Prompt:
Human: We have posted a copy of that release as well as reconciliations of the non-GAAP measures used in today's call to the Investor Relations section of our website under the heading Financials and Filings.
Mike will focus his comments on Q3 performance as well as future catalysts and the outlook for our business, including Q4 full year 2021 guidance.
During today's Q&A session, Mike and Dan will be joined by our Chief Medical Officers, Dr. Ian Meredith; and Dr. Ken Stein.
Before we begin, I'd like to remind everyone that on the call, operational revenue growth excludes the impact of foreign currency fluctuation and organic revenue growth further excludes acquisitions and divestitures for which there are less than a full period of comparable net sales.
Relevant acquisitions for organic growth versus 2020 and 2019 include Preventice, Farapulse and Lumenis Surgical, which closed in March, August and September of 2021, respectively, as well as Vertiflex and BTG Interventional Medicines, which closed in May and mid-August of 2019, respectively.
Divestitures include BTG Spec Pharma, which closed on March 1, 2021, and the global embolic microspheres portfolio and intrauterine health franchise, which were divested in August 2019 and second quarter of 2020 respectively.
Guidance excludes the recently announced Devoro Medical and Baylis Medical acquisitions, which are expected to close in Q4 '21 and Q1 '22, respectively.
Finally, growth goals of 6% to 8% ex-COVID represent comparisons between time periods in which results are not materially impacted by the COVID-19 pandemic.
They include, among other things, the impact of COVID-19 pandemic on the company's operations and financial results; statements about our growth and market share, new product approvals and launches, acquisitions, clinical trials, cost savings and growth opportunities, our cash flow and expected use, our financial performance, including sales, margins and earnings, as well as our tax rates, R&D spend and other expenses.
Factors that may cause such differences include those described in the Risk Factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC.
These statements speak only as of today's date, and we disclaim any intention or obligation to update them.
I'm proud of our global team's execution despite the various challenges presented by the COVID surge in third quarter.
The third quarter was impacted by COVID more than we anticipated as the Delta variant surged globally and some electric procedures were deferred.
While we aren't satisfied with this quarter's sales results, we delivered on our third quarter earnings per share and margin targets.
And we're confident that as global vaccination rates continue to increase and COVID wanes, we are well positioned to achieve our long-term sales goals.
We continue to be excited and confident about the opportunities we laid out at our recent Investor Day, further enabled by our strategy of category leadership, entry into higher adjacent growth markets and tuck-in M&A.
Total company third quarter operational sales grew 10% versus 2020, while organic sales grew 11% versus '20 and 4% versus 2019, just below our guidance of 12% to 14% versus 2020 as Delta impacted procedure volume globally.
Despite the temporary impact of procedure volumes, we saw strength in new product launches, generated robust clinical evidence and executed broadly across the portfolio.
Q3 adjusted earnings per share of $0.41 grew 10.5% versus 2020 and 4% versus 2019, reaching the high end of our third quarter guidance range of $0.39 to $0.41.
Adjusted operating margin at 25.6% continues to improve and was in line with our third quarter expectations.
We continue to be pleased with our cash flow with third quarter free cash flow generation of $360 million and adjusted free cash flow of $525 million.
We're updating our fourth quarter and our full year guidance ranges for both sales and EPS, which assumes some level of impact to procedures from COVID and staffing shortages.
Compared to 2020, we target fourth quarter '21 organic revenue growth of 12% to 16% and full year growth of 18% to 19%.
Compared to 2019, we target fourth quarter '21 organic revenue growth of 4% to 8% and for full year organic revenue growth of 5% to 6% versus 2019.
Our fourth quarter adjusted earnings per share estimate is $0.43 to $0.45, and we're updating full year adjusted earnings per share to a revised range of $1.60 to $1.62.
Dan will provide more details on both sales and earnings per share performance and outlook, including the revenue contribution from our acquisitions this year.
I'll now provide additional highlights in Q3 '21 results along with comments on our fourth quarter and '21 outlook.
Within the regions on an operational basis Q3 2020, the US grew 15%; Europe, Mid-East Africa grew 8%, Asia Pac grew 8% and the emerging market sales grew 18%.
Operationally, despite the impact from Delta, EMEA delivered solid growth in third quarter across the majority of businesses and countries with notable strength in PI, EP and Endo, fueled by new and ongoing product launches like TheraSphere, POLARx and AXIOS.
We [Technical Issues] performance with strong utilization driving double-digit growth versus both '20 and 2019.
Asia Pac was impacted by pandemic-related lockdowns in parts of the region, though growth in China remained very strong.
We're encouraged heading into fourth quarter in 2022 as countries within Asia Pac are reopening as vaccination rates increase and COVID cases decline.
Although Japan was in a state of emergency throughout third quarter, we were able to advance new product launches, achieving Number 1 share position with our Ranger Drug-Coated Balloon as well as launching POLARx in October.
China continues to deliver excellent results and sales grew 14% versus 2020.
We continue to see momentum across the portfolio driven by complex PCI and imaging as well as new product launches like Eluvia and AXIOS.
Digital tools are also playing a role, enabling virtual physician training and allowing us to expand our reach with differentiated products like IVUS.
We continue to expect double-digit full year 2021 growth from China versus both 2020 and 2019.
I'll now provide some additional commentary on the business units.
Urology and Pelvic Health sales grew 7% organically versus 2020.
And the Lumenis acquisition closed in September, which expands the urology portfolio and stone offering to include the MOSES laser, which is complementary to the LithoVue single-use flexible ureteroscope in our broad portfolio of disposables that support kidney stone removal.
The prostate health franchise grew double digits with continued strength in our Rezum and SpaceOAR businesses, and we're excited to initiate two trials in this space within the quarter.
The global SABRE clinical trial, which will examine the effectiveness of SpaceOAR Vue in reducing late toxicity in patients receiving a stereotactic body radiotherapy treatment for prostate cancer; and the VAPEUR trial, which compares Rezum to dual drug therapy for BPH.
Our elective procedures within the pelvic health portfolio were impacted by the third quarter surge in Delta but historical growth trends have shown a quicker recovery as COVID surges wane.
In Endoscopy, sales grew 11% organically versus 2020.
Our market-leading global endoscopy portfolio continues to benefit from differentiated, innovative technology launches, including AXIOS, Resolution Ultra hemostasis clip, and single-use scopes.
During the quarter, EXALT B received FDA clearance and is now available in both US and Europe, with physicians pleased with this image quality and suction capabilities.
We continue to make progress with EXALT-D and are launching the 1.5 enhanced EXALT-D design, which features improved physician ergonomics.
Additionally, we're pleased to now have approximately 40% of ERCP procedures qualify for additional reimbursement with NTAP approval as of October 1.
In Cardiac Rhythm Management, organic sales were flat versus 2020.
S-ICD sales grew mid-single digits versus Q3 '19, supported by the launch of the enhanced electrode.
While core CRM third quarter trends improved over first half '21 across both defib and pacer, we believe that growth likely lagged the market.
Looking ahead, we anticipate stabilization in our core CRM growth exiting 2021 and to early 2022, supported by S-ICD and our differentiated HeartLogic offering.
Within our Diagnostics franchise, our LUX-Dx implantable cardiac monitor continues to gain share as physicians are pleased with the implant experience, technology and remote programming capability.
Our Preventice business remains on track to deliver plus 20% growth for the full year versus 2020 on a pro forma basis, fueled by the broad and differentiated ambulatory ECG portfolio.
Electrophysiology organic sales were up 10% versus 2020, driven by strong international sales in both Europe and Japan.
International growth is well above market, driven by the innovative portfolio, including POLARx and STABLEPOINT.
POLARx was recently approved in Japan with the first cases occurring in October.
In addition, the FROZEN-AF trial completed enrollment, which represents an important step in bringing POLARx to the US with an expected launch in 2023.
We also closed our Farapulse acquisition in third quarter, which is the only commercially available PFA technology, and we are seeing strong early usage in a limited number of launched accounts in Europe.
Finally, we announced our acquisition of Baylis Medical, further enabling our strategy of category leadership with a novel approach to left heart access.
Within the US, the Baylis platform is used in close to 40% of EP ablation procedures on the left side of the heart.
Furthermore, it is used in left atrial appendage closure and mitral valve intervention.
We expect to close this acquisition in first quarter 2022.
In neuromodulation, organic revenue grew 2% versus 2020 as underlying procedure volumes was impacted by the Delta surge throughout much of the quarter.
Within our pain management franchise, we continue to see excitement for our WaveWriter Alpha SCS system and differentiated FAST algorithm as well as our Cognita digital solution.
Within deep brain stimulation, the majority of our accounts have transitioned to Vercise Genus, and we continue to drive new account openings as physicians are pleased with the integrated platform and personalized therapy.
And last week, we received approval for our Essential Tremor indication and are excited to begin our limited launch in fourth quarter 2021, which expand our addressable market by $2 billion.
In Interventional Cardiology, organic sales grew 26% versus 2020, which includes a 1,200 basis point tailwind related to the WATCHMAN consignment sales return reserve taken in third quarter '20.
Our WATCHMAN franchise had another strong quarter of double-digit growth as physicians continue to be pleased with the next-generation of FLX performance and differentiated clinical data.
This positive sentiment has been further supported by ongoing real-world clinical evidence presented at HRS demonstrating the high rates of effective LAA closure and low rates of complications post procedure.
We continue to innovate and are launching our Fixed Curve Sheath, offering greater deployment control and ability to reach an expanded range of anatomies.
We also anticipate enabling our US label to include DAPT to support physician and patient choice in patient implant care by year-end.
In TAVR, ACURATE neo2 continues to do well with physicians pleased with its clinical performance and ease of use, backed by strong real-world clinical data, resulting in approximately 20% market share in open accounts.
Momentum continues with SENTINEL, our cerebral embolic protection device, which is exceeding 20% share in the US, where it's utilized.
