Good morning, ladies and gentlemen. Welcome to CCL Industries' Second Quarter Investor Update. Please note that there will be a question and answer session after the call. The moderator for today is Geoff Martin, President and Chief Executive Officer, and joining him is Mr. Sean Washchuk, Senior Vice President and Chief Financial Officer. Please go ahead, gentlemen. Thank you. Good morning, everyone. Welcome to our second quarter conference call. We'll jump right in here. Starting on page two, we have a disclaimer regarding forward-looking information. I will 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 2020 annual MD&A, particularly the section Risks and Uncertainties. Our annual and quarterly reports can be found online on the company's website, cclind.com, or on sedar.com. Moving to slide three. For the second quarter of 2021, sales increased 15.1%, with organic growth of 20.5%, acquisition-related growth of 1.5%, partially offset by 6.9% negative impact from foreign currency translation. This resulted in sales of CAD 1.41 billion compared to CAD 1.22 billion in the second quarter of 2020. Operating income was CAD 235.5 million for the 2021 second quarter, compared to CAD 163.6 million for the second quarter of 2020, a 51.4% increase excluding the impact of foreign currency translation. Geoff will expand on our segmented results of the CCL, Avery, Checkpoint, and Innovia segments momentarily. Included in the second quarter results was a CAD 8.8 million increase in corporate expense due to an increase in short-term and long-term variable compensation expenses for the comparative periods. Consolidated EBITDA for the 2021 second quarter, excluding the impact of foreign currency translation, increased approximately 31% compared to the same period in 2020. Net finance expense was CAD 14.1 million for the second quarter of 2021 compared to CAD 15.9 million for the 2020 second quarter. The decrease in net finance costs was due to a lower average debt outstanding for the comparative periods. The overall effective tax rate was 25.5% for the 2021 second quarter, up slightly from 25.1% effective tax rate recorded in the second quarter of 2020. The effective tax rate was impacted by recent amendments to U.K. tax legislation enacted into law during the quarter, partially offset by a reduction in valuation allowances due to improved profitability at certain subsidiaries of our company. This effective tax rate may change in future periods, depending on the proportion of taxable income earned in different tax jurisdictions with different rates. Net earnings for the 2021 second quarter was CAD 153 million, up 55%, excluding foreign currency translation, compared to CAD 103.9 million for the 2020 second quarter. For the six-month period, sales increased 14%, operating income increased 31%, and net earnings increased 36% compared to the same six-month period in 2020. 2021 included results from 11 acquisitions completed since January 1st, 2020, delivering acquisition-related sales growth for the period of 2%, organic sales growth of 12.1%, and a foreign currency translation headwind of 4.7% to sales. Moving to slide four. Basic earnings per Class B share were CAD 0.86 for the second quarter of 2021 compared to CAD 0.58 for the second quarter of 2020. Adjusted basic earnings per Class B share were CAD 0.89 for the 2021 second quarter compared to adjusted basic earnings per Class B share of CAD 0.59 for the second quarter of 2020. The increase in adjusted basic EPS to CAD 0.89 is primarily attributable to an increase in operating income resulting in CAD 0.36, a CAD 0.03 reduction in tax expense attributable to the net impact of the new U.K. tax legislation increasing deferred taxes for future timing differences, offset by a reduction in tax valuation allowances. These improvements offset by CAD 0.05 negative impact from foreign currency translation and a CAD 0.04 increase in corporate expenses. For the 2021 six-month period, the CAD 0.40 increase in adjusted basic earnings per Class B share is largely due to the CAD 0.47 increase attributable to operating income, offset by CAD 0.07 negative foreign currency translation impact, with an increase in corporate expenses of CAD 0.06, offset by a reduction in tax expense of CAD 0.05 and lower interest expense of CAD 0.01. This resulted in adjusted basic earnings per Class B share of CAD 1.71 for the six-month period of 2021 compared to CAD 1.31 for the 2020 six-month period. Moving to slide 5. For the second quarter of 2021, free cash flow from operations was CAD 94.7 million compared to CAD 145.7 million in the 2020 second quarter. An increase in cash taxes paid, net capital expenditures, coupled with the retrenchment of net working capital. Cash reduced free cash flow from operations and cash provided by operating activities for the second quarter of 2021 