Diversey Holdings, Ltd.

Greetings and welcome to the Diversity Holdings fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Grant Graver, Investor Relations. Thank you, Grant, and you may begin.

Thank you. Hello, everyone, and welcome to Diversi's fourth quarter and year-end 2021 conference call. With me today are Phil Wieland, our CEO, and Todd Herndon, our CFO. As a reminder, during this call, we will make forward-looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC. the company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, the company will discuss certain non-GAAP measures and make references to certain supplemental data which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures and referenced supplemental data can be found on our website at ir.diversity.com and in our most recent annual report. And now I will pass the call over to Phil.

Thank you, Grant, and good morning to all of you joining us. There are several areas that I would like to highlight this morning, as well as providing some additional context regarding our outlook and how we see our company navigating these unique times. Specifically, I'd like to highlight our results, provide a brief update regarding our long-term expectations and how we are positioned to deliver our EBITDA and margin goals, along with some of the global dynamics we are managing and how our business model is uniquely built to tackle these challenges. I will then turn it over to Todd to provide further details on the quarter and our 2022 guidance. Firstly, it's important to say that we delivered our fourth quarter targets, despite the increasingly tough operating environment. On top line, we grew 1% versus fourth quarter 2020, and our base institutional and food and beverage businesses, which together represent more than 85% of our revenue, grew 17% and 14% respectively. On adjusted EBITDA, we delivered approximately 14% growth versus the fourth quarter of 2020 as we expanded margins to 16.3%. For the full year, we reported flat revenues versus the pre-pandemic year of 2019, demonstrating the resilience of the business with significant additional recovery remaining. Within this, we've seen an acceleration of market share gains having one net new business equivalent to approximately 3% of annualized top line on both segments, while retaining 99% of our top customers' revenues. We delivered industry-leading adjusted EBITDA growth of more than 20% against 2019, and we saw adjusted EBITDA margin expansion of 40 basis points against 2020 and 270 basis points against 2019. We leave 2021 with solid momentum on strategic drivers. Whilst we've seen encouraging recovery as markets open up, we still have over 220 million of post-COVID market recovery in front of us. We're accelerating our market share growth from 2% net new business wins in 2020 to 3% annualized in 2021, and have seen further improvements to net new business in the first 10 weeks of 2022. We have also added five new businesses to M&A over the last 15 months. These strengthen our overall business in our most important geographies and bolster our supply chain efficiencies and customer service excellence. We have a full pipeline of further opportunities under review. We are pricing smartly but firmly to cover inflation. We took an average of over 3% in 2021, over 4% in Q4 2021, and anticipate taking over 6% in 2022. Reflecting the essential nature of our products and services, our price increases were well accepted across our institutional and F&B businesses. and we expect these increases to remain intact. We also remain committed to lowering fixed and variable costs. As such, we expect margins to accelerate when inflation begins to subside. Whilst we cannot accurately predict the timing and speed of future inflation, we do anticipate maintaining our pricing discipline. We were pleased to deliver further margin accretion in 2021 despite the very tough environment. The opening of our new factory and warehouse in Kentucky at the end of 2022 will be another important milestone, adding 100 basis points to our group margins. We remain fully committed to our long-term target of 20% adjusted EBITDA margins. As a reminder, diversity is one of only two large global players that offer a full suite of hygiene, infection prevention, and cleaning solutions in an industry that remains highly fragmented. We have spent the last three years transforming our business, strengthening our team, driving pricing discipline, delivering operational excellence, implementing our clear strategy to take market share and strengthen our business through M&A. This leaves us increasingly well positioned to take advantage of our growthful yet fragmented $32 billion addressable market. Now let me go back and unpack some of the headlines a little more. Our base institutional business, excluding infection prevention, grew by 17% in Q4 and 15% in the full year 2021. We previously explained that we temporarily lost approximately 400 million of mostly food service and hospitality revenues in 2020. The reopening of markets in some geographies along with our pricing and market share gains, has driven this dramatic upswing. Our share gains are driven by our investments in U.S. food service and hospitality, commercial excellence, and global accounts, as well as our innovation pipeline and recently upgraded ESG plan, which becomes more important to customers with each passing quarter. Todd will provide more color around the institutional base recovery a little bit later. Separately, we gained over 420 million of growth in 2020 in our institutional infection prevention. This has normalized since Q2 2021 at a level more than 20% ahead of the pre-pandemic level. We believe this represents a permanent step change in a growing market. Q1 2022 is therefore anticipated to be the last quarter of normalization at this new run rate level. Thereafter, we see good growth prospects for infection prevention, supported by a range of new and soon to be launched products, for example, specialist food production wipes and hand care wipes, as well as our recently announced expanded distribution agreement with Reckitt Benckiser to bring their trusted brands to our portfolio in more parts of the world. Our F&B business has been gaining share over a sustained period. We anticipate this to continue, supported by our water treatment offering, which continues to be well received by the market, and via our acquisition of Berco in the US, which strengthened our North American F&B presence, so that we now believe we're the number one or number two player in every region around the world. In M&A, our plan remains unchanged. to add 2% to the top line annually, with targeted multiples ranging from 6 to 10 times EBITDA on a trailing 12-month basis, and less than 6 times on a fully synergized basis. During the last 15 months, we acquired Sanachem in Poland, Avmor in Canada, Tasman in Australia, Berco in the US, and Shorrock Trichem in the UK. These acquisitions all met the financial criteria above and strengthen our presence, supply chain, and customer service in important geographies. We are pleased to report that progress with integration is good and synergies are being delivered in line with the acquisition plans. During the fourth quarter, we completed the acquisition of Berco Corporation. This acquisition enhances our scale and competitive position in the global food and beverage market and transforms our North American food and beverage sales, manufacturing and technical service footprint, which has been a strategic priority for us. Additionally, in January of 2022, we acquired Shorrock, which strengthens our leading institutional market position in the UK. This acquisition expands our portfolio of products and services, including innovative sustainability solutions. It also enhances diversity sales and service capability through Shorrock's experienced employees and distribution infrastructure. I'd like to give a brief update on the use of funds from the equity issuance in November. Consistent with the rationale explained at the time, we've invested in the two transactions described above, Berco and Shorrock. which are strategically important to the US and UK, our two largest geographies. Secondly, we're investing in the new factory and warehouse in Kentucky, which, as described earlier, will add materially to our global margins. And thirdly, we're investing in an increased level of new business growth, which will become evident as we go through 2022. Now, we are clearly operating in an unprecedented environment with COVID variants impacting global economies, rising inflation, supply chain bottlenecks, and other operating expenses that can be difficult to predict and challenging to manage. Against that background, I'm extremely pleased with the resiliency of our business model and our management team's ability to be agile in the short term whilst maintaining focus on our long-term goals. We remain confident that diversity is positioned to maintain its targeted growth goals of double digit percentage adjusted EBITDA growth. We are encouraged by the ongoing recovery in our institutional based business that continues to build as the markets around the globe stabilize and reopen. We enter 2022 with a larger sales force and more products that can drive growth as we realise the benefits from our acquisitions completed over the last few years. I would like to thank all of our dedicated and hard-working people at Diversity, including our new employees from Berco and Shorrock, for their dedication and delivery in uniquely tough times. This is a great time for Diversity to shine, and we thank you for everything you do. And with that, let me now pass it over to Todd to further discuss our fourth quarter financial results and our outlook for 2022.