Coronary Therapies grew 8% versus 2020 as the China DES tender impact begins to annualize and our portfolio mix shift into higher growth markets continues to strengthen.
We continue to see excellent growth in complex PCI and imaging being driven by ROTAPRO and IVUS.
We also just received FDA clearance for AVVIGO II, our next-generation guidance platform.
Peripheral Interventions consistently delivers with organic sales up 8% versus Q3 2020.
TheraSphere was a standout once again and grew double digits in the quarter with continued momentum for the positive EPOCH trial, a first of its kind where TheraSphere was studied as second-line therapy where the primary endpoint of progression-free survival in patients with mCRC was met.
Additionally, we've begun patient enrollment in the MANDARIN trial, an important first step for bringing HCC treatment to China patients.
In arterial, our drug-eluting portfolio continues to perform well, growing double digits versus 2020 with positive late-breaking clinical data presented at VIVA earlier this month.
Eluvia, our drug-eluting stent exhibited superiority in the EMINENT trial compared to bare metal stents and 2-year data from the RANGER 2 trial demonstrated continued high rates, primary patency and significant reduction in reinterventions with our Ranger DCB.
In venous, we continue to push forward with our first patient enrolled in the HI-PEITHO trial.
We also had late-breaking clinical data from the KNOCKOUT PE registry presented at VIVA confirming the safety and efficacy of EKOS.
Building our strategy of category leadership, we announced our acquisition of Devoro Medical in the WOLF Thrombectomy Platform, which is an innovative technology designed to rapidly capture and extract blood clots in arterial and venous systems while minimizing blood loss.
We look forward to closing this acquisition in fourth quarter '21.
More broadly, we're furthering our commitment to sustainability, and I'm proud to report that Boston Scientific is joining the United Nations Race to Zero campaign.
And since 2017, we've reduced the BSC carbon footprint by 50% and are on track to meet our goal to be carbon neutral in all manufacturing and key distribution sites by 2030.
We're building on this foundation to establish ambitious science-based targets to set us on the path to net zero emissions across our entire value chain.
We are bullish about the future outlook of Boston Scientific.
At our recent Investor Day, we detailed our LRP plans for growth of 6% to 8% growth, operating margin expansion of 50 basis points or more each year and double-digit adjusted earnings per share growth.
And I'll now turn things over to Dan.
Third quarter consolidated revenue of $2.932 billion represents 10.3% reported revenue growth versus the third quarter of 2020 and reflects a $17 million tailwind from foreign exchange.
On an operational basis, revenue growth was 9.7% in the quarter.
Sales from the acquisitions of Preventice, Farapulse and Lumenis contributed 220 basis points more than offset by the divestiture of Specialty Pharmaceuticals, resulting in 10.6% organic revenue growth, slightly below our guidance range of 12% to 14% growth versus 2020.
Compared to the third quarter 2019, organic growth was 4.1%, below our guidance range of 5% to 7%.
This 4.1% growth excludes $35 million in 2019 sales of divested intrauterine health, embolic beads and BTG Specialty Pharmaceuticals businesses as well as $117 million in 2021 sales of acquired businesses, which consists of half a quarter of BTG Interventional Medicines, a full quarter of Preventice and post-close revenue from Farapulse and Lumenis.
Spend controls and a favorable tax rate drove Q3 adjusted earnings per share of $0.41, representing 10.5% growth versus 2020, 4% growth versus 2019 and achieving the high end of our guidance range of $0.39 to $0.41.
Adjusted gross margin for the third quarter was 70.6%, in line with our expectations.
We expect slight sequential improvements to continue in Q4 as some headwinds remain, in particular, the transient cost of running plants with COVID-specific measures, increased freight costs and some price pressures on direct materials and wages.
Third quarter adjusted operating margin was 25.6%, again, in line with our expectations, driven by spend control and lower travel offsetting the revenue headwinds.
We're pleased with our trajectory and continue to target adjusted operating margin to average 26% for the second half of this year.
On a GAAP basis, operating margin was 13.2% and includes a $128 million intangible asset impairment primarily related to VENITI, as we've made the decision to retire the VICI VENOUS STENT venous stent following our voluntary recall earlier this year.
Moving to below the line.
Adjusted interest and other expense totaled $104 million, again, in line with expectations.
Our tax rate for the third quarter was 7.8% on an adjusted basis, favorable to our expectations, driven by the geographic mix of earnings.
We ended Q3 with 1,436 million fully diluted weighted average shares outstanding.
Adjusted free cash flow for the quarter was $525 million, and free cash flow was $359 million with $465 million from operating activities, less $106 million net capital expenditures.
Our goal remains to deliver adjusted free cash flow in line with 2020 approximately $2 billion as we continue to expect increased working capital investments in inventory and accounts receivable during the remainder of 2021.
As of September 30, 2021, we had cash on hand of $1.9 billion.
We continue to expect to close the acquisition of Devoro Medical in Q4 of this year and Baylis Medical Company in Q1 of 2022.
Our top priority for capital remains tuck-in M&A, and we'll continue to assess additional opportunities in conjunction with our financial goals.
I'll now walk through guidance for fourth quarter and full year 2021.
For the full year, we expect 2021 operational revenue growth to be in a range of 18% to 19% versus 2020, which includes an approximate net 30 basis point headwind from the divestiture of our intrauterine health franchise and Specialty Pharmaceuticals, partially offset by the acquisitions of Preventice, Farapulse and Lumenis.
Excluding the impact of closed acquisitions and divestitures, we expect full year organic revenue growth to be in a range of 18% to 19% versus 2020 and 5% to 6% versus 2019.
For the organic comparison to 2019, full year 2019 sales exclude $50 million in sales of our embolic beads portfolio and intrauterine health franchise as well as $81 million in Specialty Pharmaceutical sales and at the midpoint of guidance, 2021 sales exclude approximately $530 million in sales from recent acquisitions, including [Technical Issues] BTG Interventional Medicines through mid-August, Preventice, Farapulse and Lumenis as well as $13 million of Specialty Pharmaceutical sales prior to divestiture.
For the fourth quarter 2021, we expect operational revenue growth to be in a range of 14% to 18% versus 2020, which includes an approximate net 180 basis point tailwind from the acquisitions of Preventice, Farapulse and Lumenis, partially offset by the divestiture of Specialty Pharmaceutical.
Excluding the impact of acquisitions and divestitures, we expect Q4 organic revenue growth to be in a range of 12% to 16% versus 2020 and 4% to 8% growth versus 2019.
For the Q4 organic comparison to 2019, 2019 sales exclude $67 million in sales of our divested intrauterine health and Specialty Pharmaceuticals businesses.
And at the midpoint of guidance, 2021 sales exclude $90 million -- approximately $90 million in sales from the acquisition of Preventice, Farapulse and Lumenis.
We continue to expect adjusted below-the-line expenses, which include interest payments, dilution from our VC portfolio and costs associated with our hedging program to be approximately $400 million to $425 million for the year.
Based on year-to-date favorability, we now forecast our full year 2021 operational tax rate to be approximately 10% and our adjusted tax rate to be approximately 9%.
We expect fully diluted weighted average share count of approximately 1,439 million shares for Q4 2021 and 1,434 million shares for the full year 2021.
We are narrowing the range for full year 2021 adjusted earnings per share guidance to $1.60 to $1.62, which includes our update to sales guidance and considers Q3 performing at the high end of our guidance range.
For the fourth quarter, adjusted earnings per share is expected to be in a range of $0.43 to $0.45.
Please check our Investor Relations website for Q3 2021 financial and operational highlights, which outlines more detailed Q3 results.
Andrew, let's open it up to questions for the next 35 minutes or so.
In order to enable us to take as many questions as possible, please limit yourself to one question and one related follow-up.
 Assistant:

Chosen response:
q3 sales rose 10.3 percent to $2.932 billion.
q3 adjusted earnings per share $0.41.
saw some softness this quarter.
estimates net sales growth for q4, versus prior year period, to be in a range of about 13 to 17 percent on a reported basis.
sees net sales growth for q4 of 2021, versus prior year period, to be in a range of about 13% to 17% on reported basis.
sees q4 adjusted eps, excluding certain charges (credits), in range of $0.43 to $0.45.


Prompt:
Human: We encourage you to consider the risk factors referenced there, along with our public filings with the SEC.
Peabody had a very good third quarter with our results benefiting from current robust global coal market dynamics.
Strong operational performance, coupled with increased seaborne pricing and global demand yielded quarterly results we have not seen since 2018.
We continue to advance actions to position the company to be resilient in all market cycles by expanding our margins, reducing our debt levels and removing obstacles to increase production.
We are excelling not only because of strong coal markets, but also due to the dedication and efforts of our talented workforce.
Across the globe, we are seeing record coal index prices in each market segment and demand returning to near pre-pandemic levels.
The near-term market outlook for all our operating segments is favorable, with strong market indicators and increased global demand, providing a compelling story for coal and Peabody.
The seaborne thermal and metallurgical coal markets are expected to remain tight in the near to medium-term as supplier response to elevated demand remains muted.
Heavy rains in Indonesia, rail issues in Russia, production issues in Colombia and hampered domestic supply in China.
Additionally, gas supply constraints and low wind generation in Europe have all combined to exert positive pressure on the global thermal market, while the seaborne met market is being bolstered by robust steel production and decade-high steel margins and tight coal availability.
For 2022, with two million tons of incremental production expected at our met coal mines and thermal export production in line with 2021, we are well positioned and are looking forward to taking advantage of this demand and the margins that we anticipate will come with it.
In the U.S., thermal coal market indicators are also favorable with increased electricity demand and high natural gas prices leading to gas to coal switching and robust growth in coal generation as compared to prior year.
Overall, electricity demand increased 3% over last year, with coal's share of electricity generation increasing to approximately 23% for the first nine months of 2021.
Natural gas prices hit high levels this quarter that we have not seen since 2014, driving up coal generation demand.
During the first nine months, utility consumption of PRB coal rose approximately 30% compared to prior year.
