UNVR - Earnings call transcript Q3 2018

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Operator

Good morning, ladies and gentlemen, and welcome to the Univar Third Quarter 2018 Earnings Conference Call. My name is Matthew, and I'll be your host operator on this call. [Operator Instructions]. I will now turn the meeting over to your host for today's call, David Lim, Vice President of Corporate Development and Investor Relations at Univar. Please go ahead, David.

David Lim

morning. good and you, Thank Welcome to Call Webcast. XXXX Third Quarter Conference and Univar's

our released been quarter be with slide both ended David call Executive viewed President Chief morning, a along our today Jukes, The posted Executive along and which website results we of the This Officer. supplemental Joining September XX, at are with release, Financial slide univar.com. Vice the Lukach, Chief our on earnings for financial Carl have presentation. Officer; XXXX, and presentation should

we this financial financial presentation. and During the the to measures release for will slide GAAP call, refer reconciliation certain which measures comparable find earnings supplemental non-GAAP in our you can the to

call expectations of our in Slide on business the and and metrics financial quarter, David to to X, today's will through announced for expectations with over we and make such business risks estimates, SEC Slide the our All not inherent about the filings for of David I'll walk and while on statements Please the are X, more Carl our referenced future uncertainties our forward-looking, then will his performance listing are and that, our acquisition As opening risks reflect guarantees they our turn will involve an please provide David the of in future. of will estimates, and for first performance. complete update our and uncertainties current future. now forecasts With statements call, or close remarks. for they overview On our an projections, a outlook, turn see Nexeo.

David Jukes

with some with that I'd our big everyone. of the time trajectory accelerate on the quarter period in Thank you, performance announcements of David, and morning, significantly growth our the like news our really the will to that good later agreements it. for and growth after for deal of buy come But quarter our the that third from will can't excitement adequately my results. I this discuss Solutions. express abundance more Nexeo I to and opportunities spend Carl

our the net report rose in per earnings to As while in per this to you $XX grew XX% $X.XX XX% income rose to $X.XX. quarter earnings morning, adjusted XX% saw share million and share GAAP third

solid double-digit of plant all have global largest our growth market performance we with chemicals, our Canada. distribution shutdown though, EBITDA further by exception customers. business, adjusted in double-digit of but greater-than-expected of there, We a with growth our Even across encountered core the demand the segments saw chemical partial of decline crop for compounded protection one in

of both be We headwinds these expect temporary. to

X% ninth and EBITDA consecutive and on quarter plan. XX adjusted remain for began the to EBITDA Our quarter by grew a basis consecutive operating growth solid spending with prudent leveraged and disciplined eighth of our new expansion margin expanding and our since We we EBITDA basis ratio marked execute expenses, our of conversion currency-neutral points. strategic quarter our our

we balance our some our And strengthen our we exhibiting unexpected softness While while faced control. we sheet is investments well while business working, for against our high-return stable to further certain cash reducing continue within the We that to future continuing factors to are during our make leverage during of ratio in quarter, in growth that some the our executing is demand markets. by our quarter, growth. environment saw plan the operating clearly momentum business demonstrates operational and are used strong the flow that headwinds

a of watching too industrials, saw trend. this periods and across and number expressed market Our trade in Like saw a a call uncertainty we number in for the of billion demand further. mode we early wait-and-see October. pressures. into their costs into that go chemical have early to carefully, global markets, customers the tariff But environments. of a ought we September customers a distribution short our time slowdown and We of we're any in macroeconomic our it's one a our inflationary a result share have of We which freight before remain like inventory. Rising a be many as $XXX challenge, small restocking this are period concerns that grow where can business market, to continued with past the company addressing

positioned a increases can't do we've to carriers implemented is well to our outstanding you know, be [indiscernible] resilient additional carriers markets reduce light, a any absorb afford need keeping and to provide nimble news service that said, more continuing while We good think cost them. asset variable October, to develops. and model common private increases fixed better business we're mix working countercyclical. that of and As costs basis, with optimizing the all but low the may job dedicated is to our we fleets, out freight-delivered and if are we it as response capital sell to and we can well our our than customers honestly we economic of indeed Accordingly, base ride our price is in on conditions With to pace is customers. to in

benefits next with we business more value have come increased as grow opportunities chapter we will Nexeo and transformation levers to multiple plan, our with scale our within our additional control the and with create importantly, industry. value. that And in creation provide reap shareholder More our integrate our even

U.S.A. strategy During great discuss which plan moment. but will the have to there a with signs is I success, ability I to our much quarter, we in in advanced execute, of still confidence and do. clear transformation our more

important the to the in gathering it's say time. culture as equally transformation it get difficult I'm right. takes it me heard change to move you've and As And impatient sustained solid, Whilst we're faster, is and and for early is innings before, momentum.

are programs training sales Our working.

by seen effectiveness. average programs U.S. the have increase marked demonstrating of sales been sellers business, has the improvement their in counselor Our book year-over-year sellers XX% in our come attended These now a in their of

