Whole Earth Brands Inc (FREE) 2023 Q3 法說會逐字稿

Good morning and welcome to Whole Earth Brands' third-quarter 2023 results conference call. (Operator Instructions) Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Jeff Sonnek, Investor Relations of ICR. Sir, please go ahead.

早安，歡迎參加 Whole Earth Brands 2023 年第三季業績電話會議。 （操作員說明）也請注意今天的活動正在錄製中。現在，我想將電話會議轉給 ICR 投資者關係部門的 Jeff Sonnek。先生，請繼續。

Thank you, and good morning. Today's presentation will be hosted by Rajnish Ohri and Jeffrey Robinson, the company's Co-Chief Executive Officers; and Bernardo Fiaux, Chief Financial Officer; Nigel Willerton, President and CEO of Branded CPG North America region, and Irwin Simon, the company's Executive Chairman, will be available for Q&A.

謝謝你，早安。今天的演講將由該公司聯合執行長 Rajnish Ohri 和 Jeffrey Robinson 主持；財務長貝爾納多‧菲奧克斯 (Bernardo Fiaux)； Branded CPG 北美地區總裁兼執行長 Nigel Willerton 和公司執行主席 Irwin Simon 將出席問答環節。

The comments during today's call and the accompanying presentation contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward looking statements.

今天電話會議中的評論和隨附的演示文稿包含 1995 年《私人證券訴訟改革法案》安全港條款含義內的前瞻性陳述。除歷史事實陳述外的所有陳述均被視為前瞻性陳述。

These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements.

這些陳述是基於管理層目前的預期和信念以及有關未來事件的一些假設。此類前瞻性陳述受到已知和未知的風險和不確定性的影響，可能導致實際結果與前瞻性陳述中討論的結果有重大差異。

While these risks and uncertainties are identified and discussed in the company's filings with the SEC, we'll also refer to certain non-GAAP financial measures today. Please refer to the tables included in the earnings release, which can be found on our Investor Relations website, investor.wholeearthbrands.com for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures.

雖然這些風險和不確定性已在公司向 SEC 提交的文件中進行了識別和討論，但我們今天也將提及某些非 GAAP 財務指標。請參閱收益報告中包含的表格，這些表格可以在我們的投資者關係網站 Investor.wholeearthbrands.com 上找到，以了解非 GAAP 財務指標與最直接可比較的 GAAP 指標的對帳情況。

Additionally, we provided a supplemental earnings presentation on the Investor Relations website that may be useful in your analysis of the company's performance. With that, I'd now like to turn the call over to Mr. Ohri. Please go ahead.

此外，我們在投資者關係網站上提供了補充收益演示，這可能有助於您分析公司的表現。現在，我想將電話轉給 Ohri 先生。請繼續。

Good morning, everybody, and thank you for taking time to be on the call. This is the second quarter since Jeff and I took over as co-CEOs, and I'm very pleased to -- on the way of our business is evolving despite some very challenging macroeconomic and geopolitical situations around the world.

大家早安，感謝您抽出寶貴時間接聽電話。這是我和傑夫接任聯合執行長以來的第二個季度，我很高興看到——儘管世界各地的宏觀經濟和地緣政治形勢非常具有挑戰性，但我們的業務仍在不斷發展。

For today's call, I will begin by providing an update on the consolidated numbers for the quarter and then shift to an update on the progress of our Branded CPG business. We produced consolidated third-quarter revenue of $134.4 million and generated $21 million of adjusted EBITDA.

在今天的電話會議中，我將首先介紹本季合併數據的最新情況，然後再介紹我們品牌消費品業務的最新進展。我們第三季的綜合營收為 1.344 億美元，調整後 EBITDA 為 2,100 萬美元。

Our adjusted gross profit margin of 31.6% is an improvement of 80 basis point versus the prior year period. Since Q4 of 2022, our adjusted gross profit margin has expanded [270] basis point, which makes our third consecutive quarter of improvement on stabilizing, streamlining, and evolving our operations to derive enhanced productivity and sustainable margin improvements.

我們的調整後毛利率為 31.6%，比去年同期提高了 80 個基點。自2022 年第四季以來，我們的調整後毛利率擴大了[270] 個基點，這使得我們在穩定、精簡和發展業務方面連續第三個季度取得進步，從而提高生產力和可持續的利潤率改善。

The outcomes from those efforts are also key to driving improved cash flow to support our growth initiatives and reduce leverage, both of which we advanced during the third quarter and Bernardo in his presentation will share more details about it.

這些努力的成果對於推動改善現金流以支持我們的成長計畫和降低槓桿率也至關重要，這兩項工作都是我們在第三季度推進的，貝爾納多將在演講中分享更多相關細節。

As mentioned in the previous calls, within our Branded CPG business, our core focus continues to be on simplification, our global structure, and removing complexity, reinvention, and optimizing our North America supply chain and leveraging our brand strength and expand into adjacent categories.

正如先前的電話會議中所提到的，在我們的品牌CPG 業務中，我們的核心重點仍然是簡化、全球結構、消除複雜性、重塑和優化我們的北美供應鏈，並利用我們的品牌優勢並擴展到相鄰類別。

Branded CPG segment product revenues were $103.3 million, representing a decrease of 2% versus the prior year or a decrease of 2.9% on a constant currency basis. Excluding the planned decrease in wholesome bulk sugar sales, segment constant currency revenue was essentially flat at 4.7% growth due to pricing was offset by a 4.6% decline in non-bulk sugar sales volume.

品牌 CPG 部門產品營收為 1.033 億美元，較上年下降 2%，以固定匯率計算下降 2.9%。不包括計劃中的健康散裝糖銷量下降，該部門的固定貨幣收入基本持平，增長 4.7%，因為定價被非散裝糖銷量下降 4.6% 所抵消。

As a reminder, the reason to limit bulk sugar sales was to avoid paying incremental tariffs, which would negatively impact our margins and profitability. However, going forward and considering the current sugar prices we may consider selling some of our bulk sugar to manage inventories and generate additional cash.