High supply and demand balances are leading to high forward prices for natural gas.
Those forward prices and strong coal export demand are supporting expectations of continued elevated coal prices in the near term.
s PRB operations, we increased volumes and are trending toward the high end of our guidance range for 2021 and anticipate some incremental volumes next year.
We currently have some uncommitted tons for 2022.
However, given current demand exceeds supply, we are only selling those uncommitted tons under multiyear contracts.
At our other U.S. thermal operations, we are ramping up volumes next year by approximately two million tons to meet increased customer demand.
So we only have a small portion left to be sold for 2022 and for 2023.
Now turning to the quarter.
Our operations were able to deliver projected volumes, offsetting the impacts of labor shortages and higher fuel costs.
In addition, we continue to invest in the future with increased equipment refurbishments and mine development.
Within our seaborne thermal segment, the Wilpinjong extension and the Wambo Open-Cut JV development projects continue to advance, with over $200 million of capital invested over the past three years.
I'm happy to report the box cut development workloads completed at both projects in the third quarter, and we anticipate the Wambo JV to operate at full production run rates in Q4.
Our seaborne thermal margins benefited from price increases of 66% in the quarter compared to the prior year, and the segment is on target to deliver higher export volumes in the fourth quarter as compared to prior quarters in 2021.
Our seaborne met segment continues to deliver on efforts to expand margins through cost and productivity improvement initiatives as well as sales strategies.
In the quarter, the CMJV complex and Metropolitan delivered 36% higher volumes at 16% lower cost per ton as compared to the prior year.
The CMJV continued to realize productivity improvements at Metropolitan and Metropolitan reached planned longwall production rates.
At Metropolitan, we reached a long-term sales agreement that underpins the mine for the next three years with pricing linked to seaborne met coal pricing.
And importantly, both Metropolitan and Shoal Creek completed renegotiated labor agreements.
The workforce has been back at Shoal Creek since early October, and we expect to restart production later this year.
The U.S. thermal mines delivered another solid quarter, generating significant EBITDA.
Availability of labor impacted production at several of our U.S. mines this quarter, but we see this improving through programs that we have put in place.
And finally, robust U.S. coal market dynamics have allowed us to build a strong book of forward business.
The settlement of several long-term sales agreements and improved prices as compared to current levels.
Notably, in addition to multiyear PRB contracts, we have reached agreements that will support the continued operation of our Twentymile Mine in Colorado for the next five years and assigned agreements in the Illinois Basin with increased pricing through 2025.
Our globally diversified asset base, which makes us distinctly unique from any other U.S. coal company is allowing us to benefit from these market conditions.
Our Q3 results were a confirmation of the value we can generate from our asset mix.
During the quarter, we also continued to take actions to reduce our debt levels and raise cash to the issuance of common shares.
To date this year, we have reduced our debt levels by approximately $250 million.
We also took steps to reduce our closed mine and legacy liabilities through the sale of our Millennium and Wilkie Creek closed mines.
These actions are part of our commitment to enhance our platform to be resilient in all market cycles.
We are also progressing on multiple initiatives that will allow us to expand and improve near-term production.
As previously mentioned, Shoal Creek will be back in production later this quarter.
And at Metropolitan, the longwall was producing at full run rates, resulting in significant year-over-year increases to our seaborne met export volumes.
Moorvale South, which will result in improved quality and extended life at our CMJV is expected to be in production in the first half of 2022.
And in the U.S., we are implementing plans to produce incremental volumes on our minds in the near-term, adding underground production units in the Illinois Basin and expanding development at our Wild Boar complex.
In addition, in the PRB, we are refurbishing and relocating equipment to enable increased production.
Our long-term strategy remains to reweight investments toward seaborne markets, maximize U.S. thermal asset cash generation and enhanced financial strength through debt reduction.
I'll now turn things over to Mark to cover the financials.
Third quarter results demonstrated our ability to capture improved market conditions and generate substantial margins from our diverse asset portfolio.
The thermal segment, both U.S. and seaborne, as well as our improving seaborne met segment reported strong results.
Third quarter sales were over $900 million; our highest in seven quarters, an increase by more than 30% from the prior year.
Reported revenue was $679 million, net of $238 million of unrealized mark-to-market losses.
Those losses primarily related to economic coal hedges.
At September 30, we had hedges on 2.9 million metric tons, the majority of which were contracted in the first half of 2021 and relate to 2.1 million metric tons of expected production at our Wambo underground mine.
These tons are expected to be mined and settled at a rate of 1.4 million tons in 2022 and 0.7 million tons in 2023.
The hedge contracts support the profitability of the mine by securing average prices of $84 per metric ton through mid-2023 and are a key ingredient of a strategy to extend the expected life of the mine.
The remaining tons relate to brokered coal transactions and other blending and optimization activities, which will settle beginning in the fourth quarter and throughout 2022.
Net loss attributable to common shareholders totaled $44 million, including recognition of the $238 million of unrealized mark-to-market losses.
We reported adjusted EBITDA of $289 million, more than double the $122 million reported in the second quarter and three times the prior year results of $95 million.
Importantly, we took further action to enhance our financial strength, retiring an additional $93 million of senior secured debt in the quarter, resulting in a net gain from early debt extinguishment of $16 million.
We also retired an additional $30 million after September 30.
That brings debt retired this year to approximately $250 million, more than 16% of debt outstanding at January 1.
In the quarter, we raised net cash proceeds of $112 million by issuing nine million shares of common stock under the at-the-market equity program.
Subsequent to September 30, we raised an additional $39 million and issued 2.8 million shares.
Outstanding shares are now approximately 126 million, and we have about five million shares remaining available under the currently approved ATM program.
At September 30, we had $587 million of cash and cash equivalents, net of $240 million of cash margin posted related to the economic coal hedges previously discussed.
When these tons are sold, we will realize either the currently higher spot price or cash margin will reverse as prices decline toward the hedged price.
Turning now to the segment results.
The seaborne thermal segment generated EBITDA of $104 million and benefited from a $23 increase in average realized prices compared to the prior year.
Costs per ton were higher than prior year due to lower production at Wilpinjong and the transition to the Wamba joint venture, in addition to unfavorable exchange rates, higher fuel and royalty costs.
Wilpinjong shipped 3.5 million tons in the quarter, including 1.6 million export tons at an average cost of $26 per ton.
Wilpinjong realized average sales price of $42, resulting in EBITDA margins of approximately 40%.
Wilpinjong recorded $56 million of adjusted EBITDA and had $145 million of cash at September 30.
The seaborne met segment generated EBITDA of $57 million with an average realized price of $120 per ton and costs of 82, resulting in 32% margins.
Third quarter met shipments were approximately 400,000 tons higher than last year due to higher production at Metropolitan and the CMJV.
Total costs for the seaborne met segment were lower by more than $15 per ton compared to prior year due to elevated costs at Shoal Creek in 2020, and this despite higher royalties on favorable exchange rates and higher fuel prices in the current quarter.
The continued improvement in costs and recent rise in international coal prices demonstrate the value of our seaborne met segment to the company's diversified portfolio of mines.
In the U.S., our mines delivered $82 million of EBITDA despite challenges with labor availability and COVID related absenteeism impacting production at several operations.
Our PRB mine shipped 22.7 million tons in the quarter at a 15% margin.
The other U.S. thermal mines shipped to combined 4.5 million tons and generated 24% EBITDA margins.
Both the PRB and other thermal segment costs increased due to higher levels of planned equipment maintenance and higher fuel prices.
In the PRB, higher overburden removal and weather events also impacted cost and production for the quarter.
Looking ahead through the remainder of the year, we anticipate higher seaborne thermal volumes, including the three million to four million export tons, of which approximately 50% are un-priced.
Costs are expected to be lower than the third quarter as the Wambo Open-Cut is at full production and Wilpinjong development is complete.
Wilpinjong volumes are expected to be approximately four million tons with two million export tons to finish the year with its strongest quarter.
The seaborne met segment is expected to ship one million to 1.5 million tons in the fourth quarter, with 75% of those tons on price.
We anticipate production at Shoal Creek to recommence in the second half of the fourth quarter, with ramp-up continuing through the first quarter of next year.
We are planning for PRB and other U.S. thermal volumes to be flat with third quarter levels and costs for both segments to be slightly higher in the fourth quarter due to mix.
Fourth quarter cash flows are expected to increase substantially over third quarter levels as we continue to see favorable pricing in each of our segments and the cash margin related to coal hedges begin to reverse.
Lastly, we will continue to be disciplined, taking advantage of strong markets, controlling costs and further reducing debt.
 Assistant:

Chosen response:
q3 revenue $679 million.
reached labor agreements at both our metropolitan and shoal creek mines which paves way for higher met coal production next year.
continue to focus on long term with a disciplined approach to cost control, pricing strategies.
shoal creek is anticipated to begin production in second half of q4, with ramp up through q1 of 2022.


Prompt:
Human: Our discussion today includes certain non-GAAP financial measures, which provide additional information we believe is helpful to our investors.
These measures have been reconciled to the related GAAP measures in accordance with SEC regulations.
Please consider the risks and uncertainties that are mentioned in today's call and are described in our periodic filings with the SEC.
Barnes Group delivered a very good quarter to begin 2021, with the recovery we had anticipated to occur later in the year starting a little earlier than expected.
Strong order intake continuing sequential revenue growth now for the third consecutive quarter and better than expected earnings performance add confidence to our view that the second half of the year will show meaningful recovery progress.
For the first quarter, organic sales were down 10% compared to a year ago as a result of lower volumes at Aerospace.
However, our Industrial segment generated high single-digit organic growth, which was better than our February expectation given solid orders and sales in March.
While we previously envision business improving as the year progressed, now with the stronger momentum exiting the first quarter, we have increased our outlook for the year.
Earnings per share were $0.38, down 46% from last year's adjusted $0.71, so firmly exceeding the high end of our February expectation.
