You'll recall, last quarter we increased our three year post merger cost synergy target from $200 million to $250 million.
Now moving to page 5.
Sales were up 4% sequentially in Q4 on a workday adjusted basis when typically our sales declined sequentially in the fourth quarter.
We generated $586 million of free cash flow last year, close to the $600 million target that we set for three years out, and more than 250% of our adjusted net income.
This enabled us to reduce net debt by almost $400 million and leverage by 0.4 times in just the first six months since the Anixter closed.
And last month, we completed a debt refinancing of our 2021 notes that reduces our interest expense by $20 million per year, which will further enhance cash flow and support achieving our 2023 debt reduction and debt repayment target.
In the first six months post close, we have realized $39 million of cost synergies, $15 million in Q3 and $24 million in Q4.
In 2021, we expect to realize an additional $90 million of synergies, bringing our total to $130 million by the end of the year.
Consistent with the expectation we provided on our last earnings call, we still anticipate realizing $100 million of cost synergies in the first 12 months of the merger through June of 2021, with a cumulative cost synergies of $130 million by December.
As you can see, we have spent $37 million in one-time operating costs in the first six months, and expect to spend an incremental $78 million on one-time operating expenses to generate the incremental $90 million of synergies in 2021.
By June of 2023, we expect to generate $250 million of realized cost synergies on a trailing 12 month basis.
In total, this $250 million target is comprised of initiatives that are approximately 20% related to cost of goods sold and approximately 80% related to reducing operating expenses.
In Q4, we delivered another quarter of strong free cash flow that represented more than 160% of net income.
For the full year, free cash flow was $586 million or more than 250% of adjusted net income.
This resilient model, coupled with our execution on the integration with Anixter gives us very high confidence that we will successfully reduce leverage below 3.5 times adjusted EBITDA over the next two and a half years, consistent with our commitment when we announced the merger.
We made substantial progress on this goal in 2020 as we reduced net debt by $389 million and leverage by 0.4 times trailing 12-months adjusted EBITDA since closing the Anixter acquisition in June.
Net debt was reduced by $109 million [Technical Issues] 2028 notes.
Liquidity, which is comprised of invested cash and borrowing availability on our bank credit facilities, is exceptionally strong and totalled $1.1 billion at the end of the fourth quarter.
In early January, we increased the size of two bank credit facilities by a combined $275 million.
We utilized this higher capacity and existing availability to retire our $500 million 2021 notes.
Turning to page 9.
When adjusting the results to a comparable workday basis, sales were up more than 4%.
Adjusted gross margin, which excludes the effect of merger related fair value adjustments to inventory and an out of period adjustment related to inventory absorption accounting was 19.6%, in line with the prior quarter and up 10 basis points versus the prior year.
Adjusted income from operations was $172 million in the quarter, after adjusting to remove the effect of merger related costs of $40 million, merger related fair value adjustments on inventory of $16 million and the out of period adjustment of $23 million related to inventory absorption accounting.
Adjusted income from operations was $28 million lower than the third quarter, which primarily reflects an increase in SG&A related to the discontinuance of temporary cost reduction measures we had taken in response to COVID-19.
These measures, along with certain other actions, had generated more than $50 [Phonetic] million of savings during the second and third quarters of 2020 relative to WESCO's Q1 SG&A run rate before the merger.
In total, adjusted income from operations was $13 million lower than prior year pro forma, on sales that were $223 million lower, representing a decremental margin of approximately 6%.
Adjusted EBITDA, which excludes the effect of the adjustments I just mentioned, as well as stock based compensation and other net adjustments was $216 million or 5.2% of sales, lower than the third quarter due to the higher SG&A I just discussed and approximately in line with the prior year.
Adjusted diluted earnings per share for the quarter was $1.22.
First, electrical and electronic systems, or EES, which is approximately 40% of our Company's total business.
And then third, utility and broadband solutions or UBS, which represents the remaining 27% of the overall sales across the enterprise.
Reported sales in our EES segment were up 1% versus the third quarter on a reported basis and up 6% on a comparable workday basis.
Adjusted EBITDA of $94 million represented 5.6% of sales, about $14 million lower than the third quarter.
On a reported basis, sales were 1% lower than the prior quarter, but were up 3% on a comparable workday basis.
Adjusted EBITDA was $112 million or 8.2% of sales.
This was 50 basis points higher than the prior year, but down sequentially from the third quarter, primarily reflecting the reinstatement of temporary cost reductions.
Sales in our UBS segment were down slightly versus the third quarter on a reported basis, but up 4% on a comparable workday basis.
Adjusted EBITDA of $79 million was in line with the prior year and up 10 basis points as a percentage of sales.
On a pro forma basis, sales were $16 billion in 2020.
In 2021, we estimate market growth of roughly 3% to 5%.
On top of that, we expect that the combination of the continued outperformance and our cross-sell programs will grow sales 1% to 2% above the market.
[Technical Issues] are approximately $125 million.
The impact of these will be a headwind of approximately 1%.
So in total, we expect sales to grow 3% to 6%.
On the right-hand side of the page, we have provided a bridge for our 2020 pro forma adjusted EBITDA margin of 5.3% to our outlook for adjusted EBITDA margin of 5.4% to 5.7%.
We expect to benefit from improving mix, market outperformance and operating leverage, which we expect to collectively drive about 50 to 80 basis points of margin expansion.
In addition, as you saw on the prior page, we expect to generate an incremental $90 million of realized cost synergies in 2021, which will contribute approximately 55 basis points of additional EBITDA margin.
Partially offsetting these two margin drivers will be the restoration of the employee compensation benefit costs discussed previously and the restoration of a full accrual for incentive compensation, the aggregate amount of which is approximately 90 basis points.
Continuing down the income statement, we expect our effective tax rate to be approximately 23% and adjusted diluted earnings per share in the range of $5.50 to $6.
We assume a diluted share count of approximately 51.5 million shares.
We expect to spend between $100 million to $120 million on capital expenditures in 2021, much of which will be invested in the early stages of aligning our systems and investing in digital tools.
We expect to continue generating substantial free cash flow, which we're forecasting to be at least 100% of adjusted net income.
As we look at the drivers of the first quarter of 2021, we expect to benefit from $28 million of realized cost synergies in the quarter.

Summary:
Adjusted diluted earnings per share for the quarter was $1.22.