Whole Earth Brands, Inc.

Good morning and welcome to the Whole Earth Brand's first quarter 2021 conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. At this time, I'd like to turn the conference call over to Jeff Sonick, Investor Relations at ICR. Sir, please go ahead.

Thank you and good morning. Today's presentation will be hosted by Albert Manzoni, Chief Executive Officer, and Andy Rusi, Chief Financial Officer. Executive Chairman Erwin Simon is also participating on the call and will be available for Q&A. The comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in those forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC, We'll also refer to certain non-GAAP financial measures today. Please refer to the tables included in the earnings release, which can be found on our investor relations website, investor.wholeearthbrands.com, for reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures. I'd now like to turn the call over to Albert Manzoni, EO.

Thank you, Jeff, and thanks to everyone for joining the call today. Our business is off to a strong start in 2021. We delivered organic constant currency product revenue growth of 10% for our branded CPG segment and 6% for whole earth brands. This is our second consecutive quarter of double-digit growth for our branded CPG segment, demonstrating the strength of our Better For You brand and the impact it is having on our portfolio to generate long-term sustainable growth. We delivered 17.5 million of adjusted EBITDA in the first quarter, driven by strong branded CPG top line growth and improved the margins as a result of successful cost productivity initiatives. Sales in all our key geographical markets around the world grew double digits versus prior year, as did our portfolio of natural brands, All Earth, Swerve, and Wholesome. I'm also happy to report to you that the integration of the swerve and wholesome acquisitions is complete. A testament to our people's competency, agility, and focus. We're further encouraged by the pace of the economic recovery and the positive implications for the food service industry in North America. We are reiterating our fiscal 2021 guidance. Since going public over the past 10 months, we have been very deliberate in our vision to grow all our friends to a 1 billion revenue global food and beverage company that plays in attractive categories and geographies and delivers sustainable growth. We're achieving our vision by building a portfolio of trusted brands and delicious products and ingredients focused on the consumer preference shift towards plant-based natural alternatives and clean label products. Our mission, simply put, is to open up a world of goodness for consumers around the world. We started our journey as a public company in June 2020 with an attractive global portfolio of brands and ingredients. Swerve and Wholesome, which we acquired in less than eight months after going public, helped us double the size of our branded CPG segment. and build upon our existing strengths and also added new capabilities. The swerve and wholesome integrations are now complete within a very short period of time since those acquisitions, and we could not be more excited by the growth prospects of each of our brands, the talent of our combined teams, and the significant breadth this provides in North America as well as in our international markets. in the near term were focused on our organic growth efforts and generating strong free cash flow towards reducing our balance of sheet leverage, M&A remains an important part of our growth strategy. We intend to continue to increase penetration in the better for you sweetener and adjacent sweets categories for organic and M&A initiatives. These categories include baking mixes, chocolates, bars, gems, and spreads, to name a few, and represents over $30 billion in addressable market with a projected 8% CAGR in the coming years. Our ability to complete the integrations of Swerve and Wholesome at a fast pace is evidence of the M&A being a core competency of all our brands. Till, what excites me the most is the durable nature of the wellness opportunities we're serving for. What we're experiencing is more than a positive trend. It is a lifestyle shift where food plays a central role in our health and wellness goals, helps manage various health problems, or fits a range of lifestyle choices, including keto, gluten-free, low-calorie, low-carb, or vegan, to name a few. All of these trends provide our business with near-term and long-term tailwinds to support sustainable growth. We're addressing this from our presence in the market as our North American market share has doubled and revenues from natural sweeteners are now approximately 70% of our... ...is the fastest growing stevia brand and one of the fastest growing natural brands in North America. organic sweetener brand in Mudo, a natural channel to deliver sustainable growth in this growing market thanks to our relentless execution within our five key strategic pillars of growth and marketing teams to drive awareness for our brands and increase household penetration. Our North American team has developed a power of one brand portfolio with a clear and differentiated brand promise and consumer use for whole-earth, wholesome, swerve, and equal brands. The complementary