compared to the second quarter of 2020. For the last 12 months ended June 30th, 2021, free cash flow from operations improved CAD 109.7 million compared to the last 12 months ended June 30th, 2020. The comparative improvement is attributable to the improved cash flow from operations and reduced capital spending for the comparative periods. Moving to slide six. Net debt as at June 30th, 2021 was CAD 1.26 billion, a decrease of CAD 128.6 million compared to December 31st, 2020. The decrease is principally a result of debt repayments during the first six months of the year, partially offset by a decrease of cash on hand for June 30th, 2021 compared to December 30th, 2020. The company's balance sheet closed the quarter in a strong position. Our balance sheet leverage ratio was 1.05 x, declining from 1.24 x at the end of December 2020. Liquidity was robust with CAD 693.3 million of cash on hand and $1.2 billion of available undrawn credit capacity on the company's revolving bank credit facility. The company expects to repay the full portion of its long-term debt from free cash flow or using its revolving credit facility before it comes due. The company's overall average finance rate was largely unchanged at approximately 2.3% at June 30th, 2021 and December 30th, 2020. The company's balance sheet continues to be well-positioned as we move through 2021. Geoff, over to you. Thank you, Sean, good morning, everybody. I'm on slide number seven, highlights for capital spending for the year. CAD 132 million spent so far, CAD 127 million net of disposals. Just want to point out that we're planning to spend CAD 340 million for the year in total, so capital spending in the second half of the year will be much heavier than it was last year, around CAD 200 million and change. Moving on to slide eight, highlights of the CCL business. Very strong quarter. Mid-teens organic sales growth. Very strong in North America, up in the high teens. Low double digits in Europe and Asia Pacific, and up high single digit in Latin America. We saw strong sales gains at home and personal care, food and beverage, and CCL Design. Slightly down in healthcare and specialty due to the pandemic tailwinds in the prior year, and the same with CCL Secure, although their profits were up. Moving on to slide nine. The two joint ventures we have, one in Russia, one in the Middle East. Very strong results, particularly given the problems of foreign exchange in both jurisdictions. Slide 10, results from Avery. Strong recovery in all regions and all products. We've seen a really big strong bounce back this quarter at Avery. One laggard that remains is badges, although it has improved considerably sequentially. It's still far below normal, but much better than it has been. Our back-to-school selling has been strong. We have faced a number of logistic issues, especially supply of critical raw materials from China with the many freight problems and challenges importing from that country into the U.S. currently today. That may affect replenishment sales in Q3. Inflation has also been a factor. Slide 11, Checkpoint. Big recovery here, especially in the apparel label business. You have to remember, in the second quarter of last year, large parts of that industry were completely shut down, so we've seen a particularly strong bounce back there, but also strong in merchandise availability with non-essential retailing coming back. In the crisis last year, we had still some good business with essential retailing, but non-essential is the part that's really bounced back there. Record profitability in the second quarter, well above Q2 2019 and above the previous Q2 2018 high watermark. Slide 12 with results for Innovia. This one really surprised us a little bit. We had very good pass through of the higher resin costs, but the profit change really was aided by improved mix. We've done a fair amount of pruning of low-margin product lines, especially in the acquired Polish operation out of the plant in Mexico, and that really helped our mix in the quarter that's just gone through. Productivity gains, especially in the U.K. and large Mexican plants, also augmented results. The Polish plant EcoFloat investment is on schedule as planned for the second half of 2021. Slide 13, a few comments on our outlook. Just want to point out that the third quarter last year was a record quarter for the company. Earnings were up 18% last year in that quarter on a normal comparative period in 2019. That's quite a high bar at today's foreign exchange rates, especially to the weaker US dollar. Avery will improve over the second half of 2020. That's a typo on that slide. It says the second half of 2020, and the Delta variant which will improve really depends on back to school. We do expect Checkpoint progress to continue, but at a more modest pace, although our RFID will still be a source