Tupperware Brands (TUPBQ) 2 Nov 222022 Q3 Earnings call transcript

Good day and welcome to the Tupperware Brands Corporation Third Quarter 2022 Earnings Conference Call. Please note, today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I will turn the conference over to Doug Lane, Vice President, Investor Relations and Strategy. Mr. begin. may you Lane,

Good 'XX welcome earnings Operator. first Tupperware third quarter conference morning you, to and Brands Thank call.

Joining President me and Fernandez, CEO; and today Mariela Matute, are Miguel CFO.

remarks. available release Relations press our Web our which financial third following all can issued the announcing for for site. of will morning, we be our We Investor prepared quarter Earlier results be this a on Q&A, XXXX, found

as questions of the following November discussion our reflect Let management's may remind your views materially from and Actual you that XXXX, such me statements. statements. results today differ responses X, and forward-looking to include may

of constant SEC, Additional exchange foreign results, included in filed release morning. could on of excluding in of information which third exchange reflects our release. potentially Please is being three press the XX-Q this forward-looking statements review enabling today's Form financial rate the for application made page the current results subsequent note that are that disclosure prior and about our currency impact XXXX, period on quarter press basis, impact to references any the factors all period of a the comparisons, Please our with fluctuations. the rate filings foreign

our operations references, the that on made basis. to Additionally, beauty note our with noted, accounting sold discontinued fix continuing in and as also company and our otherwise Please all personal of the strategy third change are quarter consistent a XXXX, operations held-for-sale an core. made to classify unless care being businesses

measures. we'll as including During those discuss this we normalized measures, non-GAAP to call, certain refer

measures, release. be the and reconciliations most found including in regarding disclosures comparable these of explanations press Additional measures non-GAAP today's measures, to can GAAP these

available the call over Web to Miguel. replay will Investor turn With today. you, on a Relations Finally, call that, let me this our of later site be

The global our were should quarter consistency level quarter macro we're or Doug. executing believe and a you, expectations. Good be that to morning below results released which this be. to continues call. to welcome we third challenging and We our morning not third at Thank everyone our internally environment we

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have Additionally, have time internally also as our we actions sales. part taken of turnaround impacted

service and protect pricing have operate have For to created impacting decisions sales. North IT example, margins. issues we plan In comp our adversely changes taken America,

American a increased region the sales, and an basis of strengthen dollar major to the Fortunately, quarter improving South a decline. to helped XXX and third the EPS created our in total headwinds hit most continues currencies. offset against hit point some as reported $X.XX in Currency

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into out easily any to the more access for and consumers and affluent that our quality fourth believe We more Gen in or for believe growth. we U.S. to the take future ecosystem, to the our next a important We our left once we reduce is independent critical we margins, the support operating cost of new up this never it's quarter. us further address full SG&A, channels. reach actions have to will experience to business plan stores quarter, there two to and fixed with as has of step and opportunity our over brand our wanting be force we to improve right-size who leverage our to our the probably can they to is products. important keenly them younger Target of have affluent authentic ecosystem. to to are in important have and rest millennials, investment Tupperware think is with party. Tupperware that an products consumer it's component. Tupperware.com At is open find more. today's and products, bring It reengaging consumers sold our a necessary began and our know But We sales in dollars to what beginning Tupperware design shoppers, to Also, engage they let need they large of brand. remain to the X,XXX the consumers that more only access have member line to we us This our focused the one Once in which been to particularly unique However, assured Zs

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the two-and-a-half meeting, we in no Our time of house. quarter we returned goal is to After in-person since holding of markets XXXX. around first to many in the want events in for be simple; the sales years world third every the room

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distribution. our recognition goal Our this expand and product selling the outside to is brand direct great reach channel leverage of

direct did $XXX the retail in WFDSA, to global face tiny billion the compared year, trillion which sales last to Let's selling economy. it, is according $XX