Since our points average customers, better efficiency understand doubled leads week. disciplines drive and customer than increased to have work and calls per These week and at also to We've year, X,XXX closed running partners, close help growth holding our around improve per to steps taken sales commercial leader weekly to sharpen delight business. and now the sellers. X,XXX to touch sustainable we our will of starting supplier weekly We needed more of to needs the to our execution. ideas are us our the some institutionalize and customers' the beginning share meetings more

opportunities new Our new we're to and increase, pipeline business. of continues winning

move it's making our adjustments have to will sales capture needs field identify our our and and made leadership pace. ratio win-loss changes and to but ultimately still Our opportunities. to not tools help We improving, force faster, recognized We've we're it out quicken new additional be. technology that while to strong sellers to and is needs rolled where our transformation

our authorizations On supplier in enhance the supplier side, have XXXX of number encouraged to partner we rates XXXX. we're secured new by in growth the

engaged people We supplier our approach. potential really consultative discussions of partners who additions understand new healthy line the and are actively in value a from with product and have pipeline differentiated sales

over can You the to announcements expect see coming months. additional

to helping and difficult Our operational freight work execution a through improving, environment. us it's is

In and to I and market place are highly operate go to labor a are roles. demonstrate Univar drivers been able home We gets to company continuous fill fleet night that have we front low want valued open to of at of drivers want historical be able of the is we a get a that we every members Although positions remains where to tight, been consistently for about commercial a market, our of safe work. for where training, driver our has especially growth That are tight our an and the have a people us the to the part customer. progress with population abundant team. our making want and initiatives. important the who relationship against we team a best work, this true in growth excited opportunities on-the-job Univar are is

who you me quarter turn through let the third will Carl, call detail. walk our to over in results Now

Carl Lukach

of Thanks, in a digits. our share business higher share pressure to adjusted net $XX rate of additional earnings translation David, increased double of X. Slide I'll and despite XX% grew XX% EBITDA rates. $X.XX from morning, Outside income tax per share on XX%, million good Canada, rose the grew to $X.XX. from and Adjusted quarter, the global per everyone. FX quarter impacted GAAP $X.XX headwind earnings per a third In and begin adversely

row, EBITDA of David Our increase management, due cost earlier, margin improved XX.X%. And profitability mentioned increasing per in our good strategy ninth Gross ninth a improve pound adjusted to diligent reflecting for ratio to X.X% XX basis profit the our a points increased mix. business in operating a quarter leverage. points to row, quarter XX the basis for conversion to with the combined resulted growth, in as

Turning now to X. Slide

billion, repatriation $X.X cash sheet continues prior million been quarter debt debt year. reduced $XXX strengthen. a versus of in has interest Net of efficient was to the million resulting Gross September since Our reduction end XXXX lower management, from expense. cash cash principal at $XXX and balance

ratio of leverage quarter X.Xx XXXX. the was X.Xx calculation under at end Our our debt at third for just quarter compared to covenant

to a on continue earn investment. We superior return

metric to basis our ROIC, Univar to on year CROIC all like capital points XX.X% Our return and metrics, XXX value-added on assets similar deployed from a internal ago. increased return XX.X% showed increases. Other

increase expect to we plan. metrics implement We continue as to these our

factors force to increased result our neutral consolidated actions currency sales Turning the business. to win was on dollars $XXX profit Gross X. X% to Growth Slide several profitable results million. of including

improved value will the well, increase their investments Disciplined, for in savings pipeline, are and execution attributed are the building our except of long-term can targeted value the line David that ratio to success. improve to investments cost leverage and bottom we redesigned rewards be creation, good in tracking operating mentioned and to continue especially prospect sellers digitization. plan Operational for new increase training them This relationships customers. high-return that Our segment these their with value the improvements Canada. and incentive sales productivity in as conversion their management in generated every reinvest to

was average to long-lasting force strong consecutive higher and with revenues me matures higher X%, now our We each discovers from of beginning quarter selling of growth on as had sales volume you volumes. X. price line through our segments X% to another of from quarter value as the and Let came walk customers. add This new U.S.A. grew second X% growth top ways the our Slide

our pace. gradual $XXX million. healthy ratio Our grew adjusted we U.S.A. quarter, win-loss XX% U.S.A. just EBITDA to improvement a and actions under quicken to in are continued taking the its third

strong demand chemical line the shift in This year's from proportion compared quarter. by caustic third resulted remained saw year growth as of XX% compared a a improvement quarter basis in line basis bulk led in points bulk a gross flow ago mix our year. we increased to hydrochloric an dollars This margins operating a to acid. second decline conversion second chemical sequential profit ratio XX and from gross XX.X%. coming with last our through leverage led soda business to our to incremental this strong delivered of As adjusted quarter, and slight sales in market of XXX U.S.A. for of point EBITDA, business increased to

growth to to new in in of business. build, pipeline we line from supplier Our focused forward those look industries of authorizations and authorizations continues our XXXX

Let's double-digit for our look Adjusted and was momentum growth and the strong sales on higher business neutral. by XX% segment markets, fell execution bright maintained the force results industrial In margins. excellent quarter EBITDA X. its our another of spot at with in currency Canada Slide Eastern Canada supported XX% the or

Alberta by Canada market. Plains However, offset we than this reduced recovery apply the demand treatments compounded that parts Early the fungus inventory exist weeds, of year's and of agriculture weather-disrupted across that the fall the in full Central last late-season significantly supply to drought the usual in growth for expected absence conditions. protect from more from in situation the snow chain act was crops This their farmers insecticides. and

