Prompt:
Human: During the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin, and free cash flow.
With these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.
I hope everyone and your families continue to be well.
I know we all can see light at the end of the tunnel regarding the pandemic but I also know that in no place around the world, no place around the world are we yet fully in that light so I'm hoping everybody remains safe.
I'm also hoping that we are -- is there a binging in the background there?
Well, I'm in a new place doing the call.
So unfortunately, we might have a little background noise.
So, look, I'm hoping everybody stays safe.
I'm also hoping that we all are getting a chance to reconnect with our loved ones and our colleagues in a somewhat deeper way.
Over the last several weeks, like this week, I've had the pleasure of starting to see clients in person and traveling to just some of our offices to see our people.
And I hope you have begun to have the equivalent.
For me, it has been wonderful to get the chance to see people, person-in-person again.
Obviously, technology is incredibly terrific about connecting us.
It changes our ability to feel connected when we're apart.
Now some technologies are better than others.
I think letter writing from my youth wasn't that great, notwithstanding the fact that my parents then celebrated the fact that I sent them a postcard from summer camp.
And telegrams, except for emergencies, weren't much better but telephones obviously helped, right?
They were real time.
They allowed you to talk with somebody and stay connected.
And Zoom and Teams are incredibly better.
They also give us eye contact.
They give us the ability to see authenticity in somebody's face.
It's a powerful thing.
But when we get back out in the world, I, for one, am rediscovering the fact that, even today, even today, nothing is better than getting a chance to see someone in person and maybe giving that person a hug.
Turning to our results.
I'm going to let Ajay give you all the details of this, yet again terrific quarter.
It is a terrific quarter, and there's lots of details but I'm going to leave that to him.
What I'd like to do, with your permission, is share a bit of a longer-term perspective.
On these earnings calls, we often are talking about market forces.
The forces that are external to our firm.
Last year, for example, we talked about the courts being closed and travel restrictions and the impact of each of those.
In other times, we've talked now about the restructuring markets either being up or down or whether the transaction market is booming or not.
Obviously, those discussions are important.
We wouldn't be talking about them if they weren't.
Markets do affect our individual businesses, and they can affect them sharply over any short period of time.
What is also true, and to me far more powerful, is how little the markets determine our performance over an extended period of time.
How much -- when you look back over two years, four years, six years, seven years of our history, how much of our business is not driven by quarters or by market factors but is driven by us, by what our teams do.
It's about what -- our ability over any extended period of time to not get driven by quarterly market forces but rather for us to control our destiny.
Now I know there's some longtime observers of our company on the call, and some of you have suggested that at one point this company was never up unless the restructuring business was up, and the restructuring business was not up unless the restructuring market was up.
And as a consequence, at one point we were also seen by some as a cork that floats up and down with the restructuring wave.
I don't know whether that was ever fully true but I believe our track record over the last two, four, five-plus years suggests it is not the case today.
Our teams have been, and are, building businesses that are global, diverse but, most important, powerful.
Each 10, as we've seen, be whipsawed by markets in just the short term.
But over the last years, we have shown that if we do the right things over any extended period of time, we are not corks on the wave but rather folks who determine our future.
By now, I believe that you can see examples of this in every one of our businesses and every one of our regions.
For example, our technology business.
This quarter is being helped by the strong M&A markets.
Having said that, by far, the more fundamental change in our trajectory in this business wasn't driven by markets.
It was driven by the teams driving strategic changes that they engineered four years ago.
At that point, some of you might remember, the business was headed in the wrong direction even with solid markets.
The strategic changes the team drove reversed that.
Our business started to move up even before the M&A boom.
And as a consequence, I believe, we have been the fastest-growing major player -- at least organically, in the e-discovery business over the last few years, not because of the market but because of what our teams have done.
Similarly, in E-con -- yes, the M&A and the antitrust clearance markets are hot.
If you look underneath that, you see the cornerstone of our multiyear growth that we have driven is actions taken by teams that support and add to the fabulous positions we have in the U.S. and extend those clear positions abroad, not market phenomena but the phenomenon of great people attracting other great people.
FLC, obviously, saw the market's effects last year due to the halted court activities and travel.
As a consequence, as I think many of you remember, the business operated at a loss at some point last year.
As you know, we remain convinced that we have a very good business in FLC with terrific professionals and we hired even in the face of that downturn.
A side note, look, in my experience, you can hurt a business seriously by overreacting to short-term headwinds.
For example, by failing to hire great people or getting rid of good people.
But my experience also is that if you don't make those steps, if instead you support great people in a downturn, you see ultimately that the short-term headwinds dissipate and the powerful underlying strength and potential for that great group of people emerges, and we are seeing that this year with FLC.
In strat coms, you saw our teams beginning six years ago and since, drive a set of strategic changes that turned the business from one what was once a declining business into a terrific growth engine.
A business that's really growing its brand, in revenue and capability, not on every dimension perfectly every quarter, but robustly and powerfully over any extended period of time, including this year.
I saved corp fin for last.
Some, I suspect, worry that corp fin is a counterexample.
Since at least this year, the market forces seem to be trumping everything.
I would argue that corp fin, in fact, fully reinforces the overall point.
Yes, this restructuring market is down a huge amount.
And we are, therefore, down in restructuring substantially versus last year.
But it's worth noting that our restructuring business, in the face of this terrible market, is still up substantially from six years ago.
For example, my first year here, reflecting the team's strengthening of that business, strengthening an already strong creditor rights business we had in the U.S., expanding substantially our U.S. company-site business and demanding -- dramatically strengthening our restructuring positions abroad in multiple markets.
And the CF results today also reflect the efforts of our team made over the same period to build business transformation and transactions business that today are soaring.
The result is if you look out over multiple years, not just this year versus last year, you look through the ups and downs of the market, we have been able to develop and attract great professionals in the U.S. and around the world.
And as a result, though the CF results are down year on year, they are not over an extended period of time.
For example, the profits in the first half of this year, even with the hit to the market, the restructuring, are still at a run rate that is essentially triple my first year here.
So are we affected by markets?
But are we determined by those markets?
I don't think the data suggests that.
I think the data explicitly suggests otherwise.
Market forces affect us sometimes that's dramatically over short periods of time in our individual businesses.
They cause zig and zag.
But we have also seen that if we don't overreact to the zigs and zags, if instead we assess our businesses and when we find that we have confidence in those businesses and in the teams driving them and we commit to investing in those businesses even in a slow period, even if it hurts those financials in that slow period, as we did back in FLC and are fully willing to do so in CF, our experience is over any longer period of time, we get rewarded powerfully.
We end up building businesses that great people want to stay in and help build, that great people want to be part of.
Businesses that attract great people, that support their ambitions and their development and allows them to build businesses they're proud of and client relationships that make an impact.
And when you have great people doing great work and feeling supported, you end up with people who are developing this themselves, feeling good about themselves, and great people outside your firm who want to be part of that.
You create businesses that through the zigs and zags, become sustainable, powerful, durable, resilient and exciting growth engine.
That is what our teams through the zigs and zags, to me, have demonstrated.
And together, I believe we will continue to do so.
Beginning with our second-quarter results.
Revenue growth more than offset increased costs, primarily from our investments in both organic head count growth and in acquisition.
Earnings per share were further boosted by lower weighted average shares outstanding, or WASO, and from a lower tax rate, resulting in a 39.4% increase in GAAP earnings per share and a 31.8% increase in adjusted EPS.
The strength in our M&A and litigation-driven businesses that more than offset the impact of lower demand for restructuring globally.
Overall, we are pleased with these results, which give us even greater confidence in our increased guidance ranges for the year.
Revenues of $711.5 million were up $103.6 million, compared to revenues of $607.9 million in the prior-year quarter.
GAAP earnings per share of $1.77 in 2Q '21, compared to $1.27 in 2Q '20.
Adjusted earnings per share for the quarter were $1.74, which compared to $1.32 in the prior-year quarter.
The difference between our GAAP and adjusted earnings per share in 2Q '21 reflects $3.1 million in a fair value remeasurement of acquisition-related contingent consideration, which increased GAAP earnings per share by $0.09, and a $2.4 million of noncash interest expense related to our convertible notes, which reduced GAAP earnings per share by $0.06.
Net income of $62.8 million, compared to $48.2 million in the prior-year quarter.
The year-over-year increase was primarily due to high operating profits in our Forensic and Litigation Consulting or FLC segment, as well as our technology and economic consulting segments, which was only partially offset by lower operating profits in our Corporate Finance & Restructuring segment compared to the prior-year quarter.
SG&A of $133.9 million were 18.8% of revenues.
This compares to SG&A of $126.9 million or 20.9% of revenues in the second year -- in the second quarter of 2020.
The dollar increase in SG&A was primarily due to an unfavorable impact related to foreign currency translation, or FX, increased compensation primarily related to nonbillable head count growth, and the higher rent, which was partially offset by lower bad debt and the previously mentioned fair value remeasurement.
Second-quarter 2021 adjusted EBITDA of $92.3 million or 13% of revenues, compared to $75.8 million or 12.5% of revenues in the prior-year quarter.
Our second-quarter effective tax rate of 19.3%, compared to 23.1% in the prior-year quarter.
Our tax rate for the quarter was favorably impacted by a discrete tax adjustment from the remeasurement of our deferred tax asset in the U.K., following the proposed U.K. tax rate increase that's effective April 2023.
Without this change, our second-quarter '21 effective tax rate would have been 23.3%.
For the balance of '21, we expect our effective tax rate to be between 22% and 25%.
