premium between Global Specialty and Middle Market was $28 million or 11% of related new business sold by these segments.
Since the Navigators acquisition, this effort has delivered $185 million in new business and is on pace to eclipse our initial goal of $200 million a year early.
We now have close to 2,500 accounts with policies that record premium in both Middle Market and Global Specialty.
We're also particularly encouraged by the success of our industry specialization strategy built both organically and through the Navigators acquisition.
For example, the acquired retail excess and U.S. financial lines are significant contributors to our cross-sell execution.
The combined new business growth from these two lines has increased more than 50% since the acquisition.
After years of development, we view our product breadth as a competitive strength.
Let's move on to pricing metrics.
U.S. standard lines and Global Specialty commercial pricing, excluding workers' compensation, was 9.2% in the quarter.
Middle Market ex workers' compensation price change of 8.2%, although down 1.1 points, continues to exceed loss cost trend and reflects improved profitability performance.
In the workers' compensation, renewal repricing was 1% in the quarter.
A key indicator of future pricing includes the impact of the 2020 pandemic trends on 2022 bureau loss cost filings.
We will be closely monitoring these filings in the coming months on a state-by-state basis.
Global Specialty renewal written price remained strong in the U.S. at 11% and international at 24%.
All in, I'm very pleased with our pricing this quarter.
Turning to commercial loss trends, the second quarter current accident year loss ratio was largely in line with expectations.
We are intensely watching inflation and have been particularly dialed in to recent building repair costs and rising wage trends.
Within Large Commercial property, Small Commercial recorded a few large fire losses in the quarter.
And in Global Specialty international, we incurred a large offshore energy loss.
Both were within a normal range of expected volatility.
Overall, Middle Market property loss ratios were slightly favorable to expectations in the quarter.
Favorable claim frequency was partially offset by an increase in severity related to labor and material costs.
While we believe property severity trends may be slightly elevated for the rest of the year, we remain confident in our initial full year Middle Market property loss ratio expectation.
Shifting to workers' compensation, the economic recovery is driving wage growth for our worker population.
This wage growth translates into higher premiums and wage replacement benefits.
Generally speaking, the net impact is a minor improvement in the workers' compensation loss ratio.
Combining earned pricing and loss trends, I'm pleased with the continued strong current accident year performance.
In the quarter, the Commercial Lines underlying ex COVID loss ratio was 57%, 1.3 points better than Q2 of last year.
Let's now turn to Personal Lines.
As expected, the second quarter underlying combined ratio rose 7.5 points to 88.2.
Auto frequency is elevating with increasing vehicle trips and miles traveled, but our book is still favorable to pre-pandemic levels.
As expected, home losses were higher versus a very strong prior year.
Overall, we had favorable claims frequency in the quarter, which was offset by higher claim severity, driven by modestly higher-than-expected large ex CAT fire losses and a provision for elevated building material and labor costs.
Written premium declined 5% after adjusting for both the second quarter 2020 extended billing grace period and the $80 million -- $81 million refund.
According to J.D. Power, auto shopping rates among the 50-plus age segment are down approximately 5% from third quarter 2020 when they first initiated the survey.
Persistency of the shopping trend may continue to pressure new business growth for our customer base.
However, increased marketing spend in the quarter drove June new business premium above expectations, and policy retention was up one point as compared to prior year.
We're also encouraged by the early results from the launch of our new contemporary Personal Lines auto and home product, Prevail.
Through the second quarter, yield, average issued premium and policy counts all met or exceeded expectations.
Both products are now available in Arizona and Illinois.
Seven additional states, along with advanced capabilities, will be online by year-end.
And we remain confident in our long-term growth plan for Personal Lines.
Property & Casualty achieved another outstanding quarter.
Our top line outperformed, providing confidence we will achieve our Commercial Lines 4% to 5% multiyear CAGR guidance.
Strong pricing is earning into the book driving lower current accident year loss ratios, and the expense ratio continues to benefit from our ongoing Hartford Next initiatives.
We are seeing the positive results of our multiyear road map with deeper and broader products, improved risk selection and outstanding execution.
I'm thrilled with our continued progress and look forward to updating you in 90 days.
Operator, we'll take questions now.
 Assistant:

Chosen response: continue to expect full year pre-tax savings of approximately $540 million in 2022 and $625 million in 2023.


