Whole Earth Brands, Inc.

Good morning, and welcome to Whole Earth Brand's second quarter 2022 results conference call. All participants are in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's conference is being recorded. At this time, I would like to turn the conference over to Jeff Sonick, Investor Relations at ICR. So, please go ahead.

Thank you, and good morning. Today's presentation will be hosted by Albert Manzoni, Chief Executive Officer, and Duane Portwood, Chief Financial Officer. Executive Chairman Erwin Simon is also participating on the call today 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 our 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 investor relations 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. I'm pleased to report the business delivered a consolidated product revenues of $133.5 million, an increase of 8.5% on a constant currency basis and 5.5% on a reported basis, and generated $19.7 million of adjusted EBITDA. These results were consistent with our plan and made possible by our team's hard work amid this challenging operating environment. Our North American supply chain reinvention project allowed us to improve customer service levels and meet demand, which supported 8.1% constant currency revenue growth for the branded CPG segment during the second quarter. Our wholesome sweetener business continues to perform strongly, which helps drive an approximate 2% increase in volumes at our branded CPG segment. excluding the impact of our SKU rationalization initiatives. Our emerging international market sales, comprised of Asia Pacific, India, Middle East and Africa, and Latin America, which represent approximately 15% of our branded CPG segment, all increased at a double-digit growth rate during the second quarter, confirming the strong secular demand trends for our categories and products. Additionally, Segment revenue growth was further supported by price actions that were instituted in response to inflationary forces. Our flavors and ingredients segment continues to carry momentum with above trend growth rates and posses constant currency revenue growth of 10%, driven by both volume and price. Our concerted effort to drive use in new markets and categories has been central to these results. While we navigate the ongoing market disruptions and macroeconomic headwinds, we remain undeterred in our mission and core strategy. Despite the temporary shifts in consumer behavior, the underlying long-term trends remain more relevant today than ever, and our mission to help consumers achieve healthier lifestyles remains at the heart of our growth strategy. The health and wellness forces at play are powerful, In fact, 73% of U.S. consumers are trying to limit or avoid sugars, which speaks to the increased focus on personal health. Globally, our premium and baking-oriented brands such as Wholesome, Swerve, and Whole Earth are successfully addressing the expected shift to at-home indulgence and healthier lifestyle. And our mainstream brands such as Canderel, Equal, and Pure Via continue to address shopper needs for accessibility, affordability, and quality. As we look ahead to the oversight of this macroeconomic cycle, we believe our portfolio will be even stronger. Our slate of innovations is especially exciting as we head into the second half of this year. We have several launches planned this fall around the holidays and the ramp up of the baking season. Our new innovations are tapping into a high-growth segment of sugar substitutes with monk fruit, which is seeing consumption growth of more than 30%, and allulose, which is growing at more than 40% versus a year ago. We are reinvigorating Swerve, which is a leading natural bag product used by 2 million loyal households, by launching exciting new innovations to tap into new products and adjacency cross-purchases. We will launch Swerve products with natural monk fruit and allulose sweeteners. You will also see us in the market with blends such as monk fruit and cane sugar to help consumers transition toward a sugar-free lifestyle. Another innovation we're especially excited about is Swerve sweetened chocolate chips in the baking adjacency. Chocolate baking chips have a strong natural link to existing Swerve baking behaviors. and is a segment of interest for sugar reducing consumers. Our innovation efforts have also driven our share growth across our international markets, where today the whole of Brent's portfolio holds the number one position for the year-to-date 2022 period. For example, take our work in Australia, where we now have almost 23 shares of the natural segment which increased nearly 16 points over the past two years following the introduction of our Baker Secrets products and Moncro Sugar innovations under the Whole Earth brands. Additionally, our focus on availability remains at the forefront of our Power of One sales strategy, with our team gaining 1,700 additional doors in North America across our brands through the first Alpha 22 versus a year ago. This door expansion was driven primarily by the mass channel and by Whole Earth and the Swerve brands. We continue to see success in our global expansion strategy as well. For the first half of 2022, we gain 8,400 additional doors in aggregate across all of our international markets. Now, shifting to operational matters. While the environment has been unrelenting in its variability, we continue to be fortunate given our ongoing execution of our North America supply chain reinvention project. With respect to our new Alabama facility that services our legacy North American branded CPG business, our second quarter manufacturing was significantly more consistent in terms of total production, which reflects the hard work we have done to stabilize production. We're now producing to demand customer service and field rates are significantly improved. And this is immediately visible in the step up of our branded CPG segments, constant currency revenue growth of 8.1% versus the 3.3% growth we reported in the first quarter. Beyond the supply chain, we're also combating inflationary forces for a combination of tools, including price, cross net optimization, productivity, and prudent expense management. We're committed to defending our margins, and we will be using this tool to ensure that we continue to deliver on our commitments to the markets. We're also focused on maximizing investment in areas of trade promotion effectiveness and reallocating resources to strategic growth areas. For instance, take e-commerce, which today already represents low double digits of our branded CPG sales. Between .com and Omnichannel, we see a tremendous growth roadmap ahead of us and globally. We have expanded our e-commerce teams to accelerate growth and build channel infrastructure. We have reallocated and optimized resources to ensure we're investing adequately in talent across e-commerce advertising and operations and in capabilities and tools. With respect to our pricing actions, we instituted a mid-single-digit price increase during the first quarter, which, as expected, helped drive revenue growth in our branded CPG portfolio in the second quarter. Cost inflation has not abated, and in some areas, has accelerated. As a result, we have taken additional pricing actions that will be effective in the third quarter. While not as large as the earlier price increases, we continue to take action to protect margin dollars. Next, productivity. The SKU rationalization we executed at the beginning of the year, which was a year-over-year headwind of 1.6% in the second quarter, was largely focused on underperforming SKUs and reallocating those resources toward innovation. This is an excellent complement to our pricing strategy and something that we can control in response to external forces. Finally, expense management. The strategy we put in place during first quarter had us well positioned during the second quarter to deliver our plan, and we feel good about the levers it provides as we look to the second half of the year. We continue to be vigilant about expenses in this environment, for being smarter about our marketing cadence and are laser-focused on revenue-generative activities such as innovation. Shifting to our flavors and ingredients segment, we continued to generate above-trend revenue growth, achieving 10% at constant currency rates in the second quarter. This growth was driven primarily through volume, along with some pricing actions. This marks the third consecutive quarter of strong growth for the segment following the implementation of new leadership who have developed a set of commercial initiatives aimed at driving adoption of natural, non-GMO, flavor-enhancing, licorice-related ingredients in our hand markets across food and beverage, cosmetics, healthcare, and industrial. Together with a significantly improved cost structure, following our footprint optimization project, we also have an ability to drive more competitive prices. Taken together, the team has the tools necessary to drive growth and we're very excited about the results they are generating for the business. Flavors & Ingredients is a strong free cash flow generator with high barriers of entry and a global leadership position that will support our broader growth initiatives as we further diversify and grow all our friends. This diversification in both revenue and cash flow 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 Holder Friends are creating a stronger foundation that we will build upon. We are pleased with our progress to meet our goals for 2022. Holder 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 capability. Third, continue to build out our ESG credentials and evolve our brands and products toward becoming a large, organic, natural plant-based food company. And four, work on enhancing our cash flow management and reducing balance sheet leverage. With that, I will pass the call over to Duane for his financial review.