Whole Earth Brands, Inc.

Good morning and welcome to the Whole Earth Brands third 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 also 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 Brian Littman, Chief Accounting 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 the 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 the investor relations website, investor.wholeearthbrands.com, reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. Additionally, we've provided a supplemental earnings presentation on the investor relations website that may be useful in your analysis of the company's performance. I'd now like to turn the call over to Albert Manzoni, CEO.

Thank you, Jeff, and thanks to everyone for joining the call today. In Q3, we continue to demonstrate the strengths and momentum of our portfolio and our ability to generate strong top-line and bottom-line growth for our business. We reported consolidated organic constant currency revenue growth of 6.1%, including acquisitions in both periods. Branded CPG segment pro forma organic constant currency revenue growth of 7.6% versus 2020 or 14.3% on a two-year stacked basis versus third quarter 2019 due to strong volume growth and a record adjusted EBITDA of 22.1 million. Our Power of One strategy to enhance our shelf presence and drive greater visibility with retail customers across Wholesome, Swerve, All Earth, and Equal is working. We're seeing the distribution gains that we've been building towards across all sales channels, including retail, e-commerce, and food service. And we see this momentum continuing through the fourth quarter and into next year. Inflation and supply chain management are top of mind for the entire CPG industry, and it is a focus of ours as well. However, we believe we are in a relatively better position than others, given that we had a bit of a head start. We were already working on several initiatives to mitigate volatility, protect margin, and create opportunities to drive greater efficiencies over the long term. This includes our previously announced supply chain reinvention projects, pricing, and trade spend optimization. Our focus on sourcing, manufacturing operations, logistics, and distributions. Further, we are continuing to drive synergies with Swerve and Wholesome, which is yet another tool to protect our business against these macroeconomic forces. As such, We remain comfortable reiterating our fiscal 2021 food year guidance. We have most price increases staged with retailers to go live in the start of next year. As we look ahead, we are confident in our ability to deliver strong, sustainable growth and take advantage of market opportunities. The basis for our confidence lies in our proven operating model built on five strategic pillars. Brand building, innovation, distribution, supply chain, and our work-class team. Let me now provide some Q3 highlights. On our brand building and innovation, our growth across our branded CPG and flavors and ingredients segments has been driven primarily by volume here to date. Demand for our categories remains strong across both developed and emerging markets, and we have continued to gain share within those categories in recent years. We have very recognizable brands with number one or number two share in most key markets with new packaging design campaigns, including our wholesome purpose-led marketing campaign. and influencers' messaging in an attractive industry where consumers' demand is projected to be strong for years to come. We're meeting our goal of 30 product launches this year in branded CPG and 15 in flavors and ingredients, and we'll have over 15% of our branded CPG segment revenues derived from product innovation on a three-year rolling basis. Our innovation in branded CPGs focused on high-growth categories such as plant-based, keto-friendly zero sugar, functional benefits, organic and fair trade in current categories of sugar substitutes, baking, and baked mixes, as well as expanding into sugar-laden over categories. Half of the consumption of sugar is in baking, and we're ideally positioned to take a disproportionate share. I'm very pleased with the performance of our acquired brand's baking mix portfolio as we lap 2020 with dollar sales consumption growth up double digits and distribution up more than 60% year-on-year. On our market base execution, our brands are gaining distribution via our Power of One strategy to become retailers' key strategic category business partner across retail, e-commerce, and food service as we raise the profile of our innovative, better-for-you offerings. We believe our Power of One strategy is working because sweeteners, in particular natural sweeteners, is such a young and fast-growing category where we can work together with retailers to optimize growth improve shoppability, and help consumers at the shelf as they look for alternatives to the 100 billion refined sugar total addressable markets. The increased consumer mobility is benefiting our food service business, and there too we are leveraging Power of One