attributes of each brand bodes well for our innovation pipeline and power of 1G at retail shelves. You can find more details on how each brand fits into our portfolio in our supplemental earnings presentation found on our investor relations website. Starting now, and throughout 2021, you will be able to discover new packaging designs and campaigns for each of our brands, consistent with each brand's distinct promise. The new packaging in North America will also include a proudly part of all our brands' logo. Our second pillar is innovation. We plan to continue to deliver above 15% of our branded CPG segment revenues from innovation on a three-year rolling basis. Our six R&D centers are focused on enhancing innovation and development across the globe in the following areas. Naturals, through the use of innovative ingredients such as Ritratol, monk fruit, and allulose. Baking products, added benefits, such as whole earth with turmeric or whole earth with collagen, and adjacencies such as chocolate, natural sugar-free snack bars, and more. On our last call, I told you we were launching over 45 new products in our branded CPG segment. We have now scored significant wins with retailers in North America, Europe, and Asia in natural baking and added benefits. Those innovations will hit in Q3 and Q4 as soon as retailers reset their shelves. This leads me to our third pillar, growing distribution. Our expanded portfolio of brands significantly improves our shelves presence and visibility with retail customers. In North America, we have integrated our sales organization to elevate our partnership with retailers and lead the category in sweeteners and baking. We call it Power of One. Thus far, retailer feedback has been very positive, resulting in significant new strategic partnership opportunities and ACV gains for Whole Earth, Swerve, and Wholesome. We also have had success in new categories, such as baking mixes, which are expected to hit shelves in the second half of 2021. I'm very excited that Whole Earth will exceed well over 50% ACV in Nielsen across all channels by year end. Our e-commerce platform, which already contributes 10% of our sales, is well positioned to benefit from the consumer buying pattern shifts toward e-commerce purchasing. This enhances accessibility of our portfolio to consumers and allow for high points of distributions. In Q1, our e-commerce business grew by almost 40% in North America, 110% in France, 160% in the UK, and 90% across our Asian markets versus prior year. Our fourth pillar is manufacturing and supply chain. Supply chain is undoubtedly a competitive advantage for all our friends and continued supply chain improvements will allow us to drive top-line growth, margin expansion, and free cash flow generation. I am pleased by the immediate productivity wins our team has generated, leveraging our expanded business across ingredients and packaging. These wins are already helping us contain inflationary pressures. Further, we have started our branded CPG supply chain reinvention project, to provide added scale and leverage our overhead costs in 2022 and 2023 by optimizing the combined assets of Whole Earth Brands, Swerve, and Wholesome. You can find more details about this initiative in our supplemental earnings presentation. Additionally, within our flavors and ingredients segment, Our manufacturing footprint optimization, resulting in the closing of our Camden production facility, is proceeding, and we've started delivering benefits in late Q2 of this year. Our fifth and last pillar is our world-class team. I could not be more proud and thankful for the amazing team we have at Waller Friends. They are truly best in class, and bring operational competencies, agility, focus, and passion across all regions, functions, and brands. A perfect example, again, was the team's ability to fully integrate our swerve and wholesome business while delivering on our plan and developing strategies for sustainable growth. What's more, our organization is highly scalable with global resources in place, to expand our presence in existing and new markets. Turning to our flavors and ingredients segment, we expected the business to continue to produce strong cash flow driven by our global leadership position in licorice and our diverse end markets. Our performance in Q1 was as expected, given the spike in Q1 2020 demand as several customers pulled forward sales that would have normally occurred in Q2 2020 ahead of the pandemic-related lockdowns. As I mentioned last quarter, we have a new leadership in place that is providing a growth-oriented focus to drive the segment's future performance. To follow up from last quarter, we're receiving a lot of customer interest from our recently launched 50 new products under our Magna Femini that better address the unique needs of our customers across those diverse end markets that we serve. These markets include consumer packaged goods, over-the-counter healthcare, as well as beauty and personal care products. We're enthusiastic about leveraging our leadership position towards broadening our existing portfolio and about the customer-centric innovations that we're bringing to the market to drive growth in this segment. With that, Andy will now take you through our financials and outlook for 2021.