Fully diluted WASO for Q2 of 35.4 million shares declined 2.5 million shares, compared to 37.9 million shares in 2Q '20.
Our convertible notes had a potential diluted impact on earnings per share of approximately 872,000 shares for the quarter.
Included in WASO, as our average share price of $140.72 this past quarter was above the $101.38 conversion threshold rate.
Billable head count increased by 470 professionals or 10.1% that's compared to the prior-year quarter.
Noteworthy, in May, we closed on our acquisition of The Rhodes Group, welcoming 38 billable professionals to our construction solutions practice within our FLC segment.
And in July last year, we acquired Delta Consulting, adding 151 billable professionals.
Sequentially, billable head count decreased by 27 professionals or half of 1%.
Now I will share some insights at the segment level.
In Corporate Finance & Restructuring, revenues of $231 million decreased 6.1% compared to the prior-year quarter.
The decrease in revenue was driven by lower demand for restructuring services globally, which was partially offset by higher demand for our transactions and business transformation services in North America.
Adjusted segment EBITDA of $40.2 million or 17.4% of segment revenues, compared to $76.3 million or 31% of segment revenues in the prior-year quarter.
Adjusted segment EBITDA was negatively impacted by the continued downturn in restructuring activity compared to the record demand that saw in 2Q '20 in the initial wake of COVID as well as higher compensation, primarily related to a 19.8% increase in billable head count.
On a sequential basis, revenue increased $4.8 million or 2.1%, a strong growth in both our business transformation and transactions businesses and related success fees more than offset the continued decline in demand for our restructuring services.
Revenues of $150.7 million increased 41.7% compared to the prior-year quarter.
The increase in revenues was primarily due to higher demand for our investigations and dispute services.
Adjusted segment EBITDA of $18 million or 11.9% of segment revenues, compared to a loss of $9 million in the prior year quarter.
As a reminder, the second quarter of 2020 was when COVID-19-related lockdowns particularly affected FLC, resulting in many matters being deferred due to travel restrictions, foreclosures, and delays.
The year-over-year increase in adjusted segment EBITDA was primarily due to higher revenues and a 14 percentage point increase in utilization, which was partially offset by higher variable compensation and a 5.5% increase in the billable head count.
Sequentially, revenues were flat but adjusted segment EBITDA decreased $11.4 million, primarily due to increased compensation, acquisition-related costs, and certain revenue deferrals.
Our economic consulting segment's record revenues of $183.3 million increased 21% compared to the prior-year quarter.
The increase was primarily due to higher demand for non-M&A-related antitrust and financial economic services, which was partially offset by lower realized rates and demand for our M&A-related antitrust services compared to the prior-year quarter.
Our adjusted segment EBITDA of $30.7 million or 16.7% of segment revenues, compared to $21.7 million or 14.3% of segment revenues in the prior-year quarter.
The increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by higher variable compensation and a 9.1% growth in billable head count.
Sequentially, revenues increased $14 million or 8.3%, which was primarily driven by increased demand for financial economics and M&A-related antitrust services.
The adjusted segment EBITDA improved $4.1 million.
In technology, revenues of about $78.6 million increased 67% compared to the prior-year quarter.
The increase in revenues was primarily due to higher demand for cross-border investigations, litigation and M&A-related second request services.
Adjusted segment EBITDA of $18.5 million or 23.5% of segment revenues, compared to $6.4 million or 13.7% of segment revenues in the prior-year quarter.
The increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation and higher SG&A expense.
Sequentially, revenues were slightly lower compared to record revenues in the first quarter as decreased demand for M&A-related second request services was nearly offset by the higher demand for litigation and cross-border investigation services.
Adjusted segment EBITDA declined $3.1 million sequentially, which was largely due to an increase in SG&A expense.
Revenues in the strategic communications segment of $67.8 million increased 19.2% compared to the prior-year quarter.
The increase in revenues was primarily due to a higher demand for corporate reputation, and public affairs services.
Adjusted segment EBITDA of $13.5 million or 19.9% of segment revenues, compared to $10 million or 17.6% of segment revenues in the prior-year quarter.
The increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation and higher SG&A expense.
Sequentially, revenues increased $7.3 million, primarily due to higher demand for corporate reputation and public affairs services.
Adjusted segment EBITDA increased $3.1 million.
Let me now discuss key cash flow and balance sheet items.
We generated net cash from operating activities of $125.6 million, which decreased by $27.4 million, compared to $153 million in the second quarter of 2020.
The year-over-year decrease was largely due to an increase in salaries, primarily related to head count growth, which was also partially offset by the higher cash collection.
We generated free cash flow of $105.8 million in the quarter.
Total debt, net of cash, decreased $93.5 million sequentially from $252.8 million on March 31, 2021, to $159.4 million on June 30, 2021.
The sequential decrease was primarily due to repayment of borrowings under our senior secured bank revolving credit facility.
Turning to our guidance.
We are raising our full-year 2021 guidance ranges for revenues and GAAP EPS.
We are also raising the lower end of our full-year 2021 adjusted earnings per share guidance range.
These changes primarily reflect our strong performance in the first half of 2021.
We now expect revenues will range between $2.7 billion and $2.8 billion, up from our prior range of between $2.575 billion and $2.7 billion.
GAAP earnings per share is now expected to range between $5.89 and $6.39, up from a prior range of between $5.60 and $6.30.
We now expect adjusted earnings per share to range between $6 and $6.50, up from our prior range of between $5.80 and $6.50.
The $0.11 per share variance between earnings per share and adjusted earnings per share guidance for full-year 2021 includes the estimated tax-affected impact of noncash interest expense of $0.20 per share that's related to our 2023 convertible notes and the second-quarter 2021 $0.09 per share gain related to some fair value remeasurement.
Our updated guidance for full-year 2021 is shaped by four key considerations: First, restructuring activity remains subdued due to government support and extended moratoriums, low interest rates and the strengthening in certain industry verticals.
And our restructuring business could weaken further as large matters from 2020 roll off.
Second, global M&A activity, which drives demand in our economic consulting and technology segments as well as our transactions practice in Corporate Finance & Restructuring is at just record levels.
There is no certainty that M&A activity will continue at this pace.
Third, typically fourth quarter is a weaker quarter for us because of both an increase in time off during the holidays for our employees and a seasonal business slowdown.
Fourth, COVID-19 is still with us with different parts of the world being impacted at varying degrees.
Before I close, I want to reiterate a few key themes that underscore the strength of our company.
First, we have conviction in our world-leading businesses.
And this quarter's results reflect both the benefits of sustained investing even when facing short-term volatility and the diversity of our businesses.
Second, not only are we deepening our core capabilities, but also we are then expanding in adjacencies, such as non-M&A-related antitrust, business transformation, cybersecurity, public affairs, and environmental, social, and governance-related services.
Third, the bedrock of our success remains the strength of our people and their client relationships, combining with creating a culture that has year after year allowed FTI to be ranked as a best place to work by Forbes, Consulting Magazine and the Washington Post, among others.
And finally, our balance sheet is enviable.
And so we have demonstrated the ability to boost shareholder value through share buybacks, debt reduction, organic growth, and acquisitions when we see the right one.
 Assistant:

Chosen response:
compname reports q2 earnings per share of $1.77.
q2 adjusted earnings per share $1.74.
q2 earnings per share $1.77.
q2 revenue $711.5 million versus refinitiv ibes estimate of $642.7 million.
sees 2021 earnings per share will range between $5.89 and $6.39.
sees 2021 adjusted earnings per share will range between $6.00 and $6.50.


Prompt:
Human: A replay of today's call will be available via phone and on our website.
To be fair to everyone, please limit yourself to one question, plus one follow-up.
Before we get started, I want to let you all know that we are planning an Investor Day in early April, and we will be sharing more information soon.
With that, I will turn the discussion over to Phil Snow.
Before I begin, let me start by welcoming Kendra, who recently became FactSet's, Head of Investor Relations.
Kendra has worked at FactSet for more than two decades, most recently, serving as my Chief of Staff.
She brings a deep knowledge of the Company and industry expertise to her new role.
I look forward to working with Kendra to continued growing our Investor Relations program.
We are excited to have her here and have already begun leveraging her deep financial and operational expertise, as we continue to execute our growth strategy.
Turning to our performance.
FactSet is off to a strong start to fiscal 2022, and I'm pleased to share that this quarter, had the highest Q1 incremental ASV on record.
Building on the momentum from Q4, we grew organic ASV plus professional services by 9% year-over-year in Q1.
The strong performance of our sales and client-facing teams carry forward from Q4, increasing the pace of our go-to-market strategy.
These teams continue to drive increased retention and expansion rates among our existing clients, while achieving a high number of new business wins.
The biggest contributor to this quarter's growth were institutional asset management clients, as we continue to see strength in our workstation and accelerating growth in our analytics workflow solutions.
The last two years of accelerated investment in content and technology continue to drive top line growth.
We are seeing increased demand for differentiated content and workflow solutions.
FactSet's leading open content and analytics platform is allowing us to meet this demand and capture more share of wallet with our clients.
By client type, wins were broad-based.
We saw a double-digit ASV growth rates from our banking, wealth, hedge fund and corporate clients, as well as private equity and venture capital funds and partners.
Our investments in content and technology including deep sector, wealth and analytics solutions continue to support client retention rates and renewals across the board.
Overall, we are pleased that our performance resulted in a 13% increase in adjusted earnings per share from the prior year period.
Our adjusted operating margin of 33.6% exceeds our guidance.
Linda will walk you through the details in a few minutes.