Prompt:
Human: These reconciliations, together with additional supplemental information, are available at the Investor Relations section of our website, herbalife.com.
Additionally, when management makes reference to volumes during this conference call, they are referring to volume points.
2021 was another record year for Herbalife Nutrition.
Even during this period of continued global uncertainty due to the pandemic, our entrepreneurial direct sales channel helped consumers around the world pursue their nutrition and wellness goals by giving them access to our high-quality nutrition products.
For the full year, demand for our nutrition products resulted in net sales of $5.8 billion, an increase of 5% compared to the prior year and an annual record for the company.
Our three largest regions, Asia Pacific, North America, and EMEA, along with 37 individual markets, set annual net sales records.
Full-year 2021 reported diluted earnings per share of $4.13 and adjusted diluted earnings per share of $4.79 was an increase of 49% and 29%, respectively, compared to the full year 2020.
Full-year 2021 reported net income of $447 million and adjusted EBITDA of $874 million were both annual records for the company.
For the full year, we averaged over 500,000 active sales leaders per month, a record for the company and an increase of 9% compared to 2020.
We brought in 2.9 million new distributors and preferred customers, which was down just 1% compared to 2020 and actually up 31% compared to the more normalized 2019 year.
We continue to broaden our reach and attract new audiences in 2021, with two-thirds of our new distributor and preferred customers identifying as millennials or Gen Z. This younger demographic drives a high level of business activity by engaging with the business in new ways, including innovative nutrition club models and increased utilization of social media and digital tools.
Today, we also announced sales leader retention results for the last 12-month requalification period ending in January of 2022.
This year, a record 68.9% of our sales leaders were retained, up from last year's prior record of 67.9%.
We believe this result reflects the ongoing sustainability of our business and the attractive opportunity that we offer to our distributors.
Turning to the fourth quarter, our net sales of $1.3 billion decreased 7% compared to the fourth quarter of 2020.
The Q4 year-over-year trend was impacted by a challenging comparison period.
On a two-year stack basis, we saw growth of 8% compared to the fourth quarter of 2019.
The Asia Pacific region had another quarter of growth, up 5% compared to the prior year.
The region was led by continued strength in India, which grew 33%.
India is supported by strong underlying metrics, including 35% year-over-year growth in new distributors and in preferred members, as well as a 32% increase in active sales leaders.
We're making investments in India to further support the market with a newly opened 150,000-plus square foot state-of-the-art center in a suburb of Bangalore.
The new facility will allow us to accommodate planned growth in India as we go from the current level of 900 jobs to approximately 1,500 employees over the next five years.
The space will be home to a new local product research and development facility designed to accelerate new product launches.
It will also contain a state-of-the-art quality control lab, a distributor meeting facility, and a global business services center.
Looking at North America, we saw a decline in net sales of 3% in the quarter.
This decline is up against a challenging prior-year comparison period.
However, the two-year stacked growth rate in the region increased by approximately 29% compared to Q4 of 2019.
One area of continued strength in North America is our U.S. nutrition club business.
We ended the year with over 12,000 nutrition club locations, an increase of more than 30% compared to the end of 2020.
We are excited to see our sales force is energized by the return of in-person distributor events across the North America region, which began in October and continued with 36 separate in-person events so far in 2022.
Although several Q4 events were disrupted by the Omicron variant, attendance has been high for these events.
And we believe the interactive discussions, the face-to-face team building, and the social elements that are characteristic of our in-person events are all an important source of ideation, motivation, and inspiration for our distributors.
Additionally, in North America, we're pleased to share that we recently acquired intellectual property that will serve as the basis of our first-ever vegan product line in the region.
It's expected to launch in early 2023.
We believe this line will allow us to reach a brand-new market of savvy vegan consumers who are looking for certified vegan and organic nutrition products and dietary supplements.
EMEA experienced a challenging year-over-year comparison, resulting in a 7% decline.
However, in the region, we actually saw a 9% year-over-year increase in the number of active sales leaders, which reflects the continued strength and the solid foundation of the EMEA business.
Looking at the two-year stack in the region, EMEA grew 21% compared to the fourth quarter of 2019.
Although the combined new distributor and preferred customer numbers are lower than Q4 of 2020, we saw growth of 23% compared to the more normalized 2019 comparison period.
We're in the early stages of a new project in the region designed to rearchitect our distributors' e-retail and ordering platform.
