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q1 revenue rose 11.1 percent to $481.1 million. q1 non-gaap earnings per share $1.24. sees fy revenue $1.725 billion to $1.775 billion.

For those of you that have not, it is available on the Investor Relations section of our website at investor. Non-GAAP net earnings and non-GAAP EPS, which have been adjusted for certain items which may affect the comparability of our performance with other companies. I'm very pleased with the strong start to 2021 and the positive momentum in revenue and margins we delivered in the first quarter, demonstrating the strong operating leverage in our business. Consolidated revenues increased 11.1% year-over-year in our first full quarter as a stand-alone public company. The revenue increase included same-store revenue growth of 14.8% and we reported adjusted EBITDA margin that improved to 15.4% of revenues. This is the first quarter in over a decade that the Company has delivered double-digit same-store revenue growth. Our teams in the field and our store support centers and Woodhaven are performing at a very high level and are energized and engaged. As I visit Aaron's stores around the country to support our operations team, I'm seeing a strong sense of pride and optimism about our brand and our competitive position. Our team members and customers are embracing the innovation that we are delivering and the dynamic lease-to-own market. Over the last five years, we've significantly transformed the company for the goal of continuing to provide an exceptional customer and team member experience while also driving greater efficiencies in our operating model. I'm proud to say that as of today we have a centralized decisioning platform that provides greater control and predictability resulting in a higher quality lease portfolio. We have enhanced digital payment platforms that are enabling over 75% of monthly customer payments to be made outside of our stores. We have an industry-leading, fully transactional e-commerce platform that is attracting a new and younger customer, and we have a portfolio of 51 GenNext stores that is currently outperforming our expectations with many more store openings in the pipeline. All of these initiatives are underpinned by the investments that we have made in enhanced analytics and when combined with our more efficient operations are enabling us to deliver strong revenue and earnings growth. These transformations to our business model are contributing to our outstanding performance in the first quarter of 2021. We are encouraged by the continuing improvement and the quality and size of our same-store lease portfolio, which ended the quarter up 6.2% compared to the end of the first quarter of 2020. This improvement was primarily driven by strong demand for our products, few release merchandise returns, and lower inventory write-offs. In addition, our customer continues to benefit from the ongoing government stimulus, one of the most meaningful contributors to our strong portfolio performance was centralized decisioning, which we implemented across all Company-operated stores in the U.S., in the spring of 2020. Today, nearly 70% of our portfolio is made up of lease agreements that were originated using this technology. Centralized decisioning delivers consistency and predictability in the performance of our lease portfolio. It enables store managers the flexibility to focus their time on growth-oriented activities such as sales and lease servicing. We believe our algorithms provide better outcomes for both the customer and Aaron's with the goal of having a greater number of customers achieve ownership while at the same time reducing our cost to serve. We continue to refine this decisioning across our various channels, and we expect this will continue to drive greater productivity from our lease portfolio. Another contributor to our strong performance in the quarter was our e-commerce channel, which represented more than 14% of lease revenues. Our e-commerce team has really delivered, driving traffic growth to aarons.com by 12.8% and increasing revenues by 42% in the first quarter as compared to the prior-year quarter. E-commerce lease originations increased as compared to the year-ago quarter despite the significant shift of customer activity through our online platform in March of 2020 as stores closed during the early days of the COVID-19 pandemic. In addition, e-commerce write-offs improved by more than 50% compared to last year's quarter, primarily as a result of ongoing decisioning optimization, operational enhancements, and strong customer payment activity. Our e-commerce team continues to deliver ongoing improvements through our online customer acquisition, conversion, and servicing capabilities, which is leading to margin growth and continued positive momentum in this important channel. Our e-commerce growth in the quarter is enabled by our stores, which are not just showrooms and service centers but are also last-mile logistics hubs delivering an expanded assortment of products with same or next day delivery. Finally, our Real estate repositioning and reinvestment strategy is gaining momentum and we expect it will drive future growth. Our new GenNext stores have larger and more modern showrooms, expanded product assortment, and improved brand imaging and digital technologies. To date, we have opened 51 new GenNext stores and have generated results that are meeting or exceeding our targeted internal rate of return equally as encouraging, monthly lease originations in the first quarter. Our plan for 2021 is to plan to open in the second and third quarters. While we're excited about both the early financial results and the infrastructure we're building to accelerate our progress, we continue to maintain a disciplined approach around our execution of this strategy. We remain focused on our key strategic initiatives of simplifying and digitizing the customer experience, aligning our store footprint to our customer opportunity and promoting the Aaron's value proposition of low payments high approval rates and best-in-class service. For the first quarter of 2021, revenues were $481.1 million compared to $432.8 million for the first quarter of 2020, an increase of 11.1%. The increase in revenues was primarily due to the improving quality and increased size of our lease portfolio and strong customer payment activity during the quarter, aided in part by government stimulus and partially offset by the net reduction of 166 Company-operated and franchised stores compared to the prior year. As Douglas called out earlier, e-commerce revenues were up 42% compared to the first quarter of the prior year and represented 14.2% of overall lease revenues compared to 11.3% in 2020. On a same-store revenue basis, revenues increased 14.8% in the first quarter compared to the prior-year quarter, the first double-digit, same-store revenue growth since 2009, and our fourth consecutive positive quarter. Same-store revenue growth was primarily driven by a larger same-store lease portfolio and strong customer payment activity, including retail sales and early purchase option exercises. We believe this growth is partially a result of the government stimulus programs passed in 2020 and 2021. Additionally, the company ended the first quarter of 2021 with a lease portfolio size for all company operated stores of $128.8 million, an increase of 3.6% compared to the lease portfolio size as of March 31, 2020. Lease portfolio size represents the next month's total collectible lease payments from our aggregate outstanding customer lease agreements. Operating expenses excluding restructuring expenses, spin-related transaction costs and the impairment of goodwill and other expenses, which were both recorded in the first quarter of 2020 were down $1.5 million as compared to the first quarter of last year. This decrease was primarily due to a reduction in write-offs, store closures and the impact of the COVID-related reserves recorded in 2020, partially offset by higher personnel costs related to variable performance compensation, higher marketing expenses and an increase in bank and credit card related fees. Adjusted EBITDA was $73.9 million for the first quarter of 2021 compared with $34.7 million for the same period in 2020, an increase of $39.2 million or 112.9%. As a percentage of total revenues, adjusted EBITDA was 15.4% in the first quarter of 2021 compared with 8% for the same period last year, an improvement of 740 basis points. The improvement in adjusted EBITDA margin was primarily due to the items that drove the total revenues increase and a 310 basis point reduction in overall write-offs to 3.1% of lease revenues, including both improvement in the e-commerce and store origination channels compared to the prior year. The improvement in write-offs was due primarily to the implementation of new decisioning technology, improved operations, the benefit of government stimulus and the impact of COVID-related lease merchandise reserves recorded in the first quarter of 2020 and not repeated in 2021. On a non-GAAP basis, diluted earnings per share were $1.24 in the first quarter of 2021 compared to non-GAAP diluted earnings per share of $0.30 for the same quarter in 2020, an increase of $0.94 or 313.3%. Cash generated from operating activities was $20.2 million for the first quarter of 2021, a decline of $36.6 million compared to the first quarter of 2020, primarily due to higher inventory purchases, partially offset by higher customer payments and other changes in working capital. During the quarter, the company purchased 252,200 shares of Aaron's common stock for a total purchase price of approximately $6.3 million. As of the end of the quarter, we had approximately $143.7 million remaining under the company's share repurchase authorization that was approved by our Board on March 3rd of this year. The Company's Board of Directors also declared our first quarterly cash dividend of $0.10 per share last month and we paid the dividend on April 6. As of March 31, 2021 the company had a cash balance of $61.1 million, less than $500,000 of debt and total available liquidity of $295.5 million. Turning to our outlook, based on our performance in the first quarter of 2021 and the passage of the American Rescue Plan Act in March, we have revised our full-year 2021 outlook. For the full year, we expect consolidated revenues of between $1.725 billion and $1.775 billion representing an increase in our revenue outlook of $75 million. We also expect adjusted EBITDA of between $190 and $205 million, representing an increase in our adjusted EBITDA outlook of $35 million. For the full year 2021, our outlook for the effective tax rate, depreciation and amortization and diluted weighted average share count are unchanged. We have also increased our full-year same-store revenue outlook from a range of 0% to 2% to a range of 4% to 6%. Similar to our original outlook, total revenue and adjusted EBITDA in the first half of 2021 are expected to be higher in the second half of 2021. This outlook assumes no impact from the expansion and acceleration of the child tax credit payments expected to begin in July 2021. Additionally, our updated outlook assumes no significant deterioration in the current retail environment or in the state of the U.S. economy, as compared to its current condition and a continued improvement in global supply chain conditions.

q1 adjusted earnings per share $3.34. q1 sales $3.3 billion versus refinitiv ibes estimate of $3.28 billion. q1 same store sales rose 24.7 percent.

I'm joined by Tom Greco, our President and Chief Executive Officer; and Jeff Shepherd, our Executive Vice President and Chief Financial Officer. We also hope that you and your families are healthy and safe. The health and safety of our team members and customers has been a top priority over the past year. With strength across all channels, we delivered comparable store sales growth of 24.7%, and margin expansion of 478 basis points versus the prior year. On a two-year stack, our comp sales growth was 15.4%. Adjusted diluted earnings per share of $3.34 represented an all-time quarterly high for AAP, and improved more than 230% compared to Q1 2020. Free cash flow of $259 million was up significantly versus the prior year, and we returned over $203 million to our shareholders through a combination of share repurchases and our quarterly cash dividend. In addition, we recently announced an updated capital allocation framework targeting top quartile total shareholder return, highlighted by operating income growth, share repurchases and an increase in our dividend. This further reinforces our confidence in future cash generation and our commitment to returning excess cash to shareholders. As outlined in April, we are building an ownership culture, as well as a differentiated operating model at Advance. Over the past few years, we've made substantial investments in our brands, our digital and physical assets, and our team. These investments, along with external factors, enabled us to post a strong start to 2021. Clearly, the federal stimulus package, along with our first real winter weather in three years, was a benefit to our industry. From a category perspective, net sales growth was led by batteries, appearance chemicals and wipers. Geographically, all eight regions posted over 20% growth. Importantly, over the past year, the Northeast, our largest region, had been below our overall reported growth rate and well below that of our top-performing regions. In Q1, the gap narrowed, and in recent weeks, the Northeast has been leading our growth. This was in line with our expectations as mobility is increasing in large urban markets in the Northeast, which were disproportionately impacted by COVID-19 last year. Both DIY omnichannel and Professional performed well, delivering double-digit comp sales growth in the quarter. We saw strong increases versus year ago with a double-digit increase in transactions and high single-digit increases in dollars per transaction in both channels. In terms of cadence, DIY led the way early in Q1. As the country began to reopen later in the quarter, Professional came on strong, resulting in Pro growth of over 20% in Q1, with continued momentum into Q2. The changes in channel performance highlights the importance of flexibility in our operating model, as we adapt to rapid shifts in consumer behavior relative to 2020. Throughout AAP, our merchant, supply chain and store operations teams have been extremely agile in adjusting to this evolving environment to ensure we take care of our customers. Within the Pro sales channel, our overarching focus remains to get the right part in the right place at the right time. This enables us to compete on availability, customer service and speed of fulfillment, which are the primary drivers of choice for Pro-verizers [Phonetic]. To achieve these goals, we continued to strengthen our value proposition through improved availability as well as our Advance Pro catalog featuring tools like MotoLogic and Delivery Estimates [Phonetic]. As vaccinations rollout across the country, mobility is increasing across all income strata. As discussed in April, this is very good for AAP, as our diverse set of assets within Pro is uniquely positioned to capitalize on this trend. Specifically, WORLDPAC led our Professional growth in the quarter. With the customer base that serves higher end installers and more premium vehicles, WORLDPAC gained momentum throughout Q1. This is because, middle to high income motorists are becoming increasingly mobile, and in some cases, they are now returning to a daily commute. Saying it simply, they're driving more than they did a year ago. Secondly, we're seeing benefits from the own brand product offering expansion with the integration of Autopart International. Further, we believe our independent Carquest stores are also well positioned. They're leveraging our enterprise assortment and have excellent relationships with customers. These relationships have been strengthened over the past year, given the support we provided to both independents and our Pro customers during a difficult time. We continue to grow our independent store base through a combination of greenfield locations and the conversion of existing independent location. Today, we're extremely excited to announce that we're adding 29 new independent locations to the Pacific Northwest to the Carquest family, the single largest convergence in our history. Baxter Auto Parts announced that they will bring over 80 years of automotive aftermarket experience and strong customer relationships to the Carquest banner. This is a testament to the strength of the Carquest Independent program, including product availability, differentiated brands, technology platforms and robust marketing plan. We also grew our TechNet program across all Pro channels. TechNet enables independent service shops to create their own national network. We now have over 13,000 North American members, and we'll continue to leverage TechNet to differentiate our Pro offering and build loyalty. In summary, we expect that as our Pro installers recover, our industry-leading assortment, customized Pro solutions, and dedicated Pro banners will enable us to drive market share gain in the growing segment throughout the balance of the year. Meanwhile, our DIY omnichannel business led our growth for the fourth consecutive quarter. Stepping back and as a reminder, there was a significant increase in DIY penetration across the industry beginning in Q2 2020. According to syndicated data, an estimated 4 million new DIY buyers were added. Spend per buyer for 2020 grew close to 9%, led by online spend per buyer. DIY growth was led by project, recreation and more discretionary categories as people worked on their vehicles or even learned how to work on their vehicles. These trends generally continued through Q1, and the industry is now beginning to lap the significant increase from prior year in Q2. From an Advance standpoint, we grew share of wallet and overall market share in Q1, led by DieHard batteries. DieHard continues to have strong momentum and our advertising is clearly resonating with customers. We plan to continue to invest behind this powerful brand in 2021 to further build awareness and association with Advance. Our loyalty program remains focused on attracting, retaining and graduating Speed Perks members. Our loyalty program enables us to provide personalized offers and increase share of wallet as we leverage our customer data platform. In Q1, this helped drive growth in our VIP members by approximately 14% and our Elite members by 30%. Consistent with broader retail, during Q1, we began to see a shift back to store sales from e-commerce, given the outsized growth of the online business during the onset of the pandemic in 2020. Our investments in digital and e-commerce have been another differentiator for our DIY business. We continue to strengthen our online experience on desktop, mobile and with our app, which recently crossed nearly 1.3 million downloads. The integration of our digital and physical assets is communicated through our Advance Same Day suite of services. This enables DIYers to find the right part from our industry-leading assortment, order it online, and either pick it up in one of our stores within 30 minutes or have it delivered in three hours or less. Finally, we're very excited about our footprint expansion and new store opening plans for the year. We're targeting between 100 to 115 new stores in 2021. This includes the Pep Boys leases we're executing in California. The opening of the California locations will ramp up during the back half of the year and finish in 2022. Now, I'd like to transition to the unique opportunity we have to significantly expand our margins. As we outlined in our strategic update, there are four broad initiatives: leveraging category management, streamlining our supply chain, improving sales and profit per store, and reducing corporate SG&A. Our largest merchant expansion initiative is leveraging category management to drive gross margin improvement. This involves three components: material cost optimization, own brand expansion, and strategic pricing. Material cost optimization and strategic sourcing has been an ongoing effort for us and will continue to be a focus. Given the current inflationary environment, we are leveraging these capabilities to push back on cost increases, to keep our price to the customer low. We'll continue to work collaboratively with our supplier partners on managing input costs. Own brand expansion as a percent of our mix is an important contributor to margin rate improvement. However, growing our DieHard and Carquest brand is not just about margin, it's also about differentiation. Our merchant team is building our capabilities and sourcing to develop high quality products, leveraging our strong supplier relationships. Two recent examples include our DieHard robust enhanced flooded battery and our Carquest Hub Assembly. Once equipped with a differentiated product, our marketing team is building the awareness and the reputation of our own brand as evidenced by our DieHardisBack advertising campaign. Finally, we supplement innovative quality parts and breakthrough marketing with an improved [Technical Issues] and extensive team member training. This includes enhanced part, product and brand training to ensure our store team members are well positioned to provide our customers with trusted advice and an excellent in-store experience. So, we're not only on track with margin expansion behind own brands, we're also leveraging these brands to enhance differentiation and improve store traffic. Our extensive research around customer journey highlights the role that brands play in customer purchase decisions. When a customers car won't start, we want them to think of DieHard first, such as this becomes a reason that they come to Advance. This is why collaborating with our supplier partners is so important to ensure high quality for our own brands. We are confident as we continue to invest in product quality, building our brands, and training our team members to drive own brands as a percent of mix, we will further deliver growth across AAP. The final component of our category management initiatives is strategic pricing. By investing in new tools, we're now able to competitively price on a market-by-market basis using detailed analytics to improve rate. We're also realizing success in reducing discounts online through a rapid test and learn approach, which is driving significant margin expansion in key categories. In total, our category management initiatives are currently on track to deliver up to 200 basis points of margin expansion through 2023. As we look beyond 2023, we plan to continue building out customer data and personalization platforms to further enhance the customer experience and expand margins. Same with gross margin, we once again leveraged supply chain in Q1 versus both 2020 and 2019. Despite the current environment, we remain focused on executing our primary margin expansion initiatives while working to mitigate the impact of global supply chain challenges. We expect to complete our warehouse management system implementation in 2022 with the majority of our largest buildings converted this year. In conjunction with WMS, we're also rolling out our labor management system, which allows us to implement common standard operating procedures across our DC network. This will also enable us to incentivize hourly team members based on their performance. In terms of cross-banner replenishment, or CBR, we've converted over 70% of stores to date and expect to complete the remaining stores we originally planned by the end of Q3. CBR significantly reduces our miles driven, which is even more important today given rising fuel and labor costs. More importantly, CBR will complete the integration of the Advance and Carquest supply chains and enables us to service our approximately 4,800 corporate Advance stores and 1,300 independent Carquest stores from a single supply chain. We also continue to integrate the dedicated professional supply chain within WORLDPAC and Autopart International. In the quarter, we converted another five AI stores to the WORLDPAC system and are on track to complete this integration by the end of Q1 2022. In April, we discussed two additional supply chain initiatives building on what will soon be a more streamlined supply chain network. This includes tiering our supply chain and transforming in-market delivery and customer fulfillment. Our tiered supply chain pools the slowest moving SKUs into four strategically located regional DCs. This will allow us to make room for faster moving SKUs and ultimately improve the availability of our higher turnover products. Our second new initiative is transforming in-market delivery and customer fulfillment to improve service and productivity. The new delivery management system was selected for multiple modes of transportation to move and deliver parts at lower costs. Both of these initiatives are in their early stages, and we are targeting completion of these in 2023 and 2024, respectively. In terms of SG&A improvements, our store operations team is executing initiatives to increase sales and profit per store. We've now increased sales per store for three straight years, and we're on track to get to our target of $1.8 million average sales per store by 2023. In Q1, with strong top-line growth and disciplined execution, we leveraged store payroll versus both 2019 and 2020. We've also made improvements in scheduling and task management to drive efficiency, which helps with our customer experience as it enables us to schedule our most tenured and knowledgeable team members when we need them most. We continued to invest in our store team members in terms of training, technology and in compensation, including our unique Fuel the Frontline stock ownership program. We believe these investments have enabled us to attract the very best parts people in the business and are enabling continued improvement in primary execution metrics like net promoter score, units per transaction and ultimately sales and profit per store. Finally, we took steps to reduce corporate and other SG&A costs in the quarter. This includes three broad territories: integration, safety, and new ways of working. In terms of integration, our finance ERP is near completion and we continue to build proficiency in our global capability center at Hyderabad, India. I'd like to take this opportunity to recognize our India team, who stood up an entirely new operation literally in the middle of a global pandemic last year. We've been working hard to support them as COVID-19 infection rates have risen in India over the past few weeks. The GCC team including IT, Finance and HR team members today has certainly enabled us to reduce costs, both in terms of capex and OpEx. In addition, the IT team brings new skills in the area of software engineering, data analytics and artificial intelligence. These critical capabilities will help enable the successful implementation of our many tech initiatives. Secondly, our safety performance continues as field leaders across Advance hold their teams accountable as we build a safety culture. We delivered a 9% reduction in our total recordable injury rate compared to the previous year, and reduced our lost-time injury rate 2%. By focusing on people, behavior and continuous improvement, we're reducing claims and overall cost. Third, we recently completed a thorough review on the ways we work in our corporate offices and incorporated key learnings from working remotely for over a year. The objective was to ensure our corporate team is focused on our highest value priorities, while eliminating less productive work. From this work, we announced a restructure of our corporate functions and the reduction of our corporate office footprint. This will result in savings of approximately $30 million in SG&A, which will be realized over the next 12 months. We also believe the streamline approach will be more effective to supporting our field and supply chain teams. While we're pleased with our Q1 performance, we're confident that there is so much more opportunity ahead. To fully realize our potential, we plan to continue to invest in our brands, the customer experience, our team members and market expansion to drive top-line growth above market. Our entire team also remains focused on the execution of our margin expansion initiatives. We're energized and focused on building on the momentum we saw in Q1 to execute our long-term strategy in the months to come. Now, let me pass it over to Jeff, who will go into more details on our financial results. In Q1, our net sales increased 23.4% to $3.3 billion. Adjusted gross profit margin expanded 91 basis points to 44.8% as a result of improvement throughout gross margin, including supply chain, net pricing, channel mix and material cost optimization. These improvements were slightly offset by unfavorable inventory-related costs, product mix and headwinds associated with shrink and defectives. Our Q1 adjusted SG&A expense was $1.2 billion. On a rate basis, this represented 35.8% of net sales, which improved 387 basis points compared to one year ago. The improvement was driven by sales leverage in both payroll and rent, as well as lower claim-related expenses from the Company's emphasis on safety. We discussed our labor management system previously, but we really saw the benefit this quarter as we staffed our store based on customer needs, utilizing nights, weekends and an improved mix of full and part-time schedules. In addition, our ongoing focus on team member safety will always remain one of our highest priorities. The savings were partially offset by an increase in field bonus costs related to our improved performance. In addition, as Tom outlined earlier, we invested in marketing during Q1, primarily associated with DieHard. This lap marketing cuts the previous year, which were made at the onset of the pandemic. We also saw an increase in third party and service contracts related to our transformational plans, primarily within IT. Related to the increased COVID-19 cases we saw late in 2020 and early 2021, we incurred approximately $16 million in COVID-19 cost during the quarter, which is flat to the prior year. While the future impact of COVID-19 remains unknown, we expect these costs to subside throughout the year, assuming infection rates continue to decline. Our adjusted operating income increased from $113 million last year to $299 million. On a rate basis, our adjusted OI margin expanded by 478 basis points to 9%. Finally, our adjusted diluted earnings per share was $3.34, up from $1.00 a year ago. Our free cash flow for the quarter was $259 million, an increase of $330 million compared to last year. The improvement was primarily driven by year-over-year operating income growth, as well as improvements we achieved from working capital initiatives, including higher utilization of our supply chain financing facilities that we began to see during the pandemic last year. Our AP ratio improved by nearly 1,000 basis points to 84%, the highest we've achieved since the GPI acquisition. A portion of the improvement is attributable to the actions we took during the pandemic, and the continued partnerships we have with our suppliers. In the quarter, we spent $71 million in capital expenditures versus $83 million in the prior year quarter. We expect to be within our guidance for capital expenditures, as we continue to invest in our transformation initiatives. During Q1, we returned more than $200 million to our shareholders through the repurchase of 1.1 million shares and our quarterly cash dividend. We expect to be within our 2021 share repurchase guidance of $300 million to $500 million. Miles driven are beginning to grow for the first time in over a year, and historically, this has been overall positive for our industry. In addition, our Professional business is accelerating, and we expect Pro to outperform DIY for the balance of the year. For these reasons, we're raising our comp sales guidance to up 4% to 6%. We're also cognizant of several macroeconomic factors. This includes inflationary costs in commodities, transportation and wages, along with currency headwinds. As a reminder, our industry has historically been very rational and successful in passing on inflationary costs in the form of price, and that is our intention this year as well. Also our Pro business carries a lower margin rate than DIY, which may partially offset the gains we expect to see in sales. As a result of our top-line strength and current cost assumptions, we're updating our adjusted OI margin range to be between 9% and 9.2%. Our guide for comp sales is now up 3 full points, and our adjusted OI margin rate is now up 30 basis points compared to our initial guidance provided in February. We remain committed to delivering against the strategy we laid out in April and are confident in our ability to execute our long-term strategic plans to deliver strong and sustainable total shareholder return.

