Q1 2021 Whole Earth Brands Inc Earnings Call
[music].
Good morning, and welcome to the whole Earth brands first quarter 2021 conference call.
All participants will be in a listen only mode.
After todays presentation, there will be an opportunity to ask questions. Please note.
Days event is being recorded.
At this time I'd like to turn the conference call over to Jeff Sonic Investor Relations that I see are Sir. Please go ahead.
Thank you and good morning, today's presentation will be hosted by Albert Man zoning, Chief Executive Officer, and Andy Russi, Chief Financial Officer.
Active chairman Irwin Simon is also participating on the call and will be available for Q&A. 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 1095, all statements other than statements of historical facts on.
Are considered forward looking statements. 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 those forward looking statements. Some of these risks and uncertainties are identified and discussed on the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures today, please refer to the <unk>.
Tables included in the earnings release, which can be found on our Investor Relations website investor debt holder, the brand's dot com for reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures.
I'd now like to turn the call over to Albert <unk> zoning.
Thank you Geoff and thanks to everyone for joining the call today, our business is off to a strong start in 2021 with.
We delivered organic constant currency product revenue growth of 10% for branded CPG segment, and 6% for holder friends.
This is our second consecutive quarter of double digit growth for branded CPG segment, demonstrating the strength of our beds reported your brands.
Impact it is having on our portfolio to generate long term sustainable growth.
We delivered $17 5 million of adjusted EBITDA in the first quarter driven by strong branded CPG top line growth and improved margins because they're on.
Result of successful cost productivity and you should see.
Sales in all our key geographical markets around the world grew double digits versus prior year as did our portfolio for natural brands whole Earth swerve in wholesome.
I'm also happy to report for you that the integration of this work and also on acquisitions is complete.
Testaments to our People's competency at GTT and focus.
We're further encourage by the pace of the economic recovery and the positive implications for the foodservice industry in North America.
We are reiterating our fiscal 2021 guidance.
Okay.
Since going public over the past 10 months, we've been very deliberate in order to grow order friends to our 1 billion revenue global food and beverage company debt.
Ladies and attractive categories, and geographies and deliver sustainable growth.
We're achieving our vision by building a portfolio of trusted brands and delicious products and ingredients focused on the consumer preference shifts towards calling base natural alternatives.
Clean label products.
Our mission simply put is to open up a word of goodness for consumers around the world.
We started our journey as a public company in June 2020, we find attractive global portfolio of brands and ingredients.
Sure Vin wholesome, which we acquired in less than eight months after going public health test double the size of our branded CPG segments.
And build upon our existing strength and also had the new capabilities.
This would have been holding some integrations are now complete we have seen a very short period of time since those acquisitions and we could not be more excited by the growth prospects of each of our brands.
And so for our combined teams and the significant breadth this per mines in North America as weighted as in our international markets.
While in the near term, we're focused on our organic growth efforts and generating strong free cash flow towards reducing our balance sheet leverage Emma.
M&A remains an important part of our growth strategy.
We intend to continue to increase penetration in the bathroom for 40 years sweetener and adjusted suites Cathedral galleries for organic and M&A initiatives.
These categories include baking mixes chocolate bars, James and spreads to name a few.
And represents over 30 billion in addressable market with a projected 8% CAGR in the coming years.
Our ability to complete the integrations of swerve in whole or some other fast pace is evidence of the M&A being a core competency of order friends.
What excites me the most is the durable nature of the witness opportunities worth solving for.
What we're experiencing is more than that positive trend.
You said life science shifts where food plays a central role in our health and wellness scores helps manage BARDA, just health problems or pizza range of lifestyle choices, including keto gluten free low calorie low carb or vegan to name a few.
Yeah.
All of this strength provides our business with near term and long term tailored just for sport sustainable growth.
We're addressing this problem to our presence in the market.
70% off on.
Yeah.
Yeah.
Growing natural brands in North America.
Organic Sweden.
It is proceeding and we started delivering benefits in late Q2 of this year.
Our fifth and last PR is a world class team.
I could not be more proud and thankful for the amazing team, we have that whole or friends. So are truly best in class and bring operational competencies agility focus and passion across all regions functions and brands.
A perfect example, again was the team's ability to fully integrate our swerve in whole some business, while delivering on our plan and developing strategies for sustainable growth.
What's more our organization is I D scalable with global resources in place to expand our presence in existing and new markets.