提醒一下，限制散裝糖銷售的原因是為了避免支付增量關稅，這將對我們的利潤和盈利能力產生負面影響。然而，展望未來，考慮到目前的糖價，我們可能會考慮出售一些散裝糖來管理庫存並產生額外的現金。

Operating income for the Branded CPG segment for the quarter has shown significant improvement, growing approximately 31% versus prior year. The increase in operating income reflects in part the improved efficiency across the operations and the selection of the channel/product mix as well as lower supply chain reinvention costs and lower sugar import tariffs.

本季品牌 CPG 部門的營業收入顯著改善，比去年同期成長約 31%。營業收入的增加部分反映了整個營運效率的提高和通路/產品組合的選擇，以及供應鏈改造成本的降低和食糖進口關稅的降低。

These improvements are an outcome of our thoughtful plan to streamline our management structure, manufacturing operations, and decision matrix. We've now established a globally interconnected network of cross-functional teams with a clear objective of identifying opportunities that enhance productivity and drive efficiency.

這些改進是我們為簡化管理結構、製造營運和決策矩陣而精心製定的計劃的結果。我們現在已經建立了一個由跨職能團隊組成的全球互聯網絡，其明確的目標是發現提高生產力和效率的機會。

As we speak, these dedicated teams continue to look into areas of the business, including SKU rationalization, full packer efficiency optimization, the refinement of product formulations, the strategic sourcing of raw materials, and logistics consolidation.

正如我們所說，這些專業團隊繼續研究業務領域，包括 SKU 合理化、全麵包裝效率優化、產品配方的細化、原材料的策略採購和物流整合。

We believe this will further lead to systematically removing excess costs at all levels of our operations, strengthen our margin profile, and result in improved free cash flow performance. The North America supply chain reinvention project is well on track and near its completion. The Alabama facility is closed. And the co-packer in [Paris, Texas] is up and running with its all necessary certification and quality audits needed to service our customers.

我們相信，這將進一步系統性地消除我們各個營運層面的過剩成本，增強我們的利潤狀況，並改善自由現金流績效。北美供應鏈重塑計畫進展順利，即將完成。阿拉巴馬州工廠已關閉。位於[德克薩斯州巴黎]的代加工商已經啟動並運行，並通過了為我們的客戶提供服務所需的所有必要的認證和品質審核。

We are very proud of our supply chain team, who has this very complicated transition without compromising our service, which I'm pleased to say remains at high levels of approximately 99%. With this consistency in service levels, our commercial team in North America CPG branded business is working hard to regain lost distribution across different customer accounts.

我們為我們的供應鏈團隊感到非常自豪，他們在不影響我們服務的情況下完成了這個非常複雜的過渡，我很高興地說，我們的服務仍然保持在大約 99% 的高水準。憑藉這種服務水準的一致性，我們北美 CPG 品牌業務的商業團隊正在努力恢復不同客戶帳戶之間失去的分銷。

Our unmeasured channels, which account for approximately 80% of our branded CPG revenue in North America is healthy and growing in all segments, clubs, e-commerce, and foodservice. Our private-label business also continues to provide us opportunities to grow, and we are well-positioned to service customer needs across the entire portfolio.

我們的未衡量管道約占我們在北美品牌 CPG 收入的 80%，在俱樂部、電子商務和餐飲服務等所有細分市場都健康且成長。我們的自有品牌業務也持續為我們提供成長機會，並且我們有能力滿足整個產品組合中的客戶需求。

Within our international business CPG, we're experiencing category headwinds, especially in the non-utility side of the business. While this trend is limiting our ability to drive our new distribution gains, this is also impacting our competitors across the category. And as a result, we've not seen any significant changes in our market shares, which demonstrates the confidence and loyalty our consumers have in our brands.

在我們的國際業務 CPG 中，我們正在經歷類別逆風，特別是在業務的非公用事業方面。雖然這種趨勢限制了我們推動新的分銷收益的能力，但這也影響了我們整個類別的競爭對手。因此，我們的市場佔有率沒有任何重大變化，這顯示了消費者對我們品牌的信心和忠誠度。

The evolving trend towards the choice of natural and better-for-you products provides an opportunity for us to meet consumer expectations through our assortment of leading better-for-you brands across Europe, Asia, and Africa. Globally, we continue our focus on category adjacencies, and have a strategy in place to drive new product launches in identified growth categories that are aligned to our core business and distribution strengths.

選擇天然和「更好為您」產品的不斷發展趨勢為我們提供了一個機會，透過我們在歐洲、亞洲和非洲的各種領先的「更好為您」品牌來滿足消費者的期望。在全球範圍內，我們繼續關注鄰近品類，並製定了一項策略，推動在與我們的核心業務和分銷優勢相一致的已確定的增長類別中推出新產品。

Within North America, we're energized by the overcoming of our supply chain challenges, which allows us to shift our focus to further building our diversified portfolio. In fact, I'm excited to announce that we've recently brought on a new senior leader to help us advance this work and drive this very important initiatives.

在北美，我們因克服供應鏈挑戰而充滿活力，這使我們能夠將重點轉向進一步建立多元化的產品組合。事實上，我很高興地宣布，我們最近任命了一位新的高階領導者來幫助我們推進這項工作並推動這項非常重要的舉措。

In summary, I want to emphasize the renewed excitement within our CPG business. We see tremendous opportunity to build this business and believe that we've created alignment across our entire talented and committed team. I want to make sure I take this opportunity to thank all of them for their focus and individual efforts. I'll now hand over to Jeff.