advance auto parts q2 adjusted earnings per share $3.40. q2 adjusted earnings per share $3.40. q2 sales $2.6 billion versus refinitiv ibes estimate of $2.64 billion. q2 same store sales rose 5.8 percent. increased full year 2021 guidance.

I am joined by Tom Greco, our President and Chief Executive Officer and Jeff Shepherd, our Executive Vice President and Chief Financial Officer. We hope you're all healthy and safe amid the ongoing pandemic and recent surge of the delta variant. It's because of you that we're reporting the positive growth in sales, profit and earnings per share we're reviewing today. In Q2, we continued to deliver strong financial performance on both the one and two year stack, as we began lapping more difficult comparisons. In the quarter, we delivered comparable store sales growth of 5.8% and adjusted operating income margin of 11.4%, an increase of 11 basis points versus 2020. As a reminder, we lapped a highly unusual quarter from 2020 where we significantly reduced hours of operation and professional delivery expenses reflective of the channel shift from pro to DIY. As we anticipated, the professional business accelerated in Q2 2021, and between our ongoing strategic initiatives and additional actions, we expanded margins. Our actions offset known headwinds within SG&A and an extremely competitive environment for talent. On a two-year stack, our comp sales improved 13.3% and margins expanded 227 basis points compared to Q2 2019. Adjusted diluted earnings per share of $3.40 increased 15.3% compared to Q2 2020 and 56.7% compared to 2019. Year-to-date, free cash flow more than doubled, which led to a higher than anticipated return of cash to shareholders in the first half of the year, returning $661.4 [Phonetic] million through a combination of share repurchases and quarterly cash dividends. Our sales growth and margin expansion were driven by a combination of industry-related factors as well as internal operational improvements. On the industry side, the macroeconomic backdrop remained positive in the quarter as consumers benefited from the impact of government stimulus. Meanwhile, long-term industry drivers of demand continued to improve. This includes a gradual recovery in miles driven along with an increase in used car sales, which contributes to an aging fleet. While we delivered positive comp sales in all three periods of Q2 our year-over-year growth slowed late in the quarter as we lapped some of our highest growth weeks of 2020. Our category growth was led by strength in brakes, motor oil and filters, with continued momentum in key hard part professional categories. Regionally, the West led our growth benefiting from an unusually hot summer, followed by the Southwest, Northeast and Florida. To summarize channel performance, we saw double-digit growth in our professional business and a slight decline in our DIY omnichannel business. To understand the shift in our channel mix, it's important to look back at 2020 to provide context. Beginning in Q2, we saw abrupt shifts in consumer behavior across our industry due to the pandemic, resulting from the implementation of stay-at-home orders. This led to more consumers repairing their own vehicles, which drove DIY growth. In addition, our DIY online business surged as many consumers chose to shop from home and leverage digital services. Finally, as we discussed last year, our research indicated that large box retailers temporarily deprioritized long tail items, such as auto parts, in response to the pandemic. These and other factors resulted in robust sales growth and market share gains for our DIY business in 2020. Contrary to historical trends, the confluence of these factors also led to a slight decline in our professional business in Q2 2020. As we began to lap this highly unusual time, we leveraged our extensive research on customer decision journeys. This enabled us move quickly as customer shifted how they repaired and maintained their vehicles. Our sales growth and margin expansion in Q2 demonstrates the flexibility of our diversified asset base as we adapted to a very different environment in 2021. Specific to our professional business, we began to see improving demand late in Q1 2021, which continued into Q2, resulting in double-digit comp sales growth. This is directly related to the factors just discussed, along with improved mobility trends as more people returned to work and miles driven increased versus the previous year. Strategic investments are strengthening our professional customer value proposition. It starts with improved availability and getting parts closer to the customer as we leverage our dynamic assortment machine learning platform. Within our Advance Pro catalog, we saw improved key performance indicators across the board including, more online traffic, increased assortment and conversion rates and ultimately growth in transaction counts and average ticket. We also continued to invest in our technical training programs to help installers better serve their customers. Our TechNet program is also performing well as we continue to expand our North American TechNet members, providing them with a broad range of services. Each of these pro-focused initiatives have been a differentiator for Advance, enabling us to increase first call status with both national strategic accounts and local independent shops. Finally, we're pleased that through the first half of the year, we added 28 net new independent Carquest stores. We also announced the planned conversion of an additional 29 locations in the West as Baxter Auto Parts joins the Carquest family. We're excited to combine our differentiated pro customer value proposition with an extremely strong family business, highlighted by Baxter's excellent relationships with their customers in this growing market. In summary, all of our professional banners performed at or above our expectations in Q2, including our Canadian business, despite stringent lockdowns. Moving to DIY omnichannel, our business performed in line with expectations, considering our strong double-digit increases in 2020. While Q2 DIY comp sales were down slightly, DIY omnichannel was still the larger contributor to our two-year growth. DIY growth versus a year ago gradually moderated throughout the quarter as some consumers returned to professional garages. Within DIY omnichannel, we saw a shift in consumer behavior back to in-store purchases, consistent with broader retail. We've also been working to optimize and reduce inefficient online discounts. These factors along with highly effective advertising contributed to an increase in our DIY in-store mix and a significant increase in gross margins versus prior year. We remain focused on improving the DIY experience to increase share of wallet through our Speed Perks loyalty platform. We made several upgrades to our mobile app to make it easier for Speed Perks members to see their status and access rewards. We continue to see positive graduation rates among our existing Speed Perks members. In Q2, our VIP membership grew by 8% and our Elite members representing the highest tier of customer spend, increased 21%. Shifting to operating income, we expanded margin in the quarter on top of significant margin expansion in Q2 2020. This was led by our category management initiatives, which drove strong gross margin expansion in the quarter. First, our work on strategic sourcing remains a key focus as consistent sales growth over several quarters resulted in an increase in supplier incentives. Secondly, we've talked about growing own brands as a percent of our total sales. This has been a thoughtful and gradual conversion and we began to see the benefits of several quarters of hard work in Q2. This was highlighted by our first major category conversion with steering and suspension, where we saw extremely strong unit growth for our high margin Carquest premium products. In addition, the CQ product is highly regarded by our professional installers. With consistent high level of quality standards, they are now delivering lower defect rates and improved customer satisfaction. We also recently celebrated the one-year anniversary of the DieHard battery launch. Following strong year one share gains in DIY omnichannel, we've now extended DieHard distribution into the professional sales channel, where we're off to a terrific start. Further expansion of the DieHard and Carquest brands is planned for other relevant categories. In terms of strategic pricing, we significantly improved our capabilities, leveraging our new enterprise pricing platform. This platform enabled us to respond quickly as inflation escalated beyond our initial expectations for the year. Moving to supply chain, while we're continuing to execute our initiatives, we faced several unplanned, offsetting headwinds in Q2. Like most retailers, we experienced disruption within the global supply chain, wage inflation in our distribution centers and an overall shortage of workers to process the continued high level of demand. In addition, our suppliers experienced labor challenges and raw material shortages. Despite a challenging external environment, we continue to execute our internal supply chain initiatives. This includes the implementation of our new Warehouse Management System or WMS, which we're on track to complete in 2022. In the DCs that we've converted, we're delivering improvements in fill rates, on-hand accuracy, and productivity. The implementation of WMS is a critical component of our new Labor Management System or LMS. Once completed, LMS will standardize operating procedures and enable performance-based compensation. We also continue to execute our Cross Banner Replenishment or CBR initiative, transitioning stores to the most freight logical servicing DC. In Q2, we converted nearly 150 additional stores and remain on track with the completion of the originally planned stores by the end of Q3 2021. In addition to CBR, we're on track with the integration of Worldpac and Autopart International, which is expected to be completed early next year. Shifting to SG&A, we lapped several cost reduction actions in Q2 2020, which we knew we would not replicate in 2021. We discussed these actions on our Q2 call last year, primarily a reduction in delivery costs as a result of a substantial channel mix shift along with the reduction in store labor costs at the beginning of the pandemic. Jeff will discuss these in more detail in a few minutes. In terms of our initiatives, we continue to make progress on sales and profit per store. Our team delivered sales per store improvement and we remain on track to reach our goal of $1.8 million average sales per store within our timeline. Our profit per store is also growing faster than sales per store, enabling four wall margin expansion. In addition to the positive impacts of operational improvements we've implemented to drive sales and profit per store, we've also done a lot of work pruning underperforming stores and we're back to store growth. In the first half of the year, we opened six Worldpac branches, 12 Advance and Carquest stores and added 28 net new Carquest independents, as discussed earlier. We also announced the planned conversion of 109 Pep Boys locations in California. We're very excited about our California expansion with the opening of our first group of stores scheduled this fall. The resurgence of the delta variant has resulted in some construction related delays in our store opening schedule. We expect to complete the successful conversion of all stores to the Advance banner by the end of the first quarter 2022. Finally, we are focused on reducing our corporate and other SG&A costs, including a continued focus on safety. Our total recordable injury rate decreased 19% compared to Q2 2020 and 36% compared to Q2 2019. We're also finishing up our finance ERP consolidation, which is expected to be completed by the end of the year. Separately, we are in the early stages of integrating our merchandising systems to a single platform. Both of these large scale technology platforms are expected to drive SG&A savings over time. The last component of our SG&A cost reduction was a review of our corporate structure. In terms of the restructuring of our corporate functions announced earlier this year, savings were limited in Q2 due to the timing of the actions. We expect SG&A savings associated with the restructure beginning in Q3. In summary, we're very pleased with our team's dedication to caring for our customers and delivering strong financial performance in Q2. We're optimistic as the industry-related drivers of demand continue to indicate a favorable long-term outlook for the automotive aftermarket. We remain focused on executing our long-term strategy to grow above the market, expand margins and return significant excess cash back to shareholders. Now let me pass it to Jeff to discuss more details on our financial results. In Q2, our net sales increased 5.9% to $2.6 billion. Adjusted gross profit margin expanded 239 basis points to 46.4%, primarily as a result of the ongoing execution of our category management initiatives, including strategic sourcing, strategic pricing and own brand expansion. We also experienced favorable inventory-related costs versus the prior year. These benefits were partially offset by inflationary costs in supply chain and unfavorable channel mix. In the quarter, same SKU inflation was approximately 2% and we expect this will increase through the balance of the year. We're working with our supplier partners to mitigate costs where possible. Year-to-date, gross margin improved 156 basis points compared to the first half of 2020. As anticipated, Q2 adjusted SG&A expenses increased year-over-year and were up $109 million versus 2020. This deleveraged 228 basis points and was a result of three primary factors. First, our incentive compensation was much higher than the prior year, primarily in our professional business as we lapped a very challenging quarter in 2020 when pro sales were negative. Second, we experienced wage inflations beyond our expectations in stores. We remain focused on attracting, retaining and developing the very best part people in the business and we'll continue to be competitive. We expect both headwinds to continue in the back half of the year. Third, and as expected, we incurred incremental costs associated with professional delivery and normalized hours of operations when compared to Q2 2020. These increases in Q2 were partially offset by a decrease in COVID-19 related expenses to approximately $4 million compared to $15 million in the prior year. As a result of these factors, our SG&A expenses increased 13.3% to $926.4 million. As a percent of net sales, our SG&A was 35% compared to 32.7% in the prior year quarter. Year-to-date, SG&A as a percent of net sales improved 88 basis points compared to the first half of 2020. While we've seen a decrease in COVID-19 related costs year-to-date, the health and safety of our team members and customers will continue to be our top priority. As the current environment remains volatile and the delta variant remains a concern, we may see increased COVID-19 expenses in the back half of the year. Our adjusted operating income increased to $302 million compared to $282 million one year ago. On a rate basis, our adjusted OI margin expanded by 11 basis points to 11.4%. Finally, our adjusted diluted earnings per share increased 15.3% to $3.40 compared to $2.95 in Q2 of 2020. Our free cash flow for the first half of the year was $646.6 million, an increase of $338.4 million compared to last year. This increase was driven in part by our operating income growth along with continued momentum in our working capital initiatives. Our capital spending was $58.7 million for the quarter and $129.6 million year to-date. We expect our investments to ramp up in the back half of the year. And in line with our guidance, we estimate we will spend between $300 million and $350 million in 2021. Due to favorable market conditions along with our improved free cash flow in Q2, we returned nearly $458 million to our shareholders through the repurchase of 2 million shares at an average price of $197.52 and our recently increased quarterly cash dividend of $1 per share. We're pleased with our performance during the first half of the year and moving into the first four weeks of Q3 on a two-year stack, our comparable store sales are in line with Q2. We're continuing to monitor the COVID-19 situation as well as other macro factors, which may put pressure on our results, including, inflationary cost in commodities, wages and transportation. Based on all these factors, we are increasing our full year 2021 guidance ranges, including net sales in the range of $10.6 billion to $10.8 billion, comparable store sales of 6% to 8% and adjusted operating income margin of 9.2% to 9.4%. As you heard from Tom on our new store openings, we've encountered some delays in the construction process of converting Pep Boys stores, primarily permitting and obtaining building materials related to the ongoing pandemic. As a result, we're lowering our guidance range and now expect to open 80 to 120 new stores this year. Additionally, given the improvement of our free cash flow and our accelerated share repurchases in the first half of the year, we are also increasing our guidance for free cash flow to a minimum of $700 million and an expected range for share repurchases of $700 million to $900 million. We remain committed to delivering against our long-term strategy as we execute against our plans to deliver strong and sustainable total shareholder return.

