TUP - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Loshana, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tupperware Brands Corporation Second Quarter 2019 Earnings Conference Call [Operator Instructions]. After the speakers' remarks, there will be a question and answer session [Operator Instructions] Thank you.

I would now like to turn the conference over to Ms. Investor of VP Garrard, Relations. Jane Please go ahead.

Jane Garrard

and Loshana. XXXX Earnings you, are, Chief Stitzel, Chief Financial Welcome President Executive on to Quarter Second Tricia Executive and Chairman Brands Officer. Tupperware our Harris, Conference and call our Vice the today's Thank Sandra Call. me With

its for the Earlier XXXX, June today, detailing and the the the for updating a issued results company outlook full-year. XXth second release its press financial quarter in

remarks supplemental We today's made also the set to on of slides published call. accompany a

You these through in website, forward-looking the access this our Investor can Company of a you can the call materials access statement later webcast replay Relations language section where today. also of

turn I for over remarks the Tricia results. to call will on now her quarter our second

Tricia Stitzel

everyone. morning, good and Jane, you, Thank

this a next successful plan history, a We My deep to relevant vision brand. make a have have the a team XX-year has for XX-years. I board this that it clear respect for iconic and we Company and have for

as to quarter revitalizing the our objective team our million wave to network will the by growth, first organization. refocusing to has of across continuing dynamically on expanding trends business us the This my access leadership consumer and toward work Chairman, allow harmonized core, through our In adapt streamline to our next sellers. been primary channels, the realignment my changing X of

that and has always is is been company. Tupperware to me great Now what's evident a

want financial that expect. We or power the we is do. However, our have growth translating recognize the sales performance to we and the work still you to not of or brand

we're and over with along million may endeavor This before. a a family large Let sellers be ship I've is bringing me said turning what bumpy individual times, at with three-year that tasked us. X of the reiterate

can short-term sometimes We this the long-term, things for discomfort. cause right which business are doing

consumer. ability salesforce to and continue to today's is capabilities, to an to drive active technology competitive our develop and our opportunity model offer reach to essential business which We entrepreneurial

from is our us that hear on and the is progress. greatest forward specific -- components you'll of that believe strategy, we today on updates milestones transformation we're the with focus measurable greater key making What right path the along moving demonstrate and the in

sales Our as return and growth, committed dividend our back we and to through earnings operational Return for quality to We efficiency to clear. focus improve go capital return it's this to intention remain capital of is shareholders. transformation. the continue our

than We that recognize changing consumer, focus balance to the need the rapidly has XX-years. it last the today, than for the our with is sales marketplace and the between been different is force it particularly

legacy have improved deep to we an organization, amount knowledge We change capabilities, resulting technological in project management talent significant digital the a and in have from retail added and portfolio CFO. complement the direct-selling industry, to historical of and comes experience. evident our hiring of a in This of is most new brands Sandra our retail provides perspective. company and She with iconic a Harris, the a strong a

plan prescribed time we the a shift are now wave structure. to get today's our move core; our for demands, doing to drive I'll midst shareholders. sustainable streamlining meet is us the we our call by greater later allow change in spend as this of which returns us, and those there revitalizing XXXX. to consumer we and strategy, We through -- harmonized tenants expanding access to for growth and right work channels; transformation specific includes will significant our the in diving some to of next changing What of into the model have believe

of our financials. turn Harris I'd call deeper now like Financial to over to for a our Sandra the Chief Officer, Sandra? discussion

Sandra Harris

Tricia. Thank you,

for the our are our near-term, proactive long-term measures and taking quarterly the footing not sales to we while in the are satisfied in create noted, groundwork growth. the drive of of next Tricia wave with financial middle profitability we sales, while to As laying

doing revitalizing to also streamlining through channels, core products future our our while by structure operating sales harmonized We expanding this growth access business, margins. in our and are to provide

the spending trends, China impacting are and tensions economic has second in to and pressure $XXX.X our in understand continued X% quarter. on predominantly a to line net Brazil, This region. top lower versus was consumer this sales to were currency up Despite year of to drove reported the trend, what Geopolitical X% X%. We slowdown the results. X% last retail The being consumer of local spending basis. turn million, Let's guidance China forecasted on in our below that put down sales in down quarter.