We are now in the final year of our multiyear investment plan, and we remain on track to achieve our goals.
Our focus is on our digital platform scaling our content refinery and creating hyper personalized workflow solutions.
Within our content refinery, ESG, data for wealth, private markets and deep sector are all fueling workstation growth.
We continue to grow our deep sector data launching real estate and technology media and telecom in November.
Deep sector and our investments in private markets have translated into growth and high retention within sell-side firms.
And our recent acquisition of Cobalt further advances, our private market strategy by connecting differentiated data with tracking and portfolio monitoring providing value to our private equity and venture capital clients.
Our workflow solutions, which deliver efficiencies across the front, middle and back office continue to add meaningful ASV.
Our analytics APIs are resonating with our clients, and we are increasingly integrating with cloud-based platforms.
Earlier this month, we launched over 90 datasets and a number of APIs on Amazon Data Exchange, the first major data and analytics provider to do so.
Our trading business continues to grow, bolstered by the recent addition of fixed income support for trade execution.
This enables our clients to surface new insights and trade across asset classes with greater speed and efficiency and was a significant contributor to the growth of our analytics and trading business during the quarter.
Our product teams are focused on identifying, developing and implementing made for client workflow solutions for each of our client types.
This has been incredibly successful within wealth, as our Advisor Dashboard maintains a healthy pipeline and solid client engagement for FY22.
We see this hyper personalization as a key differentiator and are committed to working with our clients to evolve our offerings.
Looking across our regions, we saw continued strength in ASV growth across all our markets.
The Americas was the biggest contributor, as organic ASV growth accelerated to 9% supported by broad-based strength across our businesses.
This was driven by strong retention and expansion among asset managers and asset owners.
The region also benefited from capturing higher price increases.
In EMEA, growth accelerated to 7% consistently improving over the past three quarters.
Research and advisory had a particularly positive impact, driven by improved retention among asset managers and wealth clients and strong workstation sales to new customers.
Asia Pacific had another robust quarter with growth accelerating to 14% driven primarily by CTS.
We again saw wins across many countries with hedge funds, asset managers and asset owners driving ASV growth.
In summary, I am proud of the FactSet team for delivering such strong results to the start of the year.
The first quarter, as you know is historically a slower start to the fiscal year and not necessarily an indication of our performance for the rest of the year.
However, our momentum from Q4 has continued, and we are well positioned to deliver on our targets for the year.
As such, we are reaffirming our fiscal 2022 guidance, and we remain confident in our pipeline and then the value we are delivering to our clients.
Looking ahead, we continue to focus on the three strategic priorities, scaling up our content refinery, enhancing the client experience through hyper personalized solutions, and delivering next generation workflow solutions for clients.
And we believe that our people, culture and performance-driven mindset will enable us to execute on these priorities, as we accelerate the pace of change.
We are committed to investing in and developing the talent experience and the skills of our team, as we build the industry's leading open content and analytics platform.
Finally, an important milestone in our Company's history occurred earlier this week when FactSet became part of the S&P 500 Index.
Our addition was in fact predicted by our S&P 500 constituents prediction signal on October 1st.
Our inclusion is a proud moment for FactSet and a testament to our tremendous growth and our efforts to help our clients do their best work.
Our team's creativity, dedication and collaborative spirit make us a trusted partner, and I'm tremendously proud of their drive to create smarter, more innovative solutions for our clients.
I'm really pleased to be here today as part of the FactSet team.
I've been at FactSet for just a few months, but in that short time it's become clear that the Company has been performing really well, from accelerating top line growth and strong free cash flow generation to its long history of consistent and growing shareholder returns, and there is still a lot of runway ahead of us, as the investments made over the past two years are paying off and driving growth.
There is undeniably a great deal of talent across the organization.
I look forward to working with the team to build on FactSet's history of outstanding performance, while generating meaningful value for shareholders.
I'll now share more details on our first quarter performance.
First on ASV, we grew organic ASV plus professional services by 9%.
As Phil noted previously, we typically see a seasonal deceleration in Q1.
Our performance reflects increased demand for our content and product, higher retention, and our ability to realize higher pricing.
The marketplace has been supportive with solid workstation growth in banking and greater demands for our portfolio analytics solutions, as market conditions continue to evolve, our subscription-based ASV will continue to support value-based pricing.
GAAP revenue increased by 9% to $425 million, while organic revenue, which excludes any impact from foreign exchange and acquisitions increased 9% to $423 million, growth was driven primarily by analytics and trading and research and advisory.
All regions experienced notable year-over-year growth.
For our geographic segments, on an organic basis, Americas revenue grew 9%, EMEA also came in at 9% and Asia Pac revenues grew at 14%.
The main drivers in the region were analytics, CTS and workstation growth.
Turning now to expenses.
GAAP operating expenses grew 13% in the first quarter to $302 million, impacted by anticipated changes incurred during the period.
We recorded a restructuring charge of $9 million to drive a more efficient and empowered organizational structure.
Ongoing savings from this realignment will primarily be used for product reinvestment and key talent retention.
In addition, we recognized $4 million of expense related to vacating certain office space in New York City.
We recently pulled our employees on optimal work arrangements and consistent with what we see in the market, a vast majority prefer a hybrid or remote working model.
Given this preference, we are reassessing our real estate footprint to better reflect our new work arrangements.
Also, in Q1, we incorporated the FactSet Charitable Foundation to facilitate our corporate social responsibility goals.
Compared to the previous year, our GAAP operating margin decreased by 230 basis points to 29% and our adjusted operating margin decreased by 70 basis points to 34%.
As stated before this exceeds our guidance on this measure.
Our increased expenses were partially offset by lower compensation expense.
As a percentage of revenue, our cost of sales was 32 basis points higher than last year on a GAAP basis and 72 basis points lower on an adjusted basis.
This reflects increased data and infrastructure costs and higher compensation expense for our existing employee base.
These expenses also include our ongoing shift to the public cloud, as part of our digital transformation and multiyear investment plan.
Lower personnel expenses, partially offset these increases.
When expressed on a percentage basis of revenue, SG&A was 198 basis points higher year-over-year on a GAAP basis and 145 basis points higher on an adjusted basis.
The primary drivers include increased employee compensation, higher bonus accrual and real estate exit costs.
This was partially offset by lower stock compensation year-over-year.
Turning now to taxes, our tax rate for the quarter was 10% compared to last year's rate of 16%.
This lower rate was due to a tax benefit from the exercise of stock options, as a result of our record stock price.
This caused the annual estimated benefit to be higher than expected.
The lower annual rate was partially offset by higher-than-expected U.S. income.
GAAP earnings per share increased 7% to $2.79 this quarter versus $2.62 in the prior year.
Adjusted diluted earnings per share grew 13% to $3.25 driven higher -- by higher revenues and a lower tax rate.
Free cash flow, which we defined as cash generated from operations, less capital spending was $64 million for the quarter, a decrease of 9% over the same period last year.
This was primarily due to the timing of tax payments, higher year-over-year employee bonus payments, and a reduction in capital expenditures related to facilities build outs.
Our ASV retention remained at -- greater than 95%.
We grew the total number of clients by 14% compared to the prior year, which continues to be driven by the addition of more wealth and corporate clients.
Our client retention improved to 92% year-over-year, which speaks to the success of our products and investments and the efforts of our sales teams.
For the first quarter, we repurchased 46,200 shares of our common stock for a total of $19 million at an average per share price of $403.
We remain disciplined in our buyback program and committed to returning long-term value to our shareholders.
We are reaffirming our guidance for 2022, and as we often say our business is a tale of two halves.
While it is clear that our momentum from Q4 has continued and we believe that we are well positioned to deliver on our targets, it's still early in the fiscal year.
We remain focused on developing our content, technology and people and delivering value for our shareholders.
 Assistant:

Chosen response:
qtrly diluted gaap earnings per share of $2.79.
qtrly adjusted diluted earnings per share of $3.25.
reaffirms its annual outlook for fiscal 2022 as provided in september 2021.


Prompt:
Human: To kick things off, our CEO, Bryan Jordan and CFO, BJ Losch will provide an overview of our results and then we're going to open things up for question.
We're really pleased to have Susan Springfield, our Chief Credit Officer with us to help with that effort.
Our statements reflect our views today and we aren't obligated to update them.
And with that, I'm going to hand it over to Bryan.
This has been a very significant quarter for us.
We closed our merger of equals with IBERIABANK, we acquired the 30 branches from SunTrust Truist, really excited about that.
That integration was done in mid-July.
We've made significant progress during the quarter.
We are very pleased with the performance of the organization, the great work that our associates did to serve their customers and their communities in what has been a challenging and trying time.
We see good momentum in our business, we proved out again the counter cyclical benefit of our businesses, mortgage, mortgage warehouse lending and our fixed income business.
Our balance sheet continues to perform well.
And as we've talked about over the last ten years or 12 years, we have really significantly restructured the balance sheet and the focus is more on C&I.
We had net charge-offs of 44 basis points during the quarter and we saw a slight tick up in nonperforming assets, but we ended the period with about $1.3 billion of capacity for loss taking.
So very strong balance sheet.
We had a good quarter in terms of deposit activity.
We had good customer inflows and the balance sheet feels good and we saw some progress made in adjusting our pricing to compensate for the lower interest rate environment.
Also during the quarter, we made good progress on our expenses.
We captured another $8 million of run rate, excuse me of run rate in our quest for $170 million plus in expense savings.
We feel very good about our progress in controlling costs and are planning for the integration.
There is a couple of good slides in the investor deck, which you can reference that lay out the expectations around expense efficiencies over the next couple of quarters and year.