Slide to X, EBITDA as acceptance euro. and region favorable the of Reported profit currency grew their had fourth segment a result to Adjusted our execution. building We in the to shutdown. Western in Middle did the neutral East our as on strongest our basis with our the XX% sales plant double-digit partial have strategy into continued ratio, quarter. Europe, in of sales against mix this improved gross was quarter. was as of authorizations of margins our a Delivered go-to-market points growth largest third focused expanded U.S. XX%, temporary On new supplier reflecting and growth EBITDA and Africa the industries, growth and XXX but with adjusted Canada also customer customers force which conversion momentum Reduced significant strong and our strengthening sales lower EBITDA of the one and extensions. improved result XX% dollar

X% U.S. markets growth EBITDA then dollar. EBITDA currency-neutral increased in strong due segment, XX. mix, change to by to basis Slide the Asia world grew and cosmetic profitability in fell Moving basis to points our on personal rest but the translation performance XX% stronger care and the our to grew Gross driven reflect Brazilian segment had of Pacific improved Adjusted on our due core in a margin We operations. basis, a in rates favorable X.X%. reported XX basis product the last and points year versus again XX on FX market to margin and

$XX in other was last cash CapEx on interest operating Change activity. outflow million a cash EBITDA the Moving flow flow expense, now quarter higher benefited and XX. and working to of outflow compared year. in from to however, capital, lower $XX contributions, million Slide Cash pension net

capital XX.X% in working of because net working higher primarily Canada. as percentage of XX.X%, average net sequentially Our to a sales capital from increased agriculture-related XX-month

net line third was last tenant as a year. sales XX.X%, the of with capital agriculture, percentage working Excluding quarter in

actively Canadian net million continue increase the to year. the are to $XX and We working for full $XXX working managing million this in capital a investment in capital expect year

our to year light prior our outlook adjust our CapEx from CapEx. to million investment acquisition. Turning guidance million Nexeo as of in $XX lowering digital our $XXX of plans, this especially We're we

Moving on taxes. to

loss EPS tax headwind mix was utilization rate prior a net last for in and tax in pretax $X.XX adjusted quarter of income the The rate in a change higher share year. in effective was quarter. XX%, per the higher of year of Our to due the than geographic carryforwards operating

continue rate our for million in year purposes, be year, the low track EPS For taxes to approximately cash effective that, adjusted expect the towards we financial full a $XX XX%. for will and reporting tax for

to flow and earnings lower and free deleveraging, EBITDA interest supports per revenue strong adjusted will expense continued relative which growth translate Our in cash higher growth. into share

quarter, then much turn end years began the of Let's our we is third executing when outlook XX. long-term growth At XXXX deliver it than to the positioned X ago. growth better for our to on sustainable plan Slide company our was

new force securing is sales Our and wins. maturing

authorizations supplier are New increasing.

adjusted adjusted is Year-to-date be and a footprint lower by share accountability fourth to currency expanding, degree Canadian execute. and EBITDA digital of and quarter XX%, of will per likely dampened high Our is results translation foreign growth earnings growth the however, there of XX% in headwinds.

some saw into our of are we October in we September In incorporating signs addition, and of the guidance. early softness

the with now essentially For quarter, EBITDA fourth adjusted expect we be to flat last year.

point. last I'll of and your With I'd we growth file prior As outlook call later approximately week. to tax to year higher a adjusted we're acquisition for filed $X.XX Form from SEC expected a it that, expectation share, Nexeo, turn to you, or XX% share high One last year rate. we administrative headwind from Form to our David. per result, S-X full like EBITDA $X.XX adjusted we're XX-Q per SEC double-digit up growth. revising last regarding revising $X.XX an earnings attention our our will single-digit back to And despite this that low for Friday

David Jukes

Carl. in of XX those against Day people strides of world's XX% most our months to cost uncovering executed to plan elements. a At their we've day, the to margin key the key grow new ago, Univar. and making you Inaugural we're right Univar Investor time, at grow our market valuable company. chemical to presented with the many the that journey and careers opportunities, of Thanks, making value attracting right distributor. Since elements successfully operating become we ingredient We're our who the our significant investments, become and productivity improve ways want finding Each to

to the acquisition, look I'd closing eagerly unlocking we near-term how tremendous move opportunities Nexeo you the to like plan growth on our outline for we intend growth against forward. brings, today forward where to it stand and As we

First, a company. from we XXXX improved our as public greatly are debut company a

our our extended strategy, As in have a and earnings. market result stronger advantages business higher-quality changes we focus clear of our directional and have competitive

product application that and to industry in strength moved the our commodities finest providing business deep expertise. have world's a suppliers, model offerings with We augments from specialty

force energized, have We sales incentivized. and a better properly trained that is

profitability Our than higher with gains, are XX significantly more productivity overall business and conversion to and capturing higher during efficiency our nearly with ago. ratios and has pound targets period We're per basis that points you. communicated mix tracking improved same than years XX% our X well we

Our earnings and advancing flow sustainable. are cash more and

decline, Our leverage balance profitable share. and sheet we're our ratio is stronger continues to as growing

and defined plans action is growth our strategy global are regional aligned. Our clearly

customers, a we September, have by been quarter we Secondly, we while completing to our leading our our and plastics. us the forces. signing further sales In further shareholders. the through months, and suppliers, of accentuate that the combining combination improvements opportunities over brings truly now for gains, Solutions, of development company consolidation. we a past allow that like with and on an the This opportunity share our announced for definitive we've spend focused you distributor experts global remain accomplished industry to I'd chemicals and acquire our efficiency exciting and hugely people Nexeo agreement that our profit skills synergistic exceptional much, announced catalogs, in time we expansion on to of and the some teams extraordinary accelerate But transformation will of plans XX sharing

