Westrock Company

Good day and thank you for standing by. Welcome to the West Rock Company second quarter physical 2021 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star zero. I will now let the hand of conference over to your speaker today, James Armstrong. Please go ahead.

Thank you. Good morning, and thank you for joining our second fiscal quarter 2021 earnings call. We issued our press release this morning and posted the accompanying slide presentation to the investor relations section of our website. They can be accessed at ir.westrock.com or via a link on the application you're using to view this webcast. With me on today's call are Westrock's Chief Executive Officer, David Sewell, our Chief Financial Officer, Ward Dixon, our Chief Commercial Officer and President of Corrugated Packaging, Jeff Chalovich, as well as our Chief Innovation Officer and President of Consumer Packaging, Pat Lindner. Following our prepared comments, we will open up the call for a question and answer session. During the course of today's call, we will be making forward-looking statements involving our plans, expectations, estimates, and beliefs related to future events. These statements may involve a number of risks and uncertainties that could cause actual results to differ materially from those we discussed during the call. We describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30th, 2020. In addition, we may be making forward-looking statements about the impact of COVID-19 pandemic and the recent ransomware attack on our operational and financial performance. The extent of these impacts, including the duration, scope, and severity, is highly uncertain and cannot be predicted with confidence at this time. We will also be referencing non-GAAP financial measures during the call. We have provided reconciliation of these non-GAAP financial measures to most directly comparable GAAP measures in the appendix of the slide presentation. As mentioned previously, the slide presentation is available on our website. With that said, I'll now turn it over to you, David.

Thank you, James, and good morning. It's great to be joining you all today on my first earnings call as Westrock's CEO. I've been in this role now for seven weeks and have spent that time meeting with our customers, our business leaders, and teammates. With every interaction, I'm impressed with the capability and strength of the Westrock team and couldn't be more excited about our future prospects. It's still early in this process, but what I'd like to do today is share with you my initial observations since joining and my priorities going forward. Before doing that though, let me touch briefly on our performance in the second quarter, which Ward will discuss in more detail shortly. Faced with dual issues of the ransomware incident and a significant weather disruption, the team focused, executed, and delivered for our customers, generating revenue of $4.4 billion, adjusted segment EBITDA of $641 million, an adjusted EPS of 54 cents per share. The ransomware and weather incidents lowered our adjusted EPS by 23 cents. Ward will provide additional detail about our performance. I'm pleased to say that we have fully restored our IT systems with all sites up and running, and we continue to make excellent progress on restoring our supply chain and customer service levels. During the time we were dealing with this incident, we prioritized serving our customers and incurred additional costs that impacted earnings in the quarter. We are accelerating investments that were on our IT development timeline to further strengthen our infrastructure. Throughout these events, the Westrock team demonstrated incredible resiliency and dedication, and we have made a remarkable recovery. I want to extend my sincere thanks to my Westrock teammates for all they have done and continue to do for the company and our customers. With all of this now behind us, I'm confident in our team, our markets, and our path forward. I mentioned at the start that much of my time over these first seven weeks has been spent getting to know our company. I've toured 12 facilities, met virtually or in person with hundreds of teammates, and spoken with many of our top customers. Westrock has built a unique portfolio, successfully integrating acquisitions and investing to create a differentiated set of capabilities with incredible opportunities for growth. I've seen firsthand how the consumer, corrugated, and machinery businesses work together and believe we can do even more to maximize the performance of our platform. We serve diversified and growing packaging end markets, and the demand for fiber-based paper and packaging continues to gain momentum. Key markets that we serve, such as food and beverage, e-commerce, and healthcare, continue to grow. For example, the demand from customers for safe and secure e-commerce solutions has only been accelerated by the pandemic, and I believe this remains a significant opportunity that Westrock Solutions are well-positioned to address. One of my visits was to our high-quality, low-cost facility in Florence, South Carolina, and it was great to see the new state-of-the-art paper machine up and running. This slide includes a QR code you can use to view a video of the mill and the new equipment. This machine produces high performance container board grades at low basis weights and replaces three machines in our system. This mill is well positioned to serve a diverse set of customers seeking these low basis weights to drive more sustainable packaging solutions. This investment makes Florence one of the lowest cost virgin container board mills in North America. We expect Florence to ramp up to full capacity by the end of our fiscal fourth quarter. The Florence Mill is a great example of a strategic capital investment that improves our capabilities, lowers our costs, and expands margins. Looking forward, there are a few key priorities that I want to focus on. Westrock has a unique portfolio of sustainable fiber-based packaging and great opportunities to leverage the enterprise and help our customers win in their markets. The path to long-term shareholder value creation is through a focus on attractive markets where our differentiated portfolio and combination of products and services are valued and rewarded. We will also focus on improving our productivity and operational excellence across the enterprise, which are both important levers to grow earnings and margins. I believe strongly in the leadership role that Westrock can play in improving the circular economy and helping our customers improve the sustainability of their products. We recently refined our sustainability platform to focus on people and communities, bettering the planet, and innovating for our customers and their customers. Whether it's developing new fiber-based packaging solutions that enable our customers to meet their sustainability goals, initiatives to reduce our own environmental impact, or our work to improve the diversity and inclusion of our company, Westrock has substantial capabilities and opportunities to help drive a more sustainable future. And a more sustainable future means that we must focus on innovation to develop new fiber-based packaging that meets the needs of customers and consumers. Removing plastic from packaging and developing more sustainable packaging solutions through design, material science, digital and automation continue to be growth drivers in our industry. Westrock has a capability to create new, recyclable, fiber-based solutions that are good for our customers and the environment. Next, I'd like to share my initial thoughts on capital allocation. I believe that disciplined, balanced capital allocation is a key factor in creating sustainable shareholder value. I'm impressed by the strength and stability of Westrock's cash flows and believe this is a positive attribute for the company and our investors. We will invest in our business to maintain and improve our assets, and investments and acquisitions and strategic capital projects will be tightly aligned to our strategy and deliver returns above our cost of capital. We will remain committed to returning capital to our dividend and intend to steadily increase it every year. We've already taken the first step today with the announcement of a 20% increase to our quarterly dividend. Today's increase reflects our confidence in the outlook and cash flow generation of our business. In addition, we will evaluate share repurchases in the future as another way to return capital to shareholders. We remain committed to our investment grade credit profile and believe that our leverage target of two and a quarter to two and a half times is appropriate. And in the coming months, I'll share more detail about my priorities and vision for West Rock's future. And now I'll turn it over to Ward to provide our financial detail about the quarter. Ward?