ADENTRA Inc.

Good morning, ladies and gentlemen, and welcome to the ADENTRA second quarter 2023 results conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Friday, August 11, 2023. I would now like to turn the conference over to Ian Tharp, Investor Relations, ADENTRA. Please go ahead.

Thanks, Joanna, and good morning to those joining today as we discuss Adentra's financial results for the second quarter of 2023. With me on the call today are Rob Brown, Adentra's President and CEO, and Fez Karmali, Vice President and CFO. Adentra's Q2 2023 earnings release, financial statements, and MD&A are available on the investor section of our website at www.adentragroup.com. These statements have also been filed on a dentist's profile on CEDAR Plus at www.cedarplus.ca. I want to remind listeners that management comments during this call may include forward-looking statements. These statements involve various known and unknown risks and uncertainties and are based on management's current expectations and beliefs, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements. Please refer to the text in Edentra's earnings press release and financial filings for a discussion of the risks and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in U.S. dollars unless stated otherwise. I'd now like to turn the call over to Rob Brown. Rob?

Thanks, Ian. Good morning, everyone. We're pleased to share details of Edentra's financial and operating results for the second quarter of 2023. I'll start with our key financial and business highlights for the quarter. Fez, our CFO, will then provide details of our Q2 financial results. I'll finish off our prepared remarks with what we see looking forward now that we've closed out the first half of 2023. We generated $585.9 million in sales, $46.2 million in adjusted EBITDA and adjusted earnings per share of $0.56 in the second quarter. As described in our previous outlook, rising interest rates were expected to reduce demand for architectural building products in the near term. We anticipated reduced financial performance in 2023 as compared to the record-setting levels achieved in 2022. Second quarter results were in line with our expectations. We delivered sequential improvement in sales volumes, gross margin and EBITDA margin as compared to Q1 of 2023. Even in this period of reduced demand and product price deflation, as compared to 2022, we're demonstrating the resilience of our business model. Second quarter sales were down 16.3% as compared to the same period in the prior year. Approximately two-thirds of the decrease reflected lower volumes and one-third of the decrease related to product price deflation. On a sequential basis, our sales volumes were up mid single digits in the second quarter as compared to Q1 of 2023. And this was offset by product price deflation of a similar amount. Our gross profit percentage of 20.4% improved upon the 20.2% we posted in Q1. And this marks our ninth consecutive quarter with a gross profit margin above 20%. Operating expenses. continued to be tightly managed and were up just 1.7% compared to the same period in the prior year. This is a good result considering the inflationary environment that has persisted in the economy since 2022. Our operating results drove strong cash flows from operations and demonstrates our ability to consistently generate significant cash flows during periods of reduced economic activity. Similar to prior quarters, cash flow generation came from both the predictable conversion of adjusted EBITDA to operating cash flow before changes in working capital and from the release of working capital. The capital generated has been deployed in accordance with our plan. In Q2 last year, having recently acquired MidAm using our credit facilities, we stated our objective to focus on debt reduction. Since the second quarter of last year, we've reduced debt by $243 million. Over this same period, we've returned over $36 million of cash to shareholders in the form of share repurchases and dividends. As we advance through the remainder of 2023, we continue to monitor the impacts that changing economic conditions such as inflation and higher interest rates can have on our business. I'll provide more details on our business outlook before we wrap up today's call. And I'll now turn the call over to Fez to review the Q2 2023 financial results in more detail. Fez?