總之，我想強調我們的消費品業務再次令人興奮。我們看到了建立這項業務的巨大機會，並相信我們已經在整個才華橫溢、忠誠的團隊中建立了聯盟。我想確保藉此機會感謝他們所有人的關注和個人努力。現在我將把工作交給傑夫。

Thank you, Rajnish. Flavors and ingredients is a strong free cash flow generator with key barriers to entry and a global leadership position that supports our broader growth and diversification initiatives at Whole Earth Brands. This diversification and our revenue growth in new markets and new opportunities in our traditional markets have driven the continuous improvement in our operating results.

謝謝你，拉吉尼什。香精和食材業務是強大的自由現金流發生器，具有關鍵的進入障礙和全球領導地位，支持我們在 Whole Earth Brands 實現更廣泛的成長和多元化計畫。這種多元化以及我們在新市場的收入成長和傳統市場的新機會推動了我們經營績效的持續改善。

We continue to generate solid revenue growth in flavors and ingredients in this increase, which compares against a 16.9% increase in the prior year period. We will continue to face tougher comparisons for the next few quarters, but we remain encouraged by some of the long-term opportunities we see in the end markets we serve that will drive continued growth.

在這次成長中，我們繼續在口味和配料方面實現穩健的收入成長，而去年同期成長了 16.9%。未來幾個季度，我們將繼續面臨更嚴峻的比較，但我們仍然對我們所服務的終端市場中看到的一些長期機會感到鼓舞，這些機會將推動持續成長。

Our success will be supported by our deep experience, focus, and continued efforts to grow each of our product solutions, all of which are based on our ability to be nimble and identify specific uses and functions for our various licorice Products.

我們的成功將得益於我們豐富的經驗、專注以及不斷努力發展我們的每種產品解決方案，所有這些都基於我們靈活並確定各種甘草產品的特定用途和功能的能力。

More specifically, we're seeing continued concern by customers in the European Union over regulatory changes requiring rigorous product purity, which provides us with opportunities to grow our sales and wallet share and licorice extracts in 2024.

更具體地說，我們看到歐盟客戶對要求嚴格產品純度的監管變化持續擔憂，這為我們提供了在 2024 年增加甘草萃取物的銷售額和錢包份額的機會。

Our licorice extract sales grew in other sales segments during 2023 through our ability to provide functional and environmentally friendly alternatives to specific per and polyfluorinated substances or PFAS. These environmental concerns reinforce a movement towards naturally derived ingredients. And we look to expand these applications in 2024 and beyond.

2023 年，我們有能力為特定的全氟和多氟物質或 PFAS 提供功能性且環保的替代品，因此其他銷售領域的甘草萃取物銷售量有所成長。這些環境問題強化了使用天然成分的趨勢。我們希望在 2024 年及以後擴展這些應用程式。

We continue to invest in development for all of our sales segments, including new investments in consumer-facing categories and business developments. We continue to streamline our operations and improve service from our global manufacturing, quality, and logistics, and are planning new actions for 2024. Future improvements in efficiency will further improve our competitiveness and our value proposition for our customers. With that, Bernardo, over to you.

我們繼續投資所有銷售部門的發展，包括面向消費者的類別和業務發展的新投資。我們繼續精簡運營，改善全球製造、品質和物流的服務，並正在規劃 2024 年的新行動。未來效率的提高將進一步提高我們的競爭力和對客戶的價值主張。貝納多，接下來就交給你了。

Thank you, Jeff, and good morning to everyone. I will start by walking through our third-quarter financial performance. As a reminder, please refer to our non-GAAP reconciliations at the end of the press release for additional detail, and I encourage you to view our supplemental earnings presentation on our Investor Relations website.

謝謝你，傑夫，祝大家早安。我將首先介紹我們第三季的財務業績。謹此提醒，請參閱新聞稿末尾的非 GAAP 調節表以了解更多詳細信息，我鼓勵您在我們的投資者關係網站上查看我們的補充收益演示。

For the third quarter ended September 30, 2023, consolidated product revenues decreased 0.6% to $134.4 million versus the prior year quarter. On a constant currency basis, product revenue decreased 1.5% versus the prior year third quarter.

截至 2023 年 9 月 30 日的第三季度，綜合產品營收較去年同期下降 0.6%，至 1.344 億美元。以固定匯率計算，第三季產品營收較去年同期下降 1.5%。

Reported gross profit was $37.5 million compared to $35 million in the prior year third quarter. Adjusted gross profit was $42.5 million (technical difficulty) increase was driven by a decrease in import duties, lower freight costs, and improved sales mix resulting from our planned reduction in bulk sugar sales.

報告的毛利為 3750 萬美元，而去年第三季的毛利為 3500 萬美元。調整後毛利為 4,250 萬美元（技術難度），增加的原因是進口關稅減少、貨運成本降低以及我們計劃減少散裝糖銷售而改善銷售組合。

Reported gross profit margin increased to 27.9% in the third quarter of 2023 compared to 25.9% in the prior year period. Adjusted gross profit margin expanded to 31.6% compared to 30.8% in the prior year. Our adjusted gross profit margin has improved [270] basis points since 2022 year end, a testament to our team's focus on maximizing productivity and driving sustainable margin improvement. This margin recovery will serve as a foundation for higher profitability next year.

2023 年第三季報告的毛利率增至 27.9%，去年同期為 25.9%。調整後毛利率由去年的 30.8% 擴大至 31.6%。自 2022 年底以來，我們的調整後毛利率已提高 [270] 個基點，這證明了我們團隊專注於最大限度地提高生產力和推動可持續利潤率提高。利潤率的恢復將為明年更高的獲利能力奠定基礎。

Consolidated operating income was $6.7 million compared to operating income of $6.8 million in the prior year third quarter. Consolidated net loss was $5.4 million compared to a net loss of $2.5 million in the prior year period. The higher net loss was driven primarily by an increase in interest expense due to higher interest rates. Finally, consolidated adjusted EBITDA was $21 million compared to $21.5 million in the prior year third quarter.