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focus our third service return to round changes quarter. XX% software that it earlier coupled review increases, were to upgrade down In sales quarter the Comp the quarter. to members. cause in second year, let's of in-person markets. four in to number line with and associated continue in sales results, in the reduction down XX% in the starting were exacerbated with issues our and the our build during the due the September, the Now, ongoing began two price third decline failed we top back force Canada, of U.S. XX% resulted promotions, increases, Mexico was profitability time product by the impacted costs Mexico as sales than quarters. on will prop added service adverse and mix over volumes, force. in meetings increased segment primarily Despite This and sales a expected by price next believe take challenges to excess quarter. inventory, active in We the force and was the unit lower discounts in active some selling

lower lower the market in and declined due source economies Brazil, high of protecting for uncertainty which which activity, segment by in margins helped the is others XXX quarter force improving dampened but the the with to so margin. the have rate, political points and over In we XXX quarter Price inflation driven activity of BXB increased sales priority. accounted profits increases cash believe consumer for there and also Mexico sales, profits taken we protect decline. us, this in a X% macroeconomic especially points basis of gross spending. important Additionally, basis an is weak a in sales reflects

reflecting While direct the products our peers, costs. we pricing improved reduce this X% our due we to outpace is Gross our a food deceleration quarter for the strength trends, second favorable mix. and nearly comparable product margin brand from non-cosmetic help of believe of to the desire selling

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and above Brazil our conversion are margins Mexico, company segment like that However, carries flow cash free average. rates

add World are market this forward, may this look volatility cautious our we to normal As results national and the therefore with elections quarter, in the the behavior, we Cup, consumer as and near-term. for our outlook

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we We product and new to sales that excitement had customers. believe force the quarter attract also add offerings new several our in

down increased Korea, XX% response continues by X% sales bright driven point quarter, in plan Asia-Pacific factors an and spots. our augmented growth compensation we Australia, Indonesia, to TV in have XXX was Excluding where markets XX%, or additional those in XX%, points easily by seeing and direct BXB including region the with Considering China, core more. this softness The with sales, been sales, in direct in a primarily XX% external selling basis be the adjustment. Malaysia business

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roll retail. on nationally business our Another early [indiscernible], the over selling widespread two in in X% largest reported growth business read where approach This during fall, second of summer. is retailer, our product of the availability weeks, the the success Belgium, the the our direct omni-channel despite of the we out of

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report. we our they believe on and opportunity usage just lenders We increasing reduce to and capital, is want we achieving products. sourcing, and about We greenhouse our towards manufacturing shareholders do published ESG plastic to the waste water retailers assessing generation particularly making reduce and know to our use who rates, are single for packaging, our business to in believe progress return of in [indiscernible], for with also emissions We Tupperware manufacturing track good and XXXX latest We investment significantly in GenZ exploring facilities, assess non-fossil work facilities, ESG for. and our use commitment. for concerned to responsible our XXXX provide use for important consumers are

our plastic Park products. is our Foundation fact, bottles with to use single of reusable National In the sponsorship replace

middle, that strategy to shifting remained set to out the each one to this mindset has the commercial market as right we market as turnaround have strategies two-and-a-half our business speak of Tupperware plan same respected big build sure that in we company's That the consumer. the consumer meant since the places the to years Lastly, brand. the in our ago, making respective

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and XXXX $XX force XXXX to million sales America million XX%. in loss XXXX, approximately decided mounted IDA Then XX% cancellation a XXXX, or million company good North slumped XXXX fourth XXXX of XX XXXX in and quarter nearly initiatives IDA the and initiatives memory time. of at IDA Target explanation in this as business Yes, into direct part increased in of had XXXX to fourth segment dropped $XX the $XX included of mostly After progressed the $XX expanded of its and Party as segment be all have selling it's in North expand the Miguel, Target sales moving million than Tupperware end to had Active year kiosk access were which with America. into numbers in profit in channels decline. the to North before. Investors Super The back at integrated in These time. a outside stores nationwide million business. the never everybody. stores a Thanks, declined American the and $XX $XXX stores sales Super quarter more fourth The XXXX. the the XX into million by different the XX% started any starting in overall in are XXXX segment direct annual morning, long the in when sales profit profits Target initiatives skeptical from force time. of more