Our capital base continues to be strong.
Very, very pleased with the positioning.
We came in with a CET1 ratio of 9.15%.
Our tangible book value dilution was very slight from the acquisition of the branches and the completion of the merger, largely offset by our earnings during the quarter.
Our planning around the integration continues to go well, we expect that the significant integration work will be completed by the fall, early fall of 2021.
We are on target and on track for completing that integration.
We have a lot of work to do between now and then.
We have associates all over the organization who are working to make sure that we do it in a seamless fashion and minimize, absolutely minimize adverse impact on our customers and our communities.
Clearly, the progress of the PPP programs, of fiscal stimulus has been positive to date on the economy, but there is still uncertainty.
I feel like we're well positioned in terms of a strong balance sheet, strong while taking capacity, strong capital and also positioned with a tailwind in the sense that we have our non -- our counter-cyclical businesses and we also have the ability to realize a significant amount of cost savings over the next 18 months to 24 months.
So with that, I will stop.
We think it's important to note that the impact of merger accounting on our financials are overall in line with the estimates we provided you during the second quarter call and in the pro forma released during the quarter.
We've provided the detail on the marks and other impacts related to the merger in the appendix for your review.
On Slide 6, we provide a summary of our adjusted financials for the quarter compared with FHN stand-alone adjusted results in the prior quarters.
So obviously, the trends here largely reflect the net impact of the IBERIA merger and the branch acquisition.
Moving on to Slide 7 for a look at net interest income and net interest margin.
We generated net interest income of $532 million in the quarter, up $227 million linked quarter, driven by the impact of the merger.
NII remains fairly stable with second quarter combined levels, despite the impact of the challenging rate environment.
Third quarter results included a $44 million benefit from accretion or about 12 basis points on the NIM which was modestly higher than we originally expected given higher prepayments.
Reported NIM came in at 2.84% in the quarter, down 6 basis points, reflecting the impact of low rates and continued elevated levels of liquidity, somewhat offset by accretion.
We also continue to take action to improve our deposit pricing profile.
Our deposit rate paid was down again this quarter with interest bearing deposit costs down to 36 basis points.
Our goal is to manage down interest bearing deposit cost toward the levels we saw in a prior zero interest rate cycle back in 2015 of around 24 basis points.
In this quarter, we plan to align our deposit pricing across the expanded franchise, which should provide additional benefit as we enter 2021.
Our NIM also continues to reflect the impact of much higher levels of liquidity.
We estimate excess cash to lower the third quarter margin approximately 12 basis points.
We averaged about $3 billion of excess cash, which grew to $4.5 billion at quarter end.
As you know, while this excess cash position lowers the margin, it does not impact our net interest income.
We continue to look opportunistically for more attractive reinvestment alternatives going forward and expect to put more of that money to work over time.
In the fourth quarter, we expect to see additional margin pressure likely in the high single-digit to low double-digit range, but expect that level to represent the bottom for NIM going forward.
Moving on to Slide 8 and 9, I would note that here, we have provided our results versus prior period combined results for FHN and IBERIA.
We delivered solid performance in fee income again in the third quarter with relatively stable results on a linked quarter basis and a 23% year-over-year increase as the benefit of our counter-cyclical businesses in fixed income and mortgage banking helped to mitigate COVID related pressure in some of our more traditional banking fee income streams.
Fixed income results came in as expected with relatively stable results linked quarter and a $33 million increase year-over-year given average daily revenues of $1.5 million.
Mortgage banking again delivered standout results with a $13 million increase linked quarter and almost $40 million year-over-year.
Secondary originations of $1.2 billion were up 3% from strong second quarter levels while gain on sale margins expanded over 100 basis points to 3.93%.
As we look into the fourth quarter, while we expect a seasonal slowdown in volumes for both of these businesses, we do expect overall market conditions to remain favorable for both -- for the foreseeable future.
As you can see on Slide 9, we continue on our commitment to expense discipline.
Linked quarter expenses were down $15 million as the reduction in personnel expense and other non-interest expense was partially offset by an expected increase in intangibles, amortization from the Merger and Branch acquisition.
Salaries and benefits increased $7 million, driven by the alignment of benefits across the combined platform, the addition of personnel from the 30 acquired branches and an increase in healthcare costs following the pandemic driven slowdown.
This increase was more than offset by a reduction in revenue based incentives and commissions as well as lower deferred comp costs.
Our results this quarter also reflect the benefit of $8 million in net merger cost saves, giving us a year-to-date total of $18 million.
We understand the importance of remaining incredibly focused on utilizing cost control as a lever in this environment.
We have unique advantages to be able to do so given our merger and we'll continue to look for further expense reductions beyond our targeted merger savings.
Turning to Slide 13 and 14, you see a review of our loan growth and funding profiles relative to combined First Horizon, IBERIA results.
As expected, period end loan growth was modest as customer demand remains muted, pay-offs continue and utilization rates have returned to more normal levels.
Bright spot in the quarter was continued strong mortgage warehouse demand, which drove loans to mortgage companies up $1.6 billion on a spot basis and approximately $430 million on average.
Similar to fixed income and mortgage banking originations, the loans to mortgage companies functioned as a counter-cyclical, high return specialty business for us and we expect continued strong performance.
On the liability side, period-end deposits were up $2.3 billion, driven by the branch acquisition primarily as well as continued strong customer inflows, which enabled us to run off higher cost non customer balances.
Given current levels of excess liquidity and our enhanced market presence, we expect to continue to move our interest bearing deposit costs lower, particularly as we move to align our pricing strategies across the footprint.
We also further improved our funding profile with a $1.2 billion reduction in borrowings from 2Q combined levels as we leveraged our excess liquidity to pay down legacy IBERIA that Federal [Phonetic] Home Loan Bank advances.
Turning on Slide 12, we'll cover asset quality over the next few slides.
Clearly, our results this quarter reflect the impact of the merger with a lot of moving parts.
But if we step back, broadly speaking, overall asset quality continues to remain fairly benign so far outside of energy despite the impacts of COVID-19.
Net charge-offs came in at 44 basis points, up from 20 basis points for legacy FHN driven by energy-related losses and we saw a relatively modest 6 basis point increase in NPLs to 75 basis points of total loans, despite the impact of the merger.
On Slide 13, you see, we continue to add reserves this quarter as the impact of the merger and branch acquisition added $475 million to the allowance for credit losses.
Outside of merger math, we also built reserves by a modest $13 million.
Therefore, we ended the quarter with reserves of $1.1 billion, which is equivalent to 2.15% of the loan portfolio, excluding the low risk PPP and loans to mortgage companies portfolios and about four times annualized net charge-offs.
When you also factor in the unrecognized discount on acquired loans, we have total loss absorbing capacity of $1.3 billion or over 2% of total loans.
On Slide 14, we provide an update of our view around the portfolios that investors have been most focused on in terms of impacts from the pandemic.
We continue to do very detailed portfolio reviews of industries currently affected and in the quarter, we reviewed in detail $9 billion of loans in the commercial portfolio across these various sectors.
As a result of that, as well as other broader portfolio reviews, we believe that just under 11% of our total loans should be and are subject to a heightened level of monitoring.
We've shown the sub sectors of the portfolio that may be more stressed such as real estate lending, energy, retail, trade and the non-fast food portion of our accommodation foodservice portfolio.
It's important to note that other sectors such as essential services, recreational goods, manufacturing and home improvement are continuing to perform well, and additionally our higher quality consumer portfolio is performing well as well with a weighted average FICO score of 750 on a refreshed basis.
As we've mentioned to date, customers are proving to be more resilient than originally feared and overall stress appears to be declining.
We've provided data in the appendix on the reserve coverage across our portfolio, as well as on deferrals which have now declined meaningfully to around 2.4% of federal loan balances from a peak of almost 13%.
Overall, we continue to feel very comfortable with our risk profile and reserve levels, particularly after going through the very detailed process of marking the IBERIA loan book, which represents about 45% of the portfolio.
Moving on to capital and tangible book value per share on Slide 15, as we mentioned, TBV per share of $9.92 remained relatively stable to second quarter as strong earnings were offset by the impact of the IBERIA merger and the Truist branch acquisition and the CET1 ratio ended the quarter at $9.15.
Near term, we expect to continue targeting a CET1 ratio in the 9% to 9.25% range.
Turning to Slide 16 for Merger Integration Update, we continue to be very energized as Bryan said by the opportunities ahead of us in connection with our merger of equals.
In the year since we announced the deal, we've established a strong merger integration framework to help ensure that we capitalize on the opportunities in a highly efficient manner even in the face of the pandemic.
We've already done a great deal to align our cultures, processes and systems to ensure a successful integration.
We've completed much of HR related integration by identifying leadership and converting payroll systems.
And on the customer side, we've built out our go-to-market and organizational models, as well as finalizing our customer experience dashboard.
We're on track to convert various other platforms and are currently planning for the full systems conversion to occur in the fall of 2021.
Again as Bryan said, in the third quarter, we delivered $8 million of cost savings, bringing the year-to-date total to $18 million.
And in the table on the right, we provided a modestly updated view of our expected saves over time.
We continue to be highly confident in our ability to deliver at least $170 million of annualized savings in 2022, but the path of the save got shifted by a quarter or so.
This largely reflects the fact that we now believe it's prudent to target a September-October system conversion versus the previous year of the late second quarter conversion.
In the table on the right as well we've provided the estimated timing of our merger savings on an annualized basis.