合併營業收入為 670 萬美元，而去年第三季的營業收入為 680 萬美元。合併淨虧損為 540 萬美元，而去年同期淨虧損為 250 萬美元。淨虧損增加的主要原因是利率上升導致利息支出增加。最後，綜合調整後 EBITDA 為 2,100 萬美元，而去年第三季為 2,150 萬美元。

Shifting to our segment results for Q3, Branded CPG product revenues were $103.3 million for the third quarter of 2023, a decrease of $2.1 million or 2% compared to $105.4 million for the same period in the prior year.

轉向我們第三季的分部業績，2023 年第三季品牌 CPG 產品收入為 1.033 億美元，與去年同期的 1.054 億美元相比減少了 210 萬美元，即 2%。

On a constant currency basis, segment product revenues were down 2.9% compared to prior year as 4.7%. growth from pricing actions was more than offset by 7.6% decline due to lower volumes. As Rajnish noted, excluding the planned decreases in wholesome bulk sugar sales, segment constant currency revenue was differentially flat.

以固定匯率計算，分部產品收入較前一年下降 2.9%，為 4.7%。定價行動帶來的成長被銷售下降導致的 7.6% 的下降所抵消。正如拉吉尼什指出的那樣，除去計劃中的健康散裝糖銷售減少，該部門的固定貨幣收入持平。

Operating income for the Branded CPG segment was $7.2 million in the third quarter of 2023 compared to operating income of $5.5 million for the same period in the prior year. Increasing operating income was primarily due to a decline in costs associated with supply chain reinvention in lower sugar import debts, partially offset by higher bonus expenses and impairment of a right-to-use asset of $0.4 million related to a lease facility indicator, Alabama that is now vacant following our CapEx optimization.

2023 年第三季度，品牌 CPG 部門的營業收入為 720 萬美元，而去年同期的營業收入為 550 萬美元。營業收入增加主要是由於食糖進口債務供應鏈重塑相關成本下降，但部分被較高的獎金支出和與租賃設施指標相關的 40 萬美元使用權資產減值所抵消，阿拉巴馬州在我們的資本支出優化之後現在空缺。

Flavor ingredients segment product revenues decreased 4.2% to $31.2 million for the third quarter of 2023 compared to $29.9 million for the same period in the prior year. On a constant currency basis, segment product revenues increased 3.6%.

2023 年第三季度，風味配料細分市場產品收入下降 4.2%，至 3,120 萬美元，而去年同期為 2,990 萬美元。以固定匯率計算，分部產品收入成長 3.6%。

Operating income for the F&I segment was $8.4 million in the third quarter of 2023 compared to operating income of $7.3 million for the same period in the prior year. Operating expenses for corporate for the third quarter of 2023 were $9 million compared to $6 million in the prior year period. Increase is primarily due to higher bonus expense, costs associated with our strategic review and other professional fees.

2023 年第三季度，F&I 部門的營業收入為 840 萬美元，而去年同期的營業收入為 730 萬美元。 2023 年第三季企業營運費用為 900 萬美元，而去年同期為 600 萬美元。增加主要是由於獎金費用、與我們的策略審查相關的成本和其他專業費用增加。

Now I'll briefly cover our September year-to-date results. For the nine month period ended September 30, 2023, consolidated revenues were $399.7 million (technical difficulty) 0.4% compared to prior year period. Consolidated operating income was $12.7 million compared to $21.6 million in the prior year period. Consolidated adjusted EBITDA decreased 5.5% to $55.8 million.

現在我將簡要介紹我們 9 月份的年初至今的業績。截至 2023 年 9 月 30 日的九個月期間，合併收入為 3.997 億美元（技術難度），與去年同期相比成長 0.4%。合併營業收入為 1,270 萬美元，上年同期為 2,160 萬美元。合併調整後 EBITDA 下降 5.5%，至 5,580 萬美元。

Now moving to cash flow and the balance sheet. Cash provided by operating activities for the nine months ended September 30, 2023, was $10.6 million compared to our cash used in operating activities of $17.3 million in the same period last year, representing an improvement of over $27 million, despite incurring $12.2 million of high interest expense over the same period due to higher interest rates.

現在轉向現金流和資產負債表。截至2023 年9 月30 日的九個月，經營活動提供的現金為1,060 萬美元，而去年同期經營活動使用的現金為1,730 萬美元，儘管產生了1,220 萬美元的高額支出，但仍增加了超過2,700 萬美元。由於利率較高而導致同期利息支出。

Capital expenditures for nine months ended September 30, 2023, were $4.1 million. Free cash flow was approximately $6.5 million. And we expect this to go further and exceed $10 million in full year 2023. When adjusting for our cash add-backs, [which have decreased this year], year to date adjusted free cash flow was $19.9 million. We expect to build upon this further in the fourth quarter as well.

截至 2023 年 9 月 30 日止九個月的資本支出為 410 萬美元。自由現金流約 650 萬美元。我們預計這一數字將進一步擴大，並在 2023 年全年超過 1000 萬美元。在調整我們的現金回加（今年已減少）時，年初至今調整後的自由現金流為 1990 萬美元。我們預計第四季也將在此基礎上進一步發展。

The strong improvement our cash flow is a direct result of the hard work you heard Rajnish and Jeff talk about to stabilize our core. It has shown up in lower net working capital, expanded gross margins, declining costs associated with our supply chain reinvention projects and more favorable payment terms of our vendors.

我們現金流的強勁改善是拉傑尼什和傑夫所說的穩定我們核心的努力工作的直接結果。它表現在淨營運資本降低、毛利率擴大、與我們的供應鏈重塑項目相關的成本下降以及我們的供應商的更優惠的付款條件。

Taken together, we feel very good about the efforts we've made to accelerate our cash generation. And I would like to emphasize that our supply chain reinvention costs will continue to decelerate through year-end and into 2024, which gives me confidence that the adjusted free cash flow that we generate this year will be a good proxy of our reported free cash flow in 2024.