of strength. We also see some supply chain issues in apparel due to rising COVID restrictions in Asia. We had a plant in Bangladesh shut for two weeks in the month of July due to government-imposed restrictions after the Eid holiday there. There's still some challenges in the Asian apparel supply chain that are appearing as we speak. CCL Design expects a strong second half. Although automotive is much better than it was last year, I think as we get into the third quarter, the chip shortage is beginning to reveal itself in some glory, and we expect some challenges for that, particularly in the third quarter and maybe in the fourth quarter, too. It's certainly a recovered industry compared to how it was in Q2 and the latter part of Q1 last year. We do have some strong new business wins coming in electronics, which will probably offset that. Food and beverage and home and personal care are both expected to be solid. Healthcare and specialty comps remain difficult for the second half of the year, especially in the ag chem space. CCL Secure has the most difficult challenge, an extremely elevated Q3 earn, based on a high-margin windfall order we received in 2020 from the cash shortages in many developed countries around the world. The comps return to normal in the fourth quarter. Innovia still has to navigate continuing resin volatility, and we have to manage well the EcoFloat investment in Poland, and there are no more easy comps to come. With that, operator, we'd like to open up the call for questions, please. Ladies and gentlemen, as a reminder, to ask questions, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the queuing roster. Again, if you would like to ask questions, please press star one. Your first question comes from the line of Adam Josephson from KeyBanc. Sir, your line is open. Geoff and Sean, good morning. Morning, Adam. Hope you're well. One on translation, Geoff or Sean. Based on current Canadian dollar exchange rates, what magnitude of drag would you expect if these rates persist through the end of the quarter? Sean, do you want to handle that one? Sure. Adam, I think the way you have to think of it is U.S. to CAD. For every 1% move in the U.S. dollar and CAD relationship, we would take a 1% or CAD 0.01 change in EPS on an annualized basis. Look at the year-over-year exchange rates and what you expect for the back half of the year compared to where we're at now and where we were last year, and about a 1% move is a CAD 0.01 change on an annualized basis. I think in the second half, Adam, it'll be mid-single digits, 10 basis points, something like that, impact, if the rates stay where they are. For the second half as a whole, not per quarter. Correct. Right. Got it. Okay. Thanks, Geoff. It's a bit difficult to model because you've got some offsetting currencies around the world, too. The Australian dollar is strong and a few other places. We do have some offsets. Yep. Yeah, no, thanks. You don't normally provide much in the way of explicit quarterly guidance, Geoff, so I'm just wondering what you see more forthcoming than normal about your thinking about 3Q and even for the second half, for that matter. When I look at consensus already expects an earnings decline of about 4% of the second half. I'm just wondering what prompted you to be as forthcoming as you were in both the release and presentation about your second half thoughts. Well, just to remind everybody, Adam, in the second half, just to remind everybody, the first half comps were very easy. The second half were difficult. The currency is, I think, something that not everyone has picked up on before, the latter part of the last quarter. I think it was also just to remind everybody about the translation impact. The two big impacts in the second half are foreign exchange translation and that Q3 quarter we had at CCL Secure in Q3 last year, where I think we made something over CAD 20 million, and we will be lucky to do 25% of that this quarter. Got it. No, I appreciate that, Geoff. You mentioned the supply chain issues in apparel resulting from rising COVID restrictions in Asia. Are there any other aspects of the Delta variant that are causing you particular concern regarding the second half? Not particularly. I do think we'll get through it, because governments are very much keen, and I think in all parts of the world to get through this. The part of the world that's difficult at the moment is Asia Pacific, the Indian subcontinent, Thailand, Indonesia, Malaysia, Australia. These countries have all got pretty severe restrictions in place at the moment. We're currently able to operate, but there are certain times when governments act, and they acted in Bangladesh in July, and so we were closed down for two weeks, an additional two weeks on top of the Muslim holiday there in July. There was a shutdown and there have been some