In third quarter 2020, our annualized expense base excluding incentives and commissions totaled about $1.52 billion, and based on our expectations for the timing of the merger sales, we believe that our 2021 expenses excluding incentives and commissions should reflect a low single-digit decrease.
Wrapping up on Slide 17, we believe we're well positioned to capitalize on the benefits of our more diversified business model over time and through our IBERIA merger and the branch acquisition, we now have an expanded franchise across some of the most attractive markets in the south.
As we've demonstrated this quarter, we have a revenue mix that helps us offset NII pressure from the low rate environment.
We also have the advantage of merger cost saves and through prior acquisitions and efficiency initiatives, we've proven our commitment to expense controls.
Our prudent approach to risk management should help us mitigate credit losses going forward, and we have the benefit of the marked loan book and significant loss absorption capacity.
While the economic environment remains challenging and loan demand is needed, it gives us the ability to focus on merger integration for the next year, and we believe our business model will result in outperformance and shareholder value creation in the quarters and years ahead.
Since I know they're listening, I want to give a quick shout out to all those on our various teams across IR, accounting, finance, credit and technology in particular that have done an extraordinary work and have spent long hours getting us to this point.
This is my 47th quarterly earnings call with First Horizon and I've seen a lot over the years, but the complexity and the uniqueness of this quarter and the year take the cake.
We believe our strong balance sheet capital and liquidity will serve us well in this difficult operating environment.
We've maintained strong underwriting standards and built a diversified portfolio focused on profitability and performance in a downturn.
Despite the economic headwinds, we are uniquely positioned to capture merger opportunities with enhanced scale, better efficiency and improved earning power to create significant shareholder value.
We are incredibly committed to continuing to assist our associates, communities and customers in efforts to overcome the impact of COVID-19 and revitalize the economy.
Again, we are very well positioned.
I'm very, very excited about the combination of IBERIABANK and First Horizon, and we think we have unprecedented opportunities ahead of us.
With that operator, we'll be happy to take any questions.
 Assistant:

Chosen response:
first horizon national corp - qtrly net interest income $532 million versus $301 million.
first horizon national corp - three-year strategic plan to be finalized in q4 2020.


Prompt:
Human: There is an inherent risk that actual results and experience could differ materially.
You can find a discussion of our risk factors, which could potentially contribute to such differences in our 2020 10-K and in our Form 10-Q, which was filed earlier today.
Bob was the great grandson of our founder and worked at Fluor for 42 years before retiring in 2009.
For 27 years, he led the Fluor Foundation, our charitable and community involvement organization that was established by his father and his uncle Si Fluor in 1952.
Throughout his career, Bob brought meaning and value to the active giving back, inspiring thousands of employees across the company and across the globe, to commit time and resources to bettering their communities.
The company will continue to build on Bob's legacy of supporting stronger, more sustainable communities around the world.
In a few minutes, Joe will walk through the financials of our business in each of our segments.
So let me first provide a high-level overview of what we are seeing in each of our major end markets.
Starting with Urban Solutions.
In mining, work is tracking broadly to our expectations for the next 18 months.
We have seen a few large projects shift to the right as detailed estimate reviews and scrutiny of projects by our clients prior to an investment decision being taken is higher than we have seen in quite some time.
In addition to those projects, we have a steady slate of feed and limited notice to proceed work, where we have a high level of confidence in conversion to full project awards in the next couple of years.
Our prospect list is incredibly diverse, and we are not dependent on any one region or any one commodity to see significant growth in this business.
Backlog for mining declined by approximately $1 billion in the quarter.
That was due to the cancellation of a steel project in North America.
Moving to Infrastructure on slide four.
The bipartisan bill continues to gain momentum, and we are optimistic that it will focus on more traditional infrastructure projects, including roads and bridges, which we believe will provide some upside to Fluor and more importantly, funding certainty to our clients in the coming years.
Importantly, we are starting to see shifts in contract structures and collaborative models are being applied to the infrastructure sector as well as other sectors that allow contractors to compete on capabilities and qualifications instead of solely on price.
This is a positive development, and we are encouraged by this approach to risk mitigation.
On a particularly promising note, we are seeing advisory institutions acknowledging the challenges encountered in executing public works projects.
This has led to the development of more collaborative procurement models to support their public sector clients.
Last week, we were notified by TxDOT that our co-lead joint venture was selected to design, construct and maintain the 6.5-mile long I-35E Phase two project here in Dallas.
Our portion of the work will be booked in the third quarter.
We're excited about this project and look forward to supporting TxDOT on this and other capital programs in the future.
Regarding our legacy infrastructure portfolio, I want to provide an update on the Gordie Howe Bridge Project and the $138 million charge we announced today.
The project is experiencing significant COVID-related delays as well as overruns due to procurement and subcontractor cost growth.
This charge includes additional reserves for delays and disruptions in the schedule.
Fluor is not the lead operating partner on this contract.
It's important to note that these cost growth factors may be at least partially recoverable under the contract.
We expect that it will require several quarters to analyze recoverability and negotiate with our clients before the accounting standards allow us to recognize incremental revenue for these amounts.
While we are disappointed in the performance of the project, we believe we have a solid estimate on the cost at this point.
Design is essentially complete, and we have procured approximately 85% of the materials required.
We have been revising the forecast along the way, and this contract was previously included in our 0 margin projects in backlog.
As a noncontrolling partner in this JV, we continue to work with our partners to help them get this project into the best possible position.
We have just under $1 billion in backlog remaining for this project and anticipate substantial completion by the end of 2024.
Our other infrastructure projects continue to make solid progress, including the LAX people mover, which crossed a significant milestone in early July when the joint venture placed the first forward trusses for the elevated pedestrian walkway.
Turning to slide five.
In advanced technologies and life sciences, we are successfully wrapping up some of our large data center projects in Europe.
We also see opportunities for semiconductor manufacturing facilities, both domestically and internationally.
These projects are a mix of brownfield and greenfield, and provide a lot of opportunity for add-on work as these facilities grow.
In life sciences, we continue to see a good list of opportunities, as our world-class technology capabilities support our strategy of getting front-end work.
We have been awarded a few front-end projects this quarter with the goal of converting them into EPCM contracts.
Overall, we still see the ATLS end markets as an area for growth in our business, and we are focused on deploying our teams on to projects where we can grow our market share with contract terms and conditions that we find favorable.
In Mission Solutions, we experienced strong margins this quarter due to increased execution activity on DOE projects, higher-than-forecasted performance-based fees and the release of COVID-19 cost reserves.
This strong performance was somewhat offset by a decline in execution activity on army logistics and life support programs in Afghanistan and Africa.
In June, we fully demobilized our people and successfully completed our assignment in Afghanistan after 13 years.
At its peak, Fluor had 26,000 employees from 65 countries, speaking 39 languages at 76 sites and supporting over 100,000 troops.
This included 191,000 meals prepared per day and the establishment of the first-ever biodiesel program for the U.S. military deployed overseas.
Under this program, we produced over 0.5 million gallons of fuels for the bases.
We are now continuing to support the Army through our LOGCAP V task order award in Africa.
Next, please note that on the RAPID project, we have moved into the warranty period.
This project is now essentially complete.
Our major pursuits for the second half of this year in this group include the Savannah River Management & Operations contract extension and the Y12/Pantex Management & Operations contract in Tennessee and Texas.
Moving to Energy Solutions on slide seven.
We had a particularly strong quarter due to certain favorable events driving up our gross margin.
This reflects the negotiations of change orders, scope increases and cost improvements across numerous projects.
Furthermore, margins also benefited from the release of credit loss reserves after we received payment on a significant long-standing past due receivable.
These positive segment margin results were partially offset by a $20 million loss recognized on an embedded derivative, which is excluded from our adjusted earnings per share numbers.
Turning to slide eight.
We remain pleased with the progress on our LNG Canada project in Kitimat.
During the quarter, we saw a significant easing of public health orders that had slowed progress earlier this year, and we are now fully staffed onsite per our plan.
In the second quarter, we achieved several major milestones.
First, we drove the last of the Phase one plant piles.
This program started in January 2020 and included the installation of nearly 6,500 piles.
If laid end to end, the piles would extend 130 miles.
Secondly, the project's material offloading facility is now operational, receiving and unloading the first three major pieces of process equipment shipped via oceangoing vessel.
These pieces of equipment for Train one include the 345 ton, 50-meter-long main cryogenic heat exchanger and two precooler units, each weighing over 280 tons.
We are scheduled to direct these pieces this fall.
The site has gone vertical with the steel erection of the non-process building, including the central control and administration buildings.
During the quarter, we completed the LNG storage tank wall pours.
The LNG tank group and suspended deck raising is scheduled for next week.
Module fabrication has commenced for all facets of the project across the Asia and European module fabrication centers.
Preparation and planning have commenced for the first module delivery major, which are on target for Q4 2021.
We have formalized the term sheet with our client, which outlines principles of cost and schedule relief related to delays, including COVID, engineering and procurement impacts through February 26, 2021.
We are targeting finalization of a formal variation this month.
We continue to enhance our Energy Transition portfolio and believe that Fluor will be a vital contributor to a lower carbon future.
We are seeing success in several markets, such as renewable fuels, carbon capture, clean hydrogen, battery chemicals and asset decarbonization.
First, in the renewables fuel market, Fluor is focused on brownfield or revamp capabilities with a geographic focus in North America, where low carbon fuel standard credits are available, demand for liquid fuels continue and feedstock selection is broadly based.
Next, in the carbon capture market.
Fluor can perform projects with any technology globally.
This includes our own proprietary technology for both pre-combustion and post-combustion, Fluor Solvent and Econamine FG+, respectively.