compname reports q3 adjusted earnings per share of $3.21. q3 adjusted earnings per share $3.21. q3 sales rose 3.1 percent to $2.6 billion. q3 same store sales rose 3.1 percent. sees 2021 capital expenditures of minimum $275 million. sees fy 2021 comparable store sales growth of 9.5% to 10%.

I'm joined today by Tom Greco, our President and Chief Executive Officer; and Jeff Shepherd, our Executive Vice President and Chief Financial Officer. As always, we hope that you and your families are healthy and safe. Their continued dedication to provide outstanding service to our customers allowed us to deliver another quarter of top line sales growth, adjusted margin expansion and a double-digit increase in earnings per share. We've been investing in both our team and our business over multiple years to transform and better leverage Advance's assets. In Q3, this helped enable us to comp the comp on top of our strongest quarterly comparable store sales growth of 2020. Specifically, we delivered comp store sales growth of 3.1%, while sustaining an identical two-year stack of 13.3% compared with Q2. As expected, this was led by the continued recovery of our professional business and a gradual improvement in key urban markets. By putting DIY consumers and Pro customers at the center of every decision we make, we've been able to respond quickly to evolving needs. In Q3, this was highlighted by an overall channel shift back to Professional and a return to stores for DIYers. Within Professional, we're seeing increasing strength in certain geographies, which, like the rest of the country last year as the ongoing return to office of professional workers in large urban markets, catches up with the rest of the country. Our diversified digital and physical asset base has enabled us to respond rapidly to these changing channel dynamics in the current environment. In addition, we also delivered significant improvements in our adjusted gross margin rate of 246 basis points, led by our category management initiatives. Our adjusted SG&A costs as a percentage of net sales were 209 basis points higher as we lapped a unique quarter in Q3 2020. As we've discussed over the past year, our SG&A costs were much lower than normal in Q2 and Q3 of 2020. This was due to an unusually high DIY sales mix and actions we took last year during the initial stages of the pandemic, which were not repeated. Overall, we delivered adjusted operating income margin expansion of 37 basis points to 10.4% versus Q3 2020. Adjusted diluted earnings per share of $3.21 increased 21.6% compared with Q3 2020 and 31% compared with the same period of 2019. Our year-to-date adjusted earnings per share are up approximately 50% compared with 2020. Year-to-date, our balance sheet remains strong with a 19% increase in free cash flow to $734 million, while returning a record $953 million to our shareholders through a combination of share repurchases and quarterly cash dividend. Consistent with the front half of the year, there were several industry-related factors, coupled with operational improvements, contributing to our sales growth and margin expansion in Q3. The car park continues to grow slightly. The fleet is aging and perhaps most importantly vehicle miles driven continue to improve versus both 2020 and 2019. More broadly, the chip shortage continues to impact availability of new vehicles and is contributing to a surge in used car sales. This benefits our industry as consumers are repairing and maintaining their vehicles longer. As we all know, over the last 18 months, the pandemic changed consumer behavior across our industry, which led to a surge in DIY omnichannel growth in 2020, while the Professional business declined. However, as the economy continues to reopen, with miles driven steadily increasing, our Professional business is now consistently exceeding pre-pandemic levels as discussed last quarter. Regional performance was led by the Southwest and West. Category growth was led by brakes, motor oil and filters as miles driven reliant categories improved versus the softer 2020. We also saw continued strength in DieHard batteries, which led the way on a two-year stack basis. Each of these categories performed well as a result of the diligent planning between our merchant and supply chain teams, enabling a strong competitive position despite global supply chain disruptions. At the same time, we experienced challenges in Q3 as we strategically transitioned tens of thousands of undercar and engine management SKUs to own brand. Importantly, these in-stock positions are now significantly improved and we're confident these initiatives will help drive future margin expansion. Overall, comp sales were positive in all three periods of Q3, led by Professional. DIY omnichannel delivered slightly positive comp growth in Q3, while lapping high double-digit growth than the prior year. Within Professional, we navigated a very challenging global supply chain environment to allow us to say yes to our customers. The investments we've made in our supply chain, inventory positioning and in our dynamic assortment tool help put us in a favorable position competitively. We've implemented the dynamic assortment tool in all company-owned US stores as well as over 800 independent locations. Our MyAdvance portal and embedded Advance Pro catalog continues to be a differentiator for us, while driving online traffic. Our online sales to Professional customers continues to grow as we strengthen the speed and functionality of Advance Pro. We remain committed to providing our industry-leading assortment of parts for all Professional customers. This will help enable us to grow first call status and increase share of wallet in a very fragmented market. In addition, we expanded DieHard to our Professional customers. Following a recent independent consumer survey, DieHard stake disclaims as America's most trusted auto battery. During Q3, we announced a multi-year agreement with our national customer Bridgestone to sell DieHard batteries in more than 2,200 tire and vehicle service centers across the United States. With this systemwide rollout during Q3, we replaced their previous battery provider, making us the exclusive battery supplier across all Bridgestone locations. In terms of our independent business, we added 16 net new independent Carquest stores in the quarter, bringing our total to 44 net new this year. We continue to grow our independent business through differentiated offerings for our Carquest partners, including our new Carquest by Advance banner program, which we announced earlier this month. As we continue to build and strengthen the Advance brand and our DIY business, Carquest by Advance adds DIY relevance for our Carquest-branded independent partners, while providing incremental traffic and margin opportunities. We've recently enrolled this new initiative out to our independent partners and look forward to further expansion over time for both new and existing Carquest independents. Transitioning to DIY omnichannel, comparable store sales were slightly positive in Q3. As you'll recall, our DIY omnichannel business reported strong double-digit comp sales growth in Q3 2020. We continue to enhance our offerings and execute our long-term strategy to differentiate our DIY business and increased market share. In Q3, we continue to leverage our Speed Perks loyalty program as VIP membership grew by 13% and our number of ELITE members, representing the highest tier of customer spend, increased 21%. Last year, the launch of our Advance Same Day suite of services helped enable a huge surge in e-commerce growth. This year, as DIYers return to our stores, in-store sales growth led our DIY sales growth. Part of this was expected due to a planned reduction in inefficient online discounts, which significantly increased gross margins. Turning to margin expansion. We again increased our adjusted operating income margin in the quarter. Like Q2, this was driven by category management actions within gross margin, where our key initiatives played a role. First, we are realizing benefits from our new strategic pricing tools and capabilities. Like other companies, we're experiencing higher-than-expected inflation. However, our team has been able to respond rapidly in this dynamic environment as industry pricing remains rational. Behind strategic sourcing, vendor income was positive versus the previous year with continued strong sales growth. Finally, double-digit revenue growth in own brand outpaced our overall growth in the quarter as we expanded the Carquest brand into new category. Carquest products have a lower price per unit than comparable branded products, which reduced comp and net sales growth in the quarter as expected. At the same time, the margin rate for own brands is much higher and contributed to the Q3 adjusted gross margin expansion. Shifting to supply chain. We continue to make progress on our productivity initiatives. In Q3, the benefits from these initiatives were more than offset by widely documented disruptions and inflationary pressure within the global supply chain. As a result, we did not leverage supply chain in the quarter. We completed the rollout of cross-banner replenishment, or CBR, for the originally planned group of stores in the quarter. The completion of this milestone is driving cost savings through a reduction in stem miles from our DCs to stores. Over the course of our implementation, our team identified additional stores that will be added over time. Secondly, we're continuing the implementation of our new Warehouse Management System, or WMS. This is helping to deliver further improvements in fill rate, on-hand accuracy and productivity. We successfully transitioned to our new WMS in approximately 36% of our distribution center network as measured by unit volume. As previously communicated, we follow WMS with a new Labor Management System, or LMS, which drive standardization and productivity. We are on track to complete the WMS and LMS implementations by the end of 2023 as discussed in April. Further, our consolidation efforts to integrate WORLDPAC and Autopart International, known as AI, are also on track to be completed by early next year. This is enabling accelerated growth, gross margin expansion and SG&A savings. Gross margin expansion here comes behind the expanded distribution of AI's high margin owned brand products, such as shocks and struts, to the larger WORLDPAC customer base. Finally, as we expand our store footprint, we're also enhancing our supply chain capabilities on the West Coast with the addition of a much larger and more modern DC in San Bernardino. This facility will serve as the consolidation point for supplier shipments for the Western US and enable rapid e-commerce delivery. In addition, we began to work to consolidate our DC network in the Greater Toronto area. Two separate distribution centers, one Carquest and one WORLDPAC will be transitioned into a single brand-new facility that will allow us to better serve growing demand in the Ontario market. We continue to execute our initiatives, both sales and profit per store along with the reduction of corporate SG&A. As previewed on our Q2 call, we also faced both planned and unplanned inflationary cost pressure versus the prior year in Q3. SG&A headwinds include higher than planned store labor cost per hour, higher incentive compensation and increased delivery costs associated with the recovery of our Professional business. Jeff will discuss these and other SG&A details in a few minutes. We remain on track with our sales and profit per store initiative, including our average sales per store objective of $1.8 million per store by 2023. In terms of new locations year-to-date, we've opened 19 stores, six new WORLDPAC branches and converted 44 net new locations to the Carquest independent family. This puts our net new locations at 69, including stores, branches and independents during the first three quarters. Separately, we're actively working to convert the 109 locations in California we announced in April. However, we're experiencing construction-related delays, primarily due to a much slower-than-normal permitting process. This is attributable to more stringent guidelines associated with COVID-19, which were exacerbated by the surge of the Delta variant. We now expect the majority of the store openings planned for 2021 to shift into 2022. As a result, we're incurring start-up costs within SG&A for the balance of the year, while realizing less than planned revenue and income. The good news is, we remain confident that once converted, these stores will be accretive to our growth trajectory. The final area of margin expansion is reducing our corporate and other SG&A costs. We began to realize some of the cost benefits related to the restructuring of our corporate functions announced earlier this year, in addition to savings from our continued focus on team member safety. In Q3, we saw a 22% reduction in our total recordable injury rate compared with the prior year. Our lost time injury rate improved 14% compared with the same period in 2020. Our focus on team member safety is only one component of our ESG agenda at Advance. Our vision advancing a world in motion is demonstrated by the objective we outlined last April to deliver top quartile total shareholder return in the 2021 through 2023 timeframe. While delivering this goal, we're also focused on ESG. As part of this commitment, we launched our first materiality assessment earlier this year to help prioritize ESG initiatives. During Q3, we completed this assessment and are working to finalize the findings. The results will be incorporated in our 2021 Corporate Sustainability Report, which we expect to publish in mid-2022. Before turning the call over to Jeff, I want to recognize all team members and generous customers for their contribution to our recent American Heart Association campaign. This year, we introduced a new technology solution in stores that allows customers to round up at the point of sale. This made it even easier for customers to participate and helped us achieve a record-setting campaign of $1.7 million. The mission of this organization is important to all of us across the Advance family. In Q3, our net sales increased 3.1% to $2.6 billion. Adjusted gross profit margin improved 246 basis points to 46.2%, primarily the result of our ongoing category management initiatives, including strategic pricing, strategic sourcing, own brand expansion and favorable product mix. Consistent with last quarter, these were partially offset by inflationary product and supply chain costs as well as an unfavorable channel mix. In the quarter, same SKU inflation was approximately 3.6%, which was part of [Phonetic] our plan entering the year and was by far the largest headwind we had to overcome within gross profit. We're working with all our supplier partners to mitigate costs where possible. Year-to-date, adjusted gross margin improved 184 basis points compared with the same period of 2020. As expected, our Q3 SG&A expenses increased due to several factors we discussed earlier in the year. As a percent of net sales, our adjusted SG&A deleveraged by 209 basis points, driven primarily by labor costs, which included a meaningful cost per hour increase as well as higher incentive compensation compared to the prior year. In addition, we incurred higher delivery expenses related to serving our Professional customers and approximately $10 million in start-up costs related to the conversion of our California locations in Q3. Year-to-date, SG&A as a percent of net sales was relatively flat compared to the same period of 2020, increasing 9 basis points year-over-year. While we've reduced our COVID-19-related costs by $13 million year-to-date, the health and safety of our team members and customers continues to be our top priority. Our adjusted operating income increased to $274 million in Q3 compared to $256 million one year ago. On a rate basis, our adjusted OI margin expanded by 37 basis points to 10.4%. Finally, our adjusted diluted earnings per share increased 21.6% to $3.21 compared to $2.64 in Q3 of 2020. Compared with 2019, adjusted diluted earnings per share was up 31% in the quarter. Our free cash flow for the first nine months of the year was $734 million, an increase of 19% versus last year. This increase was primarily driven by improvements in our operating income as well as our continued focus on working capital metrics, including our accounts payable ratio, which expanded 351 basis points versus Q3 2020. Year-to-date through Q3, our capital investments were $191 million. We continue to focus on maintaining sufficient liquidity, while returning excess cash to shareholders. In Q3, we returned approximately $228 million to our shareholders through the repurchase of 1.1 million shares at an average price of $205.65. Year-to-date, we've returned approximately $792 million to our shareholders through the repurchase of nearly 4.2 million shares at an average price of $189.43. Since restarting our share repurchase program in Q3 of 2018, we returned over $2 billion in share repurchases at an average share price of approximately $164. Additionally, we paid a cash dividend of $1 per share in the quarter totaling $63 million. We remain confident in our ability to generate meaningful cash from our business and expect to return excess cash to our shareholders in a balanced approach between dividends and buybacks. As you saw in the yesterday's 8-K filing with the SEC, we recently closed the refinancing of our new five-year revolving credit facility. The prior facility was set to mature in January 2023. And the bank markets have returned to pre-pandemic levels, we took the opportunity to secure our liquidity for another five years. This included improved pricing and terms while also increasing the overall facility size to $1.2 billion. We have strong relationships with our banks. And this commitment allows us to secure future financial flexibility. More details of this facility can be found in our 8-K filings. Turning to our updated full year outlook. We are increasing 2021 sales and profit guidance to reflect the positive results year-to-date and our expectations for the balance of the year. Through the first four weeks of Q4, we're continuing to see sales strength in our two-year stack, remaining in line with what we delivered in the last two quarters. This guidance incorporates continued top-line strength, ongoing inflationary headwinds and up to an additional $10 million in start-up costs in Q4 related to our West Coast expansion. As discussed, the construction environment in California remains challenging, resulting in a reduction of our guidance from new store openings and capital expenditures. As a result, we're updating our full year 2021 guidance to net sales of $10.9 billion to $10.95 billion, comparable store sales of 9.5% to 10%, adjusted operating income margin rate of 9.4% to 9.5%, a minimum of 30 new stores this year, a minimum of $275 million in capex and a minimum of $725 million in free cash flow. In summary, we're very excited about our current momentum. We remain focused on the execution of the long-term strategy, while delivering top quartile total shareholder return over the 2021 to 2023 time frame.

withdrew its full year 2020 guidance that was previously issued on october 29, 2019.