總的來說，我們對我們為加速現金產生所做的努力感到非常滿意。我想強調的是，從年底到 2024 年，我們的供應鏈重塑成本將繼續下降，這讓我相信，我們今年產生的調整後自由現金流將很好地代表我們報告的自由現金流2024年。

We expect that this improvement in free cash flow will help us reduce leverage at an increasing pace will be a key element in our ability to reignite our growth strategy. Additionally, we're making continuous efforts to further reduce inventory sustainably and generate incremental cash flow.

我們預期自由現金流的改善將有助於我們加快降低槓桿率的速度，這將成為我們重新啟動成長策略的能力的關鍵因素。此外，我們正在不斷努力，進一步可持續地減少庫存並產生增量現金流。

As of September 30, 2023, we had cash and cash equivalents of [$24.2 million] and $424.5 million of long-term debt net of unamortized debt issuance. Our long-term debt decreased year end 2022 by $8.8 million as a result of overpayments of $6 million and mandatory repayments of term loan $2.8 million. At September 30, 2023, there was $70 million drawn on our $125 million revolving credit facility. We have a comfortable level of liquidity to navigate through this challenging macro environment.

截至 2023 年 9 月 30 日，我們的現金及現金等價物為 [2,420 萬美元]，扣除未攤銷債務發行的長期債務為 4.245 億美元。由於多付 600 萬美元和強制償還定期貸款 280 萬美元，我們的長期債務到 2022 年底減少了 880 萬美元。截至 2023 年 9 月 30 日，我們的 1.25 億美元循環信貸額度中提取了 7,000 萬美元。我們擁有充足的流動性來應對這個充滿挑戰的宏觀環境。

I also would like to highlight our inventory position of [$217.3 million] that a significant portion is composed of raw materials in readily tradable commodities, such as sugar and licorice. Reducing leverage continues to be a focal point for us, and we aim to accomplish this through organic means led by the improvement in our operating cash flow.

我還想強調我們的庫存狀況 [2.173 億美元]，其中很大一部分由易於交易的商品原料組成，例如糖和甘草。降低槓桿率仍然是我們關注的焦點，我們的目標是透過營運現金流改善帶動的有機手段來實現這一目標。

Now shifting to our outlook, which we updated today. As a reminder, our outlook is presented on a reported basis, which includes the impact of foreign currency translation. As a result of our year-to-date performance in 2023, we now expect consolidated product revenues to be between $540 million to $550 million.

現在轉向我們今天更新的展望。提醒一下，我們的前景是在報告的基礎上提出的，其中包括外幣換算的影響。根據我們 2023 年迄今的業績，我們現在預計綜合產品收入將在 5.4 億美元至 5.5 億美元之間。

Given the milestones achieved in regards to supply chain efficiency, we now expect consolidated adjusted EBITDA to be in the range of [$77 million to $79 million] or $1 million above the guidance range we provided previously.

鑑於供應鏈效率方面取得的里程碑，我們現在預計綜合調整後 EBITDA 將在 [7700 萬美元至 7900 萬美元]範圍內，即比我們之前提供的指導範圍高出 100 萬美元。

Our top priority is cash flow generation and the results of the past four quarters is a reflection of that focus, with an expectation that we'll generate additional gains in 2023 and extend those in 2024. We also expect some modest capital expenditure savings of about $1 million versus prior plan, which puts our revised budget at approximately [$8 million] for the full year 2023.

我們的首要任務是產生現金流，過去四個季度的業績反映了這一重點，預計我們將在 2023 年產生額外收益，並在 2024 年擴大收益。我們還預計將節省約與先前的計劃相比，預算為100 萬美元，這使得我們2023 年全年的修訂預算約為[800 萬美元]。

Finally, with respect to our supply chain reinvention, we expect costs to further decline in the coming quarters as we complete our current project. Including known and forecasted events, we anticipate another $3 million for the remainder of the year or a decline of around $6.5 million in the fourth quarter of 2023 compared to the same period last year.

最後，關於我們的供應鏈重塑，我們預計隨著我們完成當前項目，未來幾季的成本將進一步下降。包括已知和預測的事件在內，我們預計今年剩餘時間將再增加 300 萬美元，或與去年同期相比，2023 年第四季減少約 650 萬美元。

Before we open the call to your questions, I want to take a moment and address the status of our strategic review. The Board formed a special committee to review and evaluate a non-binding proposal received from some [of the holders] as well as other strategic alternatives that may be available to the company.

在我們開始回答你們的問題之前，我想花點時間談談我們的策略審查的狀況。董事會成立了一個特別委員會，負責審查和評估一些[持有人]提出的不具約束力的提案以及公司可能採用的其他策略選擇。

That review is ongoing and company and the special committee do not intend to comment further until it's complete or until they do further disclosures or otherwise appropriate, [noting] this communication shall constitute a solicitation to buy or an offer to sell shares of the company's common stock.

該審查正在進行中，公司和特別委員會在審查完成或進行進一步披露或以其他適當方式之前不打算發表進一步評論，[注意]此通訊應構成購買或出售公司普通股的要約。庫存。

There can be no assurance that any definite offer will be made, that any agreement will be executed, or that this or any other transaction will be approved or consummated. These processes remain active with a goal of maximizing value for all shareholders. When appropriate, we will update you on any developments. That concludes my prepared remarks. Operator, please open the call for questions. Thank you.

無法保證將提出任何明確的要約、將執行任何協議、或將批准或完成本次交易或任何其他交易。這些流程仍然活躍，目標是為所有股東實現價值最大化。在適當的時候，我們將向您通報任何進展。我準備好的發言就到此結束。接線員，請打開電話提問。謝謝。

(Operator Instructions) [Scott Mushkin, R5 Capital].

（操作員指令）[Scott Mushkin，R5 Capital]。

Turning to the branded side of the business, obviously, there's been a lot of press around weight-loss drugs, a lot of press around sugar substitutes. How are you thinking about that business in regards to some of these issues and how do you think about as we start to try to pay some debt down, growing that side business?