We are also seeing further opportunities for carbon capture on new and existing LNG facilities.
Our clean hydrogen efforts include both green hydrogen and blue hydrogen.
Fluor is relying on its 50 years at the forefront of the gasification industry and has executed more than 30 pre-FEED and FEED projects.
Fluor can differentiate in this market with our ability to act as integrator and OSBL contractor.
Another Energy Transition market we are exploring is battery chemicals.
We are expanding our lithium capabilities and are pursuing the growing market of electric vehicle battery production.
In asset decarbonization, Fluor is leveraging our design experience for refineries and petrochemical facilities, including steam and electrical systems.
We have global execution capabilities for conceptual front-end design through EPC for both electrification and energy efficiency projects.
Aside from these markets, we are also pursuing projects in green ammonia, chemical recycling, bio-based chemicals, long duration energy storage, waste-to-energy conversion and bio LNG.
Most of our energy transition work is in the United States and Europe.
And based on our differentiated technical position, we continue to view growth in this area as a driver for increased revenue and earnings in the coming years.
Now let's turn to NuScale, a related energy transition offering on slide 10.
For the first seven months of this year, NuScale has received $192 million in outside investments from JGC and GS Energy, Doosan, Samsung and IHI, among others.
These infusions not only eliminate the need for Fluor to provide additional funding, but also accelerate NuScale's path to commercialization and demonstrates third-party investor interest in NuScale's business prospects.
Additionally, we continue to have positive and productive conversations around nuclear power as a necessary baseload clean energy source, both in North America and abroad.
We believe that our new scale product will become a vital part of a cleaner energy future.
Before handing the call over to Joe, on slide 11, I want to share a few observations as we head into the second half of the year.
First, we expect to see some inconsistency or lumpiness in new awards as the optimism in post-pandemic capital spending from clients is partially offset by concerns about cost growth for labor and materials.
We're also keeping a close eye on the impacts of the Delta variant of COVID as it relates to our exposure to global supply chains.
While these dynamics may shift certain projects out in time somewhat and impact the near term, there are longer-term trends in our business that I view as very positive.
First, as mentioned in my infrastructure remarks, we are starting to see a better balance of risks sharing in contract structures.
Projects are increasingly structured as predevelopment agreements where clients and contractors work together to identify and mitigate risks before bids are finalized.
These collaborative models are being considered because clients are seeing contractors declining to bid on large projects as terms and conditions have shifted risk allocation too far away from the owner.
Also, we continue to see a robust pipeline of study, pre-FEED and FEED work to support future growth.
We are currently working on or have recently completed pre-EPC work that represents over $150 billion in total installed costs.
Additionally, we are pursuing another 200 study in FEED projects, representing almost $200 billion in TIC over the next several years.
So while we are seeing some near-term headwinds in 2021 with new word lumpiness, we have considerable opportunity to capture projects that are in the pipeline, and they're well suited for Fluor.
Finally, regarding our cost savings initiative, we are making solid progress and have identified significant opportunities to improve processes and reduce costs and create an organization that is competitive and fit for growth.
Our various work streams are taking specific actions to ensure that our resources are tailored to what we need today.
And we are establishing new protocols so we can efficiently scale as our markets ebb and flow.
For the second quarter of 2021, we are reporting a diluted adjusted earnings per share amount of $0.32.
Our diluted share count was $156 million for the quarter, up from $140 million in the first quarter.
This includes the additional shares from the convertible preferred offering we completed in May.
In the third quarter, we expect our diluted share count to be approximately $170 million, as the effects of the issuance will be for a full quarter.
For the quarter and the year-to-date, the offering is anti-dilutive under GAAP due to the net loss.
So common earnings per share and diluted earnings per share results are the same.
However, in terms of guidance and results, we will discuss EPS, including the aforementioned adjustments as well as using the larger diluted share count going forward for comparison purposes.
Our financial statements will continue to conform to GAAP, and we will provide the required reconciliation.
But we will use the larger dilutive share count for all periods as appropriate.
I will walk you through that a little more clearly when we talk about guidance.
Turning to slide 13.
Specific to our convertible preferred offering, we saw it as a necessary and positive step toward reinforcing financial discipline for the company.
This offering allowed us to make a significant change in our net debt profile and not have to wait for proceeds from outstanding transactions that do not have an established closing date.
With the expected debt retirement, our debt to total capitalization ratio will decline to below 40% by year-end, fulfilling the goal that we set on Strategy Day.
The positive feedback we've received from the credit rating agencies and the credit provider shows that they are supportive of our efforts to drive Fluor to its historical leverage profile.
This ensures we have the capital strength to maintain our position to bid and win the projects to support the growth within our stated strategy.
Since completing the offer, we have retired $26 million in debt, to date, and anticipate additional substantial retirements by the end of 2021.
Our overall segment profit for the quarter was $67 million or 2.1%, and included the $20 million charge for embedded derivatives in Energy Solutions and quarterly new scale expenses of $19 million.
Excluding these expenses and the effect of the embedded derivative, improves our total segment profit margin to 3.3%, in line with our guidance for the year.
Our ending cash balance was $2.7 billion, and includes the unutilized proceeds from the convertible offering and the completion of a P3 sale in North America.
Cash flow from operations was $77 million for the quarter, and we expect cash flow generation to be positive for the second half of this year.
Operating cash flow improved from the first quarter due to decreased funding for COVID costs on projects, lower cash requirements for G&A and tax payments as well as a decline in working capital.
We also completed the sale of AMECO North America in the second quarter and received cash proceeds of $71 million.
We have shifted our focus to the divestiture of AMECO South America and Stork and have confidence we will transact these divestitures prior to Q1 of 2022.
We continue to consider small M&A opportunities, as previously discussed.
But given current valuations in the market, we remain extremely selective.
Our G&A expense was $31 million compared to $66 million last quarter.
The decrease is due to the impact of stock price on our incentive compensation in the second quarter.
Before I provide details about our outlook for the balance of the year, I want to provide a bit of insight into our current portfolio.
At the end of the quarter, our backlog contained $1.2 billion in projects that are in a 0 margin or loss position.
Outside of the Gordie Howe project, we have just over $200 million in backlog remaining for projects in a loss position, virtually all of which will complete by the end of 2022.
All new awards since we tightened our bidding criteria, two years ago, remained profitable.
Furthermore, looking at this slate of more recently awarded projects, project gross margin in all three segments is about 40 basis points higher than as sold gross margin, which shows there more disciplined approach to bidding is resulting in more predictable and profitable results.
Our previous adjusted earnings per share guidance of $0.50 to $0.80 per share was based on a share count of 140 million shares and thus, implied net income of $71 million to $113 million for 2021.
Based on the performance we see in the businesses and considering the additional shares related to the convertible preferred offering, we are raising our adjusted earnings per share guidance to a range of $0.60 to $0.80, which correlates to an adjusted net income of $94 million to $128 million for the full year.
Hitting this target is dependent on many of the currently identified projects being awarded in a timely fashion and our ability to convert them into revenue in the next two quarters.
As David mentioned, some projects may be delayed by owners until there is more certainty regarding near-term concerns around cost growth for labor and materials.
We continue to monitor these headwinds through our supply chain group and we are making sure the team remains aligned with our bidding process.
Despite the anti-dilutive nature of the offering at this time, we will continue to report adjusted EPS, assuming a fully diluted share count for measurability and will provide reconciliations as necessary.
We are also adjusting our segment level guidance for the second half of the year and expect segment margins to be approximately 3% to 4% in Energy Solutions, which excludes any fluctuation from the embedded foreign currency derivative, 3% to 4% in Urban Solutions, and 2.5% to 3% in Mission Solutions.
These margins also underpin Q3 and Q4 performance to support the updated diluted and adjusted earnings per share range of $0.60 to $0.80.
On our Strategy Day in January, we provided long-term 2024 earnings per share guidance of $3 to $3.50.
This range was provided using our 2020 share count of 140 million shares.
Adjusting for a diluted share count of 170 million shares in 2024, we are updating our long-term earnings per share guidance to a range of $2.50 to $2.90.
To reinforce, we are not changing our income assumptions, just adding to the denominator.
Operator, we are now ready for our first question.
 Assistant:

Chosen response:
compname posts sees fy adjusted earnings per share $0.60 to $0.80.
sees fy adjusted earnings per share $0.60 to $0.80.
fy adjusted earnings per share guidance excludes nuscale-related expenses and other adjustments.
for second half of 2021, we see some headwinds and inconsistency in new awards.


Prompt:
Human: We appreciate you participating in our conference call today to discuss Flowserve's 2020 third quarter financial results.
These statements are based on forecasts, expectations and other information available to management as of November 6, 2020, and they involve risks and uncertainties, many of which are beyond the Company's control.
We are pleased with how Flowserve is responding to the dramatic and unprecedented change in 2020.
COVID-19 continues to impact our lives on a global scale, which is impacting Flowserve's end markets and changing the way we run our Company on a day-to-day basis.
Considering the current environment, I truly appreciate the dedication and commitment demonstrated by Flowserve's leaders and associates, and especially those in the frontline working at our manufacturing facilities and QRCs who continue to fully support our customers each and every day.
While we have had associates directly impacted by COVID, our strict adherence to the operating policies and procedures we implemented earlier in the year prevented any Flowserve to Flowserve transmission from occurring in our facilities during the quarter.
We are pleased with this outcome, and we remain committed to the safety of our associates.
Despite our best efforts in investment to ensure the health and safety of our employees and customers, COVID continues to cause sporadic disruptions within our facilities.