restrictions also in Thailand. It's not material at the company level, but it bodes some. Yeah. No, understood, Geoff. On Innovia, you mentioned the results were surprisingly good to you, and mix was a big help there. Can you just talk about exactly where that came from, and then given how well the segment handled resin inflation in 2Q, how much reason do you have to be concerned about 3Q along those lines? We got hurricane season to get through in the U.S., so these days we're all mindful of what weather can do to resin supply. We're somewhat cautious about that. We did a good job of managing the pass-through. Well, not 100%, but a good chunk of it. Because a lot of our customers, when resin was going down last year, changed their arrangements to be more real time with the moves of resin. That benefited us when the curve went the other way. The big impact this quarter was really mix, and getting out of some of the low-margin volume we had, and particularly in Poland and particularly in the plant in Mexico. Presumably, those benefits are sustainable, Geoff? Correct. Yeah. Two other ones. The large transaction that was announced about a month ago in the label converting industry, what did you make of it, particularly the multiple, and what do you think it says about the going multiples in the label industry these days? Well, I think our stock price multiple seems to now be the going rate to buy anything in the industry. We've seen multiples paid for quite small businesses that are really highly elevated. It's challenging at the moment. There's a lot of money chasing a few deals, and some of the prices that are being paid, in our opinion, are pretty ridiculous. That's just our opinion. You have to ask others what they think. Yep. No, I appreciate that. One last one. You don't give guidance, I think, for good reason. Yes. Appreciating that the world is always uncertain, how would you characterize your level of uncertainty about what's to come in the months ahead compared to whatever it might have been historically? Not just the variant, but Brazil's hiking interest rates because of very significant inflation there. Obviously, there's very significant inflation elsewhere. Just talk about what your level of visibility into the next few months compared to whatever you would consider normal. We've been facing different difficult external circumstances for it seems like forever. I wouldn't say today is more elevated than they were last year in the middle of the pandemic. We're more confident than we were in March and April and May last year, for sure. Some of our businesses have still got some runway left on the bounce back, particularly at Avery. I think like many companies, we had a very strong recovery in the second half of the year last year. The period of easy comps is gone, and on top of that, we've got the US dollar weakening pretty significantly. Those two impacts, the business is doing pretty well right now. Externally, those two things make the situation a little bit difficult. Thanks a lot, Geoff. No problem. Your next question comes from the line of Walter Spracklin from RBC Capital Markets. Your line is open. Thanks very much, operator. Good morning, everyone. Hey, Walter. Starting with Avery, and you mentioned, and looking at your different divisions, it is the one that is still below pre-pandemic on a fairly meaningful basis. I believe last quarter, you had indicated, Geoff, that you did expect it to be up year-over-year, now albeit on a tough comp. Are you getting more encouraged? It looked like a great quarter. Things seem to be coming back. You mentioned a few of the driving factors. If you would take that expected to be up year-over-year, I think it was actually on the fourth quarter call you said that. Do you feel better about this division? Do you expect it to be performing better than when you gave that comment in the fourth quarter with respect to Avery? Sure. Well, in the second quarter of 2018 and 2019, we made about CAD 45 million in both of those two quarters, 2Q 2018, 2Q 2019. This year we made CAD 38 million, but at a very different foreign exchange rate. If you normalize foreign exchange to make it constant, we would have been in the low 40s. We're not far off the pre-pandemic level. The business that's still a drag is badges. Sales of some categories of badges declined 90%-95% in the crisis. They have bounced back, so the business has got profitable again. As events continue to unfold, and particularly in the U.S. and Europe, which is where that business is based, that's really the thing that has to occur. The other business that's still difficult at the moment is the ring binder business. The comments I made about China and the difficulties we have there is all around the importation of rings for the back-to-school business. The world's supply of rings, pretty much for the