Tupperware Brands Corporation

Good day and thank you for standing by. Welcome to the Tupperware Brands Corporation first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Jane Gerard, Vice President of Investor Relations. Please go ahead.

Thank you. Welcome to Tupperware Brands' first quarter 2021 earnings conference call. With me on today's call are Miguel Fernandez, our President and CEO of and Sondra Harris, our Chief Financial and Operations Officer. Earlier this morning, we issued a press release announcing our financial results for the first quarter ended March 27, 2021. The press release is available on our company website on our investor relations page. We will begin with our safe harbor statement. During the course of today's call, We will make forward-looking statements that are subject to risks and uncertainties as described in our press release and in our SEC filings. You should listen to today's call in the context of that information. We will also discuss some of our results for the quarter on a non-GAAP basis. Reconciliations between GAAP and non-GAAP measures can also be found in our press release. Any reference to sales in the discussion today is referring to local currency sales, which compares results between periods as if current period foreign exchange rates had been the exchange rates in the prior period. You can access the release and our forward-looking statement language through the investor relations section of the company website, where you can also access a webcast replay of this call later today. I will now turn the call over to Miguel for his remarks.

Thank you, Jane, and good morning, everyone. Just 13 months ago, along with a new leadership team, we began the process of turning around this iconic company. We committed to rises, the cost structure, to fix the core business, increase the use of digital tools, and strengthen the balance sheet. And as you saw in the press release this morning, both our top and bottom line performance along with our liquidity and capital structure, improved significantly from a year ago. But more about the quarter and our performance in just a minute. Let me first reiterate key elements of our strategic growth plan that are well underway. We want to pivot from a distributor push to consumer pull and distributor push model. Update a brand architecture to allow us to segment branding, products, channels, and pricing. to appeal to a broader consumer base. Expanding to new product categories and push consumer permission of our iconic brand. Align product development efforts to address needs of all consumer social subsegments. Expand distribution and access points to meet consumer where they shop. And most importantly, fix the core direct selling business with proven methods. Today, in our 75th year, That brand is very strong, widely known, and accepted. And we intend to leverage this important asset. We also believe we're on trend with a worldwide focus on ESG by producing and selling environmentally friendly reusable products. You've seen our increased efforts in this area with the sponsorship of national parks and our use of new, more environmentally friendly materials. Due to the strength and awareness of our brand, we made the strategic decisions to be a branded house, not a house of brands, as we develop our new brand architecture. As such, we expect to divest all the non-top of our businesses this year and use the proceeds to continue to pay down our debt and continue to invest in the business. We believe the execution of this new brand architecture will enable us to penetrate new channels of distribution new product categories, and new pricing structures, all of which have the potential to accelerate our growth while minimizing any potential conflict with our current direct selling channel. In the first quarter, we reorganized our leadership team around channels, with Patricia Cuesta leading our direct selling business. Hector Lozama now leads our non-direct selling business, which includes key markets like China and Korea, along with all the important markets and most importantly, our efforts to penetrate new channels of distribution. Improving our abilities and expanding our capabilities in product innovation will be a key objective of our executive team over the next two years. We believe there are highly innovative manufacturers around the world that we can strategically partner with to accelerate our efforts to broaden our current product offerings, extend our branding to new categories, and appeal to consumers in different social sub-segments. Also, we believe there is an exciting R&D journey ahead to use novel materials to accelerate our efforts to continually improve the planet. Our EcoPlus line is an example of this. This product line is a revolutionary product portfolio made with sustainable materials. We're adding two new products, Lawn Sheet Container and Sandwich Keepers with a new material partner, Triton Renew from Eastman. Triton Renew uniquely offers Tupperware the ability to design clear or transparent products with 50% certified recycled content without compromising on quality or clarity. These products with this new material will be launched in Europe in the second half of this year. Our efforts to fix the core business are evident in our recent financial results. In each of the past three quarters, we have reported 20-plus percent year-over-year growth. While we are up against easy comes, this growth reflects increased activity, higher engagement, and rapid adoption of detailed tools and techniques by our sales force. As we mentioned on our last earnings call, a key strategic shift for us in 2020 was that our sales force realized that geography was no longer a hindering factor to grow in their business. By utilizing social media platforms and digital tools, they have been able to reach beyond their physical neighborhood and leverage the expansive reach of their online social network. While it is still early in their transition to embracing digital selling tools and methods, we're confident we can build upon the success gained in 2020 and accelerate widespread adoption in 2021. We believe a more digitally equipped