consumer as sales is Chinese priced company studios, in trend inventory, to rebalanced slowdown have higher their they which were, our priced water a Our trends. to our the the though impact resulting changing products time. base XX% like the fully The shift and which This productivity the spending lower and filters, lower not our for up high were versus studios products, in products mid the X%, consumer meaning as from adjusted replace priced been of business prior there does the down some of year.

and We the in studios China are XXX with quarter, new and XX%. closures down during still expanding improving growing

a on drive to down We are intentionally new business. stronger of rapid ultimately productivity studio slowing studios openings expansion of healthier focusing the and existing

the with momentum the our during significant contracts China, in We million in e-channel. XXX,XXX and $XX digital sales particular, over retail across quarter in growth retake members in are X% our also in engagement seeing activated

of results want subject recently year, as size. through likely of also a review. is we selling are of model total direct to versus retailer emphasize this the that consumer slower negatively to you our conducted the which sellers Before direct XXX spend we China China, and government The as Brazil, aware, a several I the X% in country, in review despite day we're in do studio Chinese our the leave peers. down sales increase operate impacting impacted force an not prior financial

sales and a not in the year-over-year to reduce resulted recruits force minimum sales force, order an but new the increase for reactivate ourselves. to efforts value The increased has

Our and and offers force. digital competitors These more the a have their voice gotten rollout amplify from merchandising of harsh our some louder through externals with emphasize factors sales are media. tools modernize. to contact need more their aggressive also Deeper suffering and in to aggressive the

a opportunity we continue believe market. in We relevant this have entrepreneur to

To next more sell. for create the to tools Brazil, wave make by easier processes our it in appealing and it of need will them to growth improving to make we

For and for the of the XXXX, sales force are tools the implementing remainder digital both consumer. we

launch the sales. will campaign and ultimately the a grow brand drive energy to media excitement We the to around site

and are working on distributors areas, through programs and expansion We under penetrated market for are number targeting also unpenetrated opportunities of BXB expanding XXXX. the in

second Turning sales adjusted the low guidance. in for in guidance the the in was profit. quarter, end $X.XX in an you per pre-tax of share seasons, our now to our Overall, current after since is earnings considering with return our which April. is line This resulted quarter adjusted guidance of on worth $X.XX, at provided XX% which we

improve cash, channels revitalize know to profitability. need Regarding $XX year-over-year million, and last that is better harmonizing the by outflow inventory the and comparisons, We predominantly model, was than to expand million we which access modernizing to the efficiency our $XX core related improvements. -- our for quarter structure the streamline through better than

committed as new to delivering improvements are we this launch wave We of growth.

adjust current trends. to time, outlook same need based for on the XXXX the At we

by less markets, expected Adjusted including decline business. third decline to be due which BXB, comparison sales in from between margin to year-over-year which higher We core operating X a expected percentage approximately the includes the EPS quarter, lower than X% is in sales impact than year. to negative expect to BXB $X.XX key in a the XX% $X.XX, point sales carried and our prior

For expecting and the of per operating adjusted investing cash of flow sales to $XX million. decline X%, to to share and $X.XX full-year, $X.XX X% of we're million earnings $XX and between net

allocation Tricia, Before address the like turn I'd capital to call policy. I to back our

is EBITDA Xx. of invest consistently are continue dividend. to organically pay announced plan proud ability to have XXXX leverage, direct to debt share we time, the dividend, most to so. ratio and most previously cash and return to and available above reduce this business to is of average At repurchase as million cash We shareholders, our repurchasing still $XXX to this is April pay transformation, our we We continue a growing reduce an capital prudent believe to do in rather way it into We $XXX of in our our important to shares. that to available believe utilize of which the we access than us million, to our

transformation. Tricia to to over discuss our back further it turn Tricia? I'll that, With

