UNVR - Earnings call transcript Q2 2020

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Operator

Good morning, ladies and gentlemen, and welcome to Univar Solutions Second Quarter 2020 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. now call, meeting of Heather at Solutions. will host to Investor I Univar today’s for Kos, Instructions] turn over the your Relations [Operator Vice President Heather, go ahead. please

Heather Kos

second morning. to good and earnings you, webcast. Univar Thank Solutions’ and call quarter Welcome XXXX

supplemental David are quarter President Officer; financial Vice President and Chief results released ended our the Financial our XXXX, slide call. been to website which corporate website. Officer. for with should univarsolutions.com today a and has our to posted call Chief today’s presentation Alexos, second Nick and June The our XX, Jukes, be at Joining we the go Executive viewed earnings and also presentation slide Executive on along Last posted with release, night,

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

business end with agenda our integration through and David will uncertainties in highlights our make filings our then, call. current our see the As our and progress referenced statements complete of are strategy. our for reflect start guarantees and they on involve X, see second financial about future. our while the of expectations on SEC more Nexeo are Please slide expectations and quarter outlook, the will future risks not for forward-looking, business All estimates, our X, Nick statements slide And and/or for performance. for forecasts and David inherent trends. estimates, will the a future. close and uncertainties risks we listing they will projections, and the update. you On with market will walk

call that, to for we David opening over the I’ll questions. turn will remarks. that, Following his With now your take

David Jukes

good good to Thank good thanks call. and everyone, you, joining our evening and and Heather, afternoon morning, for

pleased adapt these to And see Streamline, performance, Solutions deliver solid to in and mission our QX times Innovate remains our is which during Univar and reflected challenging to continue at progress I’m Grow. results. Our we as

company the this priority is earnings, the a We expectations from our for customers. highlights quarter that our As upper serious our end about solid suppliers are: a remains and our Key beyond in delivered challenged of highest always our employees, safety, environment.

versus the reduction. Although headwinds cost COVID mitigate year, by were disciplined sales to customers, able partially down new the to and were economic prior management selling margin we and

million, the strength million sanitization cash customers a million With demand the and as speak $XXX We continued as had demand met We critical guidance improve well products. strong to $XXX our million, all monitor moment. new meet supplier changing that products to our and provided our high and for liquidity the trends on of sites operations and patterns from cleaning mix, of the able serve lift. markets in were we I’ll range. above enabling in margin quarter household more $XXX the $XXX for of were in relationships, to fully-operational and supply, product short

Our track. integration Nexeo on remains

strategy our accelerated streamline with digital we’re at core XXXX we’ve night, firmly to Streamline our the of A last speak direct to release will program senior SXX to and our in detail. program Nick calling which greater saw a or American is alignments North key segment. operations of reporting you enabler As put in functional this short, to me range providing organizational a

a go-forward want our and of advance our the continue business our to trends, effectiveness, capabilities update make brief to on plans. non-strategic assets. speak more streamline on And disposal our to sales more digital continue We And force COVID-XX customers. with new attracting in some I before we provide progress I

our have returned global return a headquarters around voluntary pilots For a at other process. and remotely, site work office a our working we to few employees that Currently, the remains site sites are world. to

We continued cleaning new and safety are having protocols while on guidelines, site, and WHO practices. CDC robust PPE following closely

on to schedules We basis. monitor region production continue daily well and our also a customer as supplier closures each in as reduced

excluding down the April Sciences pickup mid-teens, down year, occurring sales compared still June year-over-year. As divestiture, of back a May down and half sales mid-twenties Environmental in month, with the were the to down prior low-teens sales but were

to shopping by range of Personal demand started centers see the consumer care products displayed essential market with end markets the healthcare solutions strong Our we Globally, a uptick demand reopened. to end an region. salons wide demand in during and in as patterns related to saw needs. June

sequentially steps softest in market Canada, industrial Refining month. although business. evolves improvement saw are markets not sales guidance, July. to-date and in improvement sequential our USA the the continued processing through the affected The by to to in pandemic the we sustainable chemical and full our we back year including Our half and forward, demand May, saw significantly the take energy to were as our SXX business And I but into was during say the plan pricing both, general future. taken reinstating are success can we and going of the and quarter position actions we’ve program, the designed has into for down

focus, and platform our vertical Looking deliver and comprehensive market digital customers business that share new environment. this we with also capture ahead, network believe to along will our despite complicated of global our centers continue macroeconomic to solutions industry solution

key Now, highlight let quarter through He’ll I results an Then, to CFO, progress update call outlook. business on the walk close our it Nexeo Nick. strategies. me turn will second with our our you our and and our over integration

Nick Alexos

in David. ahead the Solutions Univar to you, performance call. on the Hello of solid delivered quarter Thank expectation. all our good morning and

the our $X Constant XX.X%. our product digital portfolio end billion investments significantly cost of offset down agility, markets, of and reductions diversity were currency operational and Our sales decline. net demand

by financials XX.X%, or we lower estimate of a basis. was $XXX XX.X%. results XX.X% last exclusively net year’s from of down Sciences sales approximately FX, million on Excluding depreciation Environmental and constant currency profit Gross were

points profit exclusive basis market of XXX by constant end the financials, Environmental favorable expanded basis. down XX.X%, gross by estimate Sciences year’s and driven a When last product depreciation margin to was currency from we mix. X.X% on results of excluding gross Our