Moving now to a discussion of end market dynamics, beginning with Industrial.
Our Industrial segment had a strong first quarter, with each of our SBUs generating year-over-year organic sales and revenue growth.
For the segment, orders were up 25% organically, with a book to bill of approximately 1.1 times.
Sequential orders were up 7% further exemplifying the momentum we're seeing.
On a macro level, manufacturing PMIs in the US and eurozone remain particularly robust.
China, while a bit softer, remains an expansion territory.
And despite the semiconductor issue that's impacting automotive bills, IHS still predicts 2021 global production to be up 12% over last year.
Within the segment, our Molding Solutions business had strong orders across all brands, up 35% organically.
Our larger end markets, automotive, medical, packaging and personal care, each saw in excess of 25% orders growth, some well above that.
Sequentially, orders improved high single digits, marking the fourth quarter in a row of sequential growth.
Organic sales were up mid-single digits, while sequential sales were up low single digits.
Book-to-bill was approximately 1.1 times.
Backlog, which is predominantly our longer cycle mold systems, grew by approximately 25% year-over-year and low double digits from the fourth quarter of 2020.
There is definitely a lot to like about the activity of Molding Solutions and the business has been recently adding more talent to the sales and marketing team with a clear focus on driving long-term growth and margin expansion.
While near-term investments in such talent coupled with our innovation and digital initiatives, that I discussed last quarter, will hinder short-term margins.
We expect long-term performance to benefit [Phonetic].
Our 2021 expectation for Molding Solutions has improved, as we now forecast organic sales growth to be in the low teens.
Moving to Force & Motion Control.
Organic orders were up low double digits with organic sales up high single digits.
FMC via sheet metal forming end market is seeing the benefit of its automotive customers push to electric and hybrid vehicles.
Year-over-year orders are up across each of our primary geographic markets, North America, Europe and China.
Likewise, we're seeing good demand in our general industrial end markets, particularly heavy-duty truck and industrial equipment.
Our FMC sales growth expectation has likewise increased, as we now anticipate organic sales to be up in the mid-teens for 2021.
Engineered Components generated organic orders growth in excess of 25% and organic revenue growth in the low double digits.
Sequentially, we saw a modest growth in orders and sales, constrained somewhat by the automotive semiconductor concern.
As a result of this issue, we estimate a first quarter impact of approximately $1 million, with the second quarter impact likely to be in the range of $4 million to $5 million before recovering in the second half.
General industrial markets remain very healthy.
Our 2021 outlook has increased for this business as well with organic sales now forecast to be up mid-teens.
Moving to Automation, we continue to see sequential performance in both orders and sales, up low teens and high-single digits, respectively.
On a year-over-year basis, organic sales were up high single digits and organic revenues up mid-teens.
A very good quarter of growth and execution from the Automation team.
Demand for our end-of-arm tooling solutions in automotive, medical and pharma and industrial automation applications remain good, as has been the trend now for a few quarters.
We now expect 2021 to deliver total growth of 20%, with organic growth in the mid-teens, again, better than our February expectation.
Overall, for the Industrial segment, we see 2021 organic growth in the mid-teens, with operating margins of approximately 13%.
Moving now to Aerospace.
Our Aerospace business experienced continuing impact from the pandemic as OEM sales were down 32% from the prior year and aftermarket sales were down 48%, not surprising as commercial aviation remain significantly disrupted.
However, we still believe that the bottom is behind us and that we're slowly recovering.
Case in point for the third quarter in a row, we have seen total Aerospace sequential sales improve.
In the first quarter, the sequential improvement was driven by our MRO business.
Our expectations for the Aerospace industry overall has not changed.
We continue to believe that OEM production levels for narrow bodies will show modest improvement, while wide bodies will remain pressured.
We did see a second consecutive quarter of good orders and OEM book-to-bill was approximately 1.5 times.
In the aftermarket, industry challenges of lower aircraft utilization, weakened airline profitability and government imposed travel restrictions all remain.
Recovery will depend on the pace and effectiveness of vaccinations.
Domestic travel activity will proceed any improvement in international travel.
We continue to expect aftermarket activity to gradually improve beginning in the second half of 2021.
In the meantime, the Aerospace team continues to execute on several items to best position our business for recovery.
For example, in the first few months of the year, we completed an extension of our West Chester, Ohio facility, expanding our capabilities, received supplier recognitions from Boeing and Rolls-Royce and announced a significant B-2 Bomber Exhaust System Contract award from Northrop Grumman.
Our 2021 expectation as for OEM sales to be up mid-single digits over 2020 and spare parts down in the mid-teens, both are unchanged from our prior view.
Our forecast for MRO is slightly improved, now down low single digits versus our prior view of been down mid-single digits.
Segment operating margin is anticipated to be approximately 13%.
Julie is a proven leader with significant experience, leading the financial operations of global businesses.
Her extensive background and proven strategic leadership in corporate finance, financial planning and analysis, mergers and acquisitions, and risk management will help us advance our long-term profitable growth strategy.
In closing, we're off to a good start in 2021.
Favorable macroeconomic indicators and our solid orders generation provide us with a high degree of confidence in our improved outlook for the year.
However, that's not to say there aren't challenges that remain, so our teams are proactively implementing risk mitigation plans.
As we move forward, we'll continue to add the necessary talent and skill sets to enable us to drive growth and improve profitability.
Those efforts will be supported by our organic investments in innovation, digitalization and strategic marketing.
Our focus remains squarely on controlling our own destiny and positioning the Company to prosper as global markets recover.
Let me begin with highlights of our first quarter results on Slide 4 of our supplement.
First quarter sales were $302 million, down 9% from the prior year period with organic sales declining 10% as ongoing impacts from the pandemic offset our Aerospace end markets.
The divested Seeger business had a negative impact of 2% on sales, while FX had a positive impact of 3%.
Operating income was $32.4 million versus $49.3 million a year ago.
Compared to last year's adjusted operating income of $51.7 million, the first quarter was down 37% and operating margin of 10.7%, decreased 490 bps from last year's adjusted 15.6%.
It's important to keep in mind that this result was not unexpected.
The first quarter of last year saw Aerospace aftermarket performance -- saw record Aerospace aftermarket performance, which generated very strong margins.
Interest expense was $3.9 million, a decrease of $400,000 as a result of lower average borrowings, offset in part by a higher average interest rate.
For the quarter, our effective tax rate was 28.1%, lower than last year's 31.5% tax rate.
The decrease is largely due to the absence of tax expense related to the completed sale of the Seeger business and the reduction of the statutory tax rate at one of our international operations, both of which occurred in the first quarter of 2020.
Offsetting these items is the impact of the global intangible low taxed income tax or GILTI tax on foreign earnings in the first quarter of 2021.
Net income was $19.4 million or $0.38 per diluted share, compared to $29.7 million or $0.58 per diluted share a year ago.
On an adjusted basis, net income per share was down 46% from last year's $0.71.
Last year's first quarter adjusted net income per diluted share excluded $0.13 of Seeger divestiture adjustments.
Turning to our segment performance, beginning with Industrial.
First quarter sales were $220 million, up 10% from a year ago.
Organic sales increased 8%.
The foregone sales from the Seeger divestiture had a negative impact of 3%, while favorable FX primarily driven by the euro to US dollar exchange increased sales by 5%.
Relative to the fourth quarter of 2020, sequential sales were up 5%.
So good news on the revenue front with three sequential quarters of improvement and a positive year-over-year result.
Industrial's operating profit for the first quarter was $21.3 million versus $17.9 million in the prior year period.
Operating profit increased from the contribution of higher volumes and productivity improvements.
These were offset in part by higher personnel costs, including incentive compensation.
Last year we saw a reduction in the quarter for incentive comp, while this year sees an uptick based on performance expectations for 2021.
On an adjusted basis, which excludes $2.4 million of Seeger divestiture adjustments last year, first quarter operating income was up 5% from last year's $20.3 million.
Compared to a year ago, adjusted operating margin was down 50 bps from 10.2%.
One of the contributing factors is the additional investments being borne by the Industrial segment.
As Patrick mentioned, these investments squarely put a focus on our long-term growth strategy.
While our end markets and businesses within Industrial showing -- are showing signs of the solid recovery, there are some supply chain concerns related to raw material availability and inflation, as well as increased freight costs.
With respect to raw materials, we've seen instances where certain customers have extended the time horizons of their order commitments, looking to ensure availability of supply and acknowledging the longer lead times required for some materials.
In the first quarter, we experienced approximately $1 million of combined freight and material inflation in the Industrial segment.
For the full year, we expect an impact of about $6 million, which is built into our outlook.
Our teams are working on [Phonetic] these issues, looking to decrease the risk exposure and to take actions to offset the inflation where appropriate.
Moving to Aerospace, sales were $82 million for the first quarter, down 38% from last year.
Operating profit of $11.1 million was down 65%, primarily driven by the lower sales volume.
Operating margin was 13.6%, versus a strong 23.9% a year ago.
You may recall, last year's margin was a high watermark, driven by the contributions of the aftermarket.
Aerospace OEM backlog ended the quarter at $600 million, up 5% from the fourth quarter and we expect to ship 45% of this backlog over the next 12 months.
First quarter cash provided by operating activities was $36 million, a decrease of $12 million versus a year ago, free cash flow was $28 million, versus $35 million last year, and capital expenditures of $8 million were down about $4 million from a year ago.
Regarding the balance sheet, our debt-to-EBITDA ratio, as defined by our credit agreement, was 3.1 times at quarter end, essentially flat to the prior quarter result.
The Company is in full compliance with all covenants of our credit agreements and maintains adequate liquidity to fund operations.
While we anticipated the leverage ratio to peak with our first quarter 2021 results, we performed better than expected with the stronger financial results of the first quarter.
We see leverage further declining from this point absent any acquisition activity.
Our first quarter average diluted shares outstanding was 51 million shares.
We now expect to resume some share repurchase activity to offset equity compensation dilution, with respect to incremental share repurchases that will depend on a number of factors related to capital deployment and growth opportunities that are available to us.