whole planet, all comes out of China, and just getting them out of there and getting them shipped to where we need them shipped has been quite challenging in the current environment. Just to give you a frame of reference, an emergency 45-foot shipping container out of China today costs CAD 45,000 versus CAD 4,000 2 years ago. That's how much the world has changed. Those are our two underlying comments that are sort of on the downside of Avery. On the upside, the label business has really returned to normal, and internationally, it's in very good shape. We're very confident about Avery, both for the coming quarter, the second half and the year-over-year growth. Fantastic. Moving to Innovia, Geoff, I believe when you first looked ahead to post the reorg in Mexico or the new plant startup, I believe you were guiding us back then to a low double-digit margin, and I'm referring to EBITDA margin. It subsequently went up to the mid-teen range, and now we're nicely trending above 20%. Is north of 20% the new normal, or is that mix that you mentioned more temporary? Should we look more at 20% or less than that as a normalized margin for Innovia? These are the margins the business was making when we bought it. We've done a very good job of cleaning it up and sorting it out. I think we'd have to wait to see what happens in a declining resin market. What happens when resins are rising, you do have some inventory of lower priced resin in situ as prices rise. You have the benefit of that. That's typically offset by price increases you don't get quite through, so it usually ends up being a wash. What we're curious to see what happens is what happens when resin prices fall. If they were to fall dramatically, and we would then have high price inventory in our silos, and what the impact of that would be as prices fall on the pass-through. That's probably the thing we've not experienced yet, but that could happen if the resin supply situation normalizes in 2022. I think there's an ongoing run rate. This would high teens, low 20s is probably as high as it's ever going to get. Walter, if that answers your question. It does. Thank you. That's great. Lastly, on the CapEx, I noticed a small increase, I think, in your CapEx spend. Can you give us a little bit of color around any interesting projects that you're looking at, new projects or these growth initiatives? What areas you're focusing your attention just from a capital expenditure standpoint? Probably the most interesting one is all around the electronics business for CCL Design. We're building a couple of new plants in China. One of them is very big for CAD 25 million project with some new business wins behind that will be coming in 2022, and the latter part of 2021. That's probably the main thing. I think also we have to bear in mind, we curtailed CapEx in the crisis for liquidity reasons. Some of this is delayed projects now coming back to the fore and takes a bit of time. The machine building industry has also got its challenges with availability of raw materials and chips and steel and aluminum and all the rest of it. Getting the machines you want on time today is also not easy. We had some delays in getting the equipment we need in parts of the business we'd otherwise would have liked to have had earlier. That's great. Appreciate the time as always, Geoff. No problem, Walter. Your next question comes from the line of Stephen MacLeod from BMO Capital Markets. Thank you. Good morning, guys. Good morning, Stephen. Morning. Just had two questions. On the CCL segment, you had another nice quarter of good margin growth. I'm just wondering if you can point to any specific margin drivers that maybe were driving the Q2 strength. Q2 strength in CCL, Stephen, was really driven by the recovery in the automotive business. That was a big factor. CCL Design Automotive was in the toilet, obviously, Q2 last year, and it bounced back pretty strongly. CCL Design margins were up quite significantly in the quarter as a result of that year-over-year. Food and beverage also bounced back. The on-premise issue that had really hurt that business was the other big change. They were the two main changes margin-wise. CCL Secure also had a good quarter, but it had a good quarter last year and the delta there isn't as big. The two margin impacts on the operating margin were really food and beverage and CCL Design. Okay. That's helpful. Thank you. I just wanted to confirm, I thought in one of the previous questions you mentioned something about CCL Secure. Did you say that you would be lucky to do 25% of what CCL Secure did last year in Q3? Correct. Yeah. I'd say a headwind in Q3 at CCL Secure, at EBIT of the order of CAD 15 million-CAD 20 million. We had a really, when I say windfall, I meant windfall. We had those big orders that came in last year in a number of jurisdictions for top-up