The goal of this initiative is ultimately to completely overhaul and modernize all our current ordering platforms with growth in mind.
And we're currently in the vendor selection phase for this project and expect a new platform will be available for our distributors in the region in 2023.
The softness in our China business continued in Q4 as net sales declined 31% compared to the fourth quarter of 2020.
Pandemic-related disruption contributed to challenges in attracting, training, and retaining new entrants in the market.
We remain confident that our strategic initiatives aimed at enhancing digital capabilities and daily consumption at nutrition clubs is going to end up benefiting our sales performance over time.
In Mexico, sales declined 5% in the quarter following three quarters of growth as the market was adversely impacted by intermittent pandemic-related disruption.
Although our business wasn't directly impacted by any government pandemic-related restrictions, we do believe that a high case number during the quarter impacted attendance at our nutrition clubs.
Beginning this year in Mexico, we initiated a new weekly commission payment system that enables distributors to receive their commissions on a weekly basis instead of a monthly basis.
This is a first-of-its-kind payment system for Herbalife Nutrition, and it's an exciting opportunity for our sales force to receive their earnings more frequently and expedite their cash flow patterns.
We will be analyzing this program's success, including its impact on distributor metrics, and evaluate the possibility of extending it to additional markets in the future.
For the South and Central American region, the fourth quarter declined 14% year over year.
The region was negatively impacted in markets such as Brazil and Colombia, where government restrictions related to COVID-19 persisted throughout the quarter and impacted our nutrition club activity.
More broadly in the region, the pandemic has contributed to macroeconomic challenges, which have impacted consumer spending.
Turning to our 2022 outlook, we're initiating net sales guidance to be in the range of flat to 6% growth for the year.
We expect the progression of year-over-year comparisons in 2022 will shape the cadence of our quarter-to-quarter performance.
We estimate first-quarter net sales to decline in the range of down 10% to down 4%.
However, we anticipate that the decline will improve in the second quarter.
And as previously stated, we expect to return to year-over-year growth in the back half of the year.
Like many other companies, we expect the bottom line in 2022 to be impacted by unique inflationary pressures being felt across many markets.
We are currently observing higher-than-usual cost increases in our supply chain with respect to raw materials, shipping costs, and labor at our manufacturing facilities.
This pressure, as well as cost increases expected due to a return to normalized levels of in-person distributor events and activities, are resulting in expected declines for adjusted earnings per share and adjusted EBITDA versus 2021.
We anticipate, however, that we can partially offset cost increases in our supply chain by executing on our pricing strategy, which is to increase prices in a way that keeps up with local CPI in each of our markets.
In 2022, we don't expect pricing will fully offset all cost increases, which will result in a net headwind to gross profit of approximately 100 basis points for the full year.
Our efforts to improve margins through productivity and efficiency improvements within our business operations are also anticipated to help offset the near-term margin pressure that we face.
One specific opportunity to achieve this is through our transformation program, first referenced on last quarter's call.
This program is a structural realignment of both the front and back office with the goal of ensuring our infrastructure processes and organizations are efficient and scalable to support our business growth.
Once fully executed, we expect the first phase of our transformation program will result in ongoing incremental savings in SG&A of $10 million to $15 million per year.
We're also assessing a second phase of the program, which we're preliminarily planning for 2023, and anticipate that it will result in annualized savings in the same magnitude as Phase 1.
Alex will provide more details on our transformation program, as well as our annual and Q1 guidance in just a moment.
We continue to execute on our long-term growth strategy, including product innovation.
And in 2021, regional product launches contributed to over 400 new SKUs in the company's portfolio.
Approximately 100 of these new SKUs have been part of our fast-growing energy, sports, and fitness category, which continued to lead our core product categories with an increase of 26% for the full year.
Our commitment to product is one of the factors that led us to be recently named by Euromonitor as the no.
1 brand in active and lifestyle nutrition, as well as the world's no.
The success of our company is rooted in the work and the dedication of not only our distributors but also our employees.
And I'm honored that Herbalife Nutrition was selected as one of America's best midsize employers and one of the top 10 employers in our industry in the 2022 Forbes rankings.
Each member of the Herbalife Nutrition team is valued, and their contributions are helping us expand access to good nutrition and economic opportunities all around the world.
I'm confident that these positive impacts will only continue to grow in 2022 and beyond.