We partners service customers offer North best sales will offer very supplier largest force the the available. We'll in America.

we supply utilization. of market innovation spoken information that allow the the combination my the simply our we remaining chemical Univar systemically powerful combined nearly our chain, before. we ingredient sellers, customers customer, highly share of will of X,XXX Since and This supplier We that that the asset of empower for reach extend organization redefine are announced accelerate Together, a drive can our the opportunities present. leverage our flow will enthusiasm this transformation. who is partners segments With can to benefits accelerate the growth. that and customers, markets I've reach, digital suppliers scale couldn't future we many our us to to of reach and for to between service acquisition the elements and confident our deal, us throughout will improve and accelerate profitable investors

we to this talk in X ingredients many highly opportunity opportunities are have acquisitions, Now chemical market. still treasure is a chest well CEOs opportunities X synergy positioned this and massive that unique to of the equals plus X the but a ensures fragmented of about truly go distribution after combination and

outside it We advisers. a estimates in in Management reductions, are employed announcements, executives $XX on and Transition synergy same augmented created several teams have did applying we and cost $XXX net and from They're times lens position savings. integration due post-close. with taking of to at we proven close Since ability into synergy savings with were least companies These diligence integration to Integration broad-based is been formed feel transaction capturing an of but planning. and annual Office, functional real which more not both the analysis the detailed to operating achieve basis. during XX down a senior with staffed our ensure the confident which synergies very a We're in We confident smooth capture that them. million CapEx our areas. averages, achievable. We of is rather broke million revised the and and at synergies use function-by-function net bottom up these annual analyzed least than different

written, transaction made to both best Charters well planning efforts of time shareholders, and detailed and from chemical of our satisfaction half the their first Univar that's becoming X in receipts distribution, the day of and to establish digital a And we positioned have and when primary of moving approval agile, ingredient goals: our company we will integration acquisition capture we've in new for X Univar the of with against company start. progress are This service-efficient best readiness, good developed, have customary are industry highly Our receive digitally manual leader regulatory commercial a utilizing conditions. approvals other accelerate as Nexeo value to XXXX both. lines interface from cost immature. our together execution an and an closing and anticipate customers in enterprise. the during strong the also been We vision building digitizing digitized, suppliers

customer somewhat thereby, But and more a these Nexeo, modern platforms. day. we if adoption MyUnivar is industry-leading, sustainable to we is our system, optimized leverage to distribution our and Our upgrading transition our platform systems new competitive avoid acquiring to complete, system. will every ERP our are create Nexeo's utilization By and we ERP costly digital risky be will accelerate increasing truly advantage. and business underlying and to positioned path well multiyear, that plans With arduous, need

digital easiest which turn Univar will enabling making us growth. preference the customer destination will #X That to experience, enhance our customer business commerce become We increased in content to drive in the us do customer will and profitable loyalty, and to space, with. our the accelerate

market transactions We will to market an superior likewise unmatched solutions of act chain a own cost their as chain. our supply superior deliver supply providing low supplier downstream provide reach supplier We'll access and experience, of extension a for that insights. partners,

delighted data help take build every we will be at and us, organizations We acquisition warm I'm new X week. the cost an To teams being supply our per total access companies both a and one. new of transaction, exciting services looks sales. will and leverage and and truly create chain, time And welcome the to two has the from valuable will deal insights to good better our eagerness received of percentage to which It's to streams. great the automate by as Univar. income OpEx decreasing digitize the

and lie before we'll our have is has our Thanks growth not that market The can which can the have that we chemical our We to our massive grow attention. in opportunities look of highly nor elements to the for achieve share, rich by future, growing transforming are changed profitability fundamental What us As And with also simultaneously changed Univar growth. industry. of your speed margin only we and energized the up while expansion of we the fragmented that, continue questions. the strategy. this industry. company, opportunities will company open for but our it at not for

Operator

[Operator Instructions].

first comes line Begleiter the Deutsche Bank. from question with Our David of

David Begleiter

end seeing we're softening you David, you end November some what that are your in And which now Can you markets. into in which referenced markets here? particular, discuss geographies?

David Jukes

thanks for a all We like we Look, I of it softness. David, coatings at in markets markets, saw markets, the be look of and question. broad-based across ingredients. saw think a strength across which was manufacturing And should markets, number number regions. personal adhesive some care fairly food the now, strong right and

going So in one the the recognizing the economy, I of tighter we're a money kind high that saw wait at We're think getting to that prices marketplace, be that bit price tanks happen We're to full with from with all September on to October. just well. uncertainty a them with high, suppliers And our We're that. looking little No that. a at see. little in they mean, partial but say that's now, seeing and I things hearing time in and down. of choose left and with all-time customers these an as their just unsurprising inflation the high, with all-time chemical a slowdown time. not from buy an wants the very less, goes right if not it's

So seeing that. think I we're of some

but order a a good, down our average customers bit it is average are little, the We average spotty. size, And little. order our see aren't. size a customers order numbers you is is our look down size at If

we have days. We have good less days really good and

no So buying future can't not system - left prices said, bring. before. in customers customers. about haven't We're products their down. They I accordingly. - uncertain prices customers buying. the we've seen to recognizing are now, the inflation's one wants what We're business and just if they're with is And be as full Right just go going thing seen of we've kind are when tanks But our that losing happens we're to the stopped and high, I've adjusting this less. that. It

anything of It's and just observed extraordinary parts October. So September occasions, in on early into we've and we don't moment. see the happening at it's many the something

David Begleiter

good. Canada, well And as into just on inventories? Very elevated Should weakness given this agricultural XXXX Western bleed activity.

