Tupperware Brands Corporation

Good day and thank you for standing by. Welcome to the Topper Rare Brands Corporation first quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After the speaker 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. If you require any further assistance, simply press star 0. With that, I would now like to hand the conference over to your speaker today, Alexis Galhan. Thank you, and please go ahead.

Thank you, operator. Good morning, and welcome to Tupperware Brands' first quarter 2022 earnings conference call. Joining me today are Rich Gutis, Executive Vice Chair, Miguel Fernandez, President and CEO, and Sondra Harris, CFO and COO. We will all be available for Q&A following our prepared remarks. Earlier this morning, we issued a press release announcing our financial results for the first quarter of 2022, which is available on our investor relations website. In addition to today's press release, we have also published supplemental materials to accompany our prepared remarks, and both items can be found on our investor relations website. Let me remind you that the following discussion and our responses to your questions reflect management's views as of today, May 4th, 2022. and may include forward-looking statements. Actual results may differ materially from such statements. Additional information about factors that could potentially impact our financial results is included in our form 10-K for 2021, subsequent filings with the SEC, and in our press release file this morning. Please review the forward-looking statements disclosure on page three of today's press release. Please note that all references today are being made on a constant currency basis. which reflects the application of the current period foreign exchange rate to any prior period results, enabling comparisons excluding the impact of foreign exchange rate fluctuations. Please also note that all references, unless otherwise noted, are being made on a continuing operations basis. During this call, we'll discuss certain non-GAAP measures, including those we refer to as normalized measures. Additional disclosures regarding these non-GAAP measures, including explanations and reconciliations of these measures to the most comparable GAAP measures can be found in today's press release, which has been posted to our investor relations website. A replay of this call will be available on our investor relations website later today. And with that, let me turn the call over to you, Rich.

Thank you, Alexis. As you've seen in our earnings release, we had a very disappointing quarter. While we expected our turnaround plan would not be linear and would at times be difficult to predict, this quarter's results were lower than we had expected on both top and bottom line based on a number of internal and external factors. Revenue was lower and we had gross margin and operating margin erosion versus last year. Our top line performance was impacted by poor service levels, continued technology issues, business model changes, and quite honestly, revenue assumptions that just didn't materialize when we expected. These internal issues, when combined with the global events, such as the COVID shutdowns in China and the knock-on effect of the Russian invasion of Ukraine, resulted in a 14% decline in our top line. Our year-over-year margin suffered for many reasons as well. The primary contributor was the result of inflationary cost increases not yet offset by price increases, atomic disconnect that we identified during the fourth quarter earnings call, coupled with volume-related impacts such as lower contribution dollars and higher inventory and receivable reserves. Additionally, we had higher freight expense in an effort to improve service levels on delivery of high-demand products in the U.S., higher investments in our omni-channel capabilities, and FX losses. Much of this happened after we issued annual guidance for the first time in over two years and initiated an accelerated share repurchase program to buy back $75 million of our stock. The quarter's lower profitability also indicates a higher breakeven point than we had a year ago after our aggressive rightsizing. As you know, we are making investments to both fix our core business while we make new investments to open up an omnichannel business. With lower than expected contribution from our direct selling business in the quarter, our profitability was dramatically affected. In the long term, this cost structure can only be justified if we are successful in driving revenue growth. To that end, we continue to make progress in turning around our core direct selling business as seen in Mexico, which was up 7%. Mexico's leadership team has embraced a more analytical approach to the business and is effectively using these insights, coupled with the input from our independent sales force, to make decisions that are driving growth. We believe other countries are embracing and learning to use the same analytical approach, and this gives us confidence that we will not only be able to stabilize our core direct selling business, but that we can actually sustainably grow it. We are also continuing to make progress on our strategic efforts to open up the Tupperware brand to all consumers. In preparation for this channel expansion, we made progress in talent acquisition, packaging, systems, and key account relationships to open more doors to accelerate growth into new channels. The more work we do to turn around the business, the more we invest in new capabilities, the more buyers we meet, and the more consumer insights we capture, our excitement and confidence grows to reintroduce Tupperware to consumers around the world. Before I turn the call back to management, let me reiterate, these first quarter results are not acceptable to us, and we take full responsibility for this poor performance. Management has been digging in deeper to further understand the root causes for its missed revenue assumptions, modifying strategic and investment decisions to fix any foundational issues, and they are making the necessary changes to help improve profitability. Now let me turn the call over to Miguel.