Veritiv Corporation

Good morning and welcome to Veritiv Corporation's first quarter 2022 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 Palfreyman, Vice President of Finance and Investor Relations. Mr. Palfreyman, you may begin.

Thank you, Vic, and good morning, everyone. I'm joined on today's call by our CEO, Sal Abate, and our CFO, Steve Smith. After my remarks, Sal will share an update on first quarter business performance, followed by Steve, who will provide more details on our financials. After Steve's comments, Sal will conclude by providing a brief strategic update and revised outlook. We will then open the call for your questions. Before we begin, please note that some of the statements made Some of the statements made in today's presentation regarding the intentions, beliefs, expectations, and or predictions of the future 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 the risks and other factors described in our 2021 Form 10-K and the company's other publicly available reports and exhibits filed with the SEC. Today's call and presentation slides will contain non-GAAP financial measures. The reconciliation of these non-GAAP measures to comparable 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. At this time, I will turn the call over to Sal.

Thanks, Scott, and good morning, everyone. This morning we reported record results across almost all of our key financial metrics for any quarter in Veritiv history, despite the first quarter typically being our weakest quarter of the year due to the seasonality of our business. Our commercial effectiveness continued to drive sales and margin improvement, and strong revenue performance in all our business segments contributed to these results in the first quarter the combination of our industry-leading supply chain network and strategic partnerships with world-class suppliers allowed us to navigate the ongoing supply chain challenges in the broader market and mitigate some of the inflationary impacts to our customers as a result of our commercial and supply chain efforts we reported double-digit revenue growth and above-market organic volume growth in all of our segments and further established our position as the leading provider of business-to-business packaging solutions. Net income in the first quarter increased was $79 million, or nearly four times what we reported in first quarter 2021, and diluted earnings per share were $5.12 compared to $1.28 in first quarter 2021. Our net income and diluted earnings per share results in the first quarter were all-time records for any quarter in company history. First quarter adjusted EBITDA was $120 million, or double the performance from the prior year period. Adjusted EBITDA margin in the first quarter was 6.4%, which marks the ninth consecutive quarter of year-over-year improvement in adjusted EBITDA margin. This trend of delivering consecutive record financial metrics demonstrates the sustainability of our performance. Our earnings in the first quarter and consistent improvements over the last two years are a direct result of disciplined execution against our strategic initiatives to improve the efficiency of our operations and how we support the needs of our customers. Our commercial initiatives continue to drive value through effective cost and price management in a highly volatile environment. These industry-leading system and process-related improvements enable the recovery and long-term sustainability of margins. In the first quarter, supplier-driven price increases continued to be the most significant driver of inflation across our business, particularly within our print and packaging segments. While product demand from our customers continues to outpace supply across most product categories, additional inflationary factors are contributing to systemic cost increases driven by higher wages, fuel, and other supply chain costs. We continue to work closely with our suppliers and customers to ensure timely pass-through of the historic level of product cost increases that we and our customers have experienced. Our own delivery fleet and coast-to-coast network of warehouses continue to provide a competitive advantage and help to organically grow our market share. We continue to strategically leverage our size and scale to efficiently navigate the constrained supply chain environment and support the needs of both our suppliers and customers. Supplier lead times remain elevated well above historical levels. As a result, we maintain strategic inventory positions where possible to minimize the effects of extended lead times on our customers. Shifting now to an update on our packaging business. We reported just over $1 billion in packaging revenue in the first quarter, which was . Packaging revenue increased 17% in the first quarter of 2022, driven by a combination of supplier cost pass-through and above-market volume growth. We saw elevated year-over-year volume growth in our retail and logistics customer sectors as consumer demand continued to outpace supply across several. Our comprehensive spectrum of packaging products and supply chains