David Jukes

think ag don't so the business. of we terms So in

I will expectations be a more for think ag our for normalized the business season.

weather supply I from chain think hasn't the been we've stock. run just through out XXXX kind. The seen XXXX

So this at all. ag year the business it wasn't

So to We wouldn't we ag. headwind. but don't in an bumper it the planning we expect ongoing for that expect a be be wouldn't season,

units mechanical and of global terms In the one of one a our had of that largest customer temporary they've of customers, impacted shutdown large us, it's their for reasons.

hasn't So come get the business when back we demand will and know we'll up, gone that away. And that back comes that back.

very our that feel fits about positive into we as XXXX it So numbers.

Operator

the next from question Our comes from line of Poliniak Allison Wells Fargo.

Allison Poliniak

tell slower big should than if about a What win-loss the the it Maybe to it as now? holding or was it's little David, issues expected. that right And if I it your you point? are this progressing win-loss wanted to back go that what's hard comment ratio. to at on ratio back is, maybe

David Jukes

Sure.

and think our I a lot it's growth double-digit to I think XX% improving, It's is win-loss EMEA, I in if contributing lot a that. growth our So EMEA. ratio to globally, contributing look in

would So the we I are isn't fast like. seeing like. U.S., positive. I would It as really as fast as In steady getting as improvement. It's it's be not to

think the I the working. we're is strategy clearly a off little So pace although

are an customers. of We increase to seeing the calls number in

training and most them been through now. growth sellers been program We who to the have training of our have from seeing our are program,

the We are in seeing growth pipelines.

the the be improved. making are to performance we adjustments sales We field where some sales and could the management think field

on team of The it on ratio beyond. we're on just But 'XX - for of significant we're pick So top getting top that. a We're better. It for up being is us right growth win-loss driver that. the to because and of absolutely pace. that staying needs the line are laser-focused is portion the

as they opportunities some So new identify I managements the tools We some in of sellers said, help put there. the arise. as better to the we'll adjust in

than predict at right to who much amount equal that, the where to But able force with be improved more making, And So increase. underlying growing cost we're of have drive can customers right ratio the at be the to we per be place sales orders, using double will business. on next, their calls that time. buying are win-loss to so a portfolio the week RAI are going investments of we're we customer

Allison Poliniak

Great. of just the point, a market. in little obviously, industrial progression this the And given sales helpful. shift second, U.S. favorable the then the That's obviously the less force mix is at and

do be out you the side? more the Just authorizations favorable should that have visibility on profit shift given there, gross when

David Jukes

mean, to XXXX. going in think we I come Yes. true that's

commoditized customers' well. specialty are perform as think we of things there said very the a a And stable to I the they probably confidence to organizations, the take expect couple XXXX. that products, of the buy we from It's buy it's you has performed the well business, to customers, of on. back before going the this well more bulk BCD There to our most year. in time formulations. and products which more customers is our sales amount one done that continue least ones into get very chemical get specified is business, turnover, are to has before it And going also start specialty

So substantive we way. will in XXXX of to percent in or new think feed of XXXX. year. The add couple authorizations supplier really that line quarter next top through quarter, shift think second the We start happen we a growth they'll have half will of a in second third

tell the right that delivering that growth just strategy we're the All up The clearly So we're say we're at pick is it us. now. very working. to indicators then But XXXX I again, the working, needs strategy just is pace. confident the clearly us impatient, pace for about operating

Operator

the comes Koort from question next Robert Goldman Our Sachs. line of with

Robert Koort

David, into the seen adjustment October are the you gone mentioned you've times, duration? you of November? that as buying trends sort and daily does as tell you what about that showed what And you've sales through many your

David Jukes

sluggishly. have every I've on morning a the the day. a in strongly. - pick sales this a Today the Bob, October and I January. more see feed this through quite this mean, kind as I January. a or we'll what decides and and things, up morning. again said finished mood down. these day. a it's was in up We typically, good good things daily we see think We little started bad open I earlier in destocking, And seen if of for numbers mood whether them We'll actually September

customers through I case, the several think I towards and still cash our quarter been times, all a - are being them destocking of all - classically what see the recession. little and at still with like to they're buying people year buying back. tight, lot nothing what's are fundamental to destocking that's They're man's start the managing I that's having And through And rather this less. program. look are one will moment. view, a come happens And the like It cash price. looks a that is And when than X, pushed being - customers come view a their being looks as of if this and it about year-end going a it, buying. If pushed I just well. at counter price happen unsure inflation to

I'd now, destocking out me. lot X X. come turns in quarter going then like to looks picked So If something this through up, quarter that bigger on. But there's to us it hasn't it expect a right

Robert Koort

going because their your the there some then competitors? to How was and you how in so transaction, dis-synergy? of And on that's create where meaningful Nexeo it. their at Univar not to dis-synergy handicap? do chose with going their Got a supplier may one distributor distributor, is other be or competitors of suppliers want other to your many maybe share Nexeo words,

David Jukes

Sure.