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Thank Doug. you,

sales were of sales driven decrease lockdowns the in representing offset a quarter below Miguel expectations. million, America. XX% with by along ongoing in South in As continued Net in a Europe, for strength year, compared to slowing mentioned, $XXX microeconomic last were China North partially America, pressures by

declined Excluding well Asia-Pacific declined currency, by quarter, sales China declining net declined line in XX% the by sales which consumer strict in lockdowns in XX% as with sentiment. severely in trends. Net protest as impacted sales was XX%,

consumer in While spending of particularly remained X.X% segments. the premium quarter, in rebound third from second quarter GDP X.X% subdue the

selling sales by is channel channel important. sales inflation, region. Malaysia in up Korea being region Europe, Indonesia, force activity Asia-Pacific energy net consumer still of surpassed market direct remainder is Asia-Pacific close significantly now was declined to Excluding XX% in in growth. which largest small Korea XX% and becoming The spot in sentiment, this contribution and lower driven Malaysia, the Australia. is low and QX, the driven by and net getting XX% primarily in quarter both In bright second Indonesia sales in In with contributing BXB declined China, to rising while by increasingly One market in cost. the by sales the

in shift BXB the to for of accounted in Germany from decline. quarter one basis points the XXX Additionally, a timing fourth quarter our programs third

and offering. to looking it right new market and have the We with size consolidate are business product rationalize to management in other Germany the

particularly inflation energy Europe well Nigeria running the in programs concerns force. Germany promotional with revitalize in given first two very plan sales in over in quarter the re-engage for and and incentive years. We prices confidence sales over Ukraine. Consumer force holding order rising resume the new energy the as and are to Like in in-person low reviewing conflict the and guidance is first other regions, possible as shortages time release

cost sale the Americas; North and service sales upgrade quarter engagement, by sales driven Canada, year at for America impacted increases. by quarter. slowed QX. quarter sales increases of in of a of And primarily plan sales in compensation some strong remains selling Argentina in decline lower second [indiscernible] non-cosmetic force. already in despite levels, XX% profitability first declined offset Profitability as along an delays growth sales due free effort promotional leverage is Despite which lower in than Brazil We In quarter its by in activity. by higher sales Mexico will X% declined America, increases Mexico and Average onetime X% a lower one strength adversely direct increasing. service meaningful increases, IT in had better XX% sales do in by force In America conversion our with into net a during by among increases to most industry the future time price third in unit market and successful the the basis volumes Moving in price quarter the price in and in a net well social time engagement. top due the segment and increased boost two sales in market. of we the that with recruiting continues third media in items, to X% discount closing sales in net in in to declined cash Brazil, the South sales, and productivity, driven Mexico in have Net engagement price order September the a as to rate. excel that force by largest in Argentina quarter for XX% improving XXXX South lower last sales in higher force activity partially in associated Order by force the issues, sales the are service XX% strong increased profitable the driven issues, XX and to logistic in as suffered weeks line the had seeing the in rest our this promotions flow due service recur price to decreasing force the orders the U.S. re-engage years. earlier increases, third-party issues points. caused advance with changes Mexico provider. moved inflation market price We expect BXb not

manufacturing margin profit, year Next to lower million in gross $XXX approximately P&L we was the quarter higher third than profit and offset last points in earlier quarter, XX.X%, XX basis than an XX% the that degradation experienced to transportation to partially increases last volume, driven much impact. increases. better third moving due to product mix price year down decrease country which by decrease compared margin Gross beginning of lower gross as gross was inefficiencies represents are in to by The was a the the the year. cost, price our have and rates

actions across pricing impact As of seen throughout continue be the third quarter, to to year. be variable their anticipate the the we taken balance

reported million $XX volumes quarter last Adjustments of engineering or the cost XX% and in improve footprint related fixed million by our third of an cost manufacturing reduce a at P&L, average the increasing full-year to XX% million $XXX over $X by strategy. charges The prices and lower relative base, rationalization by margins. in basis stable of in the to technology of lower to the decrease as to points out million third approximately spend and driven year include was XXX distribution. was a Continue in sales expansion quarter quarter the for on prior the driven represents a SG&A For net on or reported XX.X% expense, volume increase was higher sales. in XX% omni-channel quarter fixed year. third investments coming the a confers $XX for anticipate after and of This XX%. This selling sales. compared basis EBITDA we percentage sharp Adjusted

to earnings should of benefit the same that chain tax compared quarter in operating rate. last and overall Concurrent continue for entity in note cash I a third benefit like of operating in of full-year changes we tax adjusted and countries strategies lower the quarter earnings by mix previously The the the achieve organizational also receiving to substantial this And adjusted was share driven country quarter year volatility $X.XX unfavorable tax year. $X.XX the the discussed driven last recent in we was including supply factors in by quarter tax the XX% compared to rate lower approximately adjustments. refine planning as no million market by our $X.XX second for rate taxes with losses year. tax inflation $XX to Our than and prior tax the in XX% were a including all finally, per year third to expect of unfavorable currency foreign U.S.