EBITDA was demand on Second markets unfavorable product certain of interim The cost realization was the constant basis. quarter of lower divestiture a EBITDA by Nexeo’s decrease $XXX measures and offset due currency synergies. product to deflation million XX.X% the was reduction favorable Environmental XX.X% and affecting lower globally, Adjusted in price adjusted mix, by and Sciences margins. partially

from basis. Environmental approximately was year’s EBITDA a XX.X% on results, Sciences Excluding currency businesses adjusted constant last lower

EBITDA net million $XXX $XX of margin to is estimates believe $XX a a on in XXXX. million Based cumulatively $XX the $XX year-to-date we related of on which mix from global During captured the benefited for we of approximately the we quarter, quarter. QX planned nonrecurring million the cost synergies second versus Nexeo by million, million, internal product basis, adjusted integration

EPS result to fair administrative acquisition. of quarter our around in integration-related this XXXX of have the or due the prior we on EBITDA million adjusted of $XX expenses million expenditures and with did year by was include year QX, in or had ended quarter. income quarter per the related compensation. of Capital year non-Nexeo COVID payment the the on $XX.X primarily model. which guidance, principally was the versus operations in for impact settlement. the $XX were cost We the connection offset and measures, net prior our selling, demand quarter, countercyclical share million the cash second was $XXX including were biggest compared these which estimate lines hand from would $X.XX QX net believe and adjustments quarter credit reductions. income, versus $XX.X economy, recession Absent net versus Net $X.XX large million total share, and million timing the as approximately prior year due our is partially prior per per by lower of for also liquidity, under lower million. of period. of working value cash headwinds, source We prior and an is was of availability for year, one continued results. per nature asset-based the of on QX COVID-related decrease The was in warrants to impacts $XXX legal QX offset time last $XX capital our $X.X income compared to reduction cost with seasonal business quarter impairment during net collectively, COVID expenses Working share Adjusted cash expenses year Nexeo we of $X.XX profit, unique partially lower a million are of reflecting partially gross $XXX and charges and offset approximately and stock-based the a was the of issued quarter warehousing, excess for These lower earnings the for million $X.XX net million. a to the $XX of an million by This capital. integration uncertainty

quarter was the Our X.X% ROIC versus X.X% last for year.

synergies times we previous the figures quarter well as ended from capture integration, to the We business. year. from expect these X.X the improve the to We a as as down grow X.X continue leverage at ratio,

its certain impact Solutions Sciences operational markets. have decline, four for on serve we divestiture, essential partially as lower approximately across largest Univar demand metrics across regions, XX%. demand by were all gross by by in and our Latin markets. to demand have U.S., reporting continued due appendix. also benefit the advantage key significant been saw margin to higher a the X, sold. of our geographies In aggregated in essential primarily more The a and America higher the detail its slide impact and of the end growth excluding had its essential top-line Across these in higher end markets to markets. range we on segments products supply Moving down Environmental products position three global would provided the to benefited sales in offset margins,

Canada, to Going was expanded mix EBITDA positive plant XX showed margins, on and gross delivered market. of were profit significant offset impact points, enough of sufficient adjusted lines have EBITDA as were gross In commodities. expanded continue impacted strong contraction a the forward, freed segments also some supply by reporting EMEA with margin All to not basis where up, energy service the in some Adjusted more we decline. marketplace, by the the the to but not performance Canada, for return. offset deflationary reductions delivered the a at America. cost Latin margin, impact except headwinds normalized only in further the as results the USA

Despite on for uncertain the given good economic withdrawn slide and our Moving and outlook for relative guidance an our year end markets environment. stability QX XXXX, to in remains a today, update. full X QX the

signs some mentioned, continued comparable with of with sales As latter David so trends of are far part QX in demand recovery. the QX

in However, the some the seasonal year of keep given mind, into the SAP in period implementation. are net typically in at $XX holiday Full million, expected EMEA. Nexeo lows, account QX involves synergies taking delays

expect to continue the over of which also full year prior $XX incremental million reductions We for cost of versus the year about costs. half are savings

benefit half in should margins the Our also actions second XXXX. SXX of

We are it remain XX% diligently sales and annualized the between by of net to expect capital working our of XX% QX managing to year-end.

may spent in cash of a full within capital, million, lower, seasonality. $XX Nexeo QX million other be working is QX approximately of our year be QX also in $XX positive prior to from As strong which Cash expenses does cash of includes costs accruals year-end $XX QX range with and of has costs reversal to used we estimate capital now CapEx million with should while prior million. in timing to which historically million. year-to-date. expect line be XXXX guidance, around million QX of we and in seasonal integration generated up with $XXX while our as a to guidance, been it expected the working $XX noted, come in SXX The use net is already $XX of inflow

seasonal use we and cash earlier, needs. working our although effect cash guidance liquidity capital to due a be will the As of discussed other on QX exceeded in QX,

debt the to or we our expect in before $XXX be pay last with We $XXX impact $XXX down acquisitions. million of target by cash more guidance, continue to approximately million divestitures, versus to any the sales asset end the year-end. of And million for range liquidity available any year to now

And use other significant will the in plan approximately our expect of only to integration million net XXXX. total synergies by we XXXX, as targeted the our cash to portion XXXX, Nexeo Nexeo million. final $XXX still of Beyond of million $XXX $XX be QX achieve

operations certain America. the As with improve and reduce costs, David have of actions to recession, onset streamline accelerated we COVID in our North mentioned, business the and particularly subsequent performance,

are rate as press by elements our XXXX, announcing an program SXX X% of of For our a margin of follows. and the we leverage our EBITDA end year-end Other X.X release by net times of run targeting XXXX. program, yesterday, are

signed have binding a agreement to just industrial divest to emergency We and cleaning response week this nonstrategic businesses.