a things. couple of mean, I So

a for suppliers I've from so on is encouraged or I some there's what our We $XXX and from suppliers that million with. great talked business, choices our firstly, business, want for think suppliers either than I the who their will a particularly much have and there's said, in with into relationships we exclusive match treatment businesses our might which exactly or in and/or synergies. industrial who value-added factors we who about from. going suppliers stay that around what don't portfolio, that portfolio by to our now me deal, we'll which been compelling more encourage think, a great think and part customers care the any growth. care that from particularly I've seen would with and offering where leave. go reaction to to is dis-synergies, we that you And particularly I I'm really really, investors overall, our deal have one that $XXX other, really people of and in it about that to accelerate and a But to really dis-synergies the factored some far have combined net alarm It what our be just the we've in part the get of and got into net are that We And companies. business will Nexeo share built be give what thinking, us cause it's stronger excited will do deal. I more - home much, nothing the so And metal personal in million know and offering. transformational for and

Carl Lukach

it bottom to add a consultant. some from academic a We that companies, average just both times. supplier supplier It number did that. up reduced from with was not and by of was quite calculation I'll

good on So degree have in this we that deal. a of factor confidence

Operator

of Laurence comes Jefferies. next from with question Our Alexander line the

Daniel Rizzo

Laurence. for Rizzo Dan on It's

laid the attainable? it previously in Is there? that kind the improvement of what that for end Given still might does of of that? And that the and headwinds mean, I out the you until the slower-than-expected left win-loss XXXX is part destocking ratio year. Nexeo guys mean targets

David Jukes

mean, that. our really if commodity Day of we yes, no assumed in growth So me change economic we May you so laid and I and what's acquisitions, remember - XXXX. and targets, when stable out bolt-on address Investor let price small inflation

large bolt-on. side, a On We've we done the small haven't positive transformational acquisition. done

said the see targets, seeing acquisition. plan. freight without Day we're execute and tightness, on that now continue results the we downside, aggressively market deliver seen in Nexeo our We've to With said, our what the come lower the we softness. about inflation patchy we On we've market, to the Investor seen through. this growth our but pathway of end at kind that's maybe destocking XXXX And of

We we and those new and to in add line through flow expect X%, expect Canada X% conditions to supplier normalize, authorizations to top growth. our

that continue U.S. to in the to deliver feed to expect through and productivity as well. to win-loss ratio We accelerate

to efficiency margin our increase and - our intend productivity mix also we take improvement from further operating in those operation steps enrichments, and with to expect line targets. then We financial

still So those we pathway can without to see a Nexeo.

now, If means EBITDA what $X about billion you there May that get faster. add in, is company. in talked we being Nexeo can Well XXXX, we

Daniel Rizzo

the do one actually XXXX? next as Are helpful. just in for what noncash adjusting you that question, And year? see That's rate adjustments other then very just for run before

David Jukes

that going I'm hand to to Oh, Carl. one

Carl Lukach

adjusted Cash adjustments, you mean excluded the items Dan? from EBITDA,

Daniel Rizzo

the Yes. account down the from the our IPO. $XX into main We're rate to million range at forward. of and a We're acquisition be the going restructurings, a to $XX small those items. good coming costs run it assume mountain taking since are million, And bolt-on, would

Daniel Rizzo

annually? $XX million to $XX million

Carl Lukach

those with X-year the and look on that expect from gains to improvements period, that million, we about annually. And offset yes, We sales perhaps but $XXX over cost that with the excludes onetime transaction. Nexeo asset a roundly at all Yes, we of talked time onetime capital. no, working

the at of years of three X net-net, integration. the So end

Operator

Favre the Exane. line from with Laurent comes question next Our of

Laurent Favre

is how XXXX? terms inventory the being around kind is back end the versus Can And of on you to be year in profit big gross or it question, Two think Canada. could delivered a up questions you related on what us gross I my - in of side. will normal remind in One profits guess, level.

were But bit year no was happen. part high basically didn't assume there think we and the inventories surprised the and you I I'm of was okay earlier that therefore, later think, should next year. [indiscernible] this for weather that, year, a on said not David, an issue I an because you that said supply, season the that there then

that So low. I'm surprised by your inventories are comment

So CapEx the second first the will And question, the reduction. I question. on come guess, that's

the the suppose, about $XX million talked reduction Nexeo, to IT You related capabilities. I

savings of $XX you I about talked think slides, in million CapEx. Nexeo around the

wondering, synergies on just the I'm million Nexeo? guidance should So that bit from Or just year we the a abnormal? this take CapEx is it $XX is up

David Jukes

Sure.

- our... So the ag ended the think between is dollars to I over I of don't I and million expected our in increase something - down by business $X ag a overall. think of couple last year, I up Canada mean, on customer We million overall normally mean, EBITDA X% million like we $XX in shutdown. quarter

Carl Lukach

Well, about annual sales. X/X our of

David Jukes

our of in Canada. X/X About Okay. sales annual

is. it how that's So

Carl Lukach

that from the quarter outside you in impact size try $X million $X the up of to Yes, million. to to if About the to million Canada. $X

David Jukes

an Yes. $X $X million It's about million to impact.