Both are now available on the Investors section of our website, americanassetstrust.com. We recently released our 2019 annual report that we prepared during the first quarter of 2020 prior to the COVID-19 pandemic. The theme of our annual report was being grateful. During these unprecedented times, we are even more grateful, great for our colleagues, investors, banking relationships, research analysts and our families and our great portfolio. We are grateful for the first responders and healthcare workers on the front lines and the research taking place to find a grateful find a vaccine. We are grateful for all the little things in life that we have often taken for granted. One thing is certain that together, we will get through this period of history. This question is how we will be impacted and what we will look like on the other side, we are not immune from the pandemic. We too feel the bumps and bruises along the way, which Bob will talk about in more detail. But overall, our expectations and confidence is that our high-quality portfolio in Coastal West Coast markets, combined with a low leverage balance sheet, will pull us through this period in history and come out better on the other side. Reducing the dividend is heart breaking for me. It's not the track record that we wanted. And we've done it with regret and humility. But in the absence of caution during these periods of times, the Board thought it was the thing to do. We will ask the Board of Directors to reconsider making up the shortfall in subsequent quarters as soon as we can see the retail sector starting to rebound. Following Bob Barton, our EVP and Chief Financial Officer, and will end with a quick update on the office leasing success that Steve Center, our Vice President of Office Properties is seeing. From an operations perspective, in early March, we quickly mobilized to implement our business continuity and crisis management plans to help protect the health and safety of our employees, tenants and vendors and to maintain consistent open communications, both internally and to our stakeholders. Our entire employee base continues to either work remotely or on-site at one or more of our properties. Employees are generally only on site, if necessary, to either maintain critical building systems, ensure any essential businesses that are properties are properly accommodated and to provide resident services at our multifamily properties with skeleton rotating crews when feasible. Each of our properties remain open and operating, while following all local, state and federal directives and mandates. Across the board, we have increased security and implemented additional health and safety protocols at our properties. However, we have scaled back other property management services to be more in balance with the current needs of those essential tenants that are opening, which we expect will help reduce property operating expenses. Additionally, we have determined to delay most nonessential building improvement in common area projects, except for work already under contract. As expected, we have received a myriad of rent relief request. The vast majority from our retail tenants, many of which we believe to be opportunistic in nature. The majority of such requests are from restaurants, salons, fitness centers, gyms and apparel stores. Not all tenant requests will ultimately result in rent modification agreements nor are we foregoing our contractual rights under our lease agreements. However, for those tenants that we agree to modifications or concessions, we may support them during the short term, in ways that we believe will benefit us over the longer term. We are also asking for some cash or other consideration from our tenants as part of the modifications or concessions. Finally, we have begun preparing our return to office plans in each of our office markets so that we can quickly disseminate such information to our employees and tenants once regulatory authorities begin to lift or relax, stay at home orders and implement market-specific restrictions. Last night, we reported first quarter 2020 FFO of $0 56 per share and net income attributable to common stockholders of $0.20 per share for the first quarter. As previously disclosed, we withdrew our 2020 guidance on April three due to the uncertainty that the pandemic would have on our existing guidance. At the time we withdrew our 2020 guidance, we believe that we are on track, approximately a $7.6 million reduction in our dividend distribution from Q1. The Board decided to do this out of an abundance of caution due to the uncertainty during this pandemic, even though we believe our balance sheet and current liquidity remains strong. There is actually some science or math that supports the reduction that was made in the dividend. What we did was to multiply each sector's cash net operating income by the percentage of cash collected on April rents billed through April 15. Office is 49% of our cash NOI, and we had collected approximately 90% of April billings. Retail is 31% of our cash NOI, and we had collected 43% of our April billings. Multifamily is 12% of our cash NOI. And and we had collected 92% of our April billings. We have won 369 room hotel in our portfolio, which has been the number one performing Embassy Suites hotel in the world since we opened the doors in December 2006. It is known as the Embassy Suites Waikiki that sits on a retail podium referred to as Waikiki Beach Walk. The Embassy Suites Waikiki is 5% of our cash NOI, which is currently running on a skeleton crew with a minimal occupancy ranging from 5% to 15% based on Hawaii shelter in place order that has been issued through May 31. Accordingly, we are not expecting any increased occupancy until this order has been lifted. When you add these percentages up, it is approximately 68% of cash NOI and applied to a $0.30 dividend, it supports a revised dividend of approximately $0.20 per share. We also believe that from a risk perspective, diversification is a plus and lessens the impact from uncertain times like this. It is also worth noting that since our board determined our dividend in April, we have seen an uptick in April rent collections. Such that we have now collected approximately 94% of office rents, 47% of retail rents, including the retail component of Waikiki Beach Walk and 94% of multifamily rents that were due in April 2020. Other than our One Embassy Suites hotel that represents approximately 5% of our NOI, our retail sector, which represents approximately 31% of our NOI is obviously feeling the most impact with approximately 47% of April billings collected. Approximately 24% of our retail tenants are considered to provide essential services and remain open during this period of time, and the balance of tenants are considered to provide nonessential services, which we are working with to create a positive outcome for both parties. We expect the second quarter will be the most difficult, but we believe that we are well prepared with a strong balance sheet and strong. As we look at our balance sheet and liquidity at the end of the first quarter, we had approximately $402 million in liquidity comprised of $52 million of cash and cash equivalents and $350 million of availability on our line of credit, and only one of our properties is encumbered by our mortgage. Our leverage, which we measure in terms of net debt-to-EBITDA was 5.6 times at the end of Q1. Our focus is to maintain our net debt-to-EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 4.3 times. Additionally, in early April, we drew down $100 million out of the $350 million revolving line of credit, under our line of credit for working capital and general corporate purposes and to ensure future liquidity given the COVID-19 pandemic. And finally, with respect to the $250 million of unsecured debt maturities that come due in 2021, we have options to extend the $100 million term loan up to 3 times with each such extension for one year period, subject to certain conditions. And the remaining $150 million unsecured Series A notes do not mature until October 31, 2021. We have continued to drive brands and further stabilize our office portfolio. We ended the quarter at over 94% leased with only 9% of the office portfolio expiring through the end of 2021. City Center Bellevue remains 99% leased, but we continue to expand and extend our existing customers at much higher rates. We completed a full floor renewal with a major financial firm at a starting rate that is approximately 66% above the ending rate. Portland has also remained very strong for us. Our Lloyd District office buildings remain 100% leased. We recently completed a full floor lease with an energy-related company with a start rate approximately 28% above the ending rate of the prior customer. Similar to the 830 building at Oregon Square, we are currently redeveloping the 710 building, a 33,276 square-foot building that we hope to deliver in early 2021. In addition, due to the increased demand from our existing customers, as well as other tenants in the market, we are in the early stages of design development of two new office buildings on the two remaining blocks at Oregon Square, which we will continue to evaluate pending market conditions. At First & Main, we succeeded in Gate Bridge. The fully renovated approximately 102,000 square-foot building will provide an 85,000 square foot contiguous opportunity to hopefully be delivered in mid-2021. Finally, our San Diego portfolio stands at approximately 92% leased versus the overall Class A market at 89% leased. two of the 14 buildings at Torrey reserve represents 65% of our San Diego vacancy. Both have renovations and design development, and we are aggregating spaces into larger blocks, which are scarce in UTC and Del Mar Height. Solana crossing now stands at over 95% leased. And Torrey point is on track to be 97% leased with a recent expansion of one customer, a pending expansion of another and AAT's move later this year. The two existing towers of La Jolla Commons stay 99% leased. Additionally, we hope to have a building permit in the next few months for building three, and we will evaluate commencing construction as market conditions continue to evolve. That said, we remain bullish long-term on the UTC market. Direct vacancy in Class A buildings in UTC is just 3.3%, with only 0.5% of sublease space vacant, and we expect continued significant new demand driven by both life science and technology users.

american assets trust q2 ffo per share $0.48. q2 ffo per share $0.48.

Both are now available on the Investor Section of our website, americanassetstrust.com. That was well done as always. These have been unprecedented times that I've never seen before in my lifetime. When COVID-19 began, I honestly didn't know how that it would be. We expect it to be catastrophic, but we just didn't know how bad it would be, now that the second quarter is behind us. I can tell you that it is not as catastrophic as our worst case projections. It's still has been no fun. Office has performed extremely well, unless in the shining light in our portfolio, with high credit tenants in strong markets and that we would like to continue. Multifamily has also performed well better than we expected. Occupancy has been slightly lower, but collections have been strong in the mid '90s and we expect a meaningful uptick in occupancy in August 1, as a local private university takes possession of approximately 130 units and our San Diego multi-family portfolio, at good rents by a master lease that has recently been executed. Retail as expected has been very tough. Every deal, feels like a street fight in retail. We try to balance what is best for the company and its shareholders with how to maintain the long-term [Technical Issues] of these retail tenants that are so important to our shopping centers. We know that some are not going to make it. Of course, we are hopeful that most will make it. In that factor, we're hopeful that all will make it. We have a committee comprised of myself, Chris Sullivan and Adam Wyll that review every tenant requests. If a tenant ask for deferral, we ask for something from a tenant and return as well. Each one is a negotiation and we try to make sure that we're getting something fair in return for anything less 100% on time collection of our contractual rents. I truly believe that our management team is second to none and has done an excellent job strategically navigating through this pandemic. American Trust is reflective of the quality people that we have working as appreciative of the quality people that we have working in our company that are focused on creating value for our shareholders each and every day. Lastly, I want to mention that our Board of Directors has approved increasing the quarterly dividend 25% over the second quarter 2020 dividend of $0.20 to $0.25 for the third quarter based on higher rent collections in the second quarter than we had expected, combined with the significant embedded growth that we continue to expect in our office portfolio and the recent master lease signed in our multifamily portfolio. A year from now, once there is a vaccine, we expect to look back and we hope this is nothing more than a bad memory. I believe that we came -- we come out of this, we will be as good a company or even better when all this started. From an operations perspective as coronavirus infection continue to increase in many of our markets. We remain hyper-focused on the safety and well-being of our personnel tenants and vendors, as 100% of our properties remain open and accessible by our tenants. We remain committed to ensuring full compliance with the ever-changing regulatory mandates from all levels of government, not to mention, staying in front of and working against proposed regulations that we think would do damage to our industry and economy. Like SB 939 in California, which did not pass. In the proposed repeal of Prop 13 for commercial properties in California, which we believe is essentially a targeted tax increase on business, which would ultimately be passed on to tenants and customers most of whom can absorb such increases and could lead to even more business failure. As Ernest mentioned, we continue to work with our tenants on rent deferments and other lease modifications to assist those tenants as best we can, whose business have been significantly impacted by COVID-19. We've also renegotiated or bid out most of our vendor contracts to meaningfully reduce operating expenses, many of such reductions on a long-term basis, all the while maintaining our best-in-class properties. And we've leverage the high unemployment rates in our markets to hire top caliber associates to fill open positions at AAT. Finally, we appreciate more than ever, the positive impact that ESG including fostering a culture of diversity and inclusion has on the strengthening of our business, our economy and our society. Particularly in light of current events, our focus on human capital and physical and mental well being both within our company and in our communities, has never been stronger and represents the foundation that our culture was built on. For more insight on our ESG efforts please take a look at our recently published 2019 sustainability report, which can be found on the sustainability page of our website. Last night, we reported second quarter 2020 FFO of $0.48 per share and net income attributable to common shareholders of $0.13 per share for the second quarter. Let's look at the results of the second quarter for each property segment. Our office property segment continues to perform well during these uncertain times. Office properties excluding our One Beach Street property located on the North Waterfront in San Francisco which is under redevelopment. We're at 96% occupancy at the end of the second quarter, an increase of approximately 3% from the prior year. More importantly, same-store cash NOI increased 16% in Q2 over the prior year, primarily from City Center Bellevue in Washington, Lloyd District Campus, Office Campus in Oregon and Torrey Reserve Campus here in San Diego. Our retail properties have not fared as well during the pandemic. Retail properties were at 95% occupancy at the end of the second quarter, a decrease of approximately 2% from the prior year. However, retail collections have been difficult during the pandemic, as reflected in our negative same-store cash NOI. Additionally, due to COVID-19, we have taken reserve for bad debts against the outstanding retail accounts receivable and straight-line rents receivable at the end of the second quarter of approximately 14% and 7% respectively. From a dollar perspective, this translates into approximately $2 million and $1.4 million respectively, for a total of $3.4 million reserve related to our retail sector, which is approximately $0.045 of FFO. We intend to continue evaluating and potentially revising these reserves each quarter as we monitor the ever-changing viability and solvency of each of our retail tenants. Our multifamily properties we're at an 85% occupancy at the end of the second quarter, a decrease of approximately 8% from the prior year as also reflected in our negative same-store cash NOI. But as Ernest mentioned, we expect this to increase back into the low to mid 90% occupancy once our master lease with a local private university commences on August 1. Our mixed use property consisting of the Embassy Suites Hotel and the Waikiki Beach Walk Retail is located on the Island of Oahu. The State of Hawaii remains in self quarantine through the end of August, which is significantly impacted the operating results in the second quarter of 2020. The Embassy Suites average occupancy for the second quarter of 2020 was 17%, compared with the prior year's second quarter average occupancy of 92%. A good rule of thumb in our view is that a hotel without any leverage on it needs to have approximately a 50% to 60% occupancy to breakeven. Our team in Hawaii forecasted earlier this month of 46% to 50% occupancy by year-end 2020. To our pleasant surprise, we ended June with a 29% occupancy, much higher than the average occupancy of 17% for the quarter. Additionally, in the last 15 days, we have been seeing occupancy ranging from 45% to 55% with our team in Hawaii expecting to end the month of July at 62% occupancy. Right now, it is our understanding there are only two hotels remained open in Waikiki. One of which is our Embassy Suites hotel, which has been completely renovated and it's like a brand new hotel. Let's talk about billings and collections. On a companywide basis, we collected approximately 83% of the total second quarter billings, which primarily consists of base rent and cost reimbursements. We have also collected approximately 83% of July's billings as of the end of last week. We expect those percentages to increase as we continue to work hard on collection efforts. In Q2, our office rent collections were approximately 98%. Our retail rent collections excluding Waikiki Beach retail were approximately 62%. And by the way -- so far in July is about 70%, and our multifamily collections were approximately 95%. Waikiki Beach Walk Retail had an approximately 30% collection rate in Q2. As Ernest noted earlier, the Board of Directors has decided to increase the quarterly dividend from $0.20 to $0.25 per share. The Board took into consideration, the increase in collections over what was expected during Q2, combined with the embedded growth in cash flow from the office sector over the next several years, as well as the master lease in the multifamily sector. Using the same 83% collection rate applied to our initial targeted dividend of $0.30 per quarter, it gets you to approximately $0.25 per share per quarter. As we look at the liquidity on our balance sheet, at the end of the second quarter, we had approximately $396 million in liquidity, comprised of $146 million of cash and cash equivalents and $250 million of availability on our line of credit. And only one of our properties is encumbered by a mortgage. Our leverage which we measure in terms of net debt to EBITDA was 6.4 times on a quarterly annualized basis, resulting from the lower EBITDA from the added reserves that we took in the retail sector during Q2. On a trailing 12 month basis, our EBITDA would be approximately 5.8 times. Our focus is to maintain our net debt to EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 3.8 times on a quarterly annualized basis and at 4.1 times on a trailing 12 month basis. And finally with respect to $250 million of unsecured debt maturities that come due in 2021, we expect to extend the $100 million term loan up to 3 times with each extension for a one-year period subject to certain conditions and the remaining $150 million Series A Notes does not mature until October 31, 2021, which we would expect to refinance at lower rates. Regarding our guidance, as we previously disclosed, we withdrew our 2020 guidance on April 3 due to the uncertainty that the pandemic would have on our existing guidance, particularly in our hotel or retail sector. Unfortunately, the economy continues to change day by day and the current outcome remains uncertain as to impact in duration, which is why we will continue to a draw our 2020 guidance. At the end of the second quarter, net of One Beach, which is under redevelopments. Our office portfolio stood at approximately 96% leased, with approximately 6% expiring through the end of 2021. We were fortunate to renew the IRS and veterans benefits administration leases early in 2020, the First & Main in Portland in a total of 131,000 feet at start rates nearly 20% above the rates of exploration. Given the quality of our assets and the strength of the markets in which they are located with technology and life science as key market drivers. We continue to execute new and renewal leases at favorable run rates delivering continued NOI growth. With leases already signed, we have locked in approximately $29.6 million of NOI growth comprised of $6 million in 2020, $14 million in 2021 and $9.6 million in 2022 in our office segment. We anticipate significant additional NOI growth in 2022 through the redevelopment and leasing of One Beach Street in San Francisco and 710 Oregon Square in the Lloyd submarket Portland, along with the repositioning of two buildings at Torrey Reserve in the Del Mar Heights submarket of San Diego. In addition, we can grow our Office portfolio by up to 768,000 rentable square feet or 22% on sites we already owned by building Tower 3 at La Jolla Commons, which is 213,000 feet and Blocks 90 and 103 at Oregon Square totaling up to 555,000 square feet. Tower 3 at La Jolla Commons is into the city of San Diego for permits and we continue evaluating market condition, prospective tenant interest and hopefully decrease in construction costs, leading to are upcoming commencing construction. Next, schematic design has completed for Blocks 90 and 103 at Oregon Square with design development of 50% complete. We are scheduled for our first hearing with the design review committee in Portland on August 20. We currently have two active request for proposals from prospective tenants for Blocks 90 and 103 totaling 422,000 square feet, but again we will be evaluating market conditions, tenant interest and construction cost prior to commencing construction. We have a stable office portfolio with little near term rollover, significant built in NOI growth and additional upside through repositioning redevelopment within our existing portfolio plus substantial new development on sites we already own.

compname reports q2 ffo per share $0.51. q2 ffo per share $0.51.