Turning to Slide 5 of our supplement, let's discuss our updated financial outlook for 2021.
We now expect organic sales to be up 10% to 12% for the year, an increase from our prior view of up 6% to 8%, driven by stronger industrial growth.
FX is expected to have a 2% favorable impact on sales, while divested revenue -- divested Seeger revenues will have a small negative impact.
Operating margin is forecasted to be approximately 13%.
At this point, we're not anticipating significant residual restructuring charges to come through, so no forecasted adjustments to 2021 net income.
EPS is expected to be in the range of $1.78 to $1.98, up 9% to 21% from 2020's adjusted earnings of $1.64, that expectation is an increase from our prior view of $1.65 to $1.90, and we expect the first half of the year to contribute approximately 43% of 2021's earnings.
A few other outlook items.
Interest expense is anticipated to be approximately $16 million, while other expense is forecasted at [Phonetic] $8 million, both a bit better than our prior view.
We now expect capex to be approximately $50 million, down $5 million, average diluted shares of 51 million and cash conversion of over 100% are consistent with our prior outlook.
And lastly, we forecast a full year tax rate of approximately 30%.
However, we continue to analyze potential tax planning strategies to manage and reduce our overall tax cost.
To close, a very good start to 2021, supported by healthy orders for both segments.
With our focus on driving growth across the organization, we'll continue to invest in the business through capital expenditures and the funding of key strategic initiatives.
We believe that these investments will help us accelerate the recovery in our financial performance.
Leverage remains very manageable and should improve from this point, so the balance sheet can accommodate our approach.
 Assistant:

Chosen response:
q1 gaap earnings per share $0.38.
q1 sales fell 9 percent to $302 million.
2021 earnings per share outlook increased to $1.78 to $1.98.
now expects 2021 organic sales to be up 10% to 12%.
company forecasts 2021 capital expenditures of approximately $50 million.


Prompt:
Human: While we are making those statements in good faith, we do not have any guarantee about the results we will achieve.
Descriptions of the risk factors are included in the documents we filed with the SEC.
Also, we will be discussing some non-GAAP financial measures.
References to adjusted items, including organic net sales, refer to measures that exclude items management believes impact the comparability for the period referenced.
Today, Dave and I will discuss our strong fourth quarter and fiscal 2021 results, our expectations for fiscal 2022, and our perspective on how the Conagra Way playbook positions us for continued success in this dynamic environment.
Slide 5 lays out the key points we're going to cover today.
As you saw in our release, we reported very strong results for fiscal 2021 and we could not have done so without our people executing the Conagra Way with excellence.
Their dedication enabled us to capitalize on an unprecedented time of consumer demand.
Over the last year, we acquired and retained multiple years' worth of new consumers, and we grew share across categories, all while continuing to invest in the future.
This translated into strong growth across the portfolio.
We saw continued strength in frozen and snacks, as well as increased relevancy for our large staples business.
The work we've done modernizing and premiumizing our portfolio continues to pay off.
We believe our brands are healthier than ever and well-positioned to manage through the current inflationary challenges.
But I can tell you now that we're taking aggressive actions on a number of fronts.
It's also important to note that our plans provide for continued brand-building investments to drive consumer demand and further enhance brand health.
Our business remains very strong, but we are revising our fiscal '22 guidance to reflect the lag effect associated with the aggressive mitigating actions we are taking.
Essentially, we see fiscal '22 as a tale of two halves with the lag effect concentrated in the first half and particularly in Q1.
We expect many of our actions will start to flow through the P&L in Q2, setting up a second-half adjusted earnings per share in line with what was assumed for H2 within our prior guidance.
Given our resiliency over the last year and the compelling consumer trends we're continuing to track, we remain confident in the underlying strength of the business and the opportunities ahead for long-term value creation.
Finally, we plan on hosting an investor meeting next spring to provide an update on our progress and discuss fiscal '23 and beyond.
Be on the lookout for more information regarding the event.
We hope you can join us.
So with that as the backdrop, let's jump into the agenda for today's call.
We'll start with our business update and then cover our priorities and value-creation opportunities in fiscal 2022.
As you can see on Slide 7, we ended fiscal 2021 with a strong fourth quarter that was in line with our guidance.
As you know, our Q4 growth rates were impacted by the unprecedented demand we experienced in 2020 when at-home food consumption surged due to the onset of the pandemic and organic net sales increased 21.5%.
And as you can see, on a two-year CAGR basis, organic net sales for the fourth quarter increased by more than 4% and our two-year adjusted earnings per share grew by more than 22%.
On a full-year basis, our organic net sales, adjusted operating margin, and adjusted earnings per share were all up materially versus fiscal 2020.
Continued execution of the Conagra Way playbook served as the foundation for our strong fiscal 2021 performance.
Within our industry, success is defined by creating meaningful and lasting connections between consumers and brands.
We believe that our playbook is the most effective framework for delivering on that objective.
Our modern approach to brand building is based on three tenets.
First, it all starts with developing superior products through perpetual modernization.
Second, we ensure the physical availability of our items, both in-store and online.
And third, we drive the mental availability of our products to ensure we remain salient and relevant with consumers.
The foundation of the Conagra Way to brand building is our people.
Our exceptional results this past fiscal year reflect our team's dedication to executing the Conagra Way each and every day.
I'm extremely proud of the team's resilience in responding to the volatile environment throughout the year.
We know our long-term performance is a function of the caliber and engagement of our team.
That's why we're continuing to invest in our current employees and keeping the door open to talented new additions.
In fiscal '21, our team's engagement was clearly evident in their intense focus on capturing opportunities.
As I mentioned earlier, the pandemic created a unique environment for new consumer acquisition, and we were able to capitalize by having modern products available when and where consumers wanted them.
We estimate that over the course of the last fiscal year, we gained the equivalent of more than four years' worth of incremental new buyers.
COVID effectively amplified new product trials at a level rarely seen in our industry.
In the chart on the left, on Slide 10, you can see the increase in household penetration across our portfolio during fiscal 2021, clear evidence of the magnitude of our new consumer acquisition.
But what's even more encouraging is the chart on the right.
We didn't just acquire new consumers.
The data shows that our new consumers discovered the tremendous value proposition our portfolio provides, and we're proud that our products are repeatedly appearing in pantries and freezers across America.
Importantly, our performance over the last year was not only strong in the absolute, it was strong relative to the competition.
We performed better than our peers in terms of household penetration and repeat rates and we continued to gain share.
Keep in mind that we delivered these results despite hitting an upper control limit on the amount of product we could produce in certain categories.
If we had additional capacity, these numbers would likely be even more impressive.
Our disciplined approach to modernization and innovation across our product portfolio is key to our success.
As you can see on Slide 11, we delivered an impressive innovation slate in fiscal '21.
Our performance on innovation launched and sold in fiscal '21 surpassed the record performance we set in fiscal '20.
And importantly, our innovation outperformed the competition.
This strong outperformance is why even during the height of the pandemic, customers continued to ask for our new products.
This is a clear testament to the innovation engine at Conagra and the solid reputation we built with customers and consumers.
Slide 12 highlights a handful of our important launches in fiscal '21.
We continued our successful Gardein co-branding strategy with the launch of Marie Callender's pot pie with Gardein protein.
We continued to modernize and premiumize Birds Eye with the launch of vegetable bakes that are as good as any side dish you can order from a Chicago steakhouse.
We began modernizing the Hungry-Man brand with the launch of the Double Meat platform that satisfies the hungriest of appetites.
We also continued to work on Duncan Hines with the Instagrammable EPIC line of baking kits along with our keto-friendly mixes.
And we found even more ways to keep evolving our Healthy Choice Power Bowls with the launch of these vegetarian and vegan options.
I'm particularly excited about the Birds Eye breaded vegetables platform we launched in fiscal '21.
It's already started to take off with three of the cauliflower wings products being among the best-selling SKUs in the frozen vegetable category this year.
If you haven't tried them, you're missing out.
We supported the launch with a robust advertising campaign to drive awareness and mental availability.
This campaign included digital, social, and TV advertising.
In addition to mental availability, we remain focused on the physical availability of our products in Q4, whether through brick-and-mortar or online.
Slide 14 demonstrates how our ongoing investments in e-commerce have continued to yield results.
Growth in our $1 billion e-commerce business continued in fiscal 2021, both against our peers and as a percentage of our overall retail sales.
We consistently outpaced the entire total edible category in terms of e-commerce retail sales growth during the year.
E-commerce sales now represent nearly 8% of our total retail sales.
And importantly, our success in fiscal 2021 was broad-based.
Just take a look at Slide 15.
Total Conagra retail sales grew an impressive 11.7% on a two-year basis in the fourth quarter with contributions from each of our retail domains.
On a two-year basis, we delivered double-digit growth rates in retail sales across our frozen and snacking domains and a solid 5.2% growth rate in staples.
Let's dig into each domain a bit more, and let's start with frozen on Slide 16.
Over the last two years, our frozen retail sales have surged across desserts, single-serve meals, and multi-serve meals.
We've also seen consistent growth in retail sales of frozen vegetables.
All in, our strategic frozen business grew 13.5% over the two-year period ending in fiscal 2021.
And importantly, our buyers repeatedly returned to our frozen products.
As you can see on Slide 17, consumer repeat rates for our leading frozen brands have been stronger than for the competition.
Turning to Slide 18.
Our snacks business has seen similar success, delivering strong two-year retail sales growth of 21% in fiscal '21, led by increases of more than 25% across hot cocoa, microwave popcorn, ready-to-eat pudding, and meat snacks.
As with frozen, consumer repeat rates for a number of our leading snack brands beat those of competition during the fiscal year.
Staples was also a meaningful contributor to our success.
On Slide 20, you can see the strength of our staples portfolio.
Staples retail sales increased 5.2% over the past two years, spurred by steady growth across key staples categories.