Turning to our flavors and ingredients segment.
We expected the business to continue to produce strong cash flow driven by our global leadership position in <unk> and our diverse end markets.
Our performance in Q1 was as expected given the spike in Q1 2020 demand as several customers pulled forward sales that would have normally occurred in Q2 2020 ahead of the pandemic related lockdowns.
As I mentioned last quarter.
We have a new leadership in place that is providing a growth oriented focus to try the segment's future performance.
Follow up from last quarter were receiving a lot of customer interest from our recently launched 15, new products under our Magna seem to me that better address the unique needs of our customers across the diverse end markets that we serve.
This market includes consumer packaged goods over the counter health care as well as beauty and personal care products.
We're enthusiastic about leveraging our leadership position towards broadening of our existing portfolio and about the customer centric innovations that we're bringing to the market to drive growth in this segment.
With that Andy would now will take you through our financials and outlook for 2021.
Thank you Albert and good morning to everyone. As a reminder, for those new to our company our consolidated financials reflect both predecessor and successor periods indicative of the June 25, 2020 business combination day.
First quarter results, then I'll discuss compare the successors first quarter 2021 results ended March 31, 2021 to the predecessors first quarter 2020 results.
As a result on a reported GAAP financials may not be comparable to the predecessor period.
I'll call out some of the items that impact comparability, where appropriate to enhance your understanding of our financial progress and also point you to our non-GAAP reconciliations at the end of the press release for additional detail.
Also I encourage you to view the supplemental earnings presentation on our Investor Relations website.
Of note we completed the acquisition of <unk> on November 10, 2020, and wholesome on February five 2021.
I will speak to reported results, which include <unk> for the full first quarter period, and wholesome, which is included on a partial quarter period pro rata from the date of the close.
Additionally, we will provide some select pro forma results as if we owned <unk> and wholesome in both 2021 and 2020 to assist in your analysis of the organic growth of the combined portfolio.
For the first quarter ended March 31, 2021 consolidated product revenues were $105 8 million.
Representing a 64% increase from $66 million for the prior year quarter.
On a pro forma basis, including square and wholesome for the full quarter in both the current and prior year periods organic product revenue grew seven 9% compared to the prior year first quarter or increased six 1% on a constant currency basis.
Reported gross profit was $35 7 million up from $25 9 million in the prior year period and gross profit margin was 33, 7% in the first quarter of 2021 down from 39, 2% in the prior year period results were.
Were positively influenced by the $10 1 million of contributions from sort of an wholesome acquisitions and revenue gains partially offset by a $1 6 million of noncash purchase accounting charges.
Adjusted gross profit margin when adjusting for all non cash and cash adjustments was 36, 9% down from 41, 8% in the prior year driven by the inclusion of wholesome strong private label business, partially offset by productivity and favorable product mix within the business.
Consolidated operating loss was $3 1 million compared to an operating loss of $33 2 million in the prior year and consolidated net loss was $12 million in the first quarter of 2021 compared to a net loss of $28 $7 million on the prior year.
The change versus prior year is primarily driven by a $46 million noncash asset impairment charge in the prior year predecessor period.
Contributions from the acquired swerve in wholesome businesses and revenue growth dependent branded CPG segment, partially offset by one time M&A transaction costs, and both reoccurring and non reoccurring public company costs.
Adjusted EBITDA increased 38, 2% to $17 5 million compared to $12 6 million in the prior year period.
This increase was primarily due to contributions from this work and wholesome acquisitions revenue growth and productivity, partially offset by public company costs and increased bonuses.
Before shifting to our Q1 segment results. Let me briefly update you on the change in our accounting for our private placement warrants based on the consideration of the views expressed in the SEC staff statement on April 12, and I would also point you to our <unk> 25 filing last week for some additional detail on this matter.
We determined that the private placement warrants should be treated as a derivative liability recorded at fair value rather than as a component of equity as previously presented.
Changes in the fair value of these warrants are recognized as a non cash non operating gain or loss in the statement of operations.
The change in the fair value of warrant liabilities is presented below operating profit and does not impact any of our non-GAAP operating metrics, including adjusted EBITDA and free cash flow.
Moreover, the impact of the error on prior periods was not material to the company's previously filed financial statements.
Warrant liability at the end of Q1 2021 was $8 million.
On the P&L impact, including the correction of the previous period immaterial error was a two point.
$4 million noncash loss.
With that I'll briefly take you through the segment results for Q1.