As John mentioned, 2021 was a record year for Herbalife Nutrition across a number of metrics.
Net sales, net income, adjusted EBITDA, active sales leaders, and the global retention of sales leaders are a few of the records set in 2021.
However, we exited the fourth quarter with a net sales decrease of 7% compared to the fourth quarter in 2020.
This was in line with our expectations for the quarter as we continue to comp 2020 results that benefited from the surge in demand for our nutrition products.
However, comparing to the fourth quarter of 2019 prior to the pandemic, it represented an 8% increase on a two-year stack.
Currency was a headwind to net sales in the quarter, representing a drag of approximately 110 basis points.
Normalizing for currency, there was sequential improvement in the fourth quarter growth with local currency net sales declining 5.5% versus 7.6% year-over-year decline in the third quarter.
This was driven by sequential improvement in volume growth of 5.7% year-over-year decline in the fourth quarter versus the 8.3% year-over-year decline in the third quarter.
And on a two-year stack basis, local currency net sales grew by 10.3% versus Q4 of 2019.
Reported gross margin for the fourth quarter of 77.5% decreased by approximately 60 basis points compared to the prior year.
The decrease was largely driven by increased costs in our supply chain, as well as unfavorable impact of country mix.
The decreases were partially offset by the impact of price increases.
Fourth-quarter 2021 reported and adjusted SG&A as a percentage of net sales were 38.9% and 37.5%, respectively.
Excluding China member payments, adjusted SG&A as a percentage of net sales was 32.1%, approximately 290 basis points unfavorable compared to the fourth quarter 2020.
During the fourth quarter of 2021, prior to the impact of Omnicron, there was a significant increase in sales events and promotion costs versus the same period in 2020 as we began to return to in-person events.
This increase in nominal spend against lower net sales largely explains the variance in adjusted SG&A ex China member payments for the fourth quarter of 2021.
For the fourth quarter, we reported net income of approximately $38.2 million or $0.37 per diluted share.
Adjusted earnings per share of $0.57 and adjusted EBITDA of $132 million were both within our expectations for the quarter.
Currency was a tailwind of $0.02 in the quarter versus the prior year.
Our adjusted diluted earnings per share and EBITDA figures continue to exclude items we consider to be outside of normal company operations.
This quarter, you will notice, we had a $12.5 million carve-out accrual related to the Rogers lawsuit as the two parties have agreed on principal terms of a settlement.
Now briefly touching on the full year 2021 results, reported net sales of $5.8 billion increased approximately 5% on a reported basis.
Currency was an approximately 190 basis points tailwind for the full year, excluding Venezuela.
2021 reported diluted earnings per share of $4.13 and adjusted diluted earnings per share of $4.79 both benefited by approximately $0.09 per share from foreign currency fluctuation.
On a constant-currency basis, adjusted earnings per share grew approximately 26% compared to full-year 2020.
Our full-year adjusted tax rate of 19.4% improved approximately 330 basis points from our 2020 adjusted tax rate of 22.7%, primarily due to geographic mix of income.
Turning to our guidance for the full year and first quarter 2022.
We expect the current trend of sequential top-line improvement observed in the fourth quarter of 2021 to continue as we progress through 2022.
The first quarter of 2022 top-line comparison is anticipated to be more challenging than the fourth quarter of 2021, given the modest reacceleration in the first quarter of 2021 of the pandemic surge that began in mid-2020.
We expect to return to growth in the second half of 2022, resulting in projected net sales of flat to 6% growth for the full year on a reported basis, which includes an approximate 160-basis-points headwind due to currency.
Our gross profit and adjusted EBITDA margins for 2022 are expected to be pressured from currency, negative manufacturing variances, and the ongoing cost of the shift to home delivery experienced at the onset of the pandemic.
Further, we have seen significant increases in input costs consistent with the news headlines related to raw materials, labor, and freight costs.
To partially offset these margin pressures in the near term, we will continue to leverage our pricing power.
We are also actively engaged in productivity improvement programs for both our front and back-office operations through the transformation program John referenced earlier.
This program involves the realignment of infrastructure to more effectively leverage our global shared service centers, investment in new technologies to increase efficiencies internally, as well as better support distributors and customers, and repositioning of certain strategic functions closer to the regions and markets they serve to better affect local initiatives.