QX. expect to in close transaction We this

we these to During QX. now of $XX recorded assets QX, a impairment and million record a loss in to $XX approximately related expect million charge further

Although chemical ChemCare, our supportive ambition. as we nationwide is to are committed synergistic services for promise growing view these businesses and business, holds we as we waste sustainability also believe great growth of our nonstrategic,

forward. to these We up million reflected positive management, liquidity flow, business result alignment actions Of would this our outlook. charges, yet accretive million and $XX have with we going of cash in capital be and in additional targeted other we our which working yield to portfolio expect may have charges, expense, year-end management be $XX margins that to cash assist already

activities We and XXXX. timing expect $XXX additional cash in through with greater could portfolio proceeds these million pretax than yield

X% our As program, a target value management we and focus provided many in by operating Company to our we end challenging growth this the operated to through the more we’re efficiencies that SXX XXXX clear be of ways and achieving has our run aligned of during stakeholders, period. confident margin on our It our call. drive creating in have with guidance XXXX rate EBITDA for well all long-term details very is on

on share and and to measures of initiating improve track the business. cash integration Nexeo growth additional designed the market our keeping our profile plans accelerate flow While strategic and

you, flow We million in economic of cash more to also free David. With to $XXX a continue environment $XXX that, I’ll million. target it normalized to turn back

David Jukes

Nick. Thanks,

those quarter. we our ERP Despite to to million Moving our a our COVID-XX processes. $XX integration successfully the now. of obstacles, successfully service highlight to few we I’d of synergies on during We implementation, net customers, continuing the like milestones, optimizing the and progress. successfully milestones of delivered integration third realizing several our kicked-off while significant wave are

branches in Our cash further site sale and approximately the year. consolidation We $X X during closing the bringing finalized sites schedule the remain in X to total continued, with plan quarter, on proceeds million close XX. branches total to of closures of XX

X Our is more remote support. SAP a QX smaller, Canada on half same includes is of as timeline agile communicated remained waves, adopting plan which time USA roll-outs more approach we the hybrid and XXXX, and and migration The quarter, completion that with much moving last is second to training Mexico to the XXXX.

the but early customers. We’re local for strong in benefits of of our having this of realizing to presence optimizing the true stages remain strategy full scale, our our

a with business to leverage sales sellers driver we as our strategy of improvement, key platforms. force Moving digital effectiveness combination network in remains our progress, our of advantage business

see business the continue leading margin continue indicators. We to track Even to the and COVID-XX, retention, progress good at pipeline we’ve level. of maintained activity our the transactional local activity, levels growth, with obstacles of customer and momentum management in

American customer U.S. with to quarter, in XX defined as patient XX% important am new we no activity welcomed QX. And hundreds She quarter, to Operations. through regional from contacts returning cost the I’ve in to SXX and And of XX% structural leading despite see customer made business. the efficiency were the us of the will we we entropy. back which the certain the as just process Jen me take second QX, closures. months. in in be customers particularly the indicators McIntyre’s Head impact North why will first equally that also being which welcomed leadership again average allow new the to saw uninhibited like customers Our improvements sequentially in and North financials, feed responsibility drive to up are to of program will by allow purchased customers QX, I changes America organization, past is closer and

drive pricing, the deliver of told I global the in perform digital to expect largely something solutions sales Commercial of establishing of business we industrial and through has our a chemical practices Herington enrichment he control under And consumer our by these consistently us common an the chemistries partners North team. and faster to geography distribution largely for set of disruption. already America, verticals for direct that more leadership they supplier ability By ingredients they industry goals. local can differentiated Chief management growth Our Officer, made an driver whatever local execution in in significant Nick readily to Powell, important operate, progress mix through want. expansion The globalizing of taking force is execution is and Brian

a remain advantage, times source bedrock like these. a and competitive our supplier in partnerships for especially Our business of

the leading bring of Valio. You Biosynthetic partnerships our may expanding to few how the they recognize value Products, partners announcements of Technologies, from growth. These over digital have capabilities are as partners, Gett Chemicals, product along their new or last support market expertise our with such the chemical and Vink authorizations Dow, seen months ends supplier regarding ingredient our products a and recognition

continue a solution and And customer growth. as we products drive We we’ve forward, expand build developed approach go centric robust and of to portfolio to capabilities. a

decision meetings an tools believe we end addition, verticals our markets open strategic both who’ve customer better with up tool in us and our world. previously of in-depth customers’ confirmed in-person more the approach, as less the allowed how than use be address serve. deeper they globally, preferred and current for want preferences. we and surprisingly, omni-channel COVID-XX to virtual our has accelerate increase and norm. region, interact or our engagement industry mix us of greater below which intimacy In This to our throughout in-person sales to will customers a expand our digital productivity Not has interactions will of cross the channels allow and ran purchase each primary survey told to the customers We connecting of conducted in

during and customers example, America, one North and webinars technical in capabilities X,XXX we while and the stimulate ingredients for demand customer EMEA held quarter, second supplier XX chemicals as our approximately Just reaching certain the LATAM, promote engaging to partners.

