CCL Industries Inc.

Good morning, and welcome to the CCL Industries Second Quarter Investor Update Call. Please note that there will be a question and answer session after the call. The moderator for today is Mr. Jeff Martin, President and Chief Executive Officer, and joining him is Mr. Sean Waschuk, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen.

Good morning, everybody, and welcome to the second quarter call. I'm going to hand the call over to Sean Waschuk.

Thanks, Jeff. I'll draw everyone's attention to slide number two, our disclaimer regarding forward-looking information. I'll remind everyone that our business faces known and unknown risks and opportunities. For further details of these key risks, please take a look at our 2023 annual report, particularly the section Risks and Opportunities. Our annual and quarterly reports can be found online at the company's website, ccind.com, or on cdarplus.ca. Moving to slide three, our summary of financial information. For the second quarter of 2024, sales increased 12.2% with 8.5% organic growth, 3% acquisition-related growth, and 0.7% positive impact from foreign currency translation resulting in sales of $1.85 billion compared to $1.64 billion in the second quarter of 2023. Operating income was $303.5 million for the 2024 second quarter compared to $242 million for the second quarter of 2023. a 25% increase excluding the impact of foreign currency translation. Jeff will expand on our segmented operating results for our CCL, Avery, Check Point, and Inovia segments momentarily. Corporate expenses were up for the quarter due to higher discretionary expenses and short-term variable compensation versus the prior year quote. Consolidated EBITDA for the 2024 second quarter excluding the impact of foreign currency translation increased 21% compared to the same period in 2023. Net finance expense was $18.6 million for the second quarter of 2024 compared to $19.2 million in the 2023 second quarter, primarily due to an increase in interest rates on the company's cash balances, partially offset by quarterly interest expense. The overall effective tax rate was 18.8% for the 2024 second quarter, compared to an effective tax rate of 24% recorded in the second quarter of 2023. The decline in the effective tax rate is due to the non-cash, non-taxable $78.1 million in valuation gain we recorded on the legacy 50% interest in the Pac-Man joint venture acquisition. Excluding the gain, the effective tax rate was 24.5% comparable to the 2023 second quarter. The effective tax rate may change in future periods depending on the proportion of taxable income earned in different tax years. Net earnings for the 2024 second quarter were $279.5 million compared to $155.9 million for the 2023 second quarter. Albeit, these net earnings included the $78.1 million revaluation gain. For the six month period, sales, Operating income and net income increased 8%, 17%, and 47% respectively compared to the same six-month period in 2023. 2024 included results from nine acquisitions completed since January 1st, 2023, delivering acquisition-related sales growth through the period of 3%, organic growth was 5.3%, and foreign currency translation was a tailwind of 0.4% to sales. Moving to the next slide, earnings per share. Basic earnings per Class B share were $1.56 for the 2024 second quarter, compared to 88 cents for the 2023 second quarter. Adjusted for one cent of restructuring and other expenses, and 44 cents for non-cash revaluation gain. Adjusted earnings per Class B share were $1.13, a record, an improvement of 25.6% compared to 90 cents for the second quarter of 2024. The change in adjusted basic earnings per share of 23 cents is principally attributable to improvements in operating income accounting for 24 cents, partly offset by an increase in corporate costs of one cent. Moving to the next slide. Free cash flow from operations. For the second quarter of 2024, free cash flow from operations was an inflow of $118.8 million, almost equal to $120.1 million posted in the 2023 second quarter. With the trailing 12 months ended June 30, 2024, free cash flow from operations was $567.8 million compared to $523.8 million for the comparable period of 2023. This change is primarily attributable to an increase in net capital expenditures offset by an increase in cash provided by operating activities, which was generated by improved adjusted earnings. Next slide. Net debt as of June 30, 2024, was $1.76 billion, an increase of $252 million compared to December 31, 2023. The increase is principally a result of funds used for capital expenditures, business acquisitions, and our share buyback. The total share buyback for the second quarter of 2024 was 565,620 shares for $40.6 million. Although the company's debt increased, the balance sheet closed the quarter in a strong position. Our balance sheet leverage ratio was approximately 1.23 times up from 1.13 times reported at the end of December 31, 2023. Liquidity was robust with $666 million of cash on hand and US $907 million of available undrawn credit capacity on the company's revolving bank credit facility. The company's overall finance rate was 2.8% at June 30, 2024, same as December 31, 2023. The company's balance sheet continues to be well positioned as we move through fiscal 2024. Jasper, over to you.