Univar Solutions Inc.

Good morning, ladies and gentlemen, and welcome to Univar Solutions' second quarter 2021 earnings conference call. My name is Carol, 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. I will now turn the meeting over to your host for today's call, Heather Koss, Vice President of Investor Relations and Communications at Univar Solutions. Heather, please go ahead.

Thank you, and good morning. Welcome to Univar Solutions' second quarter earnings call and webcast. Joining our call today are David Jukes, President and Chief Executive Officer, and Nick Alexos, Executive Vice President and Chief Financial Officer. Last night, we released our financial results for the second quarter ended June 30th, 2021, and posted to our corporate website at univarsolutions.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 measures in our earnings release and the supplemental slide presentation. As referenced on slide two, we will make statements about our estimates, projections, outlook, forecast, and our 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 guaranteed 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 second quarter highlights and end market trends. Nick will walk through our financial update, and then David will close with progress on our 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. I'm pleased to report such a strong financial performance against a backdrop of good customer demand but constrained supply and disrupted supply chains. We believe the performance is a testament to our operating digital infrastructure as well as our outstanding team of dedicated colleagues. Their ability to identify trends, grow our supplier and customer relationships, as well as build on investments in both technology and our growing global specialty and market verticals has positioned as well to deliver for our customers and supplier partners and achieve another strong quarter of results. As we continue to execute our strategy and focus on growing together, we're building momentum and believe our singular focus on strong operational execution is paying off as we advance our strategic priorities and complete our integration activities. Key highlights from the quarter are We delivered strong Q2 adjusted EBITDA of $197.5 million, with liquidity of $882 million at quarter end, inclusive of $279 million of debt pay down in the quarter. Our headline sales were up versus prior year, as we continued to deliver growth in our core business, even with the effects of our divestiture program and exit from our Canadian ag distribution business. We improved our sales performance with positive win-loss ratios in all regions, and then in the quarter with much improved retention levels for new customers. Our SAP migration work has just been completed in Canada, with now only Mexico outstanding. We remain on track to deliver on our commitment of $120 million of net synergies from the Nexio integrations. Our digital investments are delivering real benefit, with approximately 40% of our U.S. customers now registered on our e-commerce channels and able to utilize 24-7 self-service capabilities. Additionally, approximately 21% of U.S. customers are utilizing our digital tracking capabilities, and the amount of orders placed through our shop channel increased by more than 50% quarter of a quarter. and we strengthened our position in our global specialty and market verticals with more new supplier authorizations in the quarter. We saw increasing business activity globally, with sales improving throughout the quarter. Once again, we were able to provide existing customers with security of supply as demand outpaced the supply of products, containers, and transport, as well as support the needs of new customers who've been let down elsewhere. The second quarter of 2021 experienced the strongest year-over-year growth and overall financial metrics in the recent history of Univar Solutions. Prior year comparisons were aided by the strong economic recovery and pricing reflecting demand and ongoing supply disruptions from the winter storms in Texas. We believe our global network and strong supplier partnerships provided us with a distinct strategic advantage over much of our competition, as we were able to leverage the capabilities of a single ERP in the USA to ensure we optimized available supply throughout the network. Our industrial solutions business saw strength in construction and automotive-related chemistries, with strong demand in many of the critical products for these markets. Food and personal care both experience double-digit growth, with consumer demand accelerating as vaccination programs are proving effective in much of the world. Unforeseen shortages in certain key ingredients have strengthened our value proposition within both industries, as we believe our ability to deliver bespoke formulations and strong supplier partnerships have positioned us to provide a differentiated value to customers. Our general industrial business has seen strong demand across the various markets, but in particular, chemical manufacturing, machinery, and paper. Our water treatment portfolio has been especially essential for the drought-stricken western United States. Our extensive organic chemistry portfolio has supported growth in these segments, while the ability to leverage our scale enabled us to provide our customers with secure supply. Although now a much smaller part of our business, oil and gas-related demand returns to double-digit growth compared to the prior year, with oil prices currently at pre-COVID levels and weekly oil and gas rig counts steadily increasing. Production chemistries in particular saw strong demand. Our services business was strong in the quarter, largely due to automotive and airline sectors where we managed chemical waste streams and related recycling programs. For 2021, we still expect levered gross profit growth at a rate better than industrial production indices. And with the third quarter starting strongly, we're expecting adjusted EBITDA guidance of $175 to $185 million for the third quarter. and are raising our adjusted EBITDA guidance range for the full year to $705 to $725 million, with net free cash flow conversions above 40%, which Nick will expand upon shortly. Beyond 2021, we believe the completion of the integration activities, the SAP migration, and the actions we are taking to streamline our business have further positioned us for sustainable success. We have the right people, products, tools, and strategy that we expect will deliver the innovative solutions our customers and suppliers value and position us to deliver shareholder value. Now, let me turn the call over to Nick. He will walk you through our second quarter results and our outlook. Then I will share some brief closing thoughts.