to points our e-commerce search, source adopt this results, use serve continued connect and self our share. numbers. to for customers for expand and another to source create as ways and of multiple us platforms deliver advantage entry us digital As them and select, our with gain footprint platforms competitive These customers for presents to growing in investment new

USA website information, Solutions with improved variety Customers website can as Univar browse We including of data products to our quickly feature. improve Our traffic my as customers in serve and a XXxX ratio where’s provides They quotes expanded invoices product catalog, entire to can sheets, through well of stuff we’ve and offer the their and safety launched leads. capabilities download track formulation now request and products. our the purchase documentation, to experience. the Shop.UnivarSolutions.com sales customer self recently shipments,

ChemPoint.com, We continue to expand this of through markets products served our reach channel. digital the increasing number and on

you digital share growth. make the our customers it told do require is customers really well and transactional as platform force no-frills attracting rapidly startup customers. a service aimed high-touch for that who deliver and is many new last business expanding This don’t are committed maximize and ChemCentral.com, Altogether, retail sales we easier with and suppliers we has more to those a for strategy we been operations, quarter, scale channel the and as launched our effectiveness of Solutions market to regular Univar buying foundation us new, As available through channels. exciting

to and new streamline growth in preferences. changing the customers that investing customers right the tools confident We’re with there in innovate accelerate chain, step supply we’re

other useful, our a include the is I’d highlights. for before mention report. June, sustainability XXXX dashboard, ever shows report improvements against stakeholders to and In This concluding, our Before released sustainability more comparable than we tool a few goals. comprehensive which with like a new our progress Company’s that

to global assurance sustainability transparent of and the for integrating Board, action as that on values monitoring global as initiative, those being distribution planet, access a respectful sustainability the diverse Univar achieving our of our makes supportive impacts performance Sustainability release aspects approach business on we’re the making to Solutions resources. chemical managing our our take pledging metrics. well honest CEO This SASB, new bias reporting foster material version as where and of X the emissions, references Accounting Univar scope as integration unconscious Additionally, through of enables GRI values bring a environment and X and and assurance a standards; employees reporting of we for sector; to business. the a joined priority the and to Solutions in it of Development collaborative, to culture of to to that that data; the United touches self able key external impacts pleased for ability their claims information; and more be and introduction and reporting chemicals to the the action our the to Standards vision X the and development each marked report our Goals; authentic announce significant global increasing our complete; Nation’s entirety the is on steward most safe, mitigates reporting; perspectives, as Sustainability and representing better a latest to our are Also, contributions reporting commitments, emissions stakeholders scope milestone toolkit work. with with Sustainable the expanding ingredient the combined signatory safety demonstrate our the accordance is move as redefine and Company, back as aligns valued distributor robust core us, of well

at liquidity to we your quarter to We financial questions, come $XXX times. challenging we these million summarize, had delivered June end. results Before solid of during

the net this quarter, additional working we $XXX on to synergies. expect integration million liquidity. against million year. and cost to and $XX delivered needs $XXX cost momentum the cash other We’re $XXX maintained reductions expect identified of We’ve Nexeo of end the than to achieve our $XX with control program our and of year maintaining firm savings capital million We in million million greater of

which We’ve revenue as deliver through becoming to advantages, We’re furthering original functional margins SXX in our investing EBITDA program to increasingly excellence. attractive X% our and launched a and is global customers. growth in

We as the from to force see SXX, target we greater Please competitiveness to capabilities we’ll as effectiveness position omnichannel flexibility and shareholder economy for we work through to market even to collected increase open decisive capture and and and greater opportunity serve you an value. our capture better focused these value business, in anticipated believe that, approach your stay and Through we’re recovery Company deliver for on the growth efforts to path our questions. delivering growth up digital and customers. opportunities a it to the We with enhance continue to new challenged ahead. a sales and attention. agility safe. Thank provide And operational healthy financial actions

Operator

you. question Instructions] Your Thank Bob morning [Operator Goldman from this go comes ahead. first Sachs. Koort from Please

Bob Koort

morning. you. Thank Good

David Jukes

Good Bob. morning,

Bob Koort

outs on other you granularity to you David, to do us cost XXXX self-help? that demand volume target. Can some of us maybe back And margin is EBITDA that need do to of dependent, bridge it? is X% or internal margin? How the levels to give of wondering much X% could if I a getting that how was much sense to give get it you

David Jukes

target. question. on at And growth. productivity we’re and it’s mean, enough our of year-end clear portfolio Bob give much earnings line that’s clear And have. so I for we how program very guidance call. Yes. cost things. that I further combination I the I we share management mean, we’ll our a that seeing and have It’s confidence of X% announced very a think that But, in path got -- margin sight, management, that we’ve thanks mean, and growth,

Bob Koort

a to about this maybe you’ll changed give structure? you bit trying in little understand change some do things Can with specifics going responsibility. differently forward on and the management And how us