orders with premium prices, and this year they're absent. Okay. That's the Delta. We called it on quarter. We had an exceptional quarter in Q3. Q4 was normal, and we expect Q4 to be normal, so it's really going to be a Q3 phenomenon. Right. Did you say that last year's windfall was CAD 15 million-CAD 20 million? No, the delta difference. The difference between what we're likely to make this year and what we made last year is of the order of CAD 15 million-CAD 20 million at EBIT. Oh, okay. That's helpful. Thank you. Just turning to Avery, you mentioned about just the supply chain issues. You had a strong back-to-school. You talked about supply chain impacting potential replenishment orders. How much does replenishment usually impact Q3? Is there any way to quantify or in terms of magnitude? Difficult to quantify, Steve, because last year we had the fiasco of all the school restarts in the U.S. and Canada, which I'm sure you remember well. Retailers this year are assuming, I think with some validity, that back to school will be normal. Typically what you get is you have a selling order that usually goes out in the latter part of June and the early part of July. This year, went out mostly in the latter part of June. Then in July and August, you get top-up orders from retailers. If you have the inventory, you can sell it. Obviously, the selling season's extremely short for back to school, so if you haven't sold it by September, you're done. If we don't get the ring supply we need, it could affect our ability to keep retailers supplied with what they need during that sort of replenishment period. That's the challenge at the moment. Okay. I see. Thank you. Then maybe just finally, just on the Innovia, I just wanted to clarify. You did a very good job managing through resin inflation in Q2, sorry. I guess what you're saying is Q3, you can manage the resin price inflation in a similar way, I guess you're just saying that the hurricane season creates a bit of uncertainty on supply. Is that right? Resin is still going up. It's creeping up now rather than leaping up, but still going up. In the U.S. and Europe now, resins are 2x the price of resin in China. There's so many difficulties importing from China at the moment. I don't think not many people in the world I know are thinking about sourcing from there. China's a net importer of resin anyway. If the world did that, there would be no availability anyway. The real challenge has really been what's going to happen in the future. Hurricane season, you worry about that every year because if it knocks out a cracking plant, there will be the usual impact short-term. We'll have to wait and see what happens. Okay. That makes sense. Great. Thank you, Jack. Thanks, Sean. Your next question comes from the line of David McFadgen for Cormark Securities. Sir, your line is open. Oh, great. Thank you. A couple questions. You talked about the badges business, how it's improved a bit, but it's still down, I guess, compared to normal levels, say 2019. Can you give us an idea how much it would still be down compared with 2019? It's still down 60%, 70% over 2019. Literally, the event badge part of it, rock concerts and sports events and business conventions and things like that dropped 95% in the crisis, and we're back at sort of 25% of normal levels. Okay. It should continue to improve a fair bit. Oh, of course it will. We're expecting it to continue. We've seen it improve in July, but it's a long road back. Until conventions and sports events and attended sports events and non-attended sports events don't use any badges. Attended sports events, until that becomes normal, it's still got a ways to go. It's about a CAD 100 million business, part of Avery. Right. Okay. Just on that, can you give us an idea how the direct-to-consumer performed and binders specifically in Avery in the quarter? direct-to-consumer performed very well with the exception of badges. And binders also performed quite well because of the selling for back to school, but we had some inflation challenges in ring supply, a lot of it revolved around trade. Okay. Just on the balance sheet, obviously you guys have very low leverage. I think on the last conference call, there was a question about just the optimal capital structure, and I think you thought that it was below optimal level. Are you looking at a potential substantial issuer bid or something? Well, there's a normal course issuer bid out there, and we'll see what happens. Okay. Could there be any larger? Not going to speak any more than I just commented. Okay. All right. Thanks. There are no further questions at this time. Please continue. Okay, everybody, thank you for joining the call, and we look forward to talking to you in November for the third quarter. Thank you very much for today's time. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.