Carl Lukach

course, top we Yes, $X share headwind on like million, FX. million have other of the $X a to the and of $X.XX in of headwinds quarter and taxes

David Jukes

that then from in with the into so went mean, of year we stock And XXXX. I terms think I stock,

you inventory been there bought much we level, sales, the do rightly sales been season. has because a printed in inventory throughout normally lower the anything haven't and XXXX the right There or as We like that have been pointed would out, there. haven't

buying normally to be when comes that we're higher now, we to inventory little season. it we're carrying would right a means the is - So but would probably less a do, all than going we new lot

the throughout we're stacked. Now the supply completely not chain, seeing chain supply

that's this business. a think year, we it be the I But don't aberration in in that, that confidence why not expect have weather. don't we'd a degree it another like of we've mean, year. had it won't 'XX ag to I the in have So yet, on be seen the 'XX aberration might know we've depends we bumpy

Carl Lukach

able literally there of but their down seasons that some were do, come in and to that a pre-buy farmers lot rough December. normally buy, may maybe good that to a quarter also what a think were those will Those farmers season, climate like there, the this had not. product in that had November up I they zone

lot So quarter we're next that fourth to shakes on buy that A trying of the depend will judge the out. how way. year's

David Jukes

large grew with to we're overall and customer. in think, at Canada, disappointed mean, happened look I distribution - if I by have digits. the our But double ag massively in what's business I our I think, say, really chemical it I core what's obviously mean, happened I

hurt team I and the the is team, delivered exogenous and us. a events, They strong business executing and I I well. strong the But sound really they there great think, a think that's really good, did. mean are These growth, is double-digit So there really plan fundamentally, achievement.

Carl Lukach

your On about CapEx. question, second Laurent,

the think topics you're are I separate. raising X

outlook now That's first take $XX as just to acquisition. projects, We calendar direction $XXX said, the to from that with reinflate. Nexeo the Let's CapEx. from coming million. have that we different million started a you know have $XX us We're down reducing XXXX year inflate million, the stopping ones

Laurent Favre

of them some were... And

David Jukes

go the Cap Yes, a existing look now. on what couple One we've to that system stopped that was the the to ERP was done - We in right at if to things. do and CapEx the U.S. don't need you anymore. improve of continuing maintain Clearly,

same that to to already. is we're after pause Nexeo ERP that The have to very is that the used good going system because a deal. second of enhancements is the the for close and catalog, morph piece as was The then new continued around the news system advancements the the some in what we sometime MyUnivar - soon and digital do to moment

be duplicative So morphing will with out straightforward, it's to because no some but fairly point can going be over what it there. functional it across find building we're of the

existing reduce U.S. it our into thing that's - really and can does be our on it provide moves And to So something be significantly. difficult only and the proving is customers in, an costs that in next ERP MyUnivar region which was now deliver is platform expenses EMEA. what acquisition great platform bolted to our to easier it taking the about our will our our focus difficult digital ERP Nexeo not The channel, allow approved to reduce us which platform operating but transaction the onto

we chunk sites many not the having for there synergies, all necessarily to savings having not think sites that in I in, we're many IT put that million $XX good to as a invest the maintain, as ongoing the around for CapEx not of investments. the savings, So is

Operator

of line question next comes SunTrust. with Sheehan the from Jim Our

Peter Osterland

synergies currently And This to there logistics currently in capacity is carrier where the freight Pete the differ securing significantly Osterland or could on for Univar Jim. challenging is market? that environment at? with are you help approach Nexeo's Does any from

David Jukes

combined controllable. really is So But our things, make their make own two approach competitive and more the will have will add - isn't hands freight significantly and which company what us our different. to our advantage in

density density we'll business a we greater Firstly, through have and greater of of customers sites that have. the

of density sites, some the we a greater it'll customers. of consolidate As much allow

a So from much fleet. greater efficiency our own

Secondly, fleet it adds our XX% to existing capacity.

controllables which our in So fleet increase particularly do now, the drivers, to to fleets. manage get more we through freight focused capacity. Right actually, more to own that's own trucks And control overall - we're market, hard to our to going to better. we're freight be able control to this will our what and Why? we're we're helps And really need the in that starting us uncontrollables. fleet. on, manage Because it working very challenging

to I fleet, add don't advantage and in the very have do for density really as our customers, the they'd - we truck big I competitive a that So different, root will trucks think as anything space. but densities think already, nearly of half and

Peter Osterland

where merger could then product strategy any the impact you call around there mix? Are out specialty And does see areas revenue how Great. your you improving your growth synergies?

David Jukes

strategy. line our improving in exactly It in the of entirely acquisition effectiveness - really earnings, I this was of improving operational and Well, chemistries. that think our the growing Nexeo of with fits quality those differentiated strategy our with our

when space. suppliers and and suppliers great terms compelling adhesive metal give its proposition particularly combine in really value particularly care, in you Now our now with also interesting the portfolio product in finishing, treatments us in personal industrial really in with them a for home strength and Nexeo come of urgency, think coatings care that customers, and particularly some and I and

really into have well. lab allows They combine improve richer into brings there can of us I we so can So with sorry, of value reach technical our combine there It proposition sellers mean, more that - to a there. ours capabilities to capabilities. it those as deeper markets. catalogs it those, sellers brings portfolio some great the

have for approach reach us Don't think the marketplace. ever our teleselling and improved is and of there us which think we sales channels, telemarketing couldn't sales going in help helps combining under development into distributor allows we in sellers this accelerate to in So more be of After really to really increased really I business, much That forget, growth. more that get could, reach combining any digital going largest it we just we with marketplace But then prospect into to our before. America, that the parts just industry technical on. that, verticals makes catalogs, focus key of the will lab North I is X,XXX that force some and than companies massively. combining combined to the supplier and us sellers, marketplace those support that application more those those and compelling into can omni-channel