Branded CPG product revenues increased $39 $4 million or 103, 4% to $81 8 million for the first quarter of 2021 compared to $40 2 million for the same period in the prior year.
On a constant currency basis product revenues increased 98, 1% driven by strong retail and ecommerce growth and on.
North American businesses, and the addition of swerve in wholesome, partially offset by foodservice softness.
On a pro forma basis, including swerve in wholesale for the full quarter in both the current and prior year periods segment organic profit product revenue grew 12, 1% compared to the prior year first quarter, an increase of nine 7% on a constant currency basis.
<unk> income for the branded CPG segment was $10 2 million in the first quarter of 2021 compared to an operating loss of $6 8 million for the same period in the prior year the.
The increase of $16 $9 million was driven by an $11 $1 million noncash.
Noncash asset impairment charge in the prior year predecessor period contributions from the acquired <unk> and wholesome businesses and revenue growth within the segment.
Flavors and ingredients segment product revenues were $24 million, a decrease of six 7% compared to the same period in the prior year. The decrease was primarily driven by a difficult comparison in the prior year, where we realized a spike in shipments due to COVID-19 as customers purchased our products ahead of the COVID-19.
Lockdowns across the world.
Operating income for the flavors and ingredients segment was $1 million in the first quarter of 2021 compared to an operating loss of $24 million in the prior year period.
The increase was driven by a $29 $5 million noncash asset impairment charge in the prior year predecessor period, offset by $1 million of amortization of intangible assets, resulting from the June 25, 2020 business combination zero point $7 million of noncash.
Purchase accounting charges related to inventory revaluation, and a $1 $7 million restructuring charge associated with the upcoming closure of the Camden, New Jersey factory.
Finally, beginning with the first quarter of 2021, our corporate office functions are now reported included under corporate.
Corporate is not a reportable segment and certain prior year amounts have been reclassified to conform to the current presentation.
Corporate had an operating loss for the first quarter of 2021 of $14 $2 million.
This compares to a $2 $6 million loss in the previous year.
The additional loss reflects $8 1 million of acquisition expenses $2 $1 million of public company expenses, both onetime and ongoing zero point $8 million of stock based compensation expense and zero point $5 million of increased bonuses.
Now moving to cash flow and the balance sheet.
Net cash used in operating activities was $5 6 million.
This is net of $11 $2 million of one time cash add back costs.
Our first quarter capital expenditures were $1 5 million.
Free cash flow when excluding cash related add backs was $4 1 million.
As of March 31, 2021, we had cash and cash equivalents of $27 $8 million and $389 million on debt net of issuance costs.
On February five 2021, we entered into an amended and restated credit agreement and part to finance the acquisition of wholesome sweeteners.
The new agreement provides for a $75 million five year revolving credit facility and a $375 million seven year senior secured first lien term loan b.
Using our forecasted 2021 adjusted EBITDA, our net debt to adjusted EBITDA ratio on March 31st 2021 was four five times.
Reducing balance sheet leverage as a corporate priority and we estimate they will achieve a ratio of net debt to adjusted EBITDA of approximately four times by December 31 2021.
Shifting to our outlook.
Reiterating our full year 2021 guidance, which includes our recent acquisitions are sort of in wholesome.
The outlook represents our expectations for growth on a pro forma organic basis and margins for the combined business, we define pro forma organic growth to be as if the company on both <unk> and wholesale for the full years 2020 in 2021.
We continue to expect consolidated product revenues to be in the range of $493 million to $505 million, representing reported growth of greater than 78% and pro forma organic growth of 3% to 5%.
Consolidated adjusted EBITDA in the range of $82 million to $85 million.
Representing reported growth of greater than 50% and pro forma organic growth of 3% to 5% we.
We also expect adjusted EBITDA margins to be approximately 17% of consolidated product revenues.
Adjusted gross profit margin will be 34% to 35% of product revenues, which again reflects the influence of our acquired assets wholesome headquarter.
Total capital expenditures will be in the range of $10 million to $12 million, which is an increase of approximately 2% to $4 million from 2020, the increases associated with our footprint optimization project.
Lastly, we expect that 2021 tax rate of approximately 23%.
While we're not providing quarterly guidance in the second quarter, our branded CPG segment will face a tougher comparison to 2020 due to onetime pantry loading.
In the second quarter of 2020.