Both are now available on the Investors section of our website, americanassetstrust.com. We are making great progress on all fronts as we focus our efforts on our rebound from COVID-19's impact, by enhancing and amenitizing existing properties, acquiring new accretive properties like Eastgate Office Park in Bellevue, which the team will talk about more in a bit, retaining and adding new customers to our portfolio, furthering our development of La Jolla Commons of which we recently bottomed out our excavation and otherwise remain on time and on budget and of course, growing our earnings and net asset value for our stockholders. We have been through hard time before, and each time we have emerged stronger, which remains our expectations in mind now. I want to mention that the Board of Directors has approved the quarterly dividend of $0.30 per share for the third quarter, an increase of $0.02 per share or 7% from the second quarter, which is, we believe, is supported by our increased collection efforts in the second quarter, improving traffic in Waikiki at our Embassy Suites and our expectation for operations to continue trending favorably in the near term. I'm also pleased to announce that the Board has appointed Adam Wyll, to the position of President in addition to his Chief Operating Officer role and title. As many of you know, Adam is a valuable and hard-working member of our executive team. And this title describes the breadth of responsibilities and leadership that he has successfully taken on, prior to and during the pandemic. As well as the confidence, our board and myself and our management team has in him to manage, in partnership with our excellent executive team, the day-to-day operations of AAT. I personally am blessed with excellent health, and this company is very important to me. I intend to continue my role as chairman and CEO for the foreseeable future. However, it is very important to our board, myself and shareholders that you know this company will always remain in very capable hands and that we are fortunate to have such a great management team and group of associates at AAT, all of whom work together as we continue on as a best in classes, class REIT. I very much appreciate the kind words and leadership opportunities, none of which would have been possible without your mentorship, not to mention the daily collaboration with such an incredible management team and top-notch team members and colleagues. We continue to feel bullish about our portfolio, particularly with government restrictions lifted in all of our mainland markets in Hawaii, having lightened its reopening restrictions considerably. And we are seeing firsthand consumer behavior reverting to pre-pandemic levels with packed parking lots and tons of shoppers at all our retail properties. We're already seeing many of our retailers with gross sales above pre-pandemic levels in our restaurants recovering, which is obviously very encouraging. Our collections have continued to improve each quarter with a collection rate north of 96% for the second quarter. Furthermore, we had approximately $850,000 of deferred rent due from tenants in Q2 based on COVID-19 related lease modifications. And we have collected approximately 94% of those deferred amounts, further validating our strategy of supporting our struggling retailers through the government-mandated closures. Remaining collection challenges at this point are primarily with a handful of local retailers at our Waikiki Beach Walk property. But with Hawaii tourism back in large numbers, we think we'll have an opportunity to rebound, to be viable long term, even more so once Asian countries relax their travel restrictions to Hawaii later this year or early next. Additionally, we are seeing positive activity engagement with new retailers, including mid box retailers. About half of our over 250,000 square feet of vacant retail space or in lease negotiations or LOI stage, deals that we believe we have a good likelihood of being finalized. And the vast majority of our retailers are renewing their leases at flat to modest rent increases. On the multifamily front, with new management in place at Hassalo, we are currently 99% leased and asking rents are trending up almost 20% since December 2020. The multifamily collections have been more challenging in Portland due to eviction protection still in place through the next month or so. But we are doing everything we can to stay on top of that, which include government rental assistance programs that we expect meaningful disbursements from soon. In San Diego, our multifamily properties are currently 97% leased, and we have leased approximately 90% of the 133 master lease units that expired less than two months ago and expect the remaining to be leased over the next few weeks. Asking rents at our multifamily properties are trending up as well in San Diego, almost 10% since December 2020. Last night, we reported second quarter 2021 FFO per share of $0.51 and second quarter '21 net income attributable to common stockholders per share of $0.15. Let me share with you several data points that support my belief. First, as Ernest previously mentioned, the Board has approved an increase in the dividend to its pre-COVID amount of $0.30 per share based on the continued improvement in our collections as expected, but the overriding factor was the strong results we are seeing at the Embassy Suites Hotel in Waikiki beginning in mid-June and increasing into July with a strong pent-up demand. Q2 paid occupancy was 67%, and the month of June by itself reached approximately 83%. The average daily rate was $274 for Q2 and approximately $316 for the month of June. RevPAR or revenue per available room was $184 for Q2 and approximately $262 for the month of June. It is definitely heading in the right direction. Effective July 8, all travellers entering into Hawaii who are vaccinated in the U.S. can skip quarantine without getting a pre-travel COVID test by uploading proof of their vaccination to the state of Hawaii safe travel website. The Oahu is still under tier five of its reopening plan until Hawaii's total population is 70% fully vaccinated, which should occur in the next month or two. Bars and restaurants in Oahu can be at 100% capacity as long as all customers show their vaccination card or a negative COVID test on entry. The Japanese wholesale market had accounted for approximately 35% to 40% of our customer base pre-COVID. Japan is currently just 9% fully vaccinated. Though with its current pace of over one million vaccines a day, Japan is expected to be completing vaccinations by this November and to start issuing vaccine passports in the next 30 days, in anticipation of opening up international travel. In the meantime, there is a pent-up demand from U.S. West and Canada that is expected to keep the hotel occupied and on track with this recovery. Secondly, looking at our consolidated statement of operations for the three months ended June 30th, our total revenue increased approximately $7.8 million over Q1, which is approximately at 9.3% increase. Approximately 37% of that was the outperformance of the Embassy Suites Hotel as California and Hawaii began to open up travel. Additionally, our operating income increased approximately $6.3 million over Q1 '21, which is approximately an increase of 31%. Third, same-store cash NOI overall was strong at 23% year-over-year. With office consistently strong before, during and post COVID and retail showing strong signs of recovery. Multifamily was down primarily as a result of Pacific Ridge Apartments at 71% leased at the end of Q2 due to the recurring seasonality of students leaving in May, including the expiration of the USD master lease and new students leasing over the summer before school starts in late August. Generally, approximately 60% of our 533 units at Pacific Ridge are leased by students, with the USD campus right across the street. As of this week, we are approximately 90% leased at Pacific Ridge with approximately 150 students moving in over the next several weeks in August. Hassalo on Eighth in the Lloyd District of Oregon is a 657 multifamily campus. At the end of Q1, occupancy was approximately 84% due to the lingering impact of COVID and political challenges in the prior months. As of Q2, we have increased the occupancy to approximately 95%. But in doing so, we had to adjust the rent and increase concessions. Pacific Ridge and Hassalo on Eighth are the two factors that impacted our multifamily same-store this quarter. As Adam mentioned, asking rates have been trending favorably on our multifamily properties recently, which we expect to provide meaningful growth going forward. Note that our same-store cash NOI does not include our mixed-use sector, which will return with Q3 and Q4 2021 after completing the renovation of the Embassy Suites Hotel during COVID. And fourth, as previously disclosed, we acquired Eastgate Office Park on July 7th, comprised of approximately 280,000 square foot multi-tenant office campus, in the premier I-90 corridor submarket of Bellevue, Washington, one of the top-performing markets in the nation, the Eastside market is anchored by leading tech, life science, biotech and telecommunication companies. The four-building Eastgate Park is currently greater than 95% leased to a diversified tenant base with in-place contractual lease rates that we believe are 10% to 15% below prevailing market rates for the submarket. Additionally, Eastgate Park recently obtained municipal approval for rezoning, increasing the floor area ratio from 0.5 to 1.0, which will allow for additional development opportunities. The purchase price of approximately $125 million was paid with cash on the balance sheet. The going-in cap rate was approximately 6% with an unlevered IRR north of 7%. We believe this transaction will be accretive to FFO by approximately $0.05 for the remainder of 2021 and $0.10 for the entire year of 2022. These four items are the data points that are pointing to the beginning of AAT's recovery story starting to unfold. One last point of interest is that on page 16 of the supplemental, total cash net operating income, which is a non-GAAP supplemental earnings measure, which the company considers meaningful in measuring its operating performance is shown for the three months, ended June 30, at approximately $58.7 million. If you use this as a run rate going forward, it would be approximately $234 million, which would exceed 2019 pre-COVID cash NOI of approximately $212 million. A reconciliation of total cash NOI to net income is included in the glossary of terms in the supplemental. At the end of the second quarter, we had liquidity of approximately $718 million, comprised of $368 million in cash and cash equivalents and $350 million of availability on our line of credit. Our leverage, which we measure in terms of net debt-to-EBITDA was 6.0 times. Our focus is to maintain our net debt-to-EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 3.7 times. As far as guidance goes, we are in the middle of budget season now for 2022. We hope to begin issuing formal guidance again for 2022 on our Q3 '21 earnings call. At the end of the second quarter, excluding One Beach, which is under redevelopment, our office portfolio stood at approximately 93% leased with less than 1% expiring through the end of 2021. Our top 10 office tenants represented 51% of our total office-based rent. Given the quality of our assets and the strength of the markets in which they are located with technology and life science as the key market drivers, our office portfolio is poised to capitalize on improving dynamics, especially in Bellevue and San Diego. Q2 portfolio stats by region were as follows, our San Francisco and Portland office portfolios were stable at 100% and 96% leased, respectively. City Center Bellevue was 93% leased, net of a new amenity space under development, and San Diego is 91% leased, net of new amenity spaces being added to Torrey Reserve. We had continued success in Q2 preserving pre-COVID rental rates with, 13 comparable new and renewal leases, totalling approximately 50,000 rentable square feet, with an over 9% increased over prior rent on a cash basis, and almost 15% increase on a straight-line basis. The weighted average lease term on these leases was 3.6 years, with just over $7 per rentable square foot in TIs and incentives. We experienced a modest small tenant attrition during the quarter due to COVID, resulting in a net loss of approximately 16,000 rentable square feet or less than 0.5 point of occupancy, none of which was lost to a competitor. Our outlook moving forward is one of positive net absorption with 200 proposal activity picking up significantly. At this point in time, we are seeing smaller tenants willing to commit to longer-term leases at favorable rental rates. Even more exciting is the push to return to the office in the emerging large tenant activity and competition for quality larger blocks of space in select markets, including San Diego and Bellevue, of which we have current availability and active prospects. Our continued strategic investments in our current portfolio will position us to capture more than our fair share of net absorption as the markets improve. The renovation of two buildings at Torrey Reserve is near completion. We have aggregated large blocks of space to meet demand and take advantage of pricing power, and we have active large deals and negotiations on both buildings. The final phase of the renovation will include a new state of the art fitness complex and conference center, both serving the entire 14 building Torrey Reserve Campus. Construction is in full swing on the redevelopment of One Beach Street in San Francisco, delivering in the first half of 2022, and construction is nearly complete on the redevelopment of 710 Oregon Square in the Lloyd Submarket of Portland. One Beach will grow to over 103,000 square feet and 710 Organ Square will add another 32,000 square feet to the office portfolio. As Ernest mentioned, construction is well underway on Tower three at La Jolla Commons with expected completion in Q2, Q3 of 2023, and we are encouraged by the emerging large tenant activity and competition for quality large blocks of space and UTC. Finally, leasing activity is robust for our upcoming availabilities at Eastgate Office Park in Suburban Bellevue, even prior to executing the exciting renovation plans under development to take this special property to the next level of quality and customer experience. In summary, our office portfolio is on offense as we move forward into the rest of 2021 and beyond.

q3 ffo per share $0.44. qtrly earnings per share $0.08. collected 89% to date of rents that were due during q3.

Both are now available on the Investors section of our website americanassetstrust.com. First and foremost, I would like to wish all of our stakeholders and their loved ones continued health and safety during these truly unprecedented times. We remain optimistic that a vaccine will be forthcoming over the next six to nine months and trust me, I'm going to be one of the first in line. But nevertheless, we are prepared to endure a prolonged pandemic with our solid balance sheet world-class properties and tenants, and incredibly dedicated and competent employees. Fortunately now, the second and third quarters are behind us and I can tell you that our operations and financial results were nowhere near as catastrophic as my worst case projections that we modeled in April 2020. As most of you know, for many years -- for many years many outsiders believed our asset diversification was perceived negatively relative to any of our best-in-class peers. However, we now know that our ownership of a combination of irreplaceable office, multifamily, retail and mixed-use properties as opposed to a single asset class provided us with much needed stability and protection from the risks associated with the changes in economic conditions of a particular market, industry or even economy, such as those changes created by COVID-19. Would we have declared a larger dividend? Yes, probably and I would have benefited more than anywhere, but as fiduciary store stockholders and its staunch defenders of our balance sheet, we felt it's most prudent to remain conservative on our dividend until there is more visibility into a vaccine and an economic recovery. In any case, a year or so from now, once there is a vaccine, we expect to look back and hope that this will be nothing but a bad memory. One of our primary focuses over the past quarter has been collections in our retail segment. We are pleased to have made meaningful progress on that front where we began the pandemic initially collecting approximately 40% of retail rents in April to collecting approximately 80% retail rents in the third, quarter a number that we expect to get better. No doubt this was in large part due to the tireless work of our in-house collection team comprised of our property managers, lease administrators, legal staff and direct engagement by our executives with retailers. And though we remain sensitive and at times accommodating to the financial challenges of certain impact to tenants, we have certainly taken a more aggressive position with better capitalized tenants knowing the high quality of our underlying real estate and the clear rights we have embedded in our leases. We expect those tenants to adhere to their contractual obligations and we continue to refuse to agree to deals that are not in the best interest of our company and our shareholders. As such, we expect our third quarter collections to improve further as we continue our efforts, and in fact we know more significant checks and wires are currently in transit from tenants on account of third quarter collections. Our most notable collection challenges in the retail segment remain with our movie theaters, gyms and apparel stores as well as many of our retailers at Waikiki Beach Walk which until mid-October, had no incoming tourism to sustain meaningful revenue for our tenants. It is likely going to take several more months or quarters for us to have better visibility -- recovery by these more challenged tenants. That said, our focus continues to prioritize long-term strategic growth over the short term. So, we've entered into lease modifications that have provided certain tenants relief during the pandemic by way of deferrals or other monetary concessions where necessary, provided we obtain something in return whether by lease extensions, waiver, a certain tenant-friendly lease rights or incremental percentage rent. Otherwise, we intend to pursue all means to enforce our rights under leases, including litigation as necessary, particularly for those unilaterally withholding rents when we believe they have the funds to pay. Additionally, we are pleased to report that 100% of our properties continue to remain open and accessible by our tenants in each of our markets and anecdotally the majority of our employees are voluntarily working in person at our properties or at our corporate offices each week while taking absolutely all prudent safety precautions, despite having the flexibility to work from home. We continue to firmly believe that post pandemic, being together in person will promote much better productivity, collaboration and innovation and we expect and I've heard similar sentiment from the majority of our office tenants. Finally, on the election front, we are closely following two propositions on the California ballot that take direct aim at commercial real estate. Of course, we are firmly against Prop 15 which would eliminate Prop 13 Taxpayer Protection. If it passes, we would not expect it to create an immediate, meaningful impact to our company but rather would place a significant pass through financial burden on our tenants at a time when they are already struggling, not to mention the likely negative impact of those property taxes on future rent growth. And also, we are against Prop 21 which we believe is a flawed measure that would implement a significant amendment to existing rent control laws on the multifamily side, limiting landlords' rights and likely making the housing crisis in California even worse. We are contributing, our resources to impose those propositions. While the challenges we face today are complex, whether relating to the pandemic, racial, [Indecipherable] technology or legislative matters to name a few, we do believe that we are well positioned to navigate through and manage these challenges with, as Ernest mentioned our best-in-class assets, our 200 talented and dedicated employees and the strength of our balance sheet. Last night we reported third quarter 2020 FFO of $0.44 per share and net income attributable to common stockholders of $0.08 per share for the third quarter. Let me begin with my perspective that I am optimistic with the overall performance of this portfolio, even in light of the pandemic we are all going through. We too are feeling the bumps along the road like everyone else in our sectors. What makes me optimistic about our portfolio and its future are the following. Number one, our collections of monthly recurring billings continue to improve in Q3 over Q2 with total collections of approximately 89% in Q3 versus 80% in Q2. Number two, we believe we have ample liquidity to weather the storm that we are going through. We prepared for the worst-case scenario by modeling a $50 million quarterly burn rate at the beginning of this pandemic, not knowing what we were going into and in Q2, our actual burn rate was approximately $6 million. In Q3, we ended up with a cash surplus of approximately $9 million and this is after the operating capital expenditures and the dividend. We started Q3 with approximately $146 million of cash on the balance sheet and ended Q3 with approximately $155 million of cash on the balance sheet, primarily as a result of increased cash NOI, quarter-over-quarter due to our successful collection efforts outlined earlier by Adam. Number three, we have additional liquidity of $250 million available on our line of credit, combined with an entire portfolio of unencumbered properties with the exception of our only mortgage which is on City Center Bellevue. Number four, we believe we have embedded growth in cash flow in our office portfolio with approximately $30 million plus of growth in the office cash NOI between now and the end of 2022 as Steve will discuss later. And lastly, once we get a vaccine, we believe our high quality West Coast portfolio will rebound. We believe our Embassy Suites which is currently at approximately a break-even cash NOI will rebound based on its location and tourism. On October 15, Hawaii allowed tourists to come back to the island as they can demonstrate that they have had a negative COVID tests within the last 72 hours. On the first day, there were approximately 10,000 tourists that landed in Hawaii, we expect that tourism inflow to continue to increase each week and to start benefiting our Hawaiian properties over the coming quarters. Let's take a moment to look at the results of the third quarter for each property segment. Our office property segment continues to perform well, as expected during these uncertain times. Office properties excluding One Beach Street in San Francisco, which is under redevelopment were at 96% occupancy at the end of the third quarter, an increase of approximately 2% from the prior year. More importantly, same-store cash NOI increased 13% in Q3 over the prior year, primarily from increases in base rent at La Jolla Commons, Torrey Reserve campus, City Center Bellevue and the Lloyd District portfolio. Our retail properties continue to be significantly impacted by the pandemic, although the occupancy at our retail properties remain stable for the third quarter at 95% occupancy which was a decrease of approximately 3% from the prior year our retail collections have been challenging during the pandemic, as reflected in our negative same store cash NOI. Our multifamily properties experienced a challenging quarter, as same-store cash NOI decreased approximately 5.4% due primarily from the increase in average occupancy -- or I'm sorry, due primarily from the decrease in average occupancy at Hassalo in Portland, offset by favorable master lease signed with a private university in San Diego area at the beginning of the quarter. On a segment basis, occupancy was at 87.5% at the end of the third quarter, a decrease of approximately 3% from the prior year. We expect our occupancy to return to normal, stabilized levels at Hassalo as we have recently adjusted pricing and concessions. With these adjustments, in the last 10 days we have already seen leasing traffic increase from a weekly average of four to six tour's per week, to 10 to 12 tours per week. We have captured a total of 11 new leases in just the last week. Our mixed use property consisting of the Embassy Suites Hotel and the Waikiki Beach Walk Retail is located on the Island of Oahu. The State of Hawaii remained in a self-quarantine throughout most of the third quarter, significantly impacted the operating results for the third quarter of 2020. The Embassy Suites' average occupancy for the third quarter of 2020 was 66% compared with the average occupancy in the second quarter of 2020 of 17%. The average daily rate for the third quarter of 2020 was $209, which is approximately 40% of the prior year's ADR. Waikiki Beach Walk Retail suffered considerably with virtually no tourists on the island until recently. We are working daily with our tenants at Waikiki Beach Walk to formalize a recovery plan that benefits both our tenants and the company utilizing all resources necessary, including state and city grant programs and lobbying efforts. We had COVID-19 adjustments amounting to 2% of what was billed in Q3 to our tenants and the balance of approximately 9% is the amount outstanding of what was billed in Q3. This is compared to the second quarter collections of 81%, COVID-19 adjustments of 5% and Q2 amounts that were billed and still outstanding of 14%. This is compared to a bad debt expense accounts receivable of approximately 14% of the outstanding uncollected amounts at the end of Q2 and bad debt expense of straight-line rent receivables of approximately 7% at the end of Q2. It's easy to get confused on all these percentages. However, from a big picture perspective, at the end of the third quarter, our total allowance for doubtful accounts, which reflects the cumulative bad debt expense charges recorded totals approximately 39% of our gross accounts receivable and approximately 3% of our straight-line rent receivables. Let's talk about liquidity; as we look at our balance sheet and liquidity at the end of the third quarter, we had approximately $405 million in liquidity, comprised of $155 million of cash and cash equivalents and $250 million of availability on our line of credit, and only one of our properties is encumbered by mortgage. Our leverage, which we measure in terms of net debt to EBITDA was 6.7 times on a quarterly, annualized basis. On a trailing 12 month basis, our EBITDA would be approximately 6.0 times. Our focus is to maintain our net debt-to-EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 3.6 times on a quarterly annualized basis and 3.9 times on a trailing 12 month basis. As it relates to guidance, as previously disclosed, we withdrew our 2020 guidance on April 3 due to the uncertainty that the pandemic would have on our existing guidance, particularly in our hotel and retail sectors. Until we have a clear view of the economic impact of the pandemic or more certainty as to when a vaccine becomes available, we will refrain from issuing further guidance. As Bob said earlier, at the end of the third quarter, net of One Beach, which is under redevelopment our office portfolio stood at over 96% leased with just under 6% expiring through the end of 2021. Given the quality of our assets and the strength of the markets in which they are located with technology and life science as key market drivers, we continue to execute new and renewal leases at favorable rental rates delivering continued NOI growth in our office segment. The weighted average base rent increase for our nine renewals completed during the quarter was 6.7% and it's also as Bob pointed out earlier, with leases already signed, we have locked in approximately $30 million of NOI growth in our office segment priced at approximately [Indecipherable] in 2020, $14 million in $2021 and $10 million in 2022. We anticipate significant additional NOI growth in 2022 and 2023 through the redevelopment of leasing of 102,000 square feet at One Beach Street in San Francisco and 33,000 rentable square feet at 710 Oregon Square in the Lloyd submarket in Portland. In addition, we have the ability to organically grow our office portfolio by up to an additional 768,000 square feet or 22% on sites we already own by building Tower 3 at La Jolla Commons, a 213,000 square foot tower that's currently into the city for permits and Blocks 90 and 103 at Oregon Square with two configuration options, one at 392,000 square feet and the other at 555,000 square feet, which we recently received the entitlements on from the Portland Design Review Commission. We continue evaluating market conditions, prospective tenant interest and hopefully decreasing construction costs on these development opportunities. In summary, we have a stable office portfolio, little near term rollover, significant build in NOI growth and additional upside through repositioning and redevelopment within our existing portfolio plus substantial new development on sites we already are on.