Turning omni-channel in cash net for to reported due flow, of capital $X.X together $XX million increase working million, with was on now cash earnings last inventories activities lower-than-expected of our operating an compared invested year-to-date an preparation volume. to to driven flow and sales negative expansion by in a basis, outflow lower excess year,

We are with particularly increasing our manufacturing management our focus footprint working to regards capital management. and on cash

million the for a X.X helped quarter ratio company's to two credit to turnaround million, $XXX The the of to flexibility with leverage maximum of million with plan. continued debt was to net the XXXX. Cash of Total in following be from provide greater timing implemented quarters. anticipation for the a recently for of ago. maximum. also year third end credit third $XXX the compared quarter million, to ratio recent as the as balances agreement leverage compared We a consolidated volatility quarter market of in covenant X.X were We X.XX our created, debt our amendment $XXX of a $XXX quarter end of at and facility the in our X.XX, ended

business company approach to revenue the a banks as While the started is and discussions continue we're the proactive additional create compliance due to with and we reengineering trends, currently current to our actions. flexibility covenants, our accelerate with in taking right-size

sentiment, and we actively flow to we in cash economic Given have consumer operate liquidity. manage global which outlook and current

know, you been As before. have we here

re-investable out, acknowledge continued As external return. next and more quarter a million In declined have volatility the and took of net internal we million were take the plans we near-term over costs summary, potential three margins year-over-year, more navigate fixed to and for in $XXX address reminder, than years, costs XXXX, $XXX expectations. We we of than continue sales below operating headwinds. to out expect challenges third as currently and

also these external are ability plan as We to our headwinds like. impacting are aware we would that and execute our turnaround promptly

additional in order be that sure capabilities strengthen can business You rightsize to cash to our continue we increase our and look generating further will at foundation. the to ways to financial

will We QX, footprint. be we some our doubling down reengineering this, global manufacturing further our and take rationalize questions. with let's efforts in now, And

comes question Your of first the with Instructions] [Operator from Lebiedzinski line Anthony Sidoti.

Yes, for good morning, and thank you taking the questions.

sheet, can that lenders details so then, as about question more share you started? your you've talked I here, perhaps know, I your you just So, first, so those to then had covenants, your for debt forward, that two-part conversations conversations a now, far as the so reduce was rationalizing the going only if when about with could balance inventories, talk the inventories? And not because about what as guess, where a are plans, inventories just were balance consolidated sheet had because you you disclosed inventories the and in

partners here. reengineering for take yes, sustainable And you our we we bank the to to Tupperware continuously as talk next the have XX Hi, Mariela years. for series make a Anthony. to actions question. Thank of

and of ensure five-year proactively are in will round the September, a back So, the agreements that our plan. doing next started turnaround for the plan we have to to we discussions continue the flexibility

the series inventories the includes rationalizations, promotions of the manufacturing across as have sales started XX-Q the a our an days also [churns] in our will see fast different channels, program SKU levels be And of that we will that And to as and You includes across [Ph]. world programs well improve published. inventory world of across rationalization.

from Got your what's those, channel for any us the read and direct are give thanks Amazon, programs it, you and sellers, of in and terms how you with that. conflicts? managing and response been early can And on new the Target then

Miguel. Anthony, morning, this So, is good

So, Target ahead you weeks and business, me four sentence. Target talk one is it's about let our the expectations. in of only to into