Having increasingly rediscovered the joys of cooking last year, consumers reengaged with our staples products in a meaningful way.
As you can see on Slide 21, the solid performance from staples was not isolated.
We saw strong two-year growth rates across many of our largest staples brands.
Overall, we're pleased by the performance across our retail business, both within the quarter and over the fiscal year.
And as fiscal '22 begins, we believe our branded portfolio is stronger than ever.
So let's talk about what we see looking ahead.
We have a unique opportunity in fiscal '22 to leverage our current momentum and maximize long-term value-creation potential.
New behaviors and habits created during the pandemic resulted in an elevated and sustained level of at-home eating.
Shoppers are engaging or reengaging with our products now more than ever, creating a larger, high-quality consumer base.
To sustain this engagement, we plan to continue making investments in the physical and mental availability for our products.
This includes building additional capacity to fulfill consumer demand, making further strategic e-commerce investments, pursuing efficient and thoughtful marketing campaigns, and introducing a robust fiscal '22 innovation slate.
As we invest in our brands to create new and stronger connections with our consumers, we will also strategically navigate the inflationary environment that accelerated quickly during Q4 and continues today.
We're aggressively pulling on all our margin levers to minimize the inflation-related profit lag during the first half.
Regardless of near-term cost challenges, we plan to stay focused on the long-term priorities of our business, including continued investments to further support our brands.
Our objectives are ultimately focused on driving long-term value creation achieved by pursuing growth in frozen and snacks and maintaining our staples portfolio as a reliable contributor.
Let's spend a few minutes on our fiscal '22 innovation plans for each of the domains.
I'm excited to provide you a preview of what we have in store.
Starting with frozen, once again, we have high expectations for our innovation slate.
Slide 24 highlights some of the frozen products that will be rolled out during the year.
Hungry-Man has responded very well to recent innovations.
We're extending its new Double Meat platform with this Double Chicken Bowl, which is sure to satisfy any big, bold appetite.
Our broad snacks portfolio also provides us with plenty of opportunities to innovate.
And here is just a sample of our fiscal '22 slate.
Among the products on deck, household favorite Duncan Hines will soon be offering additional EPIC kits with versions of classic cookie mixes that combine many of the brand's delicious ingredients.
Our highly relevant staples portfolio is also receiving a new slate of innovation as shown on Slide 26.
Notably, our great P.F. Chang's brand is launching a variety of new restaurant-inspired products.
Also, as more consumers seek plant-based foods, Gardein continues to expand its portfolio with new offerings, including a new line of plant-based chili.
Overall, we're confident that the investments we're making in product innovations across our portfolio will produce strong ROIs.
Ultimately, long-term brand health is dependent on the type of perpetual modernization that we're committed to here at Conagra.
Before I turn things over to Dave to walk you through the financials, I want to quickly touch on our thoughts around inflation and our updated guidance for fiscal 2022.
Dave will discuss the cost environment in more detail, but I want to reinforce that we are aggressively pulling on all of our levers to navigate the current inflationary environment.
We began executing our aggressive response plan in fiscal 2021, given the inflation we were already seeing and talking to you about in Q3.
The incremental inflation that arose as Q4 unfolded called for additional actions, and you can be assured that we've begun to respond accordingly.
As I've shared in my remarks, we're also not pulling back from investing in the business.
We remain squarely focused on long-term value creation.
But I also know that a more short-term focused question on all of your minds is, will Conagra take list pricing increases?
And the short answer is yes.
In fact, we began implementing pricing actions on some of our products in the fourth quarter related to the initial inflation we experienced.
The very early read on the data from those actions is that our elasticities look good so far, and we have more pricing coming.
Because our pricing is being implemented strategically and thoughtfully, we're cautiously optimistic that our elasticities will remain strong as our full array of pricing enters the market in fiscal '22.
This timing mismatch is expected to be particularly impactful in H1 and more specifically in Q1.
The resulting pressure on our first-half margins impact our full-year profit.
And as you saw in the release, we're updating our fiscal '22 guidance as a result.
Organic net sales growth is expected to be roughly flat to fiscal '21.
This results in a CAGR over the three years ending fiscal '22 of approximately 3.5%, compared to our original target of 1% to 2%.
Adjusted operating margin is expected to be approximately 16%, and adjusted earnings per share is expected to be approximately $2.50.
Although the substantial increase in inflation over the last few months has negatively impacted our profit guidance for the year, we remain confident in the underlying strength of the business.
Even with the lag effect I've discussed, our full-year guidance delivers significant improvements compared to our fiscal '19 starting point.
Importantly, we expect that the impacts of our aggressive mitigating actions will cause second-half adjusted earnings per share to rebound to be in line with what was assumed for H2 within our prior guidance.
We're excited about the path the business is on, and we're ready for another dynamic year ahead.
Dave, over to you.
I'll start with some highlights from the quarter and full-year fiscal '21, which are shown on Slide 30.
Before we get into the details, a reminder that our year-over-year results for the fourth quarter reflect the lapping of the onset of the pandemic in March, April, and May of fiscal '20 and the unprecedented surge in consumer demand during that time.
Additionally, our Q4 fiscal '20 included a 53rd week, which also impacts comparisons to the year-ago period.
Overall, we are pleased with our performance as our results for the quarter were in line with our expectations.
We delivered strong growth for the full fiscal year, including a 5.1% increase in organic net sales; adjusted operating profit of nearly $2 billion, up 7.4% versus fiscal '20; and operating margin of 17.5% for the year, an increase of more than 100 basis points versus fiscal '20; an adjusted EBITDA increase of 6.5%; and adjusted earnings per share growth of 15.8% for the year.
Turning to Slide 31.
You can see the net sales bridge for the fourth quarter and the full year.
Our 10.1% decrease in organic net sales during the quarter was driven by a 12.8% decline in volume due to the comparison to last year's demand surge.
The impact of the volume decline was partially offset by a 2.7% benefit from favorable mix and the initial pricing actions we took in response to the elevated inflationary environment, which I will describe in further detail shortly.
Divestitures drove a 150-basis-point decline to net sales for the quarter, and we faced an additional headwind of 560 basis points from the lapping of last year's 53rd week.
Finally, we experienced a 50 basis point benefit from foreign exchange during the quarter.
Combined, these factors drove a 16.7% decline in net sales for the quarter compared to a year ago.
The bottom half of the slide highlights the drivers of our net sales growth for full-year fiscal '21 versus the prior year with an increase in organic net sales of over 5% driven by volume growth and favorable price mix actions.
Slide 32 outlines our net sales summary by segment.
In the fourth quarter, net sales in our three retail segments declined on both a reported and organic basis due to lapping last year's surge in demand.
Conversely, our Foodservice segment grew considerably this quarter as restaurant traffic began to recover.
For the full fiscal year, the strong performance in our three retail segments during the first three quarters of the year more than offset the decline in Q4, while our Foodservice segment was negatively impacted by reduced demand for away-from-home eating for most of the year.
Slide 33 shows the puts and takes of our fourth-quarter adjusted gross margin and adjusted operating margin.
As you can see, our team did a great job pulling on our margin levers in the quarter, including taking price increases in several retail categories driving favorable mix throughout the portfolio, capturing $20 million of synergies associated with the Pinnacle Foods acquisition, managing our COVID-19-related costs, which were $36 million in the quarter and continuing to drive strong supply chain productivity.
Despite these efforts, however, we were unable to fully offset cost of goods sold inflation in the quarter.
COGS inflation continued to accelerate as the quarter progressed, ultimately landing at 8.6%, which was above the Q4 expectations we shared at the end of Q3.
We also increased our A&P by 27% in the quarter as we continue to identify opportunities for strong ROIs on these investments, particularly within e-commerce.
Finally, SG&A was a slight margin headwind in the quarter as SG&A dollars decreased at a lower rate than our reported net sales.
Cost control and a disciplined approach to SG&A remain a hallmark of our culture here at Conagra.
On Slide 34, we detail the operating profit and margin for our segments for the quarter and the full year.
Each of our three retail segments declined versus last year's fourth quarter, driven by the lapping of last year's surge in demand and 53rd week, as well as increased cost of goods sold inflation.
However, each retail segment reported higher adjusted operating profit than the fourth quarter of fiscal '19, demonstrating the sustained progress we have made.
As I noted earlier, our adjusted earnings per share of $0.54 was in line with our expectations despite higher-than-expected inflation.
The decline in adjusted operating profit and the impact of last year's 53rd week affected our results by $0.23 and $0.05, respectively, shown here on Slide 35.
These headwinds were partially offset by strong performance from our Ardent Mills joint venture, lower net interest expense and a slightly lower average diluted share count resulting from our Q3 share repurchase.
Slide 36 summarizes our net debt at fiscal year end and EBITDA and cash flow performance for the fiscal year.
We ended the year with a net debt to EBITDA ratio of 3.6 times, which is in line with our fiscal '21 target.
We took advantage of our strong balance sheet throughout the year to increase our investment in the business and return capital to shareholders.
During fiscal '21, we increased CAPEX by more than $130 million compared to the prior year and funded important capacity and productivity projects.
We also repurchased nearly $300 million worth of shares and paid $475 million in dividends in fiscal '21.
Given the timing of the closure, this sale had a minimal impact on our Q4 results, but we expect there to be an annualized net sales impact of roughly $40 million going forward.
This will primarily be reflected in our refrigerated and frozen segment with small effects on our international and foodservice segments.
We estimate that the sale will have a total annualized impact on our earnings per share of approximately $0.01.
As Sean mentioned, we are pleased with our current position in the market and are confident in our ability to continue executing the Conagra Way to drive profitable growth as we look ahead.
However, we have experienced an acceleration of inflation since Q3.
And due to the timing lag between when this inflation hits our P&L and when the benefits of our pricing and productivity actions take effect, we do not expect to fully offset the impact of these cost increases in time to meet our prior fiscal '22 earnings per share projections.
We do expect, however, second-half fiscal '22 earnings per share to be in line with what we assumed for the second half in our prior guidance.