to gain a disproportionate share of this channel's growth. Whole Earth Brands provides both sweetening and baking solutions across all our brands and all our ingredients. Equal and Whole Earth Sweetener Sashay for coffee or tea. Wholesome Organic Agave for mixology. Swerve No Sugar No Carb for muffins. Or Wholesome Organic Sugar for non-GMO organic fair trade cookies and brownies. We expect more consumers and food service operators to demand natural sweetener options, which represents an incremental opportunity. Both Swerve and Rolsum had limited presence in food service pre-acquisition and will now benefit from our power of one approach with customers. As shown in our Q3 supplemental presentation made available on our website this morning, I'm happy to report some key performance measures that highlight the direct impact of our Power of One strategy. Whole of Brands, as a company, grew ACV or distribution in the U.S. measure channels to 79% overall, which is a three-point increase year-to-date Q3 versus 2019. Swerve distribution is 54%, a 26-point increase on a similar basis. and Whole Earth Sweetener, the brand, distribution is 31%, an 11-point increase. Our momentum is continuing in Q4, and we still have distribution gains ahead of us as we look at 2022. From a door count perspective, within our U.S. natural sugar substitute portfolio, we have grown the number of selling stores by 7% through year-to-date September. Whole Earth Brands is significantly outpacing the sweetener category growth in all our key developed markets. Year-to-date Q3 versus 2019. For example, in the US, our value sales change is 20.7% versus 7.6% for the category. Our household penetration is increasing across all key developed markets. For example, In the U.S., sweeteners' household penetration grew two points to 28% year-to-date Q3 versus 2020. Still, with 26% household penetration across our key developed markets versus 77% for processed sugar, the opportunity is huge and implies an opportunity to engage with an additional 245 million households. On manufacturing and supply chain, Supply chain remains undoubtedly a competitive advantage for holder brands across our branded CPG and flavors and ingredients segments. As I have noted previously, supply chain improvements will allow us to continue to mitigate inflation and drive top-line revenue growth, margin expansion, and free cash flow generation. Specific initiatives include commodity pre-buys ahead of 2021, acceleration of our branded CPG North America supply chain reinvention, and flavors and ingredients footprint optimization, including the completed sale of our Camden, New Jersey facility in Q2. All those initiatives are proceeding on or ahead of plan. On our world-class team, with our results to prove it, I want to recognize our best-in-class employees and leadership team. They demonstrate daily the passion, competency, and engagement to deliver on our vision to build a large, organic, natural plant-based food company. Our CFO search is progressing well, supported by a leading national executive search firm, and I am pleased with the quality of candidates we are attracting. As we continue to accelerate our growth in sweetener and adjacent categories, I'm also pleased to announce the addition of Rishi Deng to our North America leadership team. Rishi has a demonstrated track record of driving strategic growth, brand building, and innovation with over two decades of experience at leading companies such as PepsiCo and Tata Consumer Products. He will also play a significant leadership role in our portfolio expansion efforts in the North American market. With respect to our flavors and ingredients segment, we're very pleased with Q3 and year-to-date performance. The business delivered revenue growth in the quarter despite a tough comparison due to a strong performance in the third quarter of 2020. Our investments in R&D and sales are continuing to pay off with good momentum in the business and significant new customers anticipated for Q4 and 2022. We expect the business to continue to produce strong free cash flow, driven by our global leadership position in licorice and our diverse end markets. Polar Brands is the global leader in the better-for-you sweetener and reduced sugar categories. Our team continues to execute on our vision to grow into a 1 billion-plus revenue company as we pursue three priorities. First, disrupt the massive 100 billion total addressable refined sugar market that is being displaced by fast-growing sweeteners. Second, drive category leadership through best-in-class innovation and brand building, expand our global distribution, Leverage our strong supply chain capabilities and continue to further accelerate our growth through strategic M&A. Third, continue to evolve our brand and product portfolio towards becoming a large, organic, natural plant-based food company. I encourage you to review our Q3 supplemental deck for further highlights and details on our Q3 earnings. With that, Brian will now take you through our financials and outlook for 2021.