談到業務的品牌方面，顯然，圍繞減肥藥和糖替代品有很多媒體報導。您如何看待該業務中的一些問題？當我們開始嘗試償還一些債務、發展副業時，您如何看待？

Yeah, I guess I will take this question. This is Rajnish. I mean, we're seeing -- while you're seeing some kind of a degrowth in the category on the non-utility side of the business, I think we see tremendous opportunity on the nutritive side of the business.

是的，我想我會回答這個問題。這是拉傑尼什。我的意思是，我們看到——雖然你看到該業務的非公用事業方面的類別出現某種程度的衰退，但我認為我們在該業務的營養方面看到了巨大的機會。

And most of our brands, whether it's brand in North America or in the global scenario where we have brands like Pure Via, Whole Earths, et cetera, they're all well positioned to ride on this wave of growth of the nutritive side of the business. And also, we have a plan where it is all the Allied categories which are aligned to the non-sugar product categories, there is a plan to grow these businesses and launch in the coming quarters as we go forward.

我們的大多數品牌，無論是北美品牌，還是全球範圍內的品牌，例如 Pure Via、Whole Earths 等，它們都處於有利地位，能夠順應營養方面的增長浪潮。商業。此外，我們還有一個計劃，其中所有聯盟類別都與非糖產品類別保持一致，並計劃在我們前進的過程中發展這些業務並在未來幾季推出。

And Scott, let me just add to that. I think these are complementary to all these weight-loss drugs. As you know, again, as consumers use these weight-loss drugs, they're looking for products that are much lower sugar, much lower in calories and nutritionals.

斯科特，讓我補充一下。我認為這些是對所有這些減肥藥的補充。如你所知，當消費者使用這些減肥藥物時，他們正在尋找糖分低得多、熱量和營養成分低得多的產品。

And I think if anything from some of the research and that's where we see is they're drinking more of the Diet Cokes, drinking more products that are sugar-free. So I think there is absolutely more opportunities for us because we are either no calories or very low calories in the sugar-free products that we have.

我認為，如果從一些研究中我們看到的有什麼變化的話，那就是他們喝了更多的健怡可樂，喝了更多的無糖產品。所以我認為我們絕對有更多的機會，因為我們的無糖產品要么不含熱量，要么熱量很低。

Got it.

知道了。

Just on paying down debt, Scott, I think the big thing is and Nigel referred to it a big part of our debt over $200 million is inventories. We turn our inventories some much longer we're buying out there. But Rajnish and Jeff have a big movement on how do we reduce our inventories.

斯科特，就償還債務而言，我認為最重要的是，奈傑爾提到我們超過 2 億美元的債務中很大一部分是庫存。我們在那裡購買的庫存週轉時間更長。但拉傑尼什和傑夫在如何減少庫存方面採取了重大行動。

Unfortunately, we buy sugar and we buy it at one time. But that is a big thing. We have really saleable inventories, but how do we focus on working with our suppliers in that and reducing inventories, which ultimately reduces our debt and use more cash coming from that to invest back in the marketing of the brands in this business.

不幸的是，我們買糖，而且是一次性買的。但這是一件大事。我們確實擁有可銷售的庫存，但我們如何專注於與供應商合作並減少庫存，從而最終減少我們的債務，並利用由此產生的更多現金投資於該業務的品牌行銷。

That actually is a great segue into my next question around the debt levels of the company and how we should frame your thoughts as we move into '24 around being able to pay more down and how should we think about that?

這實際上是我關於公司債務水平的下一個問題的一個很好的延續，以及當我們進入 24 世紀時我們應該如何圍繞能夠支付更多首付以及我們應該如何考慮這個問題來構建您的想法？

Yes, Scott, good morning, this is Bernardo. And thank you for the question. I think that free cash flow is one of the highlights of this quarter. And as we expect to continue going forward, you probably heard in my prepared remarks that I'm highlighting the adjusted cash flow for this year as a good proxy for next year.

是的，史考特，早安，我是貝爾納多。謝謝你的提問。我認為自由現金流是本季的亮點之一。當我們期望繼續前進時，您可能在我準備好的演講中聽到，我強調今年調整後的現金流量是明年的良好指標。

The reason for that is that we're expecting our add-backs to reduce massively towards next year, while we're increasing EBITDA and while growing with our growth algorithm, but that's going to be a big driver that would allow us to accelerate our debt paydown, while maintaining a more sustainable business as well.

原因是我們預計明年的回加將大幅減少，同時我們正在增加 EBITDA 並隨著我們的成長演算法而成長，但這將成為一個巨大的驅動力，使我們能夠加速我們的業務償還債務，同時保持更可持續的業務。

So all right, guys, thank you very much. Appreciate it. Good luck.

好吧，夥計們，非常感謝你們。欣賞它。祝你好運。

(Operator Instructions) Ryan Meyers, Lake Street Capital Markets.

（操作員說明）Ryan Meyers，湖街資本市場。

Hey, guys, thanks for taking my questions. When we think about the lower revenue guide, just wondering if you can provide a bit more detail on what you are seeing there, the primarily volume related or is there something else that's going on? And then as it relates to the overall Branded CPG segment as a whole, what kind of are you seeing from an industry demand perspective?

嘿，夥計們，謝謝你回答我的問題。當我們考慮較低的收入指南時，只是想知道您是否可以提供更多有關您所看到的內容的詳細信息，主要與銷量相關，或者是否還有其他情況發生？然後，由於它與整個品牌消費品細分市場相關，從行業需求的角度來看，您認為是什麼樣的？

Hey, Ryan, good morning, this is Bernardo, I'll take this one again and I welcome the rest to complement. But our year-to-date performance has really been about cost margin and cash flow improvements. And we've delivered that.

