Veritiv Corporation

Good morning, and welcome to Veritiv Corporation's second quarter 2021 financial results conference call. As a reminder, today's call is being recorded. We will begin with opening remarks and introductions. At this time, I would like to turn the call over to Scott Pell-Freeman, Director of Finance and Investor Relations. Mr. Pell-Freeman, you may begin.

Thank you, Felicia, and good morning, everyone. On today's call, you will hear prepared remarks from our CEO, Sal Abate, followed by our CFO, Steve Smith. After that, we will open the call for questions. Before we begin, please note that some of the statements made in today's presentation regarding the intentions, beliefs, expectations, and or predictions of the future by the company and or management are forward-looking. Actual results could differ in a material manner. Additional information that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes but is not limited to risks and other factors described in our 2020 annual report on Form 10-K and in the news release issued this morning, which is posted in the investor relations section at veritivcorp.com. Non-GAAP financial measures are included in our comments today and in the presentation slides. The reconciliation of these non-GAAP measures to the applicable U.S. GAAP measures are included at the end of the presentation slides and can also be found in the investor relations section of our website. I'd now like to turn the call over to Sal.

Thank you, Scott, and good morning, everyone. Thank you for joining us. We are proud to report very strong financial results in the second quarter. we achieved our best adjusted EBITDA in both dollars and margin of any quarter in the company's history, as well as record net income for a second quarter. Our sales in the second quarter increased by double digits across all of our business segments, an 18% overall increase compared to prior year. Year-over-year sales per day performance has improved every quarter for the last four quarters due to the continued recovery from last year's pandemic-driven lows. We reported record net income of $26.4 million and diluted earnings per share of $1.62 for the second quarter. Adjusted EBITDA in the second quarter was also an all-time record of $73.5 million, which was an 85% increase compared to prior year and a 70% increase compared to the second quarter of 2019. Our quarterly adjusted EBITDA has improved year-over-year in five of the last six quarters. We continue to see strong sales and earnings growth in our packaging segments. Our packaging sales in the second quarter increased 17% compared to prior year. Our record packaging adjusted EBITDA of $95 million in the second quarter increased more than double the rate of our sales growth and was up 37% compared to prior year and up 46% compared to the second quarter of 2019. Adjusted EBITDA margin increased from 8.9% in the second quarter of 2020 to a record 10.4% in the second quarter of 2021. Within the packaging segment, our healthcare, transportation, and consumer electronics sectors drove elevated growth in the second quarter compared to both prior year and the second quarter of 2019. Sales trends to manufacturing customers continued to improve and increased significantly in the second quarter compared to prior year. In addition to strong packaging sales, we also saw demand continue to recover across our other business segments in the second quarter. In particular, the pace of recovery for our print and publishing segments has been stronger than expected, which contributed to our favorable results in the quarter. The combination of strong demand and rising supplier costs have led to several price increases across our product portfolio. While we mitigated our internal cost increases with productivity offsets, we worked closely with both our suppliers and customers to ensure price increases were communicated effectively and with proper notice. As a result of our cost and price management discipline, Margins were stable throughout the first half of the year. We are also well positioned to navigate additional market price increases that have been announced for the second half of 2021 and the price volatility that is expected to continue in the near term. It's important to recognize that our record earnings performance is not simply the result of temporary benefits or short-term market dynamics. While we acknowledge the benefit of the favorable comparisons to the prior year, our stepwise improvement in earnings performance has resulted primarily from the cumulative effect of the successful execution of our multi-year strategic initiatives. As a reflection of these efforts, our first half adjusted EBITDA margin improved from 1.6% in 2019 to 2.4% in 2020, and then to 4.1% this year. Our employees have worked hard to drive process improvements across the organization. These enhancements meaningfully contributed to our results and our ability to deliver on our commitments to customers and suppliers. I'll now turn it over to Steve to provide more details on our financial performance for the quarter. After Steve's remarks, I'll provide some additional perspective on our historic performance. I will also give an updated outlook for the remainder of the year and our priorities as we move forward. Steve?