In the third quarter, our Indian and Mexican operations were the most challenged regions, where we have several large manufacturing facilities.
However, today, all of our locations are operational and providing support to our customers.
The recent rise in COVID-related cases in Europe and the United States is concerning.
We're doing everything possible to keep these facilities open and operational throughout the fourth quarter and beyond, and we believe our system and processes will continue to keep our associates safe and productive.
Before Amy covers our financials in detail, I would like to address our results at a high level.
Overall, we are pleased with our execution during the quarter.
Flowserve delivered adjusted earnings per share of $0.50, in line with our expectations.
These solid earnings also reflect the significant cost actions we have implemented this year.
In the quarter, adjusted SG&A decreased $30.8 million year-over-year to $193 million.
We continue to track ahead of our $100 million cost-out program for full-year 2020, compared to last year's cost structure.
As we communicated previously, these savings are about half from discretionary measures and half from structural actions we have taken.
In addition to the SG&A savings, we are working hard to reduce our product cost through supply chain savings and to maintain higher levels of productivity in our manufacturing locations.
Our Flowserve 2.0 Transformation program continued to deliver solid operational execution, limiting the decline in our adjusted operating margin to 60 basis points on a $71.4 million revenue decrease versus third quarter 2019, resulting in decremental margins of 19.5% in the quarter.
We are confident, as additional Flowserve 2.0 process improvement initiatives are implemented within the organization, we will capture more margin enhancement opportunities through further cost actions, manufacturing productivity and product cost reductions.
Let me now turn to our segment level performance in the third quarter.
FPD's bookings decreased 22.6%, while sales decreased 1.8% as we executed on its strong backlog.
The bookings decline was driven by original equipment down 37%, while aftermarket bookings were more resilient at a decline of 12%.
Oil and gas bookings were down 45% year-over-year, primarily due to a nearly $60 million decline in project awards.
FPD's adjusted margins were in line with expectations, including the 110 basis point improvement in adjusted operating margin to 14.1%.
Despite the modest revenue decline, adjusted operating income increased approximately 6.8% to $94.5 million, demonstrating solid operating performance, which more than offset the headwind of a 400 basis point mix shift toward original equipment.
Aggressive cost actions drove a $22 million decrease in adjusted SG&A and a 280 basis point decrease in adjusted SG&A as a percentage of sales to 18.7%.
FCD's bookings and sales were down 16% and 18.7%, respectively.
Oil and gas, power and general industries were both primary drivers or were the primary drivers, down 30%, 20% and 12%, respectively.
Additionally, within general industries, the North American distribution channel continues to be challenged as spending has been impacted by COVID and commodity price declines.
FCD's adjusted gross and operating margins were 30.3% and 12.2%, respectively.
While these are not the results we typically expect from the business, I am confident that our focus on execution, cost reduction, backlog conversion and inventory reduction will drive fourth quarter margins above their second and third quarter levels.
Turning now to bookings.
As expected, our third quarter bookings of $806 million was generally in line with second quarter levels and represented a 21% decline year-over-year.
As you may recall, last year's third quarter included strong oil and gas project activity in the Middle East and Asia Pacific, as well as the number of smaller projects awards, which together totaled roughly $140 million.
By contrast, the largest award we received in the 2020 third quarter was $12 million and when combined with our other small- to medium-sized project awards, the sum represented less than $60 million of project awards.
On a positive note, we didn't have any material cancellations in backlog in the quarter.
Third quarter aftermarket activity remained relatively stable with bookings up $424 million, down 32.5%, modestly better -- modestly below our expectations.
While customers continued to spend to meet safety and regulatory requirements, upgrade and productivity investment remained muted and larger-scale turnaround and maintenance activity continued to face COVID-related headwinds with limitations due to site access.
Original equipment bookings in the quarter were $381 million, down 28% versus prior year and up about 4% sequentially.
Large projects, which typically accounts for 10% to 15% of our business, remain the most challenged.
The majority of these projects have been delayed and are currently being reevaluated.
Our customers' project spending decisions will largely depend on the status of the COVID environment.
The bookings level over the last two quarters accurately represents the current market environment, and we expect bookings in the fourth quarter, and likely the first quarter of 2021, to be similar to this year's second and third quarter.
Given what we know today, I am increasingly optimistic that we'd begin return to bookings growth next year, as the world moves beyond the COVID crisis.
We should see it first in our aftermarket bookings ahead of an inflection in project bookings, but we expect both to be better in the back half of 2021.
On the aftermarket side, we feel there is pent-up demand building for parts and services and expect that growth in this area to incur earlier than the project business.
We are beginning to see signs of increased aftermarket spending in 2021 as operators are planning for maintenance and turnaround events.
Let me now address our served end markets.
Our oil and gas markets continue to be the most impacted due to the COVID-related declines in energy demand.
Third quarter bookings declined 42% year-over-year and were roughly flat sequentially.
Last year's third quarter presented a challenging compare figure due to the strong project environment at that time, which included several larger awards related to IMO 2020 upgrade activity.
2019 third quarter included over $90 million of project awards.
This quarter, our largest project award in oil and gas was just $12 million.
Third quarter chemical bookings were down 21.6% in the quarter, primarily driven by FPD's 31% decline, while FCD's bookings were down only 5%.
The quarter included one small award of $4 million in Asia Pacific.
Our integrated customers continued to delay petrochemical investment while specialty chemical demand presents growing opportunities.
While the power market continues to be challenged, it has not declined as much as oil and gas or the chemical markets.
Third quarter and year-to-date bookings are down just 7.5% and 9.2%, respectively.
The quarter includes a few small nuclear awards totaling $9 million and a $4 million fossil fuel award in Asia.
The general industries market, which includes a significant level of distribution and was our most challenging market in 2019, continued to show signs of recovery in the third quarter with bookings up 18.6% and up 5.9% year-to-date.
FPD's 31% increase was partially offset by FCD's 11.5% decline, driven by the continued MRO slowdown in North America.
FPD's growth was driven by distribution in food and beverage growth.
Finally, representing our smallest market, water bookings decreased $41 million or 66%.
Last year's third quarter was particularly strong, including over $20 million in awards for a large Middle East desalination project.
While the 2020 third quarter included only one project award of $6 million in North America, we continue to expect investment opportunities from desalination, flood control and municipal water markets.
Regionally, our largest dollar decline was in North America, which has seen a significant impact from COVID as well as the related downturn in energy demand.
Only Latin America has delivered constant-currency bookings growth in 2020, up 6% and 9% in the third quarter and year-to-date, respectively.
We incurred double-digit year-over-year bookings declines in all other regions.
We're seeing the most potential in the Asian markets, as mobility has returned to near-normal levels, demand for processing-based product has recovered and infrastructure spending continues.
With limited and highly competitive project opportunities, we continue to focus on improving our position for winning available work, driving our cost structure lower to offset pricing pressure and maintaining a quality backlog to increase our installed base and create aftermarket opportunities.
We believe our markets have stabilized and expect fourth quarter bookings to be in line with what we saw in the second and third quarters of this year.
Looking at Flowserve's third quarter financial results in greater detail, our reported earnings per share of $0.39 included realignment and transformation expenses, as well as below the line FX charges totaling $0.11.
Adjusted earnings per share of $0.50 was solid, considering we continued to experience ongoing COVID-related headwinds.
Third quarter revenues of $924 million were flat sequentially and down 7.2% versus the prior year.
FPD's revenue declined 1.8% on reduced aftermarket activity, which more than offset strong original equipment sales growth of 10% through backlog execution.
Consolidated OE revenues of $479 million were down 5.6%, where FCD's 21% year-over-year decrease more than offset FPD strength.
Aftermarket revenue of $445 million was down 8.8%, with both segments down in that general range.
In addition to limitations accessing our customer sites, many of the planned refinery and chemical plant turnarounds that were expected for this fall were further delayed and the active Gulf Coast hurricane season also caused temporary closures and disruptions at several of our QRCs, as well as our customers' facilities.
Third quarter adjusted gross margin decreased 230 basis points to 31.5%, including declines of 180 basis points and 240 basis points at FPD and FCD, respectively.
In addition to the previously mentioned cost increases related to COVID and the associated disruption with our sites, margins were also negatively impacted by a 100 basis point mix shift toward original equipment revenues as a percentage of our total sales, driven by FPD's 400 basis point mix shift.
On a reported basis, Flowserve's third quarter gross margins decreased 250 basis points to 30.9%, again due to COVID disruptions and mix headwinds, and a $2 million increase in realignment expenses versus last year's third quarter.
Third quarter adjusted SG&A decreased $30.8 million or 13.8%, demonstrating our cost control and the aggressive cost actions we took in the first half of the year.
These measures brought our $193 million of adjusted SG&A down 160 basis points as a percentage of sales to 20.9% versus prior year, which was flat sequentially.
On a reported basis, SG&A as a percentage of sales decreased 140 basis points, primarily due to the cost actions we implemented considering our adjusted items were relatively flat with prior year.
Third quarter adjusted operating margin decreased 60 basis points versus last year's 10.9%.
With third quarter adjusted operating income of $100.6 million and a $71.4 million year-over-year revenue decline, it represents an adjusted decremental margin of approximately 19.5%.
FPD's solid operating performance delivered adjusted operating income growth at the segment level, even as its revenues declined modestly.
As a result, FPD drove 110 basis points increase in its adjusted operating margin to 14.1%.
FCD's adjusted operating margin of 12.2% was below our expectations, driven by a higher mix of lower margin project work.
