Whole Earth Brands, Inc.

Good morning and welcome to the Whole Earth Brand's first quarter 2022 results conference call. All participants will be on 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 over to Jeff Sonick, Investor Relations at ICR. Thank you, sir. Please go ahead.

Thank you and good morning. Today's presentation will be hosted by Albert Manzoni, Chief Executive Officer of and Dwayne Portwood, 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 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 for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. Additionally, we've provided a supplemental earnings presentation on the IR website that may be useful in your analysis of the company's performance. With that, 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. We are pleased to report our first quarter earnings results. We delivered consolidated product revenues of $130.6 million, which represents a pro forma organic constant currency growth of 4.9%. And we generated adjusted EBITDA of $18.2 million at constant currency amid a fluid geopolitical, economic, and supply chain backdrop. Since we last spoke in March, the environment has been further complicated by geopolitical events that prompted an acceleration in input prices. But as we have shared previously, our focus on our global supply chain prior to the pandemic has provided us with an ability to remain in a proactive stance with a sound plan of action to ensure that we have the tools to defend our business and our margin profile. We believe we have strong foundation with an advantage supply chain, strong global diversification across our business segments, brands, channels, and geographies, and strong innovation and distribution engines to drive growth. During the first quarter, our primary focus was the ongoing execution of our North American supply chain reinvention project. We significantly ramped up production at our new Alabama facility that services our brand CPG business. March production was at its highest level in over a year and was nearly three times our January production rates. As a reminder, we accelerated our North America supply chain reinvention project in fourth quarter 2021 to help us solve for supply constraints. The primary thrust of this strategy was focused on taking control of select production from a co-packing partner. The transition of these operations and the improvement in production run rates in the first quarter was critical to increasing our fill rates with customers and restore customer service levels. This is most visible in the sequential step-up in growth from our fourth quarter where growth was constrained by supply shortages, to the 3.3% organic constant currency growth in branded CPG we achieved in the first quarter. While the transition to a higher throughput pressured margin in the first quarter, this dynamic was anticipated. And importantly, we entered the second quarter with confidence in our full-year guidance that we are reiterating today. Beyond the supply chain, we are also combating inflationary forces for a combination of tools, including price, gross net optimization, productivity, and prudent expense management. We are committed to defending our margins and will be using these tools to ensure that we continue to deliver on our commitments to the market and deliver our balance sheet this year through organic means. both of which are key priorities for us in 2022. First, an update on our pricing actions. Our retail partners implemented our price increase which was reflected in store in March. This amounted to an average increase mid single digit across our branded CPG portfolio and then an approximate 3% positive influence on revenue growth in the first quarter. Elasticity is something we're watching carefully alongside the rest of the CPG industry. Given the ongoing intensity on inflation, a new variable such as accelerating diesel prices will reserve the right to implement additional price actions as necessary. Second, productivity. As we discussed last quarter, another element of our supply chain reinvention project is SKU rationalization. Essentially, we're trying to better align our production to demand, and where appropriate, we're eliminating underperforming SKUs and reallocating those resources toward innovation. This is an excellent complement to our price strategy and something that we can control in response to external forces. Third, expense management. We are already a fairly lean global organization, and we are being vigilant about adding expenses in the environment. Thus, we have posed some headcount additions and are selectively reducing spending on discrete projects, where they are not revenue-generative in nature. Again, this is all geared toward a goal of ensuring that our business is in a nimble position to react to market dynamics and still deliver on our financial goals. Net, we are making progress since we last spoke with you on our fourth quarter earnings goal. We have production back, we have pricing in place, and we have ongoing productivity measures that are helping us drive a recovery in branded CPG margins that will carry through the year. On our flavors and ingredients business, the team is doing an exceptional job. For the first quarter 2022, we drove a 12% increase in segment revenue. This is the second quarter in a row of strong double-digit growth and is the result of strong volume growth across our diverse product categories. We're succeeding at driving adoption of natural, non-GMO, flavor-enhancing licorice-related ingredients in our hand markets across food and beverage, cosmetics, healthcare, and industrial. Our new leadership and critical investments in R&D and sales in 2021 have been instrumental in shifting our commercial approach to the diverse end markets that we serve. This is visible in our innovation and product development strategy, which now clearly maps to the various applications across our suite of Magna branded products to drive use and sales growth. Our sales team is also focused on enhancing our relationships through direct relationships and having some great successes. Further, our flavors and ingredient team is also benefiting from our footprint optimization project. As you may recall, we transitioned our North American operation from New Jersey to a state-of-the-art facility in Virginia last year. With that has come a significantly improved cost structure, which results in the ability to drive more competitive pricing. Taken together, the team has the tools necessary to drive growth, and we are very excited about the results they are generating for the business. We continue to view flavors and ingredients as a strong free cash flow generator with high barriers to entry and global leadership position that will support our broader growth initiatives as we further diversify and grow whole earth brands. Further, flavors and ingredients bring diversification in both revenue and cash flow that is valued in a fluid environment such as this, allowing us to deliver greater consistency in our operating results. In summary, our proactive efforts across all our brands are creating a stronger foundation that we will build upon. We're pleased with our progress to meet our goals for 2022. Whole of Friends is the global leader in the better for you sweetener and reduced sugar categories. Our team continues to pursue four priorities. First, disrupt the massive 100 billion total addressable refined sugar market, which is being displaced by fast-growing sweeteners. Second, Drive category leadership through best-in-class innovation and brand building. Expand our global distribution and leverage our strong supply chain capabilities. Third, continue to build out of ESG credentials and evolve our brands and product portfolio towards becoming a large, organic, natural, plant-based food company. And fourth, deliver on our balance sheet. We believe we would reduce leverage in 2022 for organic means as we deliver profitable growth and significant cash flow generation. With that, I will pass the call to Duane for his financial review.