Tricia Stitzel

Sandra. Thanks, lay that about opportunities the ahead for excited Tupperware. I'm incredibly

the into focused of keenly on drive me what go are can returns. let means. We we shareholder growth, so wave a bit deeper And that next

through updating each plans the revitalizing aspirational ensuring entrepreneurial for remain opportunity our force we're competitive firstly, geography. an core So sales to by in compensation

another launched important of is During XXXX, plan level studios certain July effort have is most compensation we network revisions. a one, the improve our is and China two the Indonesia longer first which a making before meet for to new also attractive. productivity Xst studio the term. opportunity focused had sales on upper on mid health to owners the half This threshold where changes, and for to of studio. more levels and added launched the requirement of opening we an recent productivity

track the we end from the contemporaries core the force. of model and quarter work by the business currently of expect XXXX. transition revitalizing in full as second on Continental sales is end the XX% the with complete of of efforts to Europe We're Our another reducing component by administrative the the

reducing and this the an up to including e-commerce. visibility the from supply move enhanced addition sets provides the force, sales In presence better digital administrative chain work move for

and Our for have pilot Poland transition Europe in Iberia. this markets been

Now to they move. double-digit are delivered the sales while growth small, subsequent have they

of of through our channels. component harmonized is Another growth major wave extending next access

the studios, have consumers total XX and about to provide continue opportunities these of X,XXX we for in to us. of studios to We of including to end XXX engage quarter, At China. access add the with a

seller of with sellers sales entrepreneurial studio. in for our of the is studio opportunity are average growth the higher the for the versus These double-digit on leaders and that our the an Furthermore, positive year-to-date active Now, in model percentage power China year last in points improvement force studio are not studio. studio impact recruiting are versus a brand sales the early studios a sales outside than having the not XX the force. strong enhancing those signs

orders made the also change and a implementation together site, India initiatives The with China, Flipkart. existing a channel through business also plus a model studio and selling a this our our We've in that and Flipkart received through to important to team harmonized with It's traffic. direct happening Amazon includes pilot. already own.com new this now new e-commerce India opportunities that similar additional in to distributors, Amazon of leadership our retail major concept with the it is with harmonizes will the because consumer us note they control allows in is site and brand is This Amazon model from and fulfill channels. e-tail effort benefit

initial positive the The from feedback distributors and for distributors signed the of up new model. was XX%

We brand our product have strong for and in a India. demand

the channel right India consumer another to opportunity appropriate as power here, the Expanding access. And a U.S., is this there's is avenue not right of the the leveraged and opportunity However, establish Germany low-level with need base of e-commerce, us. our Well, channel. the of growth direct-selling existing it huge population now. small This now, Canada a the penetration. we full mostly while size harmonizing is our and market yet big we've is our of in for e-commerce given

the in date last Canada the e-commerce site, we we're of US with As improve track existing quarter, and launch fall to on a mentioned XXXX. capabilities

additional to e-commerce the one our platform of this utilized market. opportunities be for foundations to expect We across be

activity We and a pilot behalf sales in continue the the of recruits average personalized increase Canada, on those of in pilot. increase with new results the included the a in XX% showing $XXX and productivity for the communications our US recruits, our early in of professional force about

And the last component, streamlining our structure.

evaluating to will to scale. centralize allow economies standardize processes We help are that and us all gain facets business our of constantly of

for XX structure efforts countries in transformation efficiency and to Continental our XX units. Europe operational better operating include streamline Our

plan are program we a and have this all for to-date. We milestones meeting

fewer continue Just markets, locations. from to office all reiterate, in the to we but sell will these operate back

achieve As savings plan, time, provide progresses, details. will in before. on to the outlined this things are forward more But we moving on initiative the we've meantime,

is technology all products. innovative initiatives underlying these and Now, our

plastic and in products, Mexico new on-the-go cup. Xst, product As including aid on a to single-use successfully polymer of of July Australia. Germany, this and ERP late live in the went that year, going straws the reduction new we we're summer in to starting an on And begin portable products circular systems in coffee certified introduce reusable