With clear visibility and line of sight, we fully expect FCD's margins to return to around the mid-teen levels in the fourth quarter.
Reported third quarter operating margin decreased 110 basis points to 9.4%, driven primarily by a loss of leverage on lower revenues and included the benefit of modestly lower adjusted items.
Turning to cash flow and liquidity.
As many of you know, Flowserve's results are traditionally seasonal and most of our full-year cash flow is delivered in the second half of the year, especially in the fourth quarter.
While our cash flow statement will be published in a few days with our 10-Q, I can say we feel good -- we feel very good about our cash generation during the quarter.
Based on our operating cash flow of $70 million to $75 million and quarterly capex spending, free cash flow for the quarter will be about $57 million.
This performance as well as the $300 million of net proceeds after our note issuance and tender offer, brought Flowserve's cash and cash equivalents balance at September 30 to over $921 million.
Even absent the net proceeds of the bond issuance, Flowserve increased its cash position $59 million in the quarter.
In future periods, we intend to use some of this excess cash to retire outstanding debt, considering we have maturities in 2022 and 2023.
However, primary working capital as a percent of sales grew to 30%, as inventory, including contract assets and liabilities, increased roughly $100 million versus the prior year.
This increase in inventory primarily relates to the strong OE project backlog we built as well as an increase in shipping and manufacturing delays due to COVID-related disruptions in a few of our larger facilities.
As a result, COVID had a greater negative impact on working capital than our revenues might reflect.
Over the last few years, Flowserve has delivered meaningful improvement in the working capital to sales metrics through our transformation initiatives.
And despite this quarter's blip, we are confident we are on the right track and that our performance in the fourth quarter will be much improved.
In particular, we are actively managing and taking discrete measures to reduce the inventory levels to reflect current demand, and we also have solid visibility to upcoming shipments.
It is critical for us to stringently manage inventory more intensely during challenging points in the cycle [Indecipherable] high growth.
And our teams are incentivized accordingly.
Accounts receivable has demonstrated somewhat better consistencies in inventory.
DSO was 73 days in the quarter versus 74 in each of the first two quarters of 2020, although we still see opportunities for improvement.
Despite some COVID-driven slow pay impacted this year, we have made significant improvement in the last three years when DSO was 87 days in the third quarter of 2017, and we expect our transformation initiatives will enable us to reach our target of below 70 days, which given the competitive environment for payment terms in certain of our end markets would represent strong performance.
In addition to the $500 million note issuance and tender offer during the third quarter, we also amended our $800 million senior credit facility to provide Flowserve increased flexibility and ample access to this source of liquidity.
We value these relationships and look forward to our ongoing work together.
In total, our quarter-end liquidity position increased roughly $370 million sequentially to $1.7 billion, which includes our cash balance as well as nearly $750 million of available capacity under our amended credit facility which remains undrawn.
With the continued progress on our $100 million cost reduction program, combined with the anticipated working capital improvements, disciplined capital spending, and discretionary cost management, we expect to deliver significant cash from operations in the seasonally strong fourth quarter.
Our expected major cash usages in 2020 remain consistent with our prior guidance, including funding our structural cost-out actions and the realignment and transformation programs.
We continue to expect full-year capital expenditures in the $60 million range and annual dividends of roughly $100 million.
First, the revision is not the result of a view of increased risk related to asbestos litigation or any change to our expectations for future cash flow.
As part of our third quarter post-procedures, we became aware that our accounting for potential future exposure to asbestos liabilities related to certain heritage brands deviated from others with similar liabilities.
Specifically, as previously disclosed, we were reporting liabilities only for those claims that were known versus using an actuary to forecast claims that were possibly incurred but not reported to the company.
As a result, we increased our liability by $74 million to $101 million in total.
This liability is partially offset by $87 million of insurance coverage booked as a receivable.
Cash from insurance proceeds is received as agreements are reached with carriers.
Our revised financial statements in the filings reflect this incurred but not reported liability on the balance sheet, as well as the correction of other immaterial timing items.
As I said earlier, we are pleased with our performance in this unprecedented year.
We are managing through the COVID pandemic, and our operational efforts with Flowserve 2.0 are positively impacting our downturn performance.
The Flowserve 2.0 work is not done and we continue to remain committed to our transformational program.
We have reprioritized certain work streams due to the pandemic-driven downturn, and we continued to make steady progress on further cost reduction plans and preparing for a return to growth.
In fact, the speed with which we reduced our cost structure by $100 million versus 2019 was possible because of our success over the last few years, creating a more flexible Flowserve 2.0 operating model.
Most of the structural cost initiatives we implemented mid-year were comprised of measures previously planned as part of the Flowserve 2.0 program that we accelerated.
In addition to managing COVID and executing our downturn playbook, we are making progress on our long-term strategy and our growth initiatives.
Over the last 18 months, we've put a lot of effort in analyzing our end markets and evaluating our overall product portfolio.
Our product teams have made significant progress in our efforts to have a differentiated offering in attractive markets that have growth potential for years to come.
This year, we have launched five new products, introduced 10 product upgrades and put six existing products through the design-to-value process.
In the third quarter alone, we launched all of the new products and expect several more before the end of the year.
Included in the new product introductions is the SIHI-branded, two-stage, liquid ring compressor designed for a variety of gases and vapors.
Our proven technology enables this product to operate under the most severe conditions, where safety, reliability and special processes are critical.
This compressor will be part of the FPD segment.
We also added new capabilities within the FCD segment.
During the third quarter, we launched a Valtek Compressor Anti-Surge Valve, which is a revolutionary solution to anti-surge control in LNG processing, refinery gas compression, natural gas stations and chemical plants using natural gas as a feedstock.
This product will provide operators with an innovative anti-surge design that combines precise control and fast responsiveness.
Additionally, we expanded our Limitorque actuator line with the new MX Series B smart electric actuator.
This IoT-enabled flow control solution provides trouble-free commissioning, improved process control from advanced diagnostic capabilities and reliable operation in multiple industries and applications.
Flowserve has historically been an innovative leader in the flow control industry.
With increased confidence in our new product development process, we will continue to increase our investment in products and technology.
While we very much believe that oil and gas is a long-term future in the energy mix, we do recognize the advances in alternative energy technologies.
Today, oil and gas represents about 60% of the global energy mix.
With significant investment in renewables through 2040, most still expect oil and gas to provide more than 50% of the global energy mix.
Nevertheless, we are excited about the increasing investment toward energy transition, reduced emissions and safer living conditions.
And virtually every major industrial process involving liquids or gases, pumps, valves, seals and services are vital to that infrastructure.
Our products and services are currently using applications throughout the world to address key environmental issues, such as flare gas recovery, which reduces methane emissions and increases process energy efficiency; hydrogen production in the downstream sector; carbon capture and storage to reduce industrial carbon intensity; process maintenance and services to maximize service life, improve efficiency and employ local workers; concentrated solar and hydro power; seawater desalination plants for cost effective access to fresh water; and flood control to protect coast lines and cities from rising seas.
And as technology advances and considering Flowserve's innovative leadership in the flow control industry, we fully expect to participate in helping make the world a better place for everyone.
I would now like to spend a minute on our environmental, social and government efforts or ESG.
Flowserve continues to improve as a corporation, and we take our ESG program very seriously.
Our commitment to ESG began almost a decade ago when we released our first sustainability report.
The vision for our program starts at the top of our organization with our Board of Directors and senior management.
We have worked together to evolve and develop a comprehensive ESG program focused on three pillars, planet, people and operational excellence.
While we believe our proactive approach to governance has been and continues to be aligned with our shareholders' best interest, as evidenced by our implementation of best practices like de-classifying our Board of Directors, improving gender and racial diversity, enacting proxy access and most recently, implementing the ability for our shareholders to act by less than unanimous written consent.
Today, I'd like to focus more specifically on our environmental initiatives within our ESG program.
Earlier this week, we published our 2020 sustainability report in which we discussed our commitment to becoming continuously improving organization.
We also specifically announced a new target for reducing global CO2 emissions intensity by 40% by 2030 using 2015 as a baseline.
In addition to setting an ambitious target to reduce our own emissions, we intend to utilize both our existing portfolio as well as developing new products that will help our customers reduce their CO2 emissions and also further participating cleaner sources of energy like hydrogen, solar and hydro electric.
Let me close with our fourth quarter outlook.
We expect fourth quarter bookings to be in line with the second and third quarter levels, while anticipating an upward bookings inflection to occur in mid-to-late 2021.
We expect to make significant progress converting our $2 billion backlog in the fourth quarter and deliver our largest revenue quarter of this year.
As we have the last two quarters, we plan to deliver strong operating margin decrementals as we effectively manage our cost structure.
Fourth quarter decrementals should be around the 20% level.
Finally, we are forecasting to finish the last quarter of the year with free cash flow generation of at least $100 million, as we reduce primary working capital from the third quarter levels.
Flowserve's results are traditionally very seasonal during the year with the best performance for revenues, adjusted earnings and cash flow occurring in the fourth quarter of the year.
We expect the 2020 fourth quarter to largely reflect that trend, absent of any COVID-related issues.
I remain confident that our transformation progress will continue to position Flowserve to execute through cycles at a higher level than previous downturns and capture growth with market recovery, driving long-term value for our associates, customers and our shareholders.
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Chosen response:
compname reports third quarter earnings per share $0.39.
q3 adjusted earnings per share $0.50.
q3 earnings per share $0.39.
can expect a return to growth in 2021.
expect a return to growth in 2021 as world recovers from covid pandemic.
expect 2020 q4 to largely follow usual trend.