Salesforce will enable ongoing engagement and increase productivity as we move forward with our other growth initiatives. Our overall digital strategy is making great progress, with expansion of Salesforce enablement tools, social commerce, and web servers. Our top-tier markets now have these important tools in order to create a more seamless interaction between consumers and our Salesforce, and increase the options for consumers to access our product. Speaking of more ways to access consumers, let me take a few minutes to discuss some new business opportunities. Historically, we have done $30 to $35 million per year in business-to-business partnerships. In these partnerships, we sell products to well-known retailers who then use the product in their loyalty programs. Top-order products are then exchanged for points based on consumer buying activity with a major retailer. We believe there are opportunities to expand these partnerships. Currently, we're working with major brands in Mexico, Brazil, and Europe, and are evaluating more opportunities for the remainder of the year to accelerate our growth in this channel. Additionally, here in the U.S., we will be testing new channels of distribution. This past weekend, Tupperware ran a feature segment using limited products with a major home shopping channel, who has access to more than 92 million homes across the U.S. through various media channels. This new product and brand exposure allow us to deepen engagement around our brand and provides potential leads for our sales force. Additionally, this is an opportunity to reach an expanded audience through the power of storytelling and discovery-driven shopping experiences. Just a few months ago, Tupperware became the first reusable plastic container brand to partner with TerraCycle's circular reuse platform, Loop. LOOP works with leading brands to create zero-waste durable and returnable packaging. As part of this agreement, Tupperware has recently partnered with one of LOOP's prominent brand partners, and we're currently designing a one-of-a-kind reusable package option for this brand, and it will be available later this year. Another example of our efforts to reduce the use of single-use plastic is our partnership with the National Park Foundation. Tupperware will be releasing a limited edition specially designed national theme park line of sandwich keepers and on-the-go cups, which will be sold through a national park service retail partner available at select parks around the country, as well as through Tupperware's direct selling and e-commerce channels. Also, our donation will help expand access to clean drinking water through new refilling stations. Turning to first quarter results, let me highlight a few of our large markets before Sandra discusses our overall financials. In the US and Canada market, sales increased 83%, and Salesforce activity was up 92%. It is important to note that this level of growth is not sustainable going forward, as the first quarter of 2021 had the easiest year-over-year comparisons. Additionally, we're shifting to more profitable sales in this market, and we will reduce some of the highly promotional programs and improve distribution costs. As we become more consumer-centric in the U.S. and Canada, our customer profile is changing. Virtual selling leads to more people purchasing smaller units, reflecting our consumer pool strategy. This change in order profile has increased our distribution costs, and while we accept the higher costs in the near term, we're evaluating ways to embrace the shift into more efficient ways. This is an important market to Tupperware, and we will be working intensely internally with our sales force to continue to increase the profitability in this market. Tupperware Mexico had an 18% sales growth in the first quarter on a 6% growth in average active sales force. This market also had an easy comparison in the first quarter of 2021 that needs to be considered going forward. While we're experiencing sales growth in Mexico, we're not meeting what we believe to be our potential in this market. As a result, we recently made a leadership change to make sure that we leverage the opportunity of our products, brand, and Salesforce going forward. The new leader of this market worked with me over the last 10 years, and I'm confident he will be able to work with the local Salesforce to increase sales and profitability. In Brazil, Sales increased 46% on an easy first quarter comparison and was achieved through an increase in Salesforce activity of 40%. As you know, the second wave of COVID has hit Brazil very hard. While this second wave has not yet significantly impacted sales, our recruiting efforts have been affected. So we will remain cautious in this market until the trend stabilizes and COVID rates topside. And lastly, a key market in our long term growth plan China, which declined 14% as active students were down 7% versus last year. Our new leader in China is focused on improving product innovation, exploring bigger opportunities in e-commerce, and fixing the core entrepreneur-led retail business. The turnaround in this market will take time, but we're confident that our brand is accepted and recognized by Chinese consumers. Looking forward, our key priorities in 2021 to strengthen our direct selling business are the following. Digital and product investment, segmentation of our Salesforce, introducing preferred customer loyalty programs around the world, use of data to identify best practices, use of data to upsell and cross-sell to our preferred customers, and ensure competitive service and costs. And our key priorities in business expansion are to explore new channels of distribution, avoiding a potential conflict with our current direct selling channel. Introducing top of our sub-brands and penetrating into different product categories where we know the consumer give us permission to enter. We believe the execution of these priorities is creating competitively strong foundation that will create meaningful value for our shareholders for years to come. Now, let me turn the call over to Sandra Harris, our CFO and COO for a review of our financial statements.