We delivered a 53% sales increase year over year with double-digit gains in every segment, business, and region.
We also recorded a 7% increase in sales over the prior quarter.
We captured strong price momentum, driven by tight supply demand balances across our key value chains, and we achieved volume growth of 2% both year over year and sequentially, supported by continued strong end-market demand despite supply and logistics constraints.
We increased operating EBIT by more than $2.1 billion year over year with improvements in all segments and businesses and $58 million higher sequentially.
Key contributors included year-over-year margin expansion of 1,170 basis points, driven by price momentum and demand growth, and increased equity earnings, up $189 million, for margin expansion at our Sadara and Kuwait joint ventures.
Our continued focus on cash generation and our balanced disciplined capital allocation enabled us to deliver cash flow from operations of $2.7 billion, up $958 million year over year, driven by margin expansion from price momentum in key value chains.
We returned a total of $918 million to shareholders through our industry-leading dividend of $518 million, plus $400 million in share repurchases.
And we also reduced gross debt by more than $1.1 billion in the quarter.
Our proactive liability management actions to tender existing notes have resulted in no long-term debt maturities due until 2026, and we've reduced annual interest expense by more than $60 million.
In the packaging and specialty plastics segment, operating EBIT was $2 billion, compared to $647 million in the year-ago period.
Sequentially, operating EBIT was down $60 million.
On a sequential basis, operating EBIT margins declined by 300 basis points on higher feedstock and energy costs.
Operating EBIT was $713 million, up $609 million year over year, primarily due to continued tight supply and demand in both businesses.
Sequentially, operating EBIT was up $65 million, and operating EBIT margins expanded by 50 basis points on volume and price gains in both businesses.
And finally, the performance materials and coatings segment reported operating EBIT of $284 million, up $209 million versus the same quarter last year as margins increased 750 basis points due to strong price momentum and robust demand recovery for silicones and industrial coatings offerings.
Sequentially, operating EBIT was up $59 million on price gains, leading to margin expansion of 210 basis points.
We expect these costs to be an approximately $350 million headwind sequentially.
We also anticipate a $175 million tailwind from turnarounds in the quarter as we completed our planned maintenance at our cracker in Canada.
Altogether, we anticipate $100 million in this segment from turnaround impacts.
Short-term increased energy costs in the U.S. Gulf Coast and Europe are expected to be an additional $100 million headwind in the quarter.
Our current estimate for the quarter includes $125 million from increased raw material costs and turnaround impacts.
On Slide 6, as we look ahead, we expect robust economic growth to continue.
As a result, we expect tighter-than-forecasted market conditions to continue, a view strengthened by China's recent dual control policy that has impacted both cold olefins and methanol to olefins-based capacity, which represent more than 30% of China's total polyethylene production.
At our investor day earlier this month, we outlined how our differentiated portfolio and our focus on sustainability-driven innovation will enable more than $3 billion in underlying EBITDA improvement across the cycle.
Our restructuring program and digital investments will yield $600 million in increased EBITDA.
Both are in progress, and our restructuring program is on track to achieve its $300 million run rate by year end.
We also have a suite of higher return, lower risk, and faster payback capital and operating investments that will enable an additional $2 billion in EBITDA in the near term.
And our investments to decarbonize and grow at our Fort Saskatchewan site in Alberta, Canada are also expected to deliver approximately $1 billion in increased EBITDA.
Our capital investments are expected to generate $1 billion in EBITDA through incremental capacity expansions, debottlenecking, and enhanced feedstock flexibility across our operating segments.
For example, in packaging and specialty plastics, our Fort Saskatchewan expansion to add ethylene capacity of 65,000 metric tons per year to support growing polyethylene demand is now complete and will ramp by the end of the fourth quarter.
Our FCDH pilot plant in Louisiana will start up in 2022, featuring 20% to 40% lower capex and 5% to 7% lower opex while reducing CO2 emissions by up to 20% compared to other PDH technologies.
In industrial intermediates and infrastructure, our debottlenecking project to add 60,000 metric tons per year of aniline will be fully online by year end.
And we are progressing our 50 kt methacrylate investment on the U.S. Gulf Coast to support global end markets, such as inks, resins, and packaging materials, which is scheduled to come online in the first half of next year.
In addition, our operating investments are also expected to generate another $1 billion in EBITDA as we improve our production capabilities and shift our product mix to higher growth and higher value markets.
Our ECOFAST collaboration with Ralph Lauren lowers energy usage by 40% and water usage by 50% in the fabric dying process.
And by 2025, the brand aims to incorporate this technology in more than 80% of its solid cotton products.
In performance materials and coatings, we're expanding our ability to formulate differentiated silicones for a number of attractive markets, including silicone adhesives for foldable displays in consumer electronics, thermal conducted silicone solutions for electric vehicles, and silicone solutions for 5G where the market is expected to more than double over the next 10 years.
Collectively, our slate of near-term investments will generate an increase of approximately $2 billion in underlying EBITDA, and we intend to deliver this growth with a disciplined and balanced approach, maintaining our top quartile performance in cash flow, cost structure, debt reduction, and shareholder remuneration.
Our plan enables us to capture demand from sustainability drivers, achieve zero Scope 1 and 2 carbon emissions, and deliver meaningful underlying earnings and cash flow growth for years to come.
This plan will deliver a 30% reduction in our CO2 emissions between 2005 and 2030 through a disciplined approach that manages timing based on affordability, macro and regulatory drivers around the world.
Our Texas 9 cracker proves that we can do this and do it well.
Texas-9 is 60% lower-carbon intensity than any asset in our fleet, and that's without any specific design for carbon capture or hydrogen.
The project was delivered with 20% better capital efficiency and 12 months faster than any other crackers built in that wave.
Overall, the project has a 65% lower conversion cost, is running consistently at more than 110% of nameplate capacity, and has delivered greater than 15% return on invested capital since start-up.
We will leverage key learnings from Texas-9 as we plan to build the world's first-ever net-zero carbon emissions ethylene cracker and derivatives complex in Fort Saskatchewan, Alberta, delivering approximately $1 billion in EBITDA, as Howard outlined earlier.
This project will more than triple our ethylene and downstream derivative capacity at the site while decarbonizing emissions for 20% of our global ethylene capacity.
We are committed to keeping capex at or below D&A, well below pre-spin levels while targeting return on invested capital above 13% across the economic cycle.
And we'll invest approximately $1 billion per year to decarbonize our footprint and grow earnings.
We have actions in place to both decarbonize our footprint and grow the enterprise as we achieve an additional $3 billion in underlying EBITDA, maintain industry-leading cash flow generation, and drive toward zero Scope 1 and 2 carbon emissions.
Our balanced capital allocation approach targets more than 13% return on invested capital, keeps capex within D&A, and return 65% of net income to shareholders across the economic cycle.

Summary:
On Slide 6, as we look ahead, we expect robust economic growth to continue.