sees fy ffo per share $1.91 to $1.93. q3 ffo per share $0.57. qtrly earnings per share $0.17.

Both are now available on the Investors section of our website, americanassetstrust.com. I am pleased to report that we continue to make great progress on all fronts as we rebound from the impact of COVID-19. We knew at the onset of the pandemic that we would not be impervious to its economic impact, but we were confident that the high-quality, irreplaceable properties and asset class diversity of our portfolio, combined with the strength of our balance sheet and ample liquidity would help us pull through and maybe even come out on the other side better off than at the beginning. We continue to be optimistic as we meaningfully rebounded in 2021 and anticipate further growth in 2022 and beyond. That's why we've aggregated the portfolio comprised of a well-balanced collection of office, retail, multifamily and mixed-use properties located in dynamic high barrier to entry markets, where we believe that the demographics, pent-up demand and local economies remain strong relative to others. Our properties are more resilient in our view to economic downturns as they are in the path of growth, education, and innovation and importantly can likely withstand the impact of long-term inflation, perhaps even benefit from the benefits of long-term inflation. Along those lines during the past quarter, we used our liquidity to acquire two complementary and accretive office properties in Bellevue, Washington, a market that we remain very bullish on and in which we expect continued rent growth. Meanwhile, our development of La Jolla Commons III into an 11 story, approximately 210,000 square foot Class A office tower remains on time and on budget for Q2 or Q3 2023 delivery. We are encouraged about the leasing prospects in the UTC submarket for high-quality, large blocks of space, where both tech and life science funding continues at record levels and same tenants continue to expand. But we don't have specific news to share on that front at this time. The same holds true for our One Beach Street development on the North Waterfront of San Francisco, which we believe to be a unique opportunity for a full building tenant with delivery expected in Q2 or Q3 of 2022. Additionally, I'm happy to inform you that our Board of Directors has approved the quarterly dividend of $0.30 a share for the third quarter, which we believe is supported by our expectations for operations to continue trending positively. It will be paid on December 23 to shareholders of record on December nine. As we look at our portfolio, we are always reminded of the importance of owning and operating the preeminent properties in each of our markets. That's why we focused on continuing to enhance our best-in-class community shopping centers to promote a better experience for our shoppers with the expectation that this will further strengthen our properties as the dominant centers in our submarkets. And we understand the importance of modern state-of-the-art amenities in our office projects, which assist our tenants in the hiring and retention of talent in what is currently a very competitive job market. We feel strongly that consistently improving and monetizing our properties, including incorporating sustainability and health and wellness elements is critical to remaining competitive in the marketplace in order to attract the highest quality and highest credit tenants. Meanwhile, we are encouraged by our approximately 97% collection percentage in Q3, increased leasing activity across all asset classes, fewer tenant failures and bankruptcies than we expected and many modified leases hitting percentage rent thresholds sooner than expected and are collecting of approximately 96% of deferred rents due during the third quarter, all validating the strategies we implemented during COVID to support our struggling retailers through the government-mandated closures as we are fortunate to have the financial ability to do so. Briefly on the retail front, we've seen an improved leasing environment over the past few quarters with positive activity engagement with new retailers for many of our vacancies, including recently signed new deals with Columbia Sportswear, Williams-Sonoma, Total Wine and First Hawaiian Bank to name a few, and renewals with Nordstrom's, Petco and Whole Earth among others as well as many other new deals and renewals in the lease documentation process. Retailers are choosing our best-in-class locations to improve their sales, all the while we remain selective in terms of merchandising our shopping centers for the longer term. Chris Sullivan and his team have done a tremendous job on that front despite some of the continuing headwinds at our Waikiki Beach Walk retail. On the multifamily front as of quarter end, we were 96% leased at Hassalo in Portland, and 98% leased in San Diego multifamily portfolio. All of the master lease units in San Diego that you've heard us discuss previously were absorbed by early August. Though multifamily collections have been particularly challenging in Portland due to COVID-related government restrictions, we have started receiving meaningful checks from government rental assistant programs to drive down our outstanding amounts owed and expect more checks to come. We are confident that Abigail's strong leadership at San Diego multifamily and Tania's new energy at Hassalo will drive improvements at our multifamily properties, both operationally and financially. Last night we reported third quarter 2021 FFO per share of $0.57, and third quarter 2021 net income attributable to common stockholders per share of $0.17. Third quarter results are primarily comprised of the following: actual FFO increased in the third quarter by approximately 11.4% on a FFO per share basis to $0.57 per FFO share compared to the second quarter of 2021, primarily from the following four items: first, the acquisitions of Eastgate Office Park in Corporate Campus East III in Bellevue, Washington, on July seven and September 10, respectively, added approximately $0.023 of FFO per share in Q3. Second, Alamo Quarry in San Antonio added approximately $0.017 of FFO per share in Q3, resulting from 2019 and 2020 real estate tax refunds received during the third quarter of 2021, which reduced Alamo Quarry's real estate tax expense. Third, decrease of bad debt expense at Carmel Mountain Plaza added approximately $0.005 per FFO share in Q3. And fourth, the Embassy Suites and Waikiki Beach Walk added approximately $0.012 of FFO per share in Q3 due to the seasonality over the summer months. Let me give you an update on our Waikiki Embassy Suites hotel. Due to the impact of the delta variant, Hawaiian Governor Ige made a formal announcement on the third week in August that if you have plans or are thinking of coming to Hawaii, please don't come until we tell you otherwise. It was not a mandate, but it did create a detrimental impact to our visitors to Hawaii and resulted in huge cancellation starting in August and into September. Our results for Q3 at Embassy Suites hotel were expected to be much higher. Overall, occupancy, ADR and RevPAR continued to increase on heading in the right direction. As of October 19, Governor Ige made another formal announcement to begin welcoming all essential and nonessential travel, starting November 1, 2021. We look forward to welcoming the fully vaccinated individuals and ramping up our visitor industry. On our Q2 earnings call, I mentioned that Japan, who was then approximately 9% fully vaccinated, is now over 65% fully vaccinated and is expected to hit 80% by November. All emergency measures in Japan were lifted on September 30 and lifted the intensive antivirus measures. It marks the first time since April that Japan is free of corona virus declarations and intensive measures. We expect to start seeing the Japanese tourists beginning to slowly start revisiting the Hawaiian Islands beginning in November, including Waikiki. Now as we look at our consolidated statement of operations for the three months ended September 30, 2021, our total revenue increased approximately $6.5 million over Q2 '21, which is approximately a 7% increase. Approximately 43% of that was from the two new office acquisitions. Same-store cash NOI overall was strong at 14% year-over-year, with office consistently strong before, during and post-COVID and retail showing strong signs of recovery. Multifamily was flat primarily year-over-year as a result of higher bad debt expense at our Hassalo on eight departments in Portland, but it was still approximately 5% higher than Q2 2021. As previously disclosed, we acquired Corpus Campus East III on September 10, comprised of an approximately 161,000 square foot multi-tenant office campus located just off Interstate 405 and 520 freeway interchange, less than five minutes away from downtown Bellevue, Washington. The four building campus is currently 86% leased to a diversified tenant base, which we saw as an opportunity when in-place rents were compared to what we were seeing in the marketplace. The purchase price of approximately $84 million was paid with cash on the balance sheet. The going-in cap rate was north of 3% as a result of the existing vacancy. Our expectation based on our underwriting is that this asset will produce a five year average cap rate over 6% and a strong unlevered IRR of 7%. Let's talk about liquidity. At the end of the third quarter, we had liquidity of approximately $522 million, comprised of approximately $172 million in cash and cash equivalents and $350 million of availability on our line of credit. Our leverage, which we measure in terms of net debt-to-EBITDA was 6.4 times. Our focus is to maintain our net debt-to-EBITDA at 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 3.9 times. As we approach year-end, we are providing our 2021 guidance. The full year range of 2021 is $1.91 to $1.93 per FFO share with a midpoint of $1.92 per FFO share. With that midpoint, we would expect Q4 2021 to be approximately $0.46 per FFO share. The $0.11 estimated difference in Q4 FFO per share would be attributable to the following: approximately a negative $0.025 of FFO per share relating to nonrecurring collection of prior rents at one of our theaters in Q3 that will not occur in Q4 2021. Secondly, our mixed-use properties are expected to be down approximately $0.037 of FFO per share relating to the normal seasonality of the Embassy Suites hotel and the related parking. Third, Alamo Quarry is expected to be down approximately $0.02 of FFO per share relating to the nonrecurring property tax refund that was received in Q3 2021 for 2019 and 2020. And we expect G&A and interest expense to increase and therefore, decrease FFO by approximately $0.02 per FFO share. Additionally, we plan to issue 2022 full year guidance subject to Board approval when we announce year-end 2021 results in February of 2022. Historically, we have issued our full year guidance on the Q3 earnings call. We believe resetting the issuance and cadence of our guidance to the Q4 earnings call going forward is more in alignment with our peers and also gives us more clarity as to the following year guidance. We will continue our best to be as transparent as possible and share with you our analysis, interpretations of our quarterly numbers. Our office portfolio grew by approximately 440,000 square feet or nearly 13% in Q3 with the two new office acquisitions. We brought up these assets on board at approximately 92% leased with approximately 20% rolling through 2022, which provides us with the opportunity to deliver start rates from approximately 10% to 30% over ending rents. At the end of the third quarter at One Beach, which remains under redevelopment, our office portfolio is approximately 93% leased with 1.5% expiring through the end of 2021, approximately 9% expiring in 2022 with tour and proposed activity that has increased significantly. Our office portfolio has weathered the storm well. In the second and third quarters, we executed 57,000 annual square feet of comparable new and renewal leases with increases over prior rent of 9.2% and 14.5% on a cash and straight-line basis respectively. New start rates for the 2021 rollover are estimated to be approximately 17% above the ending rates. In fact, we are at least documentation for over half of the space rolling in 2021 as start rates nearly 28% over ending rates. New start rates for the 2022 rollovers are estimated to be approximately 18% above the ending rates. We are employing multiple initiatives to drive rent growth and occupancy, including renovating buildings with significant vacancy, adding or enhancing amenities, aggregating and white boxing larger loss of space where there is a scarcity of such blocks and improving our smaller spaces to be move-in ready. By way of a few examples, we are just completing renovations of two buildings at Torrey Reserve in San Diego. Those two buildings represent 80% of the total project vacancy. We now have leases signed or in documentation for over half of that vacancy at premium rates. We will be completing similar renovations Eastgate Office Park where leasing activity is already robust, but we anticipate taking this property to the next level of quality. We are adding new fitness and conference facilities at Torrey Reserve, City Center Bellevue and Corporate Campus East III and will be further enhancing the employee's amenities building at Eastgate. We believe that our continued strategic investments in our portfolio will position us to capture more than our fair share of that absorption at premium rents as the markets improve. And we have more to look forward to with redevelopments and development. In addition to One Beach Street and La Jolla Commons previously mentioned by Ernest, construction is nearly complete on the redevelopment of seven Tower Square in the, on our market at Portland, which will add another 32,000 rentable square feet to the office portfolio. In summary, our office portfolio is on us as we move forward into the rest of 2021 and beyond.

q1 adjusted non-gaap earnings per share $2.18 excluding items. updating its outlook for fiscal year 2021. revenues of $52.5 billion for q1, a 9.7 percent increase year-over-year. sees fy 2021 revenue growth in high-single digit percent range, up from mid-single digit percent range. all other previously communicated aspects of co's fiscal year 2021 financial guidance and assumptions remain same.