David Jukes

plan processes model. the accelerate of accelerate and our and benefits What to up operating the benefits is of into the digital integrate the speed really Sure. some our is, decision-making digital and optimization

about really accelerating of the enhancing it’s on that the we’re have. So, that strategy different then the and we business pieces

has basis our So, and our the to down focus of been making accelerate a then as a entropy global having that and industries and actions, on Jen’s regional to faster. some and the program on that single the segmenting decision performance, suppliers focus and global good slows that single much and that can we role we believe bogged Certainly didn’t and we focus is that. optimization in of probably And cost and business which not key our buy virtuous we part Powell say productivity, improving giving that solutions that to our we our a processes growth want. to making strategy. will easier consumer have certainly reducing to industries on costs, globally, from, the Nick effect also of those our of but it those see solutions down now run consistent is Because do for focused give in from customers to something get approach expect industrial and successful if a growth

then allows to the And investments at know to the digital our much me SAP have Brian very them. of then, it with we’re of of sure that be leverage Nick, things a Powell to doing that So, the house, business back the think drive front of house Herington be to back U.S. ought and are improvements. through we getting able that Jen the more benefits clearly split, process front as lean time house. where we doing has in and to doing house, of kind into we business of make ought local it we to

Operator

Favre Please from question Exane Laurent next Your from BNP. go ahead. comes

Laurent Favre

two got please. have questions, I

The on first David, actually is ChemCare. one, is It this sounds that business caught. now

do the Univar what I’m one, us then, share how this the within to get That’s to QX, number could see some is is second you just misunderstood intend you anything if understand how now? my And KPIs to you understand doing and wondering bamboozled provided. first to this was head I kind first sorry, it. around with of perhaps and with all question. trying So, business How want you grow business bit to right the a by

about in COVID in and you happening thinking be going the between difference in what’s should about QX how we how expect difference repeat perhaps I you would think we QX? QX, cost the can mix and what the So, then into guess, in

David Jukes

sorry We’ll I’m try if if a and unbamboozle, bamboozled. we Sure. word. that’s such

ingredient Let’s for provides were our a look foremost. are small ChemCare businesses with emergency just which core to businesses at response, businesses, I ChemCare not because waste emergency really core we distribution it do service first to is business value-added mean, the to cleanup, more chemical and and ingredient chemical they’re processes. divested distribution. chemical

those supports that and existing requiring dispose well. of customers or within backhaul goals distribution our sustainability we waste. network, customers are chemical our So, our the as clean-up can It our services -- product, integrate

kind transitions the it its and note value-add in it manufacturing It’s I business. slide, as second is performed into the ingredient more moment. integral It’s performing much there will cleanups, third for improving market the on place mean number plants the now quarter, of chemical a an taking activity, been of end number support. of performance Haven’t ChemCare quarter. where So, at impacted well we years. both distribution for part It’s fits few business. last the And It’s as of okay right our now.

clear a to So, we plan expectations and grow great business. that have

Nick unbamboozle of terms let let the numbers. QX, you In me with

Nick Alexos

obviously, Laurent morning quite QX, thanks pleased Yes. If very we’re well at we last your and we night. look that. notes performed for Good by and

roundly those, and earnings we recessionary informative to X and which And, look for a we mix $XX in if million that thought the performance, into that of impact, earnings a thought we’ve get when core do tried recessionary what our on pure that much terms product that million the impacted we Obviously, might’ve the going been and each environment, what impact called to we in as components is which key perhaps one continuing been the of as unique are be quote, are the pre-COVID. we spoke is last a we’ve context QX. that tracking have cost adjust number of demand, $XXX otherwise quarter, QX could benefit, further at business would those then out savings try all number of we COVID we numbers to for in the the would performance, we for terms very power on you i.e. to adjust pieces is, call. targeted QX, And those, COVID prior We of quarter of we and versus you would to of the detailed year. the give think

step is So, in the one earlier COVID impact. what I $XX would and back take there’s pre would a million have roundly year a recession numbers thought the and been those say, would’ve would

be backed our But Laurent, some end of businesses, we’re know, do you through also continuing a give of the other parts we year. there the market, certain needs what of We you divestment of had COVID offset year-over-year. which sense the Environmental in out. to to As are of that. is growth seeing tried impact this Sciences which factors, would But, year-over-year

Laurent Favre

Understood. Thank you.

Operator

Our next Jim question from Sheehan Securities. from go Truist comes Please ahead.

Jim Sheehan

regions by Good more do morning. color could margin expansion? give more savings X% likely expect margin of the you target, region? what Under some drive you. to And you are occur the where to cost Thank on

David Jukes

for I I global firstly, the mean, thanks program. is Jim, think a question. SXX that

for mean, as improvement is and U.S. about the across streamlining to particularly across do the opportunity that, is at business. our digital clearly, It those our do core it whole see right operations about So, I opportunity the the is our process business. see of part largest business. you improvement roll we bring digital and we do solutions and

right the is throughout opportunities the improvements, So, U.S. clearly, the we have business. expect the but bigger where or improvements, biggest see to we

Jim Sheehan

cash For And the takes are mentioned we free early of that for capital puts cash you $XXX and outlook. your major What million. flow to large XXXX? around your normalized XXXX? flow cash free free views aware should on know, be hurdle? flow for a being your working example, talk on about I you going be maybe Could is