We are therefore updating our guidance as shown on Slide 37.
For fiscal '22, we now expect organic net sales growth approximately flat to fiscal '21, adjusted operating margin of approximately 16%, and adjusted earnings per share of approximately $2.50.
While this guidance is our best estimate of how we will perform in fiscal '22, our ultimate performance will be highly dependent on four critical factors: first, how consumers purchase food as restaurants, offices, and schools continue to reopen; second, the level of inflation we ultimately experience; third, the elasticity impact as consumers respond to higher prices; and finally, the ability of our end-to-end supply chain to continue to operate effectively.
Slide 38 shows the progression of our fiscal '22 inflation expectations, the continued acceleration being the biggest driver of the change in our guidance.
When we initially gave our fiscal '22 targets at our Investor Day in April of 2019, our models assumed an annual inflation rate of around 3%.
At the time of our third-quarter call in April of 2021, we expected fiscal '22 inflation to come in at twice that level around 6%.
Importantly, as of the Q3 call, we still saw a path to deliver our fiscal '22 targets.
Not only is our brand health strong as evidenced by the strong consumer demand, we know how to pull on all margin levers.
That said, there is a limit to how much cost increase we can absorb in the short term given the timing lag that Sean and I have discussed.
And as all of you know, inflation has continued to rise sharply since April.
We now currently expect fiscal '22 inflation to come in around 9%.
The difference between the 6% we expected a few months ago and the 9% we expect today equates to approximately $255 million in additional costs during fiscal '22.
The bulk of this inflation can be attributed to continued increases in the cost of edible fats and oils, proteins, packaging, and transportation since the timing of our Q3 call.
While we are able to hedge some of our inputs, others, particularly certain proteins, are not easily hedged.
As Sean mentioned, we have various levers at our disposal that we are actively and strategically pulling to manage this inflation, but the profit lag effect is real.
For example, certain pricing actions can take 90 days to enact or a cost savings initiative may not be actionable until later in the year when a contract is up for review.
So while we anticipate being able to successfully manage inflation over time, the continued sharp increases to input costs we are currently experiencing will take some time to overcome.
And given our disciplined approach to managing the business for the long term, we will not reduce investments to meet the guidance target at the expense of the long-term health of our business.
Slide 40 lays out the change in our adjusted earnings per share expectations in a bit more detail.
We are updating our fiscal '22 adjusted earnings per share guidance for three items.
First, consistent with our prior divestitures, we are removing $0.01 for the Egg Beaters divestiture that we announced today.
Second, the largest driver of the change is the significant $0.41 per share increase in inflation since Q3 that I just discussed.
And finally, we have identified many ways to manage and offset this increased inflation, including additional productivity and cost savings initiatives, as well as substantial pricing actions that Sean and I have discussed.
Again, the bulk of these margin offsets will start to hit our P&L in the second quarter and continue to increase in the second half, which is why we expect second-half earnings per share to be in line with what we assumed for second-half earnings per share in our prior fiscal '22 guidance.
Slide 41 lays out some of the key assumptions that underlie our fiscal '22 expectations.
On the top line, we expect organic net sales growth to be stronger in the second half of the year compared to the first.
We expect children to return to in-person schooling and more employees to start returning to in-office work in the fall.
So while we expect continued strong demand for our products, we also expect COVID-19-related volume benefits to start to slow at the end of our first quarter.
Additionally, we have good acceptance from customers on our pricing actions so far, but we expect the majority of our pricing to start hitting the market at the end of Q1.
We expect the timing of the scale-up to benefit the second half.
We also expect our second-half operating margins to be better than the first half.
This is driven by our expectation that Q1 will be the most pressured quarter of the year.
Q1 is expected to have the highest inflation rate of the year and benefit the least from pricing.
At the same time, we have planned strong investments behind A&P and innovation for the first quarter.
As the year progresses, we expect margins to improve as the inflation rate decelerates and the impacts of our margin lever actions take hold.
As you heard Sean discussed, we also plan to continue maintaining strong brand-building support throughout the year to sustain the long-term health of the business.
Turning to Slide 42.
I think it's important to highlight that we expect the actions we are taking in fiscal '22 to create some tailwinds heading into fiscal '23.
As we mentioned, we expect our second-half earnings per share to be in line with what we assume for second-half earnings per share in our prior guidance.
So as we head into fiscal '23, we expect our profitability trend to be in line with our prior expectations.
We expect our brand building and innovation actions to help maintain retail demand above pre-COVID-19 levels.
At the same time, we expect to retain the consumers we have attracted during the pandemic while continuing to attract more.
Next, the pricing and productivity actions we are taking will have year on year -- year-over-year benefits in fiscal '23 until we lap them.
We also plan to continue executing our realized productivity programs to benefit our longer-term margins.
Finally, while we expect to have reductions in COVID-19-related costs in fiscal '22, we believe there will be additional opportunities to reduce these costs even further in fiscal '23.
Turning to capital allocation.
I'm pleased that our strong balance sheet and our confidence in the long-term health and profitability of the business have put us in a position to raise our quarterly dividend to $0.3125 or $1.25 on an annualized basis beginning in September.
This new dividend level represents a 50% payout ratio based on our fiscal '22 earnings per share guidance, which is in line with our longer-term targets.
Before I close, I also want to provide some brief color on our tax asset in the disclosure you will see in our upcoming 10-K filing.
As some of you remember, when we sold our private label business in 2016, we incurred a tax capital loss of approximately $4 billion that we could apply as a carryforward to offset capital gains generated through fiscal year-end '21.
We always held true to the principle that we would not divest assets solely because of the existence of the asset, but our team has repeatedly looked for opportunities to maximize the asset's use.
Since 2016, we utilized approximately half of the asset as we divested businesses that either weren't a strategic fit with our portfolio or were valued in excess of our internal expectations by another party.
We also utilized a portion of the asset in connection with the Q4 fiscal '21 restructuring of our ownership in Ardent Mills.
And before year end, when the carryforward expired, we took additional actions that we believe should allow us to utilize a portion of the remaining capital loss carryforward in future periods.
We are currently engaged with the IRS regarding these actions and plan to continue to update our disclosure on this matter as the process unfolds.
It's important to note that there is no guarantee that we will be successful in achieving this favorable treatment of the tax asset.
However, if we are successful, we could have some additional opportunity for future tax efficiency as we continue to strategically manage our portfolio of brands and investments.
 Assistant:

Chosen response:
q4 adjusted earnings per share $0.54.
q4 sales $2.7 billion versus refinitiv ibes estimate of $2.71 billion.
2022 organic net sales growth is expected to be approximately flat compared to fiscal 2021.
2022 adjusted earnings per share is expected to be approximately $2.50.
now expect fiscal 2022 input cost inflation to be materially higher than we anticipated at end of fiscal q3.


Prompt:
Human: Last night we released results for our fourth quarter of fiscal year 2020, copies of which are posted in the Investor Relations section of our website.
In order to provide greater transparency regarding our operating performance, we refer to certain non-GAAP financial measures that involve adjustments to GAAP results.
Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by GAAP.
Erica McLaughlin will review the business segment and corporate financial details.
I want to begin by recognizing our employees around the world for their continued commitment to the Company, to our customers, and to their community.
Managing through this pandemic has challenged us on every front, and I have never been more proud of our team.
As we manage through this pandemic, we established a set of guiding principles here at Cabot to protect the house first and prepare ourselves to be ready to win as the recovery takes hold.
I believe our performance to date reflects that balance.
For the quarter, total segment EBIT was $84 million, and adjusted earnings per share was $0.68, up $0.75 on a sequential basis.
This result was driven principally by improved results in Reinforcement Materials, which recovered nicely as demand in our key end markets increased sharply as compared to the third quarter.
Performance Chemicals results also improved in the quarter, as automotive-related demand began a recovery and our self-help initiatives took hold.
In Purification Solutions, we took another step forward in our transformation plan with the sale of our mine and the structuring of a long-term supply agreement for activated carbon with ADES, which better positions us to serve the mercury removal market.
We continued our intense focus on cash generation, delivering $99 million in operating cash flow in the quarter and $248 million for the second half, well ahead of our previously communicated expectation of $200 million of operating cash flow in the back half of the year.
Erica will go into more detail on the segment results a bit later in the call.
I would first like to share my perspective on the full fiscal year 2020 results.
There is no doubt this fiscal 2020 was the year unlike any other we've experienced, as we battle the global public health crisis and the associated economic fallout.
The global pandemic severely affected demand from our key tire and automotive customers, especially in the third fiscal quarter and that impact was reflected in our full-year results.
On the performance front, we delivered adjusted earnings per share $2.08.
While this result was well below prior levels and the earnings potential of the Company, I am very pleased with how we managed through the crisis and I believe the strength of Cabot was revealed.
Our strong balance sheet and cash generation power and our experienced management team allowed us to navigate the pandemic, while remaining focused on our advancing the core strategy.
As you know, our strategy is built on three pillars: first, investing for growth in our core businesses; second, driving application innovation with our customers; and finally, generating strong cash flows through efficiency and optimization.
In the Reinforcement Materials segment, the team did a great job delivering necessary price increases in our calendar year 2020 customer agreements, implementing new commercial terms to manage feedstock volatility and delivering cost reductions to partially offset the pandemic-driven demand reduction.
In the Performance Chemicals segment, the team was focused on self-help measures and laying the groundwork to restore profitability to historical levels.
In the year, we successfully implemented price increases in specialty carbons to offset the impact of higher MARPOL-related feedstock costs.
The segment also executed on a number of strategic priorities during the year.
We closed on the acquisition of Shenzhen Sanshun Nano, a leading producer of carbon nanotubes and formulations for the high-growth lithium-ion battery market, and customer qualifications in inkjet packaging applications continue to build momentum.
In the Purification Solutions segment, we closed on the sale of our lignite mine in Marshall, Texas to ADES and entered into a long-term supply agreement for lignite-activated carbon.