We expect the first phase of this initiative will incur total pre-tax charges in SG&A in the range of $25 million to $30 million.
We carved out approximately $13 million of these charges in 2021, with most remaining expenses to be incurred throughout 2022.
We expect this first phase will result in annual incremental savings in the range of $10 million to $15 million with some savings beginning in 2022 increasing through 2023, with the full impact of the savings expected to begin in 2024.
We are also assessing a second phase of the program to begin in 2023 with expected ongoing annualized savings of the same magnitude as Phase 1.
As a result, for the full year, we are projecting our adjusted diluted earnings per share to be in the range of $4.25 to $4.75.
This includes an approximate $0.17 currency headwind.
We are also providing full-year adjusted EBITDA guidance in the range of $785 million to $845 million, which includes an approximate $21 million headwind due to currency.
Our 2022 guidance includes the assumption of $50 million in share repurchase per quarter, which reflects the minimum buyback amount we anticipate completing on a quarterly basis.
We continue to project reliable cash flow from our business model.
We believe there is value in guiding for a base level of consistent share repurchase while leaving room for potential incremental opportunistic share repurchases to take place over the course of the year.
We have demonstrated this pattern of consistency during 2021 by repurchasing approximately $100 million, $160 million, and $100 million in the second, third and fourth quarter, respectively.
We anticipate this pattern of consistency to continue in 2022.
For the first quarter, we estimate net sales to decline in the range of down 10% to down 4%, which includes an approximate 240-basis-points currency headwind versus the prior year.
We expect the progression of the year-over-year comparisons will lead to a decline in net sales for the first half of the year, followed by growth in the back half.
First-quarter adjusted diluted earnings per share is expected to be in the range of $0.80 to $1, which includes a projected currency headwind of $0.03 compared to the first quarter of 2021.
Adjusted EBITDA is expected to be in the range of $165 million to $185 million.
Turning to cash flow, capital structure, and our share repurchase activity.
Our business continues to generate substantial cash flow.
Operating cash flow of $460 million for full-year 2021 was down from 2020, primarily due to the impact of several unfavorable accounts related to year-over-year net sales declines.
For 2022, we expect this to turn around in the second half of the year when the business returns to growth.
After completing just under $1 billion in share repurchases during the year, at the end of 2021, we had just over $600 million of cash on hand.
As I mentioned earlier, we have included a minimum of $50 million in share repurchases per quarter in our guidance for the year, which will cut into the approximately $1.1 billion remaining on our three-year share repurchase authorization.
 Assistant:

Chosen response:
q4 earnings per share $0.37.
q4 sales fell 6.6 percent to $1.3 billion.
q4 adjusted earnings per share $0.57.
initiating fy 2022 net sales guidance range of 0% - 6% growth.
2022 adjusted diluted earnings per share guidance range of $4.25 - $4.75.
sees q1 adjusted diluted earnings per share $0.80 - $1.00.


Prompt:
Human: We undertake no obligation to publicly update or revise these statements.
Kevin Jacobs, our Chief Financial Officer and President, Global Development, will then review our third quarter results.
We are pleased to report another quarter of very solid results that demonstrate continued recovery and the resiliency of our business model.
Increases in vaccination rates and consumer spending, coupled with improving business activity, continued to drive solid travel demand throughout the summer and into the fall.
As global borders reopen and the travel environment recovers, we remain extremely encouraged by people's desire to travel and connect more than ever before.
In the third quarter, systemwide RevPAR grew 99% year-over-year.
Compared to 2019, RevPAR was down roughly 19%, improving 17 percentage points versus the second quarter, with systemwide rates down just 2.5% versus 2019.
Adjusted EBITDA totaled approximately $519 million, up 132% year-over-year and down 14% versus 2019.
Performance was primarily driven by strong leisure trends with leisure room nights roughly in line with 2019 level, with leisure rates exceeding 2019 levels.
Business travel continued to gain momentum with midweek occupancy and rates improving meaningfully versus the second quarter.
In the quarter, business transient room nights were roughly 75% of prior peak levels.
Group continued to lag but showed significant sequential improvement versus the second quarter, boosted by strength in social events.
For the quarter, group RevPAR was approximately 60% of 2019 levels, improving 21 percentage points from the second quarter.
Overall systemwide RevPAR versus 2019 peaked in July at 85% with rates just shy of prior peaks.