Nick Alexos

Thanks. can $XX to of useful, XXXX, year. finalization to are of operate year. much into that Jim. do not as the trying There be of will guidance for we to next that integration of feel a Hey, XX% working bandwidth Nexeo XXXX, And highlighting within We XX% capital the at roughly we’re we’re much of giving continue other million be a very further the this one on think than the factor pieces. lot other stage that obviously we through

that full in use then environment. clear, have of give a be a and of year It’s cash. be will talk that cash. not XXXX will a end use given significant year flat, year’s we would to of up cognizant of certainly So, if be us, guidance. certainly we we when there’ll outcome XXXX, of for have where about the will versus our we If growth, also growth early be have in But, all that we the at positive we the end

Operator

Kevin question Please go Research. next McCarthy from from ahead. comes Vertical Your

Kevin McCarthy

an in You’ve elimination business response divested and your now the pest emergency third industrial quarter. business

classic that what have distribution from businesses you portfolio in you other which not addressed, chemical Aside do businesses? are ChemCare, the

David Jukes

don’t the elements getting mean, the of by obviously, priority that we goal Thanks profitable remains which When Yes. management legacy question. times number below have Nexeo will what firstly, chemical X Plastics a view Nexeo’s do support would the it’s XXXX. of legacy ingredient business, we levered us. core SXX other like for of of the businesses a fit and portfolio distribution. I And of for the into one -- end attractive

a So, business today. -- cleaning ingredient distribution couple And to we But our work chemical on there share us. on and we’ll of portfolio we’re is and can can priority nothing and looking for nothing those, core announce those. of we some management at there’s focus and our business today up a are

Kevin McCarthy

for your SXX Can your the compares will digital then, help like us today, non-digital you profitability with how it your And program. vision Okay. is be that of part future, and how businesses? sounds understand is what business new big

David Jukes

digital or don’t I’m -- about what the is as we’re mean, processes. businesses think think is sure are migration to buy and system allows this we put can from. it to business our a that easier which structured improve form then format data digitization touches reduce make we non-digital. we’re I is we What -- processes in SAP rollout, a What I -- digitizing to necessarily of mean I of

about what our specialty of our rather through, general come lots coming doors shopping store have as it we through to come just people to want front So, one mall. the or is specialty store this for come we to to front into for lots for and store have I whether And door food the solvents people big or door. think through, than

entry multiple multiple points building we’re touch and So, points for customers.

how We operate, to also talked customers changing changing they about they interact. want how

at you’re at not timescale at from X:XX I -- home, getting and done, the you’re working people you’re working are moment think, you’re work whenever if best. X:XX, you getting I certainly, home, your operating up suits finishing from suspect when but

If you at want you’re to dog dog the walk walking X, the at X.

are work and done. Customers come You back different. get no the

We customers Xth, more So, morning whenever. our the we’re channel over interacting us X:XX at July accessible. to or and open be digital seeing or in on with need

interact as many However, way to our do, choose customers doors then to business and them organization. with us we a give our and possibly streamlined through as build can

we don’t they what really do that. are capabilities digital So, focus them do, disappoint about. of that’s when our And the

Kevin McCarthy

to be to thing? of a whether trying in kind it’s salesperson, that goal, telephone or straight trying at do enter you’re or a margin moving towards may of digital what when go the sense economic get you up is, the perfect they you as sense before for door, makes lower customers digital if implications was up example? to go from that Just a you get that as to if X% That to higher, me. guess, what call are indifferent I terms use I

David Jukes

it Well, about of second one, and just two is the cost. think ways, think -- the in terms price; it then, in about

rather it comes and process inefficient the same an out order, than truck which XX means of it gets digital clearly, to a me go goes. getting channels I’m touch hops processes, So if costs in I through down more to then we it set off and if have got times before phone, I’ve on it and as it the to the door,

changing selling on but just can transaction enhance So, productive, just that price, I my cost more being my margin cost. focusing without much

our prices. pricing I to make opportunity think that processes to the effective change channel the on And It give so, we our reduce profitable. though market costs to does us that strategy therefore the gives and us opportunity don’t the over more more will transaction have. depend But,

Kevin McCarthy

Excellent. so Thank much. you

Operator

Steve from Your of Byrne America. Bank next ahead. go question comes Please from

Steve Byrne

Thank Yes. you.

tracking sales other on you and metrics that think the they that now? to right at should would fast the your have you Regarding not I as reps. commented driver you’re American you progress What that. is force specifically, and would look you I your rate would you the what the you that, it David view monitoring the What points the of would do management one overall more pace have put this percent optimum of a within effectiveness is maybe now? a operations, of touch has how level on on seen. effectiveness, force that you’re effectiveness -- hunch But liked as welcome the compared be from likely with right sales changes key this that of at accomplishing North to comment just been you

David Jukes

Thanks are on plan we the our reductions. and QX cost we’re progressing for and Look, good question. I well mean, I integration results, think, reporting