You'll have an opportunity to ask questions after today's remarks by management. AmerisourceBergen has had a strong start to our fiscal '21 year. We delivered exceptional results driven by differentiated commercial solutions with revenues of $52.5 billion for the first fiscal quarter, representing growth of 10% year-over-year and our adjusted earnings per share increasing 24% versus the prior year quarter. Building upon our businesses resilience, our teams executed and leveraged our capabilities to create value throughout the supply chain. Our purpose driven culture continues to empower our associates to think, plan and act decisively to support all of our partners and to facilitate patient access to critical medical treatments. In addition to these results, as we announced in January, we entered into a strategic transaction with Walgreens Boots Alliance to acquire the majority with large healthcare business and extend and expand our existing distribution agreement. As we have said, these agreements are part of the next evolution of enhancing AmerisourceBergen's ability to deliver innovative solutions for our partners, further building on our platform to deliver key distribution capabilities and value-added services to support patient access in new geographies. AmerisourceBergen's ongoing focus on patient access means providing innovative services and solutions to support our manufacturer partners and provide customers with our differentiated value proposition. World Courier, for example, is highly sought after for it's expertise in helping manufacturer partners navigate complexities on a global scale. During the pandemic, World Courier's proven track record as an international leader in specialty logistics have enabled us to support our customers worldwide against the backdrop of changing local restrictions, limited air traffic and additional operational challenges. We have been able to facilitate direct to patient services and global clinical trials at a time when both demand and complexity for these services was understandably at its peak. Similarly, we continue to support patient access to vital treatments for COVID-19. In the U.S., we continue to be the distributor of antiviral and antibody therapies, which are playing an increasingly important role as more and more hospitalized patients are receiving these treatments to help them recover from COVID-19. In Canada, our Innomar business is partnering with FedEx as the primary distributor for the COVID vaccine. Our team at Innomar is safety and security storing the vaccines in the storage facilities across Canada and packaging them to support the temperature requirements specified by the manufacturer. AmerisourceBergen's scale and expertise in specialty as well as our culture of delivering collaborative and innovative solutions, enabled this important work. We have spent years building on and enhancing our leadership, especially distribution. This continued investment in and focus on an important part of the pharmaceutical market continues to benefit both AmerisourceBergen and our partners. And over the last several months, the ability of our sourcing and commercial teams to leverage our expertise and data analytics capability is foundational to our facility to play an important role in providing the specialty distribution solutions for COVID related treatments. We deliver a clear and differentiated value proposition for our partners in the U.S. healthcare system and continue to focus on building on our strengths in specialty distribution as those capabilities continue to be even more important to all our customers. AmerisourceBergen's strong portfolio of customers is another important differentiator for us as it is an important driver of growth across our businesses. Over the years, AmerisourceBergen has made it a priority to have long-term strategic relationships with manufacturers and providers that embrace and appreciate collaboration. As we announced last month, we have agreed to strengthen our strategic partnership with Walgreens by extending and expanding our commercial agreements. This extended and expanded partnership in the U.S. will allow us to create incremental growth and efficiency opportunities, enabling each of our enterprises to better serve our respective customers. Teams from both our companies have already identified new opportunities for enhanced growth and efficiency in the areas of logistics, transportation and distribution. As we continue to realize the improved capabilities derived from this partnership, these initiatives will enhance our ability to create differentiated value for all of AmerisourceBergen's customers. One customer group, for whom we have consistently created new incremental value, is our independent pharmacy customers including our more than 5,000 Good Neighbor Pharmacy and Elevate Provider Network members. These independent pharmacies provide critical care for their communities and their fearlessness and adaptability as entrepreneurs have enabled them to rise to the challenges of the pandemic. We are proud to have been able to support them with the tools they have needed to connect with their patients and keep them healthy. We look forward to working as a network administrator on behalf of qualified and eligible pharmacy network partners to support vaccination efforts in their communities when we enter the broader inoculation phase here in the United States. In the Animal Health segment, our MWI business has moved swiftly to deliver innovative solutions to help our customer succeed in the current environment. These include ensuring that MWI associates are accessible to our customers 24/7 and bolstering our customers' abilities to offer virtual services to a pet caring clients including innovative client communication solutions and home delivery services of quality medications and pet care products. AmerisourceBergen's long-term focus on strong customer relationships, leadership in specialty distribution and manufacturing services and our continued ability to support innovation, has solidified our market leadership and business strength over the years. From this position of strength, we recently took a significant step to power the next evolution of enhancing our ability to provide innovative and global healthcare solutions. As we announced last month, we've entered into a strategic agreement with Walgreens Boots Alliance to acquire the majority of it's Alliance Healthcare business. Through this acquisition, we will extend our distribution capability into key new markets; add in depth, breadth and reach, and strengthening our global platform of manufacturer and other value-added services. With expanded scale and added services, our combined business will be able to better support pharmaceutical innovation through a global footprint of broad leadership and local expertise, which further positions AmerisourceBergen as the partner of choice. The pandemic has heightened both our public and private partners' awareness of the value of a strong and capable pharmaceutical supply chain and Alliance Healthcare better positions AmerisourceBergen to meet its increasingly global nature as well. As our global footprint expands, so do the importance of corporate stewardship, AmerisourceBergen understand and appreciate the value of being a responsible enterprise and our recent initiatives, including continue to advance our talent and culture, accelerating workforce diversity inclusion and further investing in and supporting our associates. We remain vigilant in our efforts to protect the safety and well-being of our associates as the COVID waves effect various regions and teams and the importance of the work we're doing remain unwavering. Driven by our purpose, we are maintaining our enhanced protection and safety protocols and appropriately compensating frontline associates. Remote work is still the prevailing policy for all suitable roles, we are watching the situation closely as I'm sure all of you are doing and we'll continue to prioritize the health and safety of our associates. Underscoring our efforts to support and empower our associates around the world, AmerisourceBergen was recently certified as a Great Place to Work company following the survey of employees around the world. The survey reveals that our associates reported a consistently positive experience with peers among leaders and in job responsibilities. We saw high scores for all indicators and our overall score was significantly higher in the typical U.S. based company. Additionally, for the fourth year in a row, the Human Rights Campaign has recognize AmerisourceBergen as a Best Place to Work for LGBTQ equality awarding us a perfect score on the Corporate Equality Index due to our non-discrimination policies, equitable benefits, support of an inclusive culture and focus on corporate social responsibility. AmerisourceBergen recognizes the business and personal importance of having a culture that is inclusive and equitable regardless of race, gender, sexual orientation or gender identity and for veterans and people with disabilities as well. To this end, we are accelerating our diversity and inclusion strategy to become an even more diverse and equitable company. Over the past months, we have conducted a comprehensive D&I organizational assessment, initiated a global D&I strategy to support among measured and engaged workforce, formed a D&I Council led by a senior C-suite executive and signed the CEO Pledge for diversity and inclusion, which is a commitment to increased diversity and support more inclusive work environments. AmerisourceBergen strives to ensure that our associates feels a part of a fare inclusive and transparent workplace. A diverse inclusive and equitable culture is a proven enhancer of business value and these initiatives will ensure that we have the right programs and tools in place in the short term, so we can become a leader in this area in the longer term. Our success in advancing our progressive culture, one that is fuelled by the passion pride and dedication of our purpose driven associates, is visually embodied by our new brand, which we unveiled last week. The new brand embodies a spirit of innovation for the design that is energizing, confident and inspiring, while also displaying our unity as an enterprise when we go to market. As we continue to move our business forward, we remain committed to advancing a differentiated culture that inspires our associates, unites them and helps them develop and achieve their full potential. Our business strength is a direct result of having engaged, passionate and dedicated associates and our focus on advancing our talent and culture remains a key strategic priority. We have continued to execute across our business to help us deliver innovative solutions to our partners. As AmerisourceBergen continues to involve, we are empowered by our purpose and we will build upon our strengths to drive growth across enterprise. We will further strengthen our portfolio of solutions and customer relationships, enhance our specialty capabilities to support both upstream partners and downstream customers, continue to focus on execution and supporting innovation and enable positive outcomes globally by facilitating market access and supporting pharmaceutical innovation. I continue to be inspired by, proud of and confident in our themes to rise to the many challenges and complexities that we face with courage and effectiveness. By being united in our responsibility to create healthier futures, AmerisourceBergen is purpose driven and well positioned to create long-term sustainable growth. My remarks today will focus on our adjusted non-GAAP financial results unless otherwise stated. Growth rates and comparisons are made against the prior year December quarter. As Steve mentioned, we clearly had a strong start to our 2021 fiscal year with growth across our businesses. As I said back in November, we entered fiscal 2021 with strong momentum and that clearly accelerated in the quarter as our teams executed it across the entire portfolio of AmerisourceBergen businesses. Guided by our purpose, our teams worked diligently to support pharmaceutical innovation and facilitate patient access to vital medications. AmerisourceBergen's key differentiators continue to provide a platform for value creation for all our stakeholders, help me provide key solutions for our partners, both upstream and down, to ultimately ensure patient health and well-being. Throughout my tenure with AmerisourceBergen, I have shared my pride in being part of a company that is driven by purpose, focused on execution and unwavering and our efforts to strengthen our associate experience. Our associates power our success and AmerisourceBergen continues to protect, support and invest in our talent. Turning now to discuss our first quarter results. First, I will review our adjusted quarterly consolidated results and our segment performance. Second, I will cover the upward revision to our fiscal 2021 guidance. Beginning with our first quarter results, we finished the quarter with adjusted diluted earnings per share of $2.18, an increase of 24%, primarily due to exceptional operating income growth across our businesses. Our consolidated revenue was $52.5 billion, up 10%, driven by revenue growth in both the Pharmaceutical Distribution Services segment and Other, which includes our Global Commercialization Services & Animal Health businesses. Gross profit increased 15% to $1.4 billion, driven by increases in gross profit in each operating segment. In the quarter, gross profit margin increased 12 basis points from the prior year quarter. This gross margin improvement is due to growth in a number of our higher margin businesses, and in particular, a significant increase in sales of specialty products. The margin improvement is also due to the gross profit portion of the tailwind related to exiting the PharMEDium business and additionally, our reversal of reserve taken in the back half of fiscal 2020 associated with forecasted inventory value writedowns that did not materialize. The PharMEDium comparison and the inventory writedown reversal contributed one-third of the 12 basis point gross profit margin improvement. Consolidated operating income was $617 million, up $122 million or 25% compared to the prior year quarter. This increase was driven by the increased gross profit in both the Pharmaceutical Distribution Services segment and our Global Commercialization & Animal Health Group, which I will discuss in more detail when I review segment level performance. To support our revenue growth while protecting, supporting and appropriately compensating our frontline associates, operating expenses grew 8% to $810 million. Operating expenses as a percent of revenue was 1.54% which is a 2 basis point decline from the prior year quarter. Moving now to net interest expense, which increased $3 million to $34 million primarily due to a decrease in interest income resulting from a decline in investment interest rates. Our effective tax rate was 22%, up from 21%, in the first quarter of fiscal 2020. Our diluted share count declined modestly to 206.8 million shares. Regarding free cash flow and cash balance, our adjusted free cash flow was $838 million in the first quarter. This strong start to the year on cash flow, positions us well after the first quarter and we are on track with our adjusted free cash flow guidance for the year. We ended the quarter with $4.9 billion of cash of which $1.1 billion was held offshore. This completes the review of our consolidated results. Now, I will turn to our segment results. Beginning with Pharmaceutical Distribution Services, segment revenue was $50.5 billion, up 10%, driven by increased specialty product sales, including COVID-19 therapies, as well as growth at some of our largest customers and broadly across our businesses. Segment operating income increased about 27% to $496 million with operating income margin up 13 basis points. As a reminder, the exit of the PharMEDium business represented a $20 million tailwind to the segment's operating income, roughly half of which is in gross profit and the other half in operating expense. Excluding the PharMEDium tailwind, segment operating income growth would have been up 20%. The strong operating income performance was driven by continued positive trends across our robust portfolio of customers and broadly across our businesses and, in particular, a significant increase in sales of specialty products. AmerisourceBergen's leadership in specialty distribution, led by the specialty physician services group, and our capabilities in supporting specialty sales into health systems continue to provide us the platform to deliver differentiated value for our partners through our scale, reach and expertise. In the quarter, our specialty physician services group continued a strong growth as practices are prepared operationally to continue to treat their patients throughout COVID challenges. Additionally, our health systems business had significant growth as we're helping to facilitate vital access to antiviral and antibody therapies for COVID-19 patients. The fundamentals of the health systems business overall continue to be strong particularly as we are now also seeing increased biosimilar utilization in this customer segment. While biosimilar utilization continues to be strongest and most impactful on the specialty physician side, we are encouraged to see growing adoption trends in health systems. I will now turn to the Other segment, which includes businesses that focus on Global Commercialization Services & Animal Health, including World Courier, AmerisourceBergen Consulting and MWI. In the quarter, total revenue was $2.1 billion, up 11%, driven by growth across the three operating segments. Operating income for the group was up $17 million or 16%, primarily due to growth at MWI and World Courier. MWI is benefiting from ongoing process initiatives and the strength of its customer relationships, particularly in the companion business where veterinarians are benefiting from increased pet ownership, increasing standards of care and adapting well virtual engagement and limited physical interaction. World Courier has continued to differentiate itself as the provider of choice in global specialty logistics as their commercial customers navigate increased complexity, the need for cell and gene solutions grows and there is an increased utilization of direct-to-patient capabilities. Additionally, I will note that World Courier's growth rate in the quarter was augmented by foreign currency exchange rate. This completes the review of our segment results. So I will now turn to our fiscal 2021 guidance. This updated financial guidance does not include any contribution from the proposed Alliance Healthcare acquisition announced in January 2021. As I've just outlined, AmerisourceBergen delivered exceptional growth in the first quarter and continues to expect positive trends across our business as we move further into fiscal 2021. We are also updating other financial guidance metrics for fiscal 2021. Revenue is now expected to be in the high single-digit percent growth range as we have seen better than expected growth in both Pharmaceutical Distribution Services and Other. Next, operating expenses, we now expect operating expenses to grow in the mid to high single-digit percent range. We remain committed to investing in, protecting and ensuring the safety and well-being of our associates, especially those on the front lines. Turning now to operating income; we now expect to grow operating income in the high single-digit percent range. This is a result of raising our pharmaceutical distribution operating income guidance to the high-single digit range, given the significant operating income growth in the first quarter and continued overall positive trends across the business. It also reflects our improved expectation for operating income in Other, which we now believe will grow in the mid to high single-digit range as a result of positive trends in our Global Commercialization & Animal Health businesses. Lastly, regarding shares outstanding. Given the cash needs associated with the Alliance acquisition, we are narrowing our guidance from a range of 206 million to 207 million and we now expect to finish the year around 207 million shares outstanding. All other financial guidance metrics for fiscal 2021 remain unchanged. Regarding our fiscal second quarter earnings per share expectations, while we do not provide quarterly guidance, I will note that the March 2021 quarter will be impacted by a tough comparison to the March 2020 quarter, which added significant pull forward of sales associated with increased customer purchases at the onset of COVID-19. In closing, our strong customer relationships, focus on execution excellence and commitment to innovation will continue to drive our business forward while enhancing our capabilities to serve our partners and their patients. AmerisourceBergen is well positioned by our key differentiators and we are excited for how the Alliance Healthcare acquisition will build on our pharmaceutical centric strategy, expanding our reach and further strengthening our global platform for value-added services and solutions. Our work around the acquisition remains on track and we look forward to welcoming the Alliance Healthcare team. These past several quarters have proven the importance of pharmaceutical innovation and access and I have spoken in great detail about the resilience of AmerisourceBergen's business. Clearly, our results and expectations show that the word resilience understates the strength of our business as our purpose driven teams are leveraging our capabilities and expertise to provide important value-added solutions to help contribute to positive patient outcomes globally. We are making positive contributions to the people, planet and communities where we live and work by being responsible business and in our upcoming Global Sustainability and Corporate Responsibility Report, we will be providing an update on our commitments in these areas to show how our business practices align with many of the leading global sustainability frameworks. We know that by doing business thoughtfully and with long-term perspective, AmerisourceBergen can drive sustainable growth, while creating value for all our stakeholders and fulfilling our purpose of being united in our responsibility to create healthier futures.

q3 adjusted non-gaap earnings per share $2.16 excluding items. adjusted diluted earnings per share guidance range raised to $9.15 to $9.30 for fiscal 2021. revenues of $53.4 billion for q3, a 17.7 percent increase year-over-year. adjusted free cash flow for fy 2021 to be approximately $1.7 billion, up from approximately $1.5 billion.