As expected, recovery slowed modestly later in the quarter due to typical seasonality and customer mix shift, but overall trends remained solid.
Both August and September RevPAR achieved roughly 80% of 2019 levels, driven by continued strength in leisure and upticks in business travel post-Labor Day as offices and schools reopen.
These trends improved modestly into October with month-to-date RevPAR at approximately 84% of 2019 levels and rates in the U.S. nearly back to prior peaks.
Roughly 40% of systemwide hotels have exceeded 2019 RevPAR levels in October month-to-date.
Additionally, bookings for all future periods are just 8% below 2019.
With loosening travel restrictions and strong nonresidential fixed investment forecast, we remain optimistic for future travel demand.
TSA reported third quarter travel numbers were nearly 80% of 2019 with demand picking up further following the announcements of the U.S. border reopening and the lift of the international travel ban for vaccinated travelers.
Additionally, studies show that nearly 70% of U.S. businesses are back on the road, up 28 points from the end of the second quarter.
With roughly 80% of our typical corporate mix coming from small- and medium-sized businesses and with the lagging recovery of larger corporate travel, we've taken the opportunity to continue our work from before COVID to further increase our focus on this segment of demand.
This demand is higher rated, the more resilient -- resilient, which has helped us recover more quickly in business transient and should drive rate compression in the future as larger corporate travel picks up.
On the group side, our position for the rest of the year remains fairly steady with forward booking sentiment improving as variant concerns taper.
Additionally, the recent reopenings of some of our large urban properties, like the New York Hilton Midtown, increased our confidence in our positioning as group recovers.
We added nearly 100 hotels and 15,000 rooms across all major regions and delivered strong net unit growth of 6.6% in the third quarter.
Conversions represented roughly 1/3 of openings.
Year-to-date, we've added more than 42,000 net rooms globally, higher than all our major branded competitors.
Our performance reflects the success of our disciplined growth strategy, the strength of our brands, network effect and commercial engines across the world.
It also illustrates our increasing confidence in a strong recovery in global tourism in the months and years to come.
During the quarter, we launched our large-scale franchise model in China, enabling independent owners to explore franchising opportunities with our Hilton Garden Inn brand with a prototype developed specifically for the Chinese market.
To date, we have signed more than 100 deals to develop Hilton Garden properties in China, strengthening our confidence in the long-term growth of our focused service brands and our ability to cater to a growing middle class.
Following our recently announced exclusive license agreement with Country Garden, we were thrilled to open our first Home2 Suites in China with plans to grow to more than 1,000 properties.
We look forward to leveraging our partnership to capture the rapidly growing demand for mid-scale hotels in China.
We also celebrated the opening of our 500th Home2 Suites following the brand's launch just 10 years ago, making it one of the fastest-growing brands in industry history and boasting the industry's largest pipeline in North America with more than 400 hotels in development.
Our luxury and lifestyle footprints also continued to expand globally with the debut of the Canopy by Hilton in Spain and the highly anticipated opening of the Mango House LXR in the Seychelles.
Marking another important milestone in its global expansion, LXR celebrated its debut in Asia Pacific with the opening of the ROKU KYOTO.
In the quarter, we signed nearly 24,000 rooms, up approximately 40% year-over-year, driven by strength in the Americas and Asia Pacific regions.
Driving our positive momentum in luxury, we announced the signing of the Conrad Los Angeles, the brand's first property in California.
The 300-room hotel is expected to open in 2022 as part of The Grand LA mixed-use development.
With approximately 404,000 rooms in development, more than half of which are under construction, we expect positive development trends to continue, driven by both new development and conversion opportunities.
For the full year, we expect net unit growth in the 5% to 5.5% range, and we continue to expect mid-single-digit growth for the next several years.
For our guests, flexibility has always been important, but the pandemic has made choice and control even more critical.
We were excited to launch several new commercial programs and loyalty extensions, including the launch of Digital Key Share, a first for a major hospitality company.
This feature allows more than one guest to have access to their room's digital key.
Additional technology enhancements have enabled our elite Honors members to begin enjoying automatic room upgrades.
Gold and Diamond members may be notified of a complementary upgrade prior to arrival, enabling guests to choose their upgraded room directly by using the Hilton Honors app.
We continue to focus on new opportunities to further engage our 123 million Honors members and are thrilled to see engagement is nearly back to 2019 levels.