I the growth leading well. share indicators to good so, I of really turn the as growth. of prepared But, really said good into the and business mean, reasonably is in think lagging the I patience And see some performing remarks, sales indicators

try that’s connecting. so, I to want things And those remove try really some I the want organizational and what stops to of that do. and entropy two

need building a the As muscle. we’re that think together. ligaments metaphor, improve muscles the I We to connect

our would into cause was last organization X they question a rather the and XX? I was one I time. area, when what asked, an answer on touch operate or can So, than just building me of I rated in XX like together, was get kind sales of effectively muscle points. this well. out X try X just or focus time a to asked executing And

at X still XX. of out are they think, I

now. of it’s see strategy recognize were don’t be adjusted I sellers -- to customers want you to is one we say we not is the have more often on, can’t or want think, right I slightly, to because probably needs I in when best customers that more what a said more where front strategy the

of that different and how and at approach very, different look do need to And have omni-channel a have we in agile an we very them touching approaching So, flexible them. we and of ways ways way. to

organizational improving Streamline about ‘XX agility, our So, really improving is our agility.

indicators leading I where the want lagging way connect all right would better to my the them then are hence can which are trending be, which the we impatience. So, not with indicators

Steve Byrne

are prior on that to respect force muscle force words you’re sales With Univar what was what the the to right acquisition? now the day Nexeo acquisition referring the headcount sales and at it legacy versus your is of what versus of to, one

David Jukes

sales at most growth of We we wasn’t sales reducing probably the two Therefore, about sales that sizing growth combined said We to there. opportunity the see since haven’t opportunity it there. the was it the cutting We the heads for to heads, we do. about time, organization, size the sensible force thing sales not the businesses. changed saw still is the

be more seem manage more more do, strategy. approach channels different and me However, to we sales way adjusting you customers sensible they manage in thinking sellers people to get transactions does a more a sensible to productive how and and so about choose and how and you make they how when touch and can to can customers

Operator

next Begleiter from Your Bank. Dave from Deutsche comes question

Dave Begleiter

just on thanks and attached SXX program specific program? your that. back on the detail the to Are cost David, savings to

David Jukes

growth that very a productivity. firstly, operating Well, Dave, margin see we through and that as that cross we and X% see we clear we said, through I fact mean, see

about more as So, our talk we’ll when details that we -- of share XXXX.

work, Univar program. they And going we we with successful blood that’s execution we’re model committed [Ph] that about when deliver that bloodstained that pace going sign wanted And and execute the to. to So, been the any same documents remember, to followed in you’ll people to had follow a the enable program. very the pace to, we us to the we talked were to

engaging lead having notion. what to commit of them We approach XXXX, cases, the having and we successful manage with one people have over-delivered not so running Streamline in to, our Univar by reasons, Jen delivered, kind then take is the -- can been which some fact, do, theoretical certain We’ll they in program, same of will Streamline committed the the what program.

Nick Alexos

the a of significant one Dave, if announce add Clearly, point as just part of that, emphasis. I not intention further to is restructuring. could

David Jukes

Yes.

Nick Alexos

structure portfolio the cost we about the rationalization David XXXX. time with leadership the our place processes is XXXX well through has highlighted that over that as as improve highlighted improving to Streamline in

David Jukes

think is really I look. cost it productivity is -- thing to the

Nick Alexos

growth. And

David Jukes

growth. And -- supports Yes. because that

Dave Begleiter

Got apologize, What it. sales the And mentioned EBITDA and are I assets on attached this. again, on you just -- non-core sale? the non-core assets. identified to

Nick Alexos

material be being would to them. to we’re to as work won’t going we’re obvious divest assets not the And reasons. specific to for Overall, I of Yes. say, try we impact achieve maximum the the they of value profile business. those for

Dave Begleiter

much. very you Thank

Operator

comes question next ahead. Your Please Duffy Fischer go Barclays. from from

Duffy Fischer

Yes. your we in sales Good But, year-over-year to? that were morning. extrapolate jeans I the Maybe comment benchmark? missed it. that that sales what is comparable July What can June, are to

David Jukes

Hey, Duffy.

year-on-year. said we prepared in that remarks down low-teens was June think, I

as than on of is went the the the June. accelerated June, like Although of and starts it end month July more

So, things. saying we’re how that’s

Duffy Fischer

rate million not $XX then, run million, July, directional just guidance Nick negative account roughly subtract two that? way is should quarters. really that’s And indicative of the to year. Okay. EBITDA per just $XX effects the be that gave guidance rest taking clear. but each next into for seasonal the of that Basically in that quarter We of Is right read of the to the

Nick Alexos

here. Duffy, I -- Yes. say would Nick

could You take approach. that

pieces those your is we net and we three $XX we views a talked million that you prior about million $XX that basically about be $XX that it’s might’ve the versus are hard would Obviously, year exactly, results. been QX, impact. into the we layer extrapolated to Our million approach would tracking QX, determine COVID thought for on a whatever pre-COVID but quarter

a year-over-year obviously for Sciences But, take probably our seasonality can businesses Environmental comparison. context into place. You and the same to get account, maybe adjust the was

Duffy Fischer

much is up sequentially your million, Fair to enough. was which you be of when much and the that at and gross what repeat profit from gross to third. of terrific. just didn’t able to down sneak $X world? And squeeze might of just the kind through line to EBITDA -- you yes, it going of how but emergency just between in to was could in we then, QX, QX line really was what do your walk was know $XX EBITDA Can When you measures the and million, we how I maybe out a profit kind was that look were able COVID