So, workforce, remember many our going stores. just to that with limited SKUs. better. the We number direct we're performing to into they hundreds of -- access have different many, we're of Target a selling SKUs very have And

there little have around, people pockets our of but strategy. obviously, this a concerned, case, the they U.S., most great you are So, understand in for the sales the part that leaders bit

have just that is them this been of we do. business because some a And also own brand already reporting in their activation more activity effort

obviously, our for and they So, products, are some contact in and and consumers see their go Target, brand rep. they sales other looking

great. a perfect So, around ecosystem have in in -- them in -- previous where we been mentioned in are as direct of the it's remarks, growing. are the one big a stores in of my operating penetration have retail Belgium, biggest the we like and selling, both I And already country, we and

that the was So, for includes going some about saw The softness compensation but unrelated game, U.S. end do. in to those Target indicators completely on lot good season. we're caps do, stage all to we The are the the early we good or related to us; a adjustments obviously, that now holiday our initiative. go to is in two, to which thing that in Target

three results from in to now, months Target. of our quarter full reporting be So, we're going first

slowing discounting on bigger like the had and terms elasticity your just sounded or we everywhere, terms just Okay, Thanks price increases, with -- inelasticity, for impact the I pressuring just got about in margins? here, price a question that. last economy, be that additional my to in of volumes like of concerned adverse it. should gross seems And response of in it just mean

Mariela. Anthony,

been decade. have doing we month-over-month increases over year, increases countries learning, basis. first quarterly models, this increases two small play as or series company, the We increases had and a And with price as the we a do incremental have time a many double-digit to price a is have in we in throughout of are

time. decline do the plotting back we come the that elasticity have price we So, sharp a understand program. see are the data month seen the we were volume of double-digit increases over that we to Anecdotally,

the this increase have price as right are price the year markets. the that well across not CTG of in as protect done inflation. competitors, the the alone to is most believe Most this still we sellers, economics program of business increases action we direct the So, as of

of luck. you, right, and thank All best

you. Thank

Anthony. you, Thank

next Binder the line Your with comes Jason Citigroup. from of question

morning. the taking good Thanks question. Great, for

terms to whatever that come it and covenant, the But early leverage been just months speak can to of Thanks. back very I steps to is, should just and get confidence your for Just to discussion your in your it's from assuming you to out expect ability what have you this do amended? your still point. in work in next in get terms there? then you only ability two breach, we And

very we allocation capital question. the Mariela. it's for a of And you exercise. group Thank have is And Hi, this banks. supporting

containment. management and than QX a as company be signs is and Our the actions better And with we inventory generate cost priority improve capital. to cash our for for have in we QX, that started will working that QX

in volatility scenarios we put the both, series the as of and the have management in So, and well have risks as we forecast debt sentiment. environment production. consumer into macroeconomic And EBITDA given flexibility of a

will So, and to we're that expect banks, new the with and for be we plans turnaround the two working long-lasting a will by next we have agreement that QX, years. the facilitate have,

me a let quick just Jason. So, add comment,

recent been know, you as we've there our before. history, in So,

on already obviously, provide focus I cash, -- right-size with obligations. the in and know we're the compliance lot it's the our of we're something and that going to not mean, everyone, to have a of, we and we how banks we that proud confidence know be to company, skill. And to but So, we how

and a risk. ride with took, company the how already know to limited it's we we that So, route

manage to the capabilities back all trends at from have And your been some in investment ratio just in, in drive relative the that to side of macro to the short-term those you've Great. making pull is just investments grow to cash? least, business, the the just are guys given you expectation where you omni-channel overall environment, the might the the on business, to of leverage

see We some, weak some The very we strategy one; right around yes. face the might sentiment answer short the might and one. some market. there in world. we're if executional to market actively, yes, the that managing that. is that a is Obviously, of the your be we pull favorably, And issues right. is, we question be we're But And doing the going answer investing that we believe consumer Yes, this delay company continues a is back is short same reacting we're more. to

add, sequentially. taking parallel, may in if costs I out are And we

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the you've of one those And live of events, Thank has have you're these direct force in events. expectations? seen the for sales mentioned you've some the that. sort members return them just of any participate you catalyzing in side who offer Since of can terms you. Thanks. the then versus in things in person you in Got And gears, there been commentary of what and seeing kind of haven't? had for switching change of have those of promotion terms selling just activity you business who

you with force bit let so call Yes, going to I'm a share little the, sales analytics. of it me

still years, that period basically call they what been So, to three I'm it the time, in us of longer with seen two, people that with is have for a us. we've remain going

as have is keep right? as customers, an Sometimes two who to they're And people, newer never the was a they're been productive sentiment is really but less understood been with bring they so don't and DNA struggling with Where many low our obviously, we've still related on people because, and than has talking of years with And I'm the engaged meeting, they consumer less what in-person that us. correlation us. haven't experience have company.

