Univar Solutions Inc.

Good morning, ladies and gentlemen, and welcome to Univire Solutions' fourth quarter 2020 earnings conference call. My name is Michelle, and I will be your host operator on this call. Currently, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. If at any time during the conference call you need to reach an operator, please press star followed by zero.

we will now turn the meeting over to your host for today's call heather cost vice president of investor relations and global communications at univar solutions heather please go ahead thank you and good morning welcome to univar solutions fourth quarter and full year 2020 earnings call and webcast joining our call today are david jukes president and chief executive officer in the galexo executive vice president and chief financial officer Last night, we released our financial results for the fourth quarter and year-end of December 31st, 2020, and posted to our corporate website at unibarsolutions.com a supplemental slide presentation to go with today's call. The slide presentation should be viewed along with the earnings release, which has also been posted on our website. During this call, as summarized on slide two, we will refer to certain non-GAAP financial measures for which you can find the reconciliation to the most directly comparable GAAP financial measure and our earnings relief and the supplemental slide presentation. As referenced on slide two, we will make statements about our estimates, projections, outlook, forecast, and or expectations for the future. All such statements are forward-looking, and while they reflect our current estimates, they involve risks and uncertainties and are not guarantees of future performance. Please see our SEC filings for a more detailed summary of the risks and uncertainties inherent in our business and our expectations for the future. On slide three, you will see the agenda for the call. David will start with fourth quarter highlights and end market trends. Nick will walk through our financial update, and then David will close with progress on our S22 Nexio integration and business strategy. Following that, we will take your questions. With that, I'll now turn the call over to David for his opening remarks.

Thank you, Heather, and good morning, good afternoon, and good evening to everyone, and thanks for joining our call. At Universe Solutions, we're focused on growing together by putting the customer at the center of all we do and working to take full advantage of every opportunity to drive growth as we execute on our strategy. This is reflected in our Q4 performance, which remains solid as we continue to adapt during this evolving pandemic environment. As a company that is always serious about safety, this, of course, remains our highest priority for our employees, our suppliers, and our customers. Key highlights from the quarter are we delivered solid financial results above our guidance range, including strong cash flow generation. As expected, although sales were down versus the prior year, we were able to partially mitigate the economic headwinds by selling to new customers, executing well on margin and cost management. We continue to monitor changing customer demands as we operate in this new normality. I'll speak more on overall trends in a moment, as well as the immediate dynamics in the supply chain due to the storm and freeze effect in the Gulf. We finished the year with strong liquidity of $855 million, ahead of our $750 to $800 million guidance range. Our Nexio integration is on track, and we have now completed our U.S. business systems migration. We advanced our S22 program, streamlining our business. We targeted divestitures. We continue to improve our sales activity with both the leading indicators like customer contact and the lagging indicators like win-loss ratio trending positive in all regions compared to the same quarter last year. Our digital investments continue to bear fruit with over 35% of our U.S. customers now registered on our e-commerce channels and able to utilize 24-7 self-service capabilities. Additionally, over 10% of U.S. customers are already regularly utilizing our digital tracking capabilities. And we strengthened our leadership in North America with the recruitment of Jim Holcomb, who brings a strong record of successful execution in chemical distribution. And we expanded our Asia business with the purchase of Techie Chem, a bolt-on that builds on our existing specialty approach in the case markets. We continue to work with customers as they return to higher operating rates. As compared to the prior year, excluding divestments, October sales were down 6%, November sales were down 3%, whilst December sales were up 8%. 2020 is an exceptionally challenging year for many of us, and it's encouraging to see progressive growth in many of our key end markets. The fourth quarter saw particular improvement in the specialty industrial solutions vertical, as automotive manufacturing demand accelerated, lifting both our lubricants business as well as automotive coatings, sealants and elastomers. Our industrial cleaning business has seen incremental growth as return to site activities in commercial and industrial buildings increases. Within the consumer solutions business, we saw double-digit growth in pharmaceuticals and personal care, and we partnered with many of the global leaders in these industries to provide them with the highest quality products. Our general industrial business has returned to growth over 2019, led by growth in the chemical manufacturing industry. Other key industry sectors are stable, and we anticipate an improving market in 2021. The refining and chemical processing business was down throughout 2020 due to significant decline in oil field services. However, refining activity has begun to increase and leveraging our existing infrastructure to support the return of this industry may present an upside in the coming period. In the first part of 2021, as industrial production improved, we've seen a tightening supply for certain chemistries and raw materials, as well as a tightening in the transportation market. Although not immune from these extraneous factors, we've been successful in mitigating them by leveraging our integrated platform to deliver products and services to customers by having the right products at the right price to meet the demand. The recent storms and freezing temperatures throughout the USA, especially in the hard-hit Texas and Gulf region, have caused some near-term challenges with supply, transport, and pricing dynamics. Although we lost a few shipping days, all our facilities are now operational, and we're in regular communication with suppliers and customers as the situation unfolds. Safety for our employees is paramount while we're supporting the needs of people in the hardest hit communities and are working to provide essential products wherever they're required. Globally, January sales were trending in the same direction as December, and we're assessing the immediate impact of the storms on the USA and Canada results. For 2021, we do expect the year to show growth at a rate better than industrial production. And with some puts and takes, we're providing an adjusted EBITDA guidance range of $630 million to $650 million for the year, with net free cash flow conversion of approximately 40%, which Nikkelexos will expand upon shortly. Beyond 2021, we believe the imminent completion of the Nexo integration and the actions we are taking with the S22 program have further positioned our business for sustainable success, even as conditions continue to disrupt business and personal lives in the near term. We have the right people, products, tools, and strategy that we expect will deliver the innovative solutions that customers and suppliers value and will deliver share growth. Now let me turn the call over to Nick. He'll walk you through our fourth quarter results and our outlook. Then I will share some closing thoughts.