I'm Bennett Murphy, Senior Vice President, Investor Relations. You have an opportunity to ask questions after today's remarks by the management. Before we discuss our results for the quarter, I want to comment on the distribution industry's recent milestone regarding the proposed settlement agreement to address opioid-related claims of U.S. state attorneys generals and political subdivisions in participating states. Throughout the litigation process, we have been consistent in stating our desire to address the normalcy of the opioid challenge by bringing solutions to the table. If the industry's proposed agreement and settlement process leads to a final settlement, it would collectively provide thousands of communities across the United States with substantial financial support. Clearly, the process is in an advanced stage, and we will not comment deeply at this time. We take our role in the supply chain seriously and continue to close with stakeholders concerning these complex matters. AmerisourceBergen will continue to work diligently and, alongside partners, combat drug diversion while supporting real solutions to help address the crisis in the communities where we live, work and serve. Turning now to our results for the third quarter of fiscal 2021. AmerisourceBergen delivered yet another quarter of exceptional results driven by a high level of execution, purpose-minded team members and continued focus on delivering differentiated value. These results reflect continued strong performance across AmerisourceBergen's businesses as we capitalize on our differentiated pharmaceutical-centric value proposition and as our team successfully executes on our key strategic initiatives. This strength and execution continue to create value for our shareholders. And today, we are again raising our fiscal 2021 full year guidance, which Jim will discuss later in greater detail. I will focus my remarks today on the key strategic pillars that are driving our strong performance, as well as how, with the addition of Alliance Healthcare, AmerisourceBergen continues to be well positioned to create value for all our stakeholders. AmerisourceBergen remains next-minded, and we are focused on continuing to enhance our ability to provide global healthcare solutions as we support pharmaceutical innovation and access, both in the United States and internationally. In the United States, our Pharmaceutical Distribution business continues to benefit from our industry-leading customer relationships, our leadership in specialty distribution and commercialization services and strong end market trends, including an earlier than expected return to pre-COVID prescription utilization trends in the June quarter. Our leading customer base includes our Good Neighbor Pharmacy and Elevate Provider Network members. They are proving daily that community pharmacies are at the forefront of providing quality and equitable care and maintaining deep levels of trust with their patients and communities. In fact, for the fifth year in a row, Good Neighbor Pharmacy was ranked highest among brick-and-mortar chain drug store pharmacies by J.D. Power. This is the tenth time we have received that honor in the past 12 years, and it is a testament to community awareness of the value of the quality care and experience patients receive at GNP member pharmacies. We held our annual Thoughtspot Conference last week, and I was touched and inspired by the stories that our members shared through the entrepreneurship, expertise and deep community roots, community pharmacies prove that they do more than just [draw] prescriptions. They are critical promoters of health equity across the U.S., often driving above and beyond to provide holistic care and health education at the local level, particularly in under-resourced communities. Since beginning of the pandemic, community pharmacies have stepped up fearlessly to meet the unprecedented challenges of a global health crisis and show the world why community pharmacies are integral to our communities. The value proposition of community-based care has never been clearer. Another relevant example is on the animal side. The growth in pet ownership has increased demand for our veterinarian customers as pets are a cherished part of the family and the care a veterinarian provides is valued. This positive trend over the last year has long-term benefits for our business as MWI is well positioned with key anchor customers and services. On the human health side, access to local trusted expertise care remains vital, particularly for those dealing with complex health challenges that bring them into the care of specialty physician providers. As I've said from the onset of the pandemic, we are conscious of the negative impact that restricted measures have on patients when they have less access to screenings and tests that help doctors identify serious health issues. This has particularly impacted patients who are used to a doctor or healthcare facility. But now our customers have begun to see a normalization in new patient trends. And as a result, patients are more effectively being diagnosed and gaining access to treatment. This is a clear positive for patient care. As the leading provider of specialty distribution and commercialization services, we will continue to play our role in supporting pharmaceutical innovation and access as patients visit volumes continues to normalize. Our specialty physician services business had strong performance this quarter and continues to differentiate AmerisourceBergen with leading value-added services, such as those through our physician GPOs. Additionally, bio centers continue to be a positive for our customers, our business and the healthcare system overall as they provide room for new innovative products to come to market. The innovations in CAR T and cell and gene therapies and the potential applications of the new mRNA technology offers the medical community new potential tools in the treatment of serious diseases that previously alluded truly effective care. AmerisourceBergen is well positioned to support all these innovations through our specialty distribution and manufacturer services offerings. Our unique ability to provide value-added expertise in conjunction with innovative solutions and quality service enhance our partnerships and grow our business. With strong partnerships, relationships and a leading portfolio of solutions to support a wide pipeline of practices and products, AmerisourceBergen is uniquely positioned to capitalize on the market opportunities provided by global pharmaceutical innovation as we drive growth in our business and help our partners tackle some of the most critical challenges based in healthcare. We have a strong foundation in place across our businesses. And in June, we took another significant step forward by closing the Alliance Healthcare transaction and welcoming their talented team to the AmerisourceBergen family. The acquisition of Alliance Healthcare is the next evolution of enhancing our ability to provide innovative and global healthcare solutions and is a critical component to our future success. Alliance Healthcare is a strong and diversified pharmaceutical distribution and manufacturer services company with leading market positions across an attractive portfolio of both established European markets and high-growth emerging markets. In addition to their traditional wholesale business, Alliance Healthcare operates a range of leading higher-margin innovation businesses serving both upstream partners and downstream customers. The acquisition of Alliance Healthcare extends our distribution reach built by our market-leading services capabilities and expands on our key differentiators. Specifically, AmerisourceBergen's leading portfolio of key anchor customers now includes a long-term relationship with Boots in the U.K. and a network of independent pharmacies across Europe through the Alphega pharmacy network. Since the completion of the transaction, we have gotten the chance to know about the business and the people and Alliance Healthcare better, and we remain very positive about the opportunity that this landmark achievement provides AmerisourceBergen as we are positioned for a differentiated global growth platform. This includes our dedication to further strengthen our portfolio of solutions and customer relationships to lead with market leaders in every segment and to supporting patient access wherever a prescription is needed. Second, AmerisourceBergen's leadership in specialty is further enhanced with key commercialization services in new markets. By leveraging the expertise and capabilities of our World Courier business, along with Alliance's Alloga and Alcura, we elevate our ability to be a differentiated solution provider for global manufacturers as they develop and commercialize pharmaceuticals around the world. This is complementary to the solutions that we provide at World Courier, which continues to play a key role of providing global specialty logistics through growth traditional commercial offerings and direct-to-patient clinical trial capabilities. We remain dedicated to expanding on our leadership in specialty and to enhancing our capabilities to support global pharmaceutical innovation. Third, AmerisourceBergen focuses on delivering best-in-class services and efficiency, and this transaction enhances our ability to develop innovation solutions that are fundamental to our success operationally and commercially. Our innovative mindset means that we embrace the advanced technologies, data and analytics, and now we can further support positive outcomes through our expanded global platform. This fiscal quarter, we were selected as the industry leader award winner at the 2021 SAP Innovation Awards for our work in developing SAP Advanced Track and Trace for Pharmaceuticals. This technology tracks millions of daily shipments at the batch level and further strengthens the pharmaceutical supply chain in the U.S. The value of a resilient and sustainable global pharmaceutical supply chain is vital and the ability to support pharmaceutical innovation to a global footprint with broad leadership and local expertise provide differentiated value for our partners. AmerisourceBergen stakeholders recognize the value we create, the importance of our purpose and the critical nature of the service and the infrastructure that we provide. Fourth, AmerisourceBergen continues to build upon our history of corporate stewardship, which focuses on advancing our people and culture, protecting the company's financial health and ensuring the long-term sustainable value creation. With Alliance Healthcare, we are now an even more global [Indecipherable] company, and we are committed more than ever to advancing the value of our talent and culture. Over the past year, we have invested in enhancing our talent and diversity and inclusion strategies to enable more growth opportunities within our increasingly inclusive workplace. In the future, we plan to provide dedicated development opportunities for high-potential employees of additional underrepresented groups. Investing in our leadership development and talent and culture is important to our long-term sustainable growth, which is supported by diverse and inclusive teams. This focus is important to ensuring we capture the value of our collective differences and reflect our social commitment as we continue to strategically focus on delivering on all elements of ESG. Our ESG strategy is foundational to AmerisourceBergen, our leadership, our Board and our people. Recently, AmerisourceBergen joined the Science-based Targets initiative as we continue to line our business with best practice organizations around the world. At the local level, we continue to be deeply committed to our communities. This past year, we launched myCommunityImpact, Matching Gifts and Dollars for Doers Program, and we recently made it available to all global employees. Our philanthropic efforts have been recognized by DiversityInc, ranking us 8th in their annual 50 [list] in philanthropy rankings. With their unwavering passion and support, AmerisourceBergen is well positioned to capitalize on our global footprint to provide leading pharmaceutical distribution services and to leverage our expertise as an innovative commercialization services provider internationally. We remain confident in our pharmaceutical-centric strategy, our capabilities as partner of choice with market-leading manufacturer services and our role in continuing the acceleration of pharmaceutical innovation. By providing differentiated value to our stakeholders, focusing on our customers, expanding on our leadership in specialty and executing, innovating and supporting pharmaceutical innovation globally, we are well positioned to create long-term stakeholder value as we remain united in our responsibility to create healthier futures. Before I discuss our third quarter results, I want to comment on the Pharmaceutical Distribution industry's continued progress toward reaching a negotiated resolution to substantially address the nationwide opioid litigation. The proposed settlement agreement represents an important step toward achieving a broad resolution of governmental opioid claims and aligns with the legal accrual the company recorded in the fourth quarter of its fiscal year ended September 30, 2020. AmerisourceBergen appreciates the enormity of the opioid epidemic, and this broad industry resolution is an important step toward delivering a meaningful relief to communities across the United States. Turning now to our business. AmerisourceBergen remains focused on our differentiated and innovative value proposition to deliver long-term growth and value creation to our stakeholders. Powered by our purpose-driven team members, we will continue to execute on our pharmaceutical-centric strategy on an enhanced global platform to serve both upstream partners and downstream customers. Having joined AmerisourceBergen myself through an acquisition and experience several acquisitions during my tenure, I have seen firsthand a thoughtful and strategic approach AmerisourceBergen takes to successfully integrate acquired companies. We enjoy working with our incredibly talented new team members and learning more not only about their businesses, but also about how much we culturally have in common. As we have said since announcing the acquisition, Alliance Healthcare is a strong and efficient business, and we look forward to working together to continue to provide innovative solutions to our customers and stakeholders. My remarks today will focus on our adjusted non-GAAP financial results unless otherwise stated. Growth rates and comparisons are made against the prior year June quarter. First, I will review our adjusted quarterly consolidated results and our segment performance. Second, I will cover the upward revision to our fiscal 2021 guidance. Turning now to discuss our third quarter results. We finished the quarter with adjusted diluted earnings per share of $2.16, an increase of 17%, which was driven by the continued strong performance across AmerisourceBergen's businesses and also benefited from the one month contribution from the Alliance Healthcare acquisition. Our consolidated revenue was $53.4 billion, up 18%, driven by revenue growth in both the Pharmaceutical Distribution Services segment and Other, which includes Alliance Healthcare and our Global Commercialization Services and Animal Health businesses. Consolidated gross profit increased 32% to $1.6 billion, driven by increases in gross profit in each operating segment. In the quarter, gross profit margin increased 33 basis points from the prior year quarter to 3.05%. This was primarily due to the acquisition of Alliance Healthcare, which has a higher gross profit margin and increase in sales of specialty products in Pharmaceutical Distribution Services and growth in some of our higher-margin businesses. Regarding consolidated operating expenses, operating expenses were $996 million, up 38% year-over-year due to the addition of the Alliance Healthcare business and also includes the internal investments we are making across our business with a focus on continuing to offer innovative services and solutions to our partners. These investments are important as they ensure we continue to create differentiated value and support our long-term growth. Turning now to consolidated operating income. Our operating income was $631 million, up 24% compared to the prior year quarter. This increase was driven by increases in both the Pharmaceutical Distribution Services segment and Other, which I will discuss in more detail when I review segment-level performance. Operating income margin grew six basis points to 1.18% as a result of the contribution from the Alliance Healthcare acquisition and growth in higher-margin businesses. Moving now to our net interest expense and effective tax rate for the third quarter. The net interest expense was $51 million, up 36% due to debt related to the Alliance Healthcare acquisition. Our effective income tax rate was 21%, up from 18.8% in the third quarter of fiscal 2020, which benefited from a discrete tax item. Our diluted share count was 208.9 million shares, a 1.6% increase due to the dilution related to employee stock comp and the weighted average saving impact of the June issuance of two million shares delivered to Walgreens as a part of the Alliance Healthcare acquisition. Turning now to adjusted free cash flow and cash. Our adjusted free cash flow was strong in our fiscal third quarter, bringing our year-to-date free cash flow number to $1.2 billion, while our cash balance was $2.6 billion. This completes the review of our consolidated results. Now I'll turn to our segment results. Pharmaceutical Distribution Services segment revenue was $49.3 billion, up 13% for the quarter driven by increased sales of specialty products and solid performance broadly across our Pharmaceutical Distribution businesses. Across our distribution businesses, we are seeing better and earlier-than-expected utilization trends as there have been more normalized physician interaction patterns leading to new patient starts. Pharmaceutical Distribution Services segment's operating income increased about 13% to $484 million. AmerisourceBergen continues to benefit in the quarter from our leadership in specialty, where there has been a notable return to pre-COVID strength and continued positive biosimilar trends. I will now turn to Other, which includes Alliance Healthcare MWI, World Courier and AmerisourceBergen Consulting. Alliance Healthcare is in our results for the month of June and had strong performance out of the gate. In the quarter, Other segment's revenue was $4.1 billion, up 128%, driven by the Alliance Healthcare acquisition and growth across the remaining operating segments. Excluding the impact of Alliance Healthcare, Global Commercialization Services and Animal Health revenue was up 22%. Other segment's operating income was $147 million, up 77% primarily due to the Alliance Healthcare acquisition and strong performance at both MWI and World Courier. Excluding the impact of Alliance Healthcare, Global Commercialization Services and Animal Health operating income was up 21%, reflecting the solid fundamentals of the businesses. World Courier has continued its exceptional performance, providing high- specialty logistics around the globe. Despite challenges in global logistics due to limited international cargo space, the team has delivered industry-leading solutions and expertise to support our customers and partners. Looking ahead, the business is highly complementary to Alliance Healthcare's Alloga and Alcura businesses, and we are excited to offer an integrated suite of solutions on our enhanced global platform to serve our manufacturer customers. Turning now to MWI. The pandemic has truly encouraged all of us to focus on the health and wellbeing of our communities and families. And this includes our animal companions. Over 12 million families in the U.S. have gained pets since the pandemic began, and since pet owners view their pets as family members, the focus on health and wellbeing is a positive market trend for our MWI companion business. In the production animal market, our investments in technology solutions and the unique offering of value-added services position the business to support long-term global demand for protein. MWI's strong execution and customer relationships have allowed the business to remain a best-in-class provider that is well positioned to capture these positive market trends. That concludes our segment-level discussion, and I will now turn to our 2021 guidance. Following the closing of the Alliance Healthcare acquisition back in June, we updated our 2021 guidance for revenue, adjusted diluted earnings per share and weighted average shares to reflect the expected contribution from Alliance Healthcare and the weighted average share count impacted the two million shares of stock that we delivered to Walgreens. Given the continued strong performance of AmerisourceBergen's businesses, we are again raising our earnings per share guidance from a range of $8.90 to $9.10, up to a range of $9.15 to $9.30, reflecting growth of 16% to 18% from the previous fiscal year. We are also updating other financial guidance metrics for fiscal 2021, including a meaningful increase to our expectations for consolidated and segment adjusted operating income. First, I'll begin with operating expenses. Operating expenses are now expected to be approximately $3.9 billion due to the Alliance Healthcare acquisition. As a reminder, when you consider your models, Alliance Healthcare has higher margins for gross profit, operating expenses and operating income as evidenced by the update to our fiscal 2021 guidance for consolidated operating expenses to reflect the four months of Alliance Healthcare. Next, turning to operating income. We now expect operating income to be approximately $2.6 billion. This is a result of raising our Pharmaceutical Distribution operating income guidance to the low double-digit growth range given the strong trends we have continued to see in our business, including specialty, which was further bolstered by patient referral activity this quarter. This rate also reflects our expectation for operating income in Other of approximately $610 million to $620 million. Excluding the contribution from Alliance Healthcare, operating income growth for Global Commercialization Services and Animal Health group is expected to be in the low double-digit range for fiscal 2021, driven by the strong performance of the World Courier and MWI. Finally, turning to free cash flow, we have raised our free cash flow guidance to be approximately $1.7 billion, up from approximately $1.5 billion. As it pertains to fiscal 2022, our corporate planning process remains unchanged. We will provide comprehensive financial guidance at the end of our current fiscal year. This approach allows for guidance to be fully informed by the output of our year-end business planning process. That being said, we want to remind you three important items from fiscal 2021 as you consider your models. First, through the end of June, the financial contribution from sales of COVID-19 therapies has declined in line with the expectations we have shared since the first quarter. COVID therapy distribution contributes roughly $0.25 to our fiscal 2021 adjusted earnings per share guidance, and the benefit from that exclusivity is not expected to repeat in fiscal 2022. Second, we will have higher interest expense in fiscal 2022 driven by the debt related to the Alliance Healthcare acquisition. Third, for the fourth quarter of fiscal 2021, we expect our weighted average shares to be almost 211 million shares due primarily to the fully planned impact of the two million shares of our stock delivered to Walgreens at the close of the Alliance Healthcare acquisition. Our share count will continue to tick higher in 2022 due to normal employee stock comp-related solution and the fact that we have committed to prioritize paying down $2 billion in total debt over the next two years and [lower] shareholder purchases. Moving past these modeling reminders. The strength of AmerisourceBergen is undeniable and is exemplified by our continued exceptional results quarter-after-quarter. This is the sixth quarter since the pandemic began and our results demonstrate the resilience and strength of our company. I am thoroughly impressed by the execution and performance across our businesses that has positioned us for continued success. Our pharmaceutical-centric foundation, market-leading talent and competitive positioning enable us to capitalize on market trends and continue to deliver strong results. AmerisourceBergen remains focused on creating long-term financial value, and we continue to work diligently to build our corporate stewardship initiatives to ensure the work we are doing benefits all stakeholders. We are focused on continuing to build robust talent development programs so that all our team members feel they have opportunities to grow and learn. In our communities, we're supporting nonprofit partners through our foundation to expand access to quality healthcare, promote health equity and provide resources to ensure prescription drug safety. In addition, we aim to be environmental stewards in the communities where we live and work through initiatives like our commitment to using sustainable packaging to reduce the use of single-use plastics and working closely with our partners to optimize delivery routes to minimize our greenhouse gas emission footprint. We look forward to providing further updates on our ESG progress as we continue to find ways to make a positive impact on the people, planet and communities where we live and work. As we focus in on the end of our fiscal year with strong momentum and continued outperformance across our business, it is important to take a moment to reflect on the important accomplishments we have already had this year. First, our teams continue to execute and leverage our capabilities to create differentiated value for our stakeholders. Second, our future growth has been further solidified by our acquisition of Alliance Healthcare. Third, our purpose-driven culture continues to empower our team members that think, plan and act decisively to do what is right for our people, partners and communities. And finally, we continue our long-term commitment to strategically invest in our businesses and talent to ensure that AmerisourceBergen will continue to deliver long-term sustainable value for all our stakeholders. As we look to the future, I'm proud of the resilient foundation we have built while we facilitate pharmaceutical innovation and remain united in our responsibility to create healthier futures.