嘿，瑞安，早安，我是貝爾納多，我會再講一遍，歡迎其他人補充。但我們今年迄今為止的業績實際上是關於成本利潤率和現金流的改善。我們已經實現了這一點。

As the category has faced headwinds this year, so to have our sales, and I think you've seen that fairly clear like in our today revenue performance. So all in all, this is an effort to be transparent on where we are and what we expect to finish the year.

由於該類別今年面臨逆風，因此我們的銷售情況也如此，我想您已經在我們今天的收入表現中看到了這一點。總而言之，這是為了讓我們的現狀和今年的目標保持透明。

I think it's important also to call out that we're doing a good job executing our margin enhancement strategy, which is being driven in part by this bulk sugar sales but also through all of the optimizations and cost efficiency. So -- and at this point, you're also seeing that we're showing a consistent adjusted EBITDA increasing and we're bumping this guidance as well by $1 million to account for this and some other items like monetary align with our goals.

我認為還必須指出的是，我們在執行利潤提高策略方面做得很好，該策略部分是由散裝糖銷售推動的，但也透過所有優化和成本效率來推動。因此，此時，您還會看到我們顯示出調整後的EBITDA 持續增長，並且我們還將這一指導方針提高了100 萬美元，以考慮到這一點以及貨幣等其他一些項目與我們的目標相一致。

But most importantly, I think that is all being translated to our very strong free cash flow generation. This has been positive this year. And we expect to extend this through Q4 2024, with all of these combination of factors, including the improving margins, lower supply chain reinvention costs, improving net working capital by reducing inventory, and also, to a lesser extent, some modest CapEx savings as we move to an even more asset-light model.

但最重要的是，我認為這一切都轉化為我們非常強大的自由現金流生成。今年的情況是正面的。我們預計將這一目標延續到 2024 年第四季度，綜合考慮所有這些因素，包括利潤率提高、供應鏈改造成本降低、透過減少庫存改善淨營運資本，以及在較小程度上節省一些資本支出我們轉向更輕資產的模式。

I just want to add to that, on the sales growth part of the business. I think Jeff has shown what has happened on the licorice side. I think the big thing for us on the consumer package size was as we move away from our de-pack, getting back in stock and getting our service levels back up to 99% where they were running in the 70s and 80s.

我只想補充一點，關於業務的銷售成長部分。我認為傑夫已經展示了甘草方面發生的事情。我認為對我們來說，消費者包裝尺寸方面最重要的事情是，我們不再進行拆包，而是重新有庫存，並將我們的服務水準恢復到 70 年代和 80 年代運行水準的 99%。

But I got to tell you this team, it has developed a big pipeline of a lot of innovation in different categories. And the whole sugar-free area have looked at distribution going into other parts of the world. Listen, our big markets today are France, UK, somewhat in Germany. So there's a big country out there called Europe. There's a big country out there called South America and the Middle East. So there's lots of growth opportunities for us.

但我必須告訴你這個團隊，它已經開發了一個包含不同類別的大量創新的大型管道。整個無糖地區都在考慮將其分銷到世界其他地區。聽著，我們今天的大市場是法國、英國，還有德國。所以有一個叫做歐洲的大國。那裡有一個大國，叫做南美洲和中東。因此，我們有很多成長機會。

And the big thing is the expansion of the products here in sugar-free, whether it's chocolate, jams, jellies, other desserts, et cetera. And I think there's a big opportunity still for us with de-pack. So as Bernardo said, first, this year was focusing on balance sheet, focusing on making sure the supply chain got fixed. And now there's a big effort on organic growth going into '24. And I think the team has a good strategic plan in place for that.

最重要的是這裡無糖產品的擴展，無論是巧克力、果醬、果凍、其他甜點等等。我認為我們在拆包方面仍然有很大的機會。正如貝爾納多所說，首先，今年的重點是資產負債表，重點是確保供應鏈得到修復。現在，進入 24 世紀，我們在有機成長方面付出了巨大的努力。我認為團隊為此制定了良好的策略計劃。

Okay. Got it. That's helpful. And then if we think about the strong gross margin during the quarter, how much of that came from sales mix or how much of that came from just taking costs out of the business? You highlighted supply chain reinvention, any commentary there would be helpful.

好的。知道了。這很有幫助。然後，如果我們考慮本季強勁的毛利率，其中有多少來自銷售組合，或者有多少來自僅僅從業務中剔除成本？您強調了供應鏈重塑，任何評論都會有所幫助。

Yeah, Ryan, overall, in terms of breakdown, it's fairly widespread. When we compare across this, there were some high ticket items, including the lower tariffs in sugar, including the lower ocean freight. So those are both efficiencies.

是的，瑞安，總的來說，就故障而言，它相當普遍。當我們對此進行比較時，有一些高價商品，包括較低的糖關稅，包括較低的海運費。所以這些都是效率。

But on top of that, we're seeing manufacturing efficiencies as our services improve. We also see improvements in other prices on the contracted side for procurement. It's like I said, it's fairly widespread. The improvements coming from that coming from the levels that we were at the end of the year at the start of this year.

但最重要的是，隨著服務的改善，我們看到了製造效率的提升。我們也看到採購合約方的其他價格有所改善。就像我說的，它相當普遍。改進來自於今年年初我們在年底的水平。

Got it. Thanks for taking my questions.

知道了。感謝您回答我的問題。

Thank you, Ryan. You have a good one.

謝謝你，瑞安。你有一個很好的。

Alex Arnold, Odeon Capital.

亞歷克斯·阿諾德，Odeon Capital。

Thank you. I guess I respect your comments about not opening the kimono on the committee process, but I was wondering from a timeline perspective, if you could just give an indication of what would be a disappointing date if this was not wrapped by.

謝謝。我想我尊重你關於不在委員會進程中打開和服的評論，但我想從時間線的角度來看，你是否可以指出如果沒有結束的話將會是一個令人失望的日期。

Listen, Alex, I think the big thing is here, I hate to put a date on it. But I think the only thing is the committee, the Board, and everybody else wants to get it right, so this is not like story events for those three periods or four quarters.