This transaction improves our efficiency while also removing a significant hurdle to divestiture of the business.
While the earnings environment was challenging, we remain intensely focused on cash flow generation and balance sheet strength.
During the year, we delivered strong operating cash flow of $377 million and free cash flow of $177 million, largely through tight working capital management.
The strong cash flow generation allowed us to repay debt, maintain our dividend, fund the Sanshun acquisition along with our capex commitments and retain our investment-grade credit rating.
And finally, ESG leadership has been a focus of ours for a long time and it is becoming ever more important to our stakeholders.
We recently launched our updated 2025 sustainability goals, which build on our existing leadership position.
By expanding our goals beyond a strict environmental focus to include areas such as product development, supplier sustainability, diversity and inclusion and community involvement, we believe all stakeholders will participate in our success.
Overall, I'm extremely proud of our team, and I believe we are well positioned and ready to win as the recovery takes hold.
Now, turning to an update on the current business environment.
We see underlying trends in both tire and automotive demand strengthening with month-on-month improvement continuing through October and into November.
The economic recovery is unquestionably linked to stabilizing the public health crisis and this remains the key to bringing consumer confidence and the economy back to its full potential.
China is a good example of where COVID transmission has remained low and the economy is strengthening with GDP up 5% year-over-year in the September quarter.
Looking at our key end markets, the trend is positive.
Automotive production represents approximately 25% of our sales, ranging from tires on new cars to a host of applications in Performance Chemicals, such as structural adhesives, batteries, coatings and plastics.
External forecasting firms report light vehicle auto production down 3% year-over-year globally in the September 2020 quarter, as compared to a decline of 43% in the June quarter.
Current industry forecast calls for an 18% drop in global auto builds for the full year, including a small decrease of 3% for the December quarter.
Now, moving to tire production.
Global replacement tire industry sales are now expected to decline 12% for the full calendar year of 2020 based on estimates from LMC.
Light vehicle replacement tire sales improved in all regions in the September quarter, down only 6% year-over-year, compared to a decline of 31% in the June quarter.
As with auto production, the December quarter is expected to approach 2019 levels with total replacement tire sales projected to be down 2% year-over-year according to LMC.
Building on the V-shaped recovery in the September quarter, we continue to see consistent improvement in terms of mobility and miles driven, and this bodes well for the replacement demand of tires, both in terms of passenger vehicles, as well as truck and bus.
As a reminder, the replacement tire market has historically been more resilient compared to other parts of the broader transportation sector.
I will start with discussing results in the Reinforcement Materials segment.
Given the global economic environment, the Reinforcement Materials segment delivered strong operating results with EBIT down $12 million, compared to the same quarter in fiscal 2019, but up $64 million sequentially, driven by improved global tire and automotive demand as compared to our third fiscal quarter.
The decrease in EBIT from the prior year was primarily due to lower volumes, partially offset by higher margins.
Globally, volumes declined by a 11% in the fourth quarter, as compared to the same period of the prior year, largely due to the impact of COVID and demand in Europe, the Americas, Japan and Southeast Asia.
Higher margins were driven by improved China pricing and higher pricing outside of China in our calendar year 2020 tire customer contracts.
Looking ahead to the first quarter of 2021, we expect an increase in EBIT due to our expectation for expanded unit margins.
This is driven by a continued sequential improvement from pricing in Asia as the market continues to recover.
Volumes are expected to remain in line with fourth quarter levels, as strength from the recovery offsets normal seasonal patterns.
Now, turning to Performance Chemicals.
EBIT increased by $4 million, as compared to the third fiscal quarter, driven by higher demand in automotive-related applications.
EBIT decreased by $16 million year-over-year, primarily due to 9% lower volumes in our Formulated Solutions business from the impact of COVID-19, a more competitive pricing environment in our fumed metal oxides product line, and a weaker product mix in our specialty carbons and fumed metal products -- metal oxides product lines from lower demand in automotive applications.
In the fourth quarter, volumes increased 2% year-over-year in Performance Additives, driven by increased volumes related to our recent energy materials acquisition.
Sequentially, Performance Additives volumes increased 3% and Formulated Solutions volumes increased by 1%, while we are pleased to see the sequential improvement in volumes, segment volumes continue to be impacted by the pandemic, particularly in demand for automotive and construction applications.
While the infrastructure end market, including wire and cable and pipe applications continue to hold up well in all regions.
Looking ahead to the first quarter of fiscal 2021, we expect a material sequential step up in EBIT, driven by higher volumes across the major product lines as our key end markets continue to recover and as we leverage the recovery in the automotive end market to drive product mix improvement in specialty carbons and compounds.
We also expect to see a price improvement as the segment benefits from actions to restore pricing in our fumed metal oxides business and as we execute higher prices in specialty carbons to offset rising environmental costs.
Moving to Purification Solutions, EBIT in the fourth quarter of 2020 decreased by $3 million, compared to the fourth quarter of last year.
The decrease was driven by lower volumes in the mercury removal applications and the unfavorable impact from reducing inventory levels to drive improved cash flow results.
Looking ahead to the first quarter, we expect to see a sequential volume decline driven by lower seasonal volumes in water and mercury removal applications and higher fixed costs due to a maintenance outage at one of our plants.
This is expected to be partially offset by lower depreciation and fixed costs due to the recently announced supply agreement and mine sale.
I will now turn to corporate items.
We ended the quarter with a cash balance of $151 million and our liquidity position remains strong at $1.4 billion.
During the fourth quarter of fiscal 2020, cash flow from operating activities were $99 million, including a decrease in net working capital of $7 million.
Capital expenditures for the fourth quarter of fiscal 2020 were $38 million, an additional uses of cash during the fourth quarter included $20 million for dividends.
During fiscal 2020 we generated $377 million of cash flow from operations, including a decrease in working capital of $185 million.
Capital expenditures for fiscal year 2020 were $200 million, which included both our targeted growth investments and the spend related to the North American EPA compliance.
Additional uses of cash during the fiscal year included $80 million for dividends and $44 million for share repurchases.
During the fourth quarter, the operating tax rate for fiscal year 2020 was 28% and we anticipate our operating tax rate for fiscal '21 to be in the range of 28% to 30%.
We expect capital expenditures to be between $175 million and $200 million in 2021 and this estimate includes continued EPA-related compliance spend and capital related to upgrading our new China carbon black plant to produce specialty products.
As we look ahead to 2021 I expect that it will be another dynamic year and we'll have to manage any future impacts from the pandemic in much the same way as we did in 2020.
Notwithstanding the challenges of COVID-19, we remain focused on executing our strategy and I would like to share with you our priorities for the upcoming year.
First, we will stay close with our customers to support their evolving needs and continue to differentiate Cabot through our product quality, service reliability and commitment to sustainability.
Second, we will continue to execute on our strategic growth initiatives, particularly energy materials, E2C and inkjet for packaging.
We are excited about the growth potential of these businesses and we have sustained our investment throughout this downturn so that we can capitalize on their full potential in the coming years.
Third, we'll continue to drive efficiency and optimization across our operation.
During fiscal year '20, we established a global business services organization to increase the efficiency and effectiveness of those processes that power our way of doing business.
We will further leverage this investment through the deployment of digital tools to simplify and automate our ways of working and I'm excited about the potential here to complement our strategic growth efforts.
Fourth, the role of bolt-on M&A in our existing businesses remains an important part of our growth story.
Over the past few years, we have made very important strategic acquisitions in our core spaces, including extending our geographic presence in our specialty compounds business through acquisitions in Canada and Southeast Asia, and by expanding our product offering in energy materials to include CNTs through our acquisition of Sanshun.
We will continue to look for opportunities to build out our pipeline and execute on opportunities of these types.
Finally, in an uncertain and dynamic environment, it will be critical that we keep tight control of costs and working capital in 2021.
We feel good about the momentum into fiscal year '21, but we must remain vigilant on cost and working capital.
I hope this gives you some color on our 2021 priorities and how they will help Cabot to extend our leadership position.
I will close out my prepared comments today by talking about our outlook as we start fiscal year '21.
Clearly, we are pleased with the momentum coming out of the fourth quarter of 2020 and we feel very good about how the first quarter is shaping up.
As Erica discussed, we expect a material step up in the Performance Chemicals segment and further strengthening in Reinforcement Materials, where performance is being driven by strong Asian spot pricing, the feedstock costs rise there and volume strength driven by stronger underlying demand and some level of inventory replenishments.
Based on this, we expect adjusted earnings per share in the first quarter to be in the range of $0.80 to $0.90.
On the cash side, we anticipate that operating cash flow will be strong as year-over-year earnings levels improve in fiscal '21, even though absolute net working capital levels will increase aligned with higher volumes.
Looking to the full-year of fiscal '21, there is still uncertainty related to the COVID-19 pandemic that impacts our longer-term visibility.
Our results will be influenced by the sustainability of the economic recovery, the outcome of our tire customer agreements, the pace of costs returning to the business to support the recovery and how we manage pricing in this dynamic environment.
As the year unfolds, we will be managing these factors carefully to match the dynamic environment.
Overall, I feel very good about the way the team has performed and the progress we have made in this unprecedented environment.
I'm optimistic about the first quarter and remain confident that the team will respond to any challenges we may face throughout the year.
The long-term fundamentals of our businesses are robust, our market positions in global presence is unmatched, and our balance sheet and liquidity provide strength and flexibility.
I am confident in our growth opportunities ahead and our ability to deliver on our strategic objectives.
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Chosen response:
compname reports q4 adjusted earnings per share $0.68.
compname reports fourth quarter diluted loss per share of ($4.81) and adjusted earnings per share of $0.68.
q4 adjusted earnings per share $0.68.
sees q1 adjusted earnings per share $0.80 to $0.90.
encouraged by pace of recovery in automotive and tire markets.
expect both yoy and sequential ebit improvement in q1.
not providing fiscal 2021 full-year earnings guidance at this time.