area innovation, the that the Waste, of past to in we environmental which reduce Furthermore, food our significantly launched the in World operational plastic In the Kitchen. Central campaign, strategic I'd quarter, XXXX waste Ellen by we've to the and No packaging to sustainability sustainability. with highlight we Time and made pledged organizations MacArthur Foundation like partnerships through reduction, goals progress like product and

long-lasting introducing reduce waste. Since our founding, on to food been the plastics Tupperware reusable home the forefront has of in

extend we offer through We made frames new and to food decrease for continue vision that this that products to that our commitment fresher through circularity waste. be years longer keep platform our are to to to and today come used increase

easily evidenced are many quarter-to-quarter. that of recognize We our strategies things can that not be

and consumer-centric across to goal sales business of drive all entire enabling markets. our force more be is the transformation Our of our to

to communicated actions committed improved And return will successful above price continued through of these ultimately, achieving of in single-digit the return the our share XXXX. the mid and as total capital form sales drive dividend. the a to in shareholders better growth of performing we've critical are execution shareholder We average

core, Our shareholders ship as me a and be our our the strategy multiple successfully execute this we markets leads is believe sellers ride will of independent loyal capital and million rewarded ability across to turnaround. in community our allocation conviction X cultures. to At Tupperware

the We the the drive revitalize shareholders. are for sellers, harmonize business working of channels to Enterprise community and our and streamline our value Tupperware to core, the

now Operator? turn And questions. with call we'll for over that, the

Operator

the Lane Lane Doug with from line have of Instruction] [Operator Research. a question We

Doug Lane

Thanks I all initiatives you're for talk, that. putting But I if for I bit, and appreciate wanted this. little update the that place cash about a on to to into could pay flow

your than that when before. So before lower it is was it was you know $XX what out flow that put from I year don't operation million. cash to forecast there? $XX like And looks this what Is figure it million

Sandra Harris

to Yes, Doug. million. Previously we $XXX million communicated $XXX

Doug Lane

can to how was looks cash think I cash in and cash I'm there's parts for you out, was because get year just especially the trying from generation understand, almost this And of through year. It $XX flows like I lot here wondering, feel it June moving last flow a plays million outside. moderate of so a this your a here, use,

So months. had you actually a six gain through

of just see could year? cash wanted reduced if more second the you half color half second So some half last it this in sounds and the the like the I generation year I to get of versus on second

Sandra Harris

Yes, Doug.

pull So we have itself. reduced it and is in relation to down the

be the So the was if us capital, we cash coming will the cash that remainder you that communicated, the you look significantly. by helped what year-over-year right, where areas point And the you're year-over-year. we've which has really quite as of know, year, focusing are off profitability reduction. it's the at flow improved we've of for of working And to on achieve reduction impacted

Tricia Stitzel

second half. BXB have the in You second we stronger know, half, the in the difference much

you So compare when it last year.

And about it, there the bit have into know, we factored have is you there. initiatives compare talked of So this that disconnect all a clearly. when been you

it's incremental. not know, you something So, that's

Doug Lane

down didn't noticed a year. I you And the expectation? a Do CapEx the see CapEx I year-to-date. number for number for have full-year it's

Sandra Harris

that Yes, as it's between investments than well $XX and $XX based obviously priority million last actually the are somewhere It's upon lower making. and year. that we're managing we million,

Operator

with Tong Bank Olivia of line the from comes question next Your of America.

Olivia Tong

the been your to rate, of dividend, the now, of about very dividend revised what the debt were reduction and commitment right level But you guidance. about repurchase. looking clear terms terms In versus at in share you've priority your actual

XX% where you in would significant others or yield talk if Thank could annualized take. So But, the helpful. you through are? run a -- So know, just what let's that to be call just give the rate, relative little market payout that pretty this probably at you. bit,

Sandra Harris

X% at know, most do as reduced we the deliver you it's dividend. our is this back right, And Olivia, about So, shareholders. the return we to to resulting to feel commitment way that's you're a when at prudent time, our communicated like around and we yield $X.XX the dividend dividend,

Tricia Stitzel

right? low in is if we price, the the it's the yield come But price So stock improved, what just $X.XX stock in. the more mean, line. because will I of factored