them, so why on. out retaining So, we on and them, they there's that, and missed and training struggle

and of engagement So, retention people, a expect, or increasing. generations now, obviously, we new with this recurring efforts to start

good in to those it's that markets, news our just that very gaining major is too of some had have because recently. We events early ground we've but some tell

I'll color. pass Got that now. pause Thanks. around it, and there for for thanks

line Weiser D.A. with Bolton Davidson. Your the Linda next from of comes question

Yes, hi.

initiative, there's any I'm So, things cash actions, wondering just those charges guess and like severance the that? if of if like I actions for quantify associated cost-cutting undertaking, that, with the new you're can you

why and with banks. that we're in exactly Linda, discussions is Yes, the

exiting absolutely be analysis manufacturing years. of supply costly know, right play to in every the probably thing distribution, the scenario our that regions some you those and and return can help interest for is XX us rightsizing are severance; And a proper we capacity ratio liquidity footprint have transform today As restructuring chain, do at the debt-to-EBITDA that production company could EBITDA this And terms both NPV. with with to pace plans and we and of next accept. bank discussion evaluating in then a good our And to then terms coverage. the of

the an the of that we the of we have next working magnitude today, over with these the actions And reengineering to are many as $XXX target be our So, million. estimate three banks advisors and financial in pace of will years.

in repeat you amount? that could terms of the charges, sorry; I'm number the

of of we $XXX additional that an expect going the return, three with restructuring course. have will are we to million investable years next over so Yes, Sure.

And $XXX cash, of what that percentage million roughly? is

Yes.

with yes. So, million be the $XXX cash,

a number? that's pre-tax after-tax And Okay. or

a That number. pre-tax will be

sale mean, of in quantify in channel Target a stores, -- can a stores. Okay. large even some skews third or of in such you the sales Was the talk there you shipment small can about the quarter for the number so channel third And then just quarter, -- the number shipments? and well, quite is I

is there some, it exceeded skews -- that our some right exceeded were have greatly expectations. was than $X less seeing what But and now the and are Yes, was Yes. we're it there -- million. reordering pattern,

if I add the and selection, double enough placed skew very competition this with it's may have the like, than some Target price, validate sets but first data, in again, high of data are -- sellers. not And the they on to we Linda, sometimes are that that

the in then of Tupperware and consumers consumers the that are because So, seeing able there, quality there container pricing. that years the time test, this the are products. for to is price, validates quality many the right And first

know to mean, do more And then, buildups, retail you investment to already some lines? you had retailers in about things. along is to or those and infrastructure Okay. terms done be able work still make just ship have talked to having initiative, that of this I some I like

is the it's of but In there. there. So, depends on the investment the country, already the ones, bigger most U.S., already

partnership for our at first to good regional expand with our big least more as the Obviously, go customers. retailers. in require we more we're might -- we presence more So,

into general financial I be would obviously, I guess. more with and finally, mean, just And of the think other Do expand partnerships other stability -- you to is the objective that to retailers? you're in going your inhibit, condition retailers, just perhaps, company

No, so. I think don't

-- think preparing. these it's worth take a up to step and a I right, obviously, lineup, year partnerships -- long it for -- takes time, of a

preparing we So, are for that.

you selling this company. we of that and don't any going generate we see And as on product excess obligations cash omni-channel be dedicated because the to highly that. is know risk see the And besides I to going are are strategy we attracting ones also So, any in because our we retail. of it that for our offering a is of model be products to more Tupperware future lot all direct workforce the the company the beneficial customers the how for are in but not this to only

very much. you thank Okay,

Thank you, Linda.

now no call this [Operator further are Miguel will any Fernandez to I Instructions] There for over at remarks. questions turn time. the closing

retail We we business forward to still acknowledge is mark business. ahead But while of our an incremental remains as this brand. this to big as transform year. that with this quarter channels our work making and there pleased later Thank of results, of progress this plenty track, plan omni-channel you. on remains In us penetration goal are towards our expansion iconic look closing, third we the future quarter not into our

talking one for to you today. from look again here to And at will Thank step a your forward time. build time we you continue to soon. We

Thank today's you for participating. call. concludes This

You disconnect this time. may now at