聽著，亞歷克斯，我認為大事就在這裡，我討厭在上面設定日期。但我認為唯一的事情是委員會、董事會和其他所有人都希望把事情做好，所以這不像這三個時期或四個季度的故事事件。

I think it would be disappointing. I want to make sure I think there's lots of factors in here. We want to make sure there's full shareholder value. You can see the improvements happening in this business. You see the margin improvement now and you take that across the full year next year and some of the costs coming out of the business.

我認為這會令人失望。我想確定一下，我認為這裡有很多因素。我們希望確保股東價值得到充分體現。您可以看到該業務正在發生的改進。現在你會看到利潤率的提高，並將其應用於明年全年，以及部分業務成本。

You heard Bernardo talked about add-backs, how they've come way down our paydown of debt or reduction of the inventory. So there's a lot of factors in here as we move forward to put out there in regard to what's the right value for shareholders. And that's what the strategic committee wants to make sure that's what the Board wants to make sure, and I want to make sure working with management.

你聽說伯納多談論了回加，以及它們如何減少我們的債務償還或庫存減少。因此，當我們繼續提出什麼是股東的正確價值時，這裡有許多因素。這就是策略委員會想要確保的，也是董事會想要確保的，我想確保與管理階層合作。

We have all those factors to make sure to say, hey, this is the value that shareholders should ultimately get in the share price or if there is a strategic opportunity to sell this company, this is what shareholders should be paid, but we got to make sure we have all the right facts in there, not only for fiscal '23, '24, '25, and there's a lot of good things coming out of this company as we moved out of [co-pack], as we moved out of de-pack, as we expanded distributions for the company as we go into new products.

我們有所有這些因素可以確保說，嘿，這是股東最終應該在股價中獲得的價值，或者如果有出售這家公司的戰略機會，這就是股東應該得到的報酬，但我們必須確保我們掌握了所有正確的事實，不僅是23、24、25 財年的事實，而且當我們搬出[co-pack] 時，這家公司會帶來很多好東西隨著我們進入新產品，我們擴大了公司的分銷範圍。

And the big thing is yes, the leverage is high. Interest rates have gone up. We've paid close to $70 million more in interest this year, but we do believe interest rates will come down. We've fixed half of our debt, but one of the biggest things is inventories and dealing with that. So I think the big thing is everybody wants to get it right. What's the right value? What's the right thing for shareholders.

最重要的是，槓桿很高。利率上升了。今年我們多支付了近 7000 萬美元的利息，但我們確實相信利率將會下降。我們已經解決了一半的債務，但最重要的事情之一是庫存和處理它。所以我認為最重要的是每個人都想把事情做好。什麼是正確的值？對股東來說什麼是正確的事。

Great, thanks.

萬分感謝。

And the most important thing is we feel good about the management team in place, running this on a day-to-day basis.

最重要的是，我們對現有管理團隊的日常運作感到滿意。

Great. Good luck. Thanks, guys.

偉大的。祝你好運。多謝你們。

I will now turn the call back to our presenters for closing comments.

現在我將把電話轉回給我們的主持人以徵求結束意見。

Yeah, I guess I'll take that. I want to thank everybody for joining the call today. And as you can see, there's a lot of good headway made with that. The team is doing at Whole Earth in regards to the margin improvement, in regards to paying down debt, in regards to free cash.

是的，我想我會接受的。我要感謝大家今天加入電話會議。正如您所看到的，這方面取得了很大進展。 《全球》團隊正在努力改善利潤、償還債務和自由現金。

In regards to taking costs out of this business, if you see what the costs that we just took out last two quarters and annualized that out and going into next year, there's lot of good cost savings that's going to come across this business.

關於從這項業務中剔除成本，如果你看看我們剛剛剔除上兩個季度的成本並將其年化並進入明年，那麼這項業務將會節省很多成本。

The categories, the licorice ingredient business, I think Jeff and team have done some great job, really expanding that ingredients and licorice into multiple categories and done a great job there, great free cash business. Rajnish and Nigel have done a great job in regards to moving to our co-packers, getting in de-pack, closing that down.

在類別、甘草成分業務方面，我認為傑夫和團隊做了一些出色的工作，真正將成分和甘草擴展到多個類別，並在那裡做得很好，很棒的免費現金業務。拉吉尼什和奈傑爾在轉移到我們的代加工廠、拆包、關閉方面做得非常出色。

At the same time, we're purchasing sugar out there and not taking it at a bond and paying the higher excise tax just to get sales. At the same time, we've had to deal with higher interest rates which we have. So the good news is we are absolutely able to pay our debt. We are good on our covenants. We're good on growth here, and there's a real good plan and team in place.

同時，我們從外面購買糖，而不是以債券的形式購買糖，並支付更高的消費稅只是為了獲得銷售。同時，我們不得不應對更高的利率。所以好消息是我們絕對有能力償還債務。我們恪守我們的契約。我們這裡的成長勢頭很好，並且有一個非常好的計劃和團隊。

But I think the most important thing is I want to reassure you that we're looking out there for shareholders, how we make sure that we're making sure we're creating shareholder values taken care of here. So I want to really congratulate and thank the management team. I'd like to -- our shareholders that are out there supporting us, and look forward to our next call and showing even better results. Thank you.

但我認為最重要的是，我想向你們保證，我們正在尋找股東，我們如何確保我們創造的股東價值在這裡得到照顧。因此，我要衷心祝賀並感謝管理團隊。我想——我們的股東一直支持我們，並期待我們的下一次電話會議並展示更好的結果。謝謝。

Thank you, ladies and gentlemen. This concludes today's program. You may now disconnect.

謝謝你們，女士們、先生們。今天的節目到此結束。您現在可以斷開連線。