Olivia Tong

terms of the the sales higher gains than the in fair revision in margin bit is margins, then guidance And a revision.

are talk like the little you BXB through the comments were like the guidance. expectations a those that. prior things that margin your couple So your can you But in just factors a issued impacting prior about cited of that like relative already bit things to when known quarter, because last you or

resulted between you the versus last sort just incremental that top in to that relative updated the EPS the difference of such was So quarter change? change what line a the guidance

Sandra Harris

you our of committed have we're the made, our expected structure, a these to while the seeing level we keep roughly track It correct. investments making are to declines can the you $X.XX things at all impact to if that the that sales so ensuring we're do sales as So are $X.XX a on a top all watching line. profitability to you're important these you EPS doing we we through changed EPS, start relatively we that that And expense impact. still would changes good grow and what see is

Olivia Tong

just the driving an on You discussions fit it work? in know, -- does And those BXB, priority? lastly where line? terms terms in, improvement how in and And top of then on in a of

Tricia Stitzel

what refer than as way we've we really even we thing bring one-off also way exactly local that's our done So these branding sales the as force recruiting in well. the that it we've now and about And the which and in market. stores we the engage the process in internally, happens And France. and We thinking retail really -- fact, call to a it separate rather we BXBs in this the changed think and name in them campaign. in

the into trying So on them how we what we to we're the we stores, do. We go the interact management on the train completely store. renegotiated in train product. We've

So sellers date they couldn't to our in those really whereas recruit, our they have were of there, reluctant couldn't sellers previously things. kinds

now take our is lift so free engaging in what those because do business, core actions strong And Carrefour. of all the they're were what able is they to seen France to things. this, actually in doing And a sellers that in in we've all the of we're

included that their thing The branding ensure include other was we campaign. media was our in that did to --

really this for billboards and really saw of there. as they stores X,XXX served think force, they it And pride So something see sales all our branding out point to and excited in the like our there's as Carrefour I engaged France. were

it for it's a really used big so because a our only we learning, really talking don't looking And in was global And what would always it company break. the boost to this we great country, Europe. global with look to now a take to same France, on so and basis. do, partner to typically, We're there, a like model. in we're great was we focus And us in a at year-after-year a these repeat

these which the can us these and at globally global On right? opportunities valleys. BXB And we field, world year-over-year don't around looking a world, maintains so this really peaks a post and we gives as it a about the great so have basis, at thing the level, sales the is, playing

our We America looking Latin for and really so Pacific to opportunities as some markets see we're Asia in potentially well. some that. And year do of next

Operator

Kite Your from the with comes Citi. of next Beth question line with

Beth Kite

wondering half either could, or hoping let bit up. expectations more me was sales in there, the of wake into for little we I the year. we a could. I delve Hi growth second regional country was if I

you that I in and How to comp some thinking easy second are if expecting about especially Specifically, some I plans, pretty quarter worse? major the -- ago. markets trend here in any I better, had that then a tied you year a trucker specific that to Brazil, guess innovation strike does expected correctly, you was

what talk you also Brazil a quarter, rather half of we challenges Thank if easy pertains the to about this when comp had second had that could just in year? even kind the and the you there, you. So of sort of

Tricia Stitzel

bigger So let's dig into ones. some the of

number China them sure So We're, studios the want on Sandra and gave rapid expansion you a happening color forth to in have the the had course, out. is in rock solid impact know, economy. parts there. the little productivity there, so through all around you health China of of economy those impact we what's bit that that for the put with have certainty we trade strategy us. lack we that of terms it the And this continuing that impacts trade and we of make have don't deal, these moderating following because on the of What of the the the we on turmoil and talk roll on then, Chinese of an as us has

see need in on a saw high-ticket as this of quarter started in added having we said, And depend we ago pressure a this one so to is filter. quarters couple the So we our there products increase had in that cooker a of moderating of water some high-priced point, the mid-priced the And fact nice only Sandra as products, we're that. can item at so given to actually high price sets we're lower quite And that level did. starting we projecting are project did have $XXX But in the not do China. continued a in we as that uncertainty we also that's it about some economy, there, a well. growth

