Diversey Holdings, Ltd.

Greetings and welcome to the diversity first quarter of 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded

Thank you. Hello, everyone, and welcome to Diversity's first quarter 2022 earnings call. With me today are Phil Wieland, our Chief Executive Officer, and Todd Herndon, our Chief Financial Officer. As a reminder, during this call, we will make forward-looking statements. Some risk factors that may impact these statements and could cause actual future results to differ materially from our projected results are described in this morning's press release, and in the reports we file with the SEC. The company does not undertake any duty to update such forward-looking statements. On 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, over to Phil.

Thanks, Grant, and good morning to all of you dialing in. There are two areas that I'd like to highlight this morning. First, I'll provide some initial thoughts on our strong first quarter results. and the read across to our confidence in hitting our full year revenue adjusted EBITDA and margin goals. I'll then discuss how our business model is uniquely built to tackle the challenging global dynamics. Then I'm going to turn it over to Todd to put some meat on the bones of the quarter and cover the 2022 outlook. So, starting with the quarter. I remain confident about the resiliency of our business and our long-term growth prospects. As I'm sure you know by now, Diversi is one of only two large global companies that offer a full suite of hygiene, infection prevention and cleaning solutions in a highly fragmented industry. And it's that fragmentation coupled with the foundation that we have built for organic revenue growth, margin improvement and consolidation that gives us a competitive advantage in penetrating the over $46 billion total addressable market. Our first quarter results highlight the strength of our business model, despite the current macro environment. Specifically, revenue improved by 4.5% as compared to the prior year, or 6.8% higher than pre-pandemic levels, with significant recovery still to capture. our constant currency organic sales growth accelerated to 7%. That revenue growth was driven by our base institutional, that's our institutional business excluding infection prevention, of 26%, and food and beverage grew by 15%. Adjusted EBITDA margins of 9.1% were in line with our expectations for the quarter, and are forecast to significantly improve sequentially throughout the year as our pricing and cost containment initiatives are implemented and continue to mature. Moving to the macro and how our business model is standing up to the challenges. We are clearly operating in an unprecedented environment with multiple COVID variants impacting global economies with rising inflation. with supply chain bottlenecks and other operating factors that can be difficult to predict and really challenging to manage. I've been extremely pleased with the resiliency of our business model and our management team's agility in the short term, while maintaining focus on our long-term growth goals. Some highlights of our current initiatives. Firstly, we've been focusing hard on pricing to cover inflation. While input costs continue to rise steadily, we're implementing price increases across our various geographies and products. In the first quarter, we realized more than 6% revenue growth from pricing, and I expect this level of pricing to increase further as we move through the year. Today, our price increases have been well accepted. We expect these increases to remain intact reflecting the essential nature of our products and services and their appeal to customers. Secondly, we have maintained a focus on controlling our fixed costs and leveraging our variable costs. Our first quarter margin of 9.1% is reflected of the near-term inflationary environment. As our pricing actions continue to be implemented, including additional pricing as required, we would expect our margins to meaningfully improve between now and the fourth quarter of the year. We also continue to invest in opportunities to expand margins into next year and beyond, a good example being our plant investment in Kentucky, which remains on track to be completed by the end of this year. In that example, by co-locating our main warehouse with manufacturing and adding more capacity to bring currently contracted manufacturing volumes in-house in combination with optimizing freight lanes, we expect to improve total company margin by roughly 100 basis points from next year. As we work to deliver our targeted long-term EBITDA margins of 20%. So, whilst it's still early in the year, we're pleased with our early pricing and cost containment results as we continue to navigate this unprecedented environment. Whilst, of course, we cannot predict the pace at which variable costs and overall inflation begin to normalize, we will maintain pricing discipline so we can drive revenue growth and capture margin expansion opportunities as the year progresses. But just as important, I'm very pleased with our continued progress on strategic growth drivers. We continue to evolve our value proposition with digital innovation and a focus on service, which is leading to high retention levels and acceleration of net new customer wins and a robust pipeline of additional growth opportunities. This is especially strong in our strategic focus areas, including U.S. food service, global accounts, and water treatment. All of this is expected to drive double-digit top-line growth in Q2 through to Q4 this year. With that, let me now pass over to Todd to give you some more detail on our strong first quarter and our outlook for the remainder of the year.