In the quarter, membership grew 11% year-over-year.
Honors members accounted for 59% of occupancy with the U.S. at 66%, just two points below 2019 levels.
During the pandemic, approximately 23 million U.S. households brought home a new pet, including my own.
And like so many others, my family loves traveling with our new dog, Miller.
In the coming months, Homewood Suites will join Home2 in becoming 100% pet-friendly in the U.S. with plans for all limited service brands to be pet-friendly by the first quarter of next year.
Our guests are eager to travel with their furry little friends.
And by making that simpler, we're able to capture demand and bring new business into the system.
As the global travel environment improves, I continue to be impressed by our team members' dedication to providing exceptional experiences to our guests.
That's why I am particularly proud that, last week, we were named the number three World's Best Workplace by Fortune and Great Place to Work.
After six consecutive years of being ranked, Hilton was the only hospitality company on the list.
We truly believe that Hilton continues to be an engine of opportunity for all of our stakeholders around the world and are very optimistic for the future.
During the quarter, systemwide RevPAR grew 98.7% versus the prior year on a comparable and currency-neutral basis as the recovery continued to accelerate, driven by strong leisure demand, particularly in the U.S. and across Europe.
Performance was driven by both occupancy and rate growth.
As Chris mentioned, systemwide RevPAR was down 18.8% compared to 2019.
Adjusted EBITDA was $519 million in the third quarter, up 132% year-over-year.
Results reflect the broader recovery in travel demand.
Management and franchise fees grew 93%, driven by strong RevPAR improvement and Honors license fees.
Additionally, results were helped by continued cost control at both the corporate and property levels.
Our ownership portfolio performed better than expected in the third quarter, driven by the accelerating recovery in Europe, the Tokyo Olympics and ongoing cost controls.
For the quarter, diluted earnings per share, adjusted for special items, was $0.78.
Turning to our regional performance.
Third quarter comparable U.S. RevPAR grew 105% year-over-year and was down 14% versus 2019.
Robust leisure demand and improving business transient trends drove strong performance in July.
Trends modestly slowed later in the quarter due to seasonality.
U.S. occupancy averaged nearly 70% for the quarter with overall rate largely in line with 2019 levels.
In the Americas outside the U.S., third quarter RevPAR increased 168% year-over-year and was down 30% versus 2019.
The region benefited from easing travel restrictions and strong leisure demand over the summer period.
Canada also saw a noticeable step-up in demand in August after reopening their borders to vaccinated Americans.
In Europe, RevPAR grew 142% year-over-year and was down 35% versus 2019.
Travel demand accelerated across the region in the third quarter as vaccination rates increased and international travel restrictions loosened.
In the Middle East and Africa region, RevPAR increased 110% year-over-year and was down 29% versus 2019.
Performance benefited from strong domestic leisure demand and international inbound travel from Europe.
In the Asia Pacific region, third quarter RevPAR grew 5% year-over-year and was down 41% versus 2019.
RevPAR in China was down 25% as compared to 2019 as a rise in COVID cases led to reimposed restrictions and lockdowns across the country.
China has recovered steadily into October with occupancy nearing 60% for the month.
In the rest of the Asia Pacific region, prolonged lockdowns in Australia and New Zealand offset upside from the Tokyo Olympics.
As Chris mentioned, in the third quarter, we grew net unit 6.6%.
Our pipeline grew sequentially, totaling 404,000 rooms at the end of the quarter with 62% of pipeline rooms located outside the U.S. Development activity continues to gain momentum across the globe as the recovery progresses, a testament to the confidence owners and developers have in our strong commercial engines and industry-leading brands.
For the full year, we now expect signings to increase in the mid- to high teens range year-over-year and expect net unit growth of 5% to 5.5%.
Turning to the balance sheet.
We ended the quarter with $8.9 billion of long-term debt and $1.4 billion in total cash and cash equivalents.
We're proud of the financial flexibility we demonstrated over the past 18 months.
And looking ahead, we remain confident in our balance sheet management as we continue to progress through the recovery and move closer toward our target leverage.
We would now like to open the line for any questions you may have.
[Operator Instructions] Chad, can we have our first question, please?
 Assistant:

Chosen response:
q3 adjusted earnings per share $0.78.
for three months ended september 30, 2021, system-wide comparable revpar increased 98.7%.