we China. grow but to we'll continue will there, moderate the So growth in

Now, the they And of in tighter drag, two the consumers consumer then also continues to spending. a in It's tighter market. really are really an that with Brazil, there's see -- aggressive things. a competition environment we -- combination economic

those tended to could sales force size what about only there double-digit very the we've and us. earning we historically, work were And sales do coming the sellers double-digit we a recruited out opportunity we quarter, that focused advantage, of advantage. have were sellers and that they typically first force so with on and do seeing size for we courier Now, optimistic

more the we the we we But through see and so to casual sellers, we today, second the really competitors, more from shift order. to to environment, see these second quarter, many with economic they this get as sellers that struggle tough courier move have and what given

So order one number only of increased. the seen people we've placing

Now, less again we half, going know to Brazil what even we're and significant with going for really on in the doing sales productivity, we're the not seeing continue Because to force to larger we're an we're size. is, recruiting. focus change in economy second quantity need a

So programs, they and some also new some new for tools have creative QX.

So we have a ordering well. as new recruiting campaign. We're for also going second and them to half the rollout online mobile enrollment in

launch the for time campaign competition and through And to media help ourselves. ever, of really first PR going this sellers to differentiate we're a our noise and the cut

both to and less we're in more the a going seen. So using in our have to and assuming we Brazil, sellers not strategy changing really current see we're we Brazil. going that or consumers they're though of the what with But so continue terms to be to support trend, attract that we're outlook, the same our pull trends push in

Sandra Harris

Beth, I'll as specifics give that around you well. some color

So Pacific that, line you with to roughly exceptions. South and and Europe, that's with QX, a to Asia be if you X%, ourselves X% at projecting you'll know, trends see down are we America, in look QX few which

about was quarter a to you inventory really know, talked with studios about story noted, Tricia their As this retail it on really working we've make how the studios the healthier. China,

perspective, in with trends will we QX, that it are improved spending consumer from QX do into continue expect in the we what China. But health expect more do in company's be And in although, that China. that line we a to

XX%. North other are America, would we which The be is X% exception saying to down

of and is slightly and we've look the where a that conversion force a website have that, improved in our to some and we sites the part the last QX taking for the actions of launch sales with for do QX the the North again, we're we do Brazil, into as around of relaunch that ended year. And Tricia numbers then work the discussed, noted of if technology from you the at finally, on of sales of America And there. lot on America, North in that

be that And so seeing. do the with in it line we are to trends expect currently more we

Beth Kite

terrific. was That Great.

food One lot expanding to of innovation talked previously notes think a of your there. to concept say a portfolio think you and from to cycle bit through the little earnings to you prime maybe shift opportunity. would more if and that I are emerging a will? innovation pipeline, about greater markets prep focused you food in you Tricia, thing storage I Where I on

Tricia Stitzel

the that. of of I talking still about demonstration gave that's for we that premium of was bringing demonstration emerging markets, on what progress in think focus So examples on we products, down a then to some in to selling the more the we're price, and the really that terms based markets. some the emerging ticket value And and but continue make good

launch fourth that well. as XXXX in our one that. fully for quarter And fact, product strategy I believe to that In on going the is we in is have

Operator

the have reached Management, We've you allotted questions. any do for closing time remarks?

Tricia Stitzel

on turn growth and in your products, the ship value. company, we the long-term. investment rejuvenate all to compelling ongoing take sustainable more for processes, shareholder in And future And our we to actions invest a work We greater and transition, we appreciate do. Tupperware I toward want thank to refocus reinvigorate We great so we business being you during with time as as Thank our the to must position and continue your streamlined support appreciate financials, the strong the much. Yes, call profitable for of this today. and this to for everybody stakeholders. company

efforts size report look average you and your Thanks studio updating revitalization Sandra appreciate I as day. on good to again, our expansion, and sales the a of on force, We forward our Continental we Have Bye-bye. Europe. e-commerce the support. progress quarter next everyone. and in

Operator

This conference concludes today's call.

disconnect. now may You

Tupperware Brands (TUPBQ) 24 Jul 192019 Q2 Earnings call transcript