Operator

Barclays. Our next question comes from the line Duffy of Fischer with

Michael Leithead

morning. in dent It's talk to Mike supplier I Canada. customer's from surprised Leithead you a on outage was plant about much hoping one I could guess, was partial a of for Duffy little see this just I your customer concentration. maybe that

region. highlight could in you the or or how each your customers sales comes top X from maybe So X EBITDA much

David Jukes

in couple the a I material I sure happens the the speaking, of yes, sure to follow-up, you largest that head. is customers. my customers be lots could its main. that us top global We can and them Canadian the I This and and And off you I of my lots head. impact not mean, we none have give I'm generally do business to think, hurts off that and of in Yes, but ag, give with the and top overall. of of our one significant then that can lots I'm it

wouldn't is medium-sized I spread thousands customers. But that the we business the have a globally, small, mean, tens we our customers of pretty have own, XX% products robustness customers. of mean, our of spread XX hurt us broad of of on pretty But its have strength and of I the broad of about with those I the that business think too overall business, a have That's sales. top much. just it are we

Michael Leithead

or on things on just helpful. logistics that's X touch freight help then called the to you And it, out that Got the you're inflation manage doing maybe and that headwind? you've in Could X quarter.

David Jukes

freight. with I'm happy mean, are where we I sure. Yes, not on

it's trespassing on - we think freight in I freights surcharges. a have and lag

don't been that I with in we've think October. So prices very we've raised me and on again Tactically, happy. it, make doesn't pace

to So internal we're we've that's as working fleet more. thing one I our before, done. said utilize Strategically,

We have dedicated now. resources to that

us use we're So now internal much also making better. but control our for cost controllables us, to much option which greater a allows fleet, of lower the is

Operator

Our Vertical of with Research. line comes McCarthy from question Kevin next the

Matthew DeYoe

It's Matt Kevin. for on

in not revenues America think think do year. if were fairly I So last about I Hurricane Harvey I'm But grew X%. correct, comps North to easy

North what So XQ? in were America volumes in

David Jukes

quarter our consecutive the in quarter Well, growth. we saw profitable volume third second of

X% consecutive volume growth. quarter, up the was profitable in volume the said, So of as is, second which quarter I

Our win-loss positive ratio trended towards the again.

got a happy us in make things, growth underlying So that EBITDA we I which the think XX% there's U.S.

Carl Lukach

And North that then go Canadian were ag... the And America, XX% to down the for quarter. to reflects Matt. volumes

David Jukes

The ag and the lost customer.

Carl Lukach

customer. the And

in you side line Eastern industrial were Canada, the So if the put our with U.S.A. markets, growth. in volumes that to

Gavin Trebilcock

U.S.A., inflation, I I bit tap little one on more on North mean, here? magnitude the ongoing And surcharges. the And just seeing I you're sorry, I of in maybe us that to then but I said - misspoke Yes, America, a clarifies you that that you any think price meant numbers mentioned do can give you it. the it. have cost on on time headwinds lags the net logistics

that Like You time lags a get now? and more little the we fully should announced them to these Is one idea fully recover should You another October. May. bit in implemented? announced in start one be implemented when how that by we in around see can expect out When financials? we to

Carl Lukach

inflation heard and I product you then first think I ask about freight.

David Jukes

think... I No,

Gavin Trebilcock

All logistics, inflation. logistics all

the I headwind taking versus to trying guess push price in net through. being, So cost i.e., prices you're cost you're

Carl Lukach

okay. Okay,

compared per pound So percent in per of in quarter, year. X%, last U.S.A. delivery with the cost fuel was up XX-ish up unit to the X% about our diesel

mix a own freight that's fleet. of and third-party Now our

that account more into takes cost that own and inflation is that been fleet drivers XPL our internal half So of on side. of the freight has with over the

David Jukes

think comfort, give me you bit let things. me I a of But let tell say - to you X

happy. not we're Firstly,

So defend trying we're not to it.

recruiting drivers. Secondly, we in have been successful

of number lowest for have We driver. who the had vacancies

and route fleet, the our better dedicated work to fleet. albeit our manage we And own that third is than in have it driver own drivers more had inflation expensive The can we And improve cost and albeit more well. better putting our through own we products better we're we monitor We October. wage We'll as thirdly, continue a Putting onto to own we've fleet own XX-ish more weekly. because our now can So fleet. increase on for our fleet better. sweat fleet started get a more own that got on managing to become. We had our percent available party on diesel We've that. that. efficient to a on resources we've

how and that's that, in remain advantage we looking to this competitive competitive environment. really get and we're intend So tricky actually freight at

Gavin Trebilcock

better margins bit a were looking than we Sure, and we're I I even the U.S., guess in appreciate for. particularly little actually - weren't that.

it it on and the take take time as versus our quarter. don't wondering, of that surcharge you I'm in us I just immediately? October is that for kind does effective financials? take the numbers and necessarily So that for see in announced headwind to view Or action course X, a the to if huge

David Jukes

depends. it So

immediately, not go - have that. some XX on the corporate grace So it will will of probably larger days of all customers some accounts

that of So October. part feed see through you'd in

November, end that. You'll you see the by part of November. of But all see should that feed in of through

Operator

further no turn to David are time. over it at I'll this questions now Lim. There back

David Lim

today's Thank call. you, in interest conclude gentlemen, and This ladies Univar. your for does

have any and a reach Relations to great questions, follow-up out day. team, you If please Investor the have

Operator

now today's disconnect. conference you This call, concludes may

Univar Solutions (UNVR) 11 Nov 182018 Q3 Earnings call transcript