Nick Alexos

million that’s we year. Yes. called million out that of $XX I savings for we the quarter $XX the on said that we of pulled mean, for the kind that

the prior plans and the costs means, versus million spending the half that rest So than we into those are are my year QX And, year, highlight QX. that those of in of million I less $XX math XXXX, that about that costs would rate versus plus run took levels. for going our so are really savings numbers out $XX

Operator

Your Laurence next Please Jefferies. Alexander comes from ahead. from go question

Laurence Alexander

A in channels? morning. couple reductions digital a cycle evolve sense experience Good kind for have things. customers who of sort your and with your fully error give you with how digitalization Can far, cash the to rates, of so you’re seeing of migrated net

David Jukes

the certainly shops will using think, for customers be to those most it storefront of information, download And today using I download and data try can you. channels, firstly, reorder. think I our if about channels, you then

which of says, it of it’ll utilize do other a to rather is than think my the greatest driver big up my many feature into to which So, more utilizing for those site, a picking of adoption bring people we shop where’s because to going the us, with have stuff, exactly often, telephone one things. to be site is we called back what

launched, a a their you something we swiping ChemCentral, customers are is at card. credit which like no-frills look channel, which If retail

swiping So, are we have buying you people know public also there, pricing cards. credit

a data been it’s a new far, cycle good. But, in in, touch-free the is in. it It in customers is and the pilot, bringing hugely massive it’s that’s cash bringing is pretty pretty successful so a So, program. that launch,

Laurence Alexander

your should margins cash your get term cycle improve? faster And then or slower longer margin your improvement, with as

Nick Alexos

we’ll into would provide. that that sure factor we guidance not any that I’m working capital

supply will both while sides. I chain within our to think, plan the benchmark XX% we on being as capital to serving that stay at And best-in-class. look we XX% working

Operator

question Wells Michael Fargo. comes from McGinn next Your from

Michael McGinn

scenario do you have the a I low scenario overall, this take out don’t really but back quick. just the as see inventory, cash a that growth what business capital sale? you into that the want nature today? where touch Is digital is a becoming for where maybe free steady given more parlaying to of marketplace of of conversation resellers to playing to percent go you you like And envision business positive working contributions, see that flow, that dropship still

David Jukes

Sure.

customers dangerous So, I is become of something don’t partners a rely us is do supplier firstly, it’s that a on well; we that mean, it’s handling come our envisage very, to something and -- very do chemicals I rely core on, chemicals, doing something and think come what we value engine. handling it ours; we’re just I that hazardous transaction on. to

certain and developments competence So, the expertise and interaction use well But, have, this about of have in that application of chemicals fundamental we and the as that. is the digitizing a as that’s differentiated core ingredients. we

I a we So, value that pure show, than have costs. think there’s just a transaction to rather

don’t a see a it a kind marketplace see evolving So, I to just don’t of into I it intermediary. model. evolving

a the which a on I for evolution the marketplaces years, think, far so more XX successful. place of But, about over been us this may question marketplaces potentially, there haven’t what in philosophical but be sustainability doing last space, that’s in is to suppliers are those functions continue we’ll and that compliance well. value invest regulated industry, us, brick-and-mortar in we those and from and perform and the highly and core incredibly safety to customers

Michael McGinn

management for And structure. Thank that. you gears to Okay. the then, maybe switching

feel regional some I line? the lot to and on of dotted and change operational the the regional be direct the that, think, is Internally, the to the Just early line how I is a want structure? But the just get color get a there’s trying versus focus. a what for and to there’s an you’re organizing of operational call. there seems prior sense focus

David Jukes

Sure.

and we what businesses, certain is, functional So, have excellence. we’ve globalizing globalized

regional a in will And cross any that functional uninterrupted way excellence and boundaries by and barriers, do cross structure. so we’ll the

is However, our a business business. local

operate to have to we have operate locally. regionally, we so, And

decision-making. we’ll those still be have excellence points our But, is local enable, to touch close what very I touch have and so we with do faster still suppliers. our we to drive global to with able local want facilities. have, points So, what process We to think sites better, local customers,

that’s effective It’s and of So, make this globalization processes locally. processes, is per not some the in. can have of consistent And agility comes se. so centralization decision-making faster you operational locally decision-making to where better

Michael McGinn

about Okay. or there any you the changing hadn’t structure of Are the past, with still organization. change shy the been same? And changes structure in now compensation this the compensation

David Jukes

Well, XXXX. there isn’t for

gross gross us. largest for will That won’t We our is esoteric. all on. look we on will you That’s really arrangements I growth, XXXX. anything will share margin We what for to made is, flip component based purpose. fit it to that’s important make growth. need it growth. sure honor will to Driving volume the But, XXXX do be for We tell we or volume at margin more based compensation what be organization, be gross to what the sales growth will for

margin change -- and XXXX its based the on while -- So, of change. might on fundamentals based growth finessed structure won’t be gross the

Michael McGinn

the time. appreciate Thanks. I

Operator

the our closing turn back portion remarks. call. I’ll call of concludes the This Q&A for any

Heather Kos

and for ladies in your you, Solutions. interest gentlemen Univar Thank

have team. any call. you today’s to questions, Investor conclude Relations If reach please the does This follow-up out

Operator

participating. more gentlemen, does this conference today’s for call. and indeed once Ladies Thank conclude you

disconnect. now may You

Univar Solutions (UNVR) 7 Aug 202020 Q2 Earnings call transcript