Alternatively, our flavors and ingredient segment will face a more favorable second quarter comparison as a surge in purchases occurred in Q1 2020 and pulled forward sales that would normally have occurred in Q2 as I described previously.
On balance and in relative terms as you think about the seasonality or cadence for the year with the added contribution from swerve in wholesome, we expect a sequential build from second quarter through fourth quarter of 2021 in terms of revenue and adjusted EBITDA dollar contribution.
While we don't view, our business to be particularly seasonal in nature, we expect that the operational plan that Albert spoke to in his remarks, we will be visible each quarter as we move through the year with each sequential quarter being better than the other beginning in Q2 as we capture the benefits from product innovation distribution gains and enhanced productivity.
<unk> from our footprint optimization project.
That concludes our prepared remarks, operator now wrote to you. Please open the call to Q&A.
Thank you.
I'll now be conducting a question and answer session. If you would.
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Please while we poll for your questions.
Okay.
Our first questions come from the line of Rob Dickerson with Jefferies. Please proceed with your questions.
Hi, great. Thanks, so much good morning.
So I guess my first question is yes.
Just around the conversations you've had so far with retailers right obviously.
Your largest strategic plan.
On the power of one strategy is kind of a core piece.
Of your go forward potential.
So I'm just curious if you could touch on.
Maybe reception so far from retailers, even though it's early innings kind of how conversations are going I heard you mentioned maybe.
Some second half.
Product introductions.
Coming.
So anything you can kind of elaborate on at this point would be really helpful. Thanks.
Sure. Good morning, Rob This is Albert on.
I'm happy to tell you as much as I can tell you.
And as you know most of our retailers would not appreciate that they mentioned specific names, but what I can tell you is first of all we are excited about the fact that all of the key retailers are resetting their mode. This year as you know last year. Some of them took a pass which obviously seems we are fast growing.
And they have significant innovation on opportunities we stand to gain this year.
Secondly to your point on the power of <unk> is very well received and the reason is that as you can see on boost to commence on deck. We have a key role in definition consumer use each brand promise for each of our core brands and one of the great things we from.
The integration of <unk>.
The whole some which is now complete is that the dose range really play each very significant growth incremental roll forward, but retailers back by brand building initiatives and you're going to see new packaging on the window springs coming into the market at the end of the second quarter together with new campaign.
<unk>.
And the reception from the retailers could not be more positive.
From us.
Keep in mind as I told you in previous conferences that throughout all of last year.
We had 99% service level. So we have proven to be a very reliable partner and now adding two weeks the brain buildings the innovation.
And the power of one on the shelf, which the stories and the way we can lead the category, which is a great category. As you know really backed up by strong secular trend is going very very well so as I say I can tell you that.
For quarter, we're probably going to exceed 50% ACB pretty soon.
Which is a big step and you can expect seeming our very strong performance on the on the yoga brand.
Can tell you also that the introduction of the baking mixes, which are taking us into new categories for on squares and who is some is going very well. So I would tell you that.
Our distribution is going well on the power one is growing when and where our zero four very confident for what's to come in.
In the quarters ahead.
Hey, Rob Good morning, I, just wanted to add to that.
I got to tell you think about it a year ago. This company was not in existence.
As a combined company, but if you look at.
Our wholesale brands, which is a phenomenal brand the splitter Grand and download Albert the team have done with whole loans.
And even the expansion of equal around the world.
And the new innovation that has come out.
And you know on about new products are the lifeblood of the company and the categories.
It's absolutely amazing what the team has got.
So much on R&D on these products.
And I come back and I think one thing that you really mentioned this is service levels.
I never had those service levels net hain so working on those 99% service levels today has been just major considering.
He's got ingredients coming from all over the world. So.
On the search for new products, new introductions, and just serving the customers.
Demands as the growth takes place.
Yes, its good points impressive non.
9%.
It's been tough for a lot.
And Delek.
Maybe on whether or not.
Not many other companies Youre, writing both got those service levels anyway.
Probably.
And then I guess just.
Kind of touching on what you said on on innovation.
I know in Europe right.
<unk> had other products that you throw out.
From some of the sweet goods on the Jam product I think recently.
I've seen a new product called <unk>.
Through the wholesome brand the organic delicious fish basically.
Kind of like a Swedish fish product.
I haven't heard you mention much about that and I'm. Just curious as you think about that new innovation going forward. Obviously the focus is on the core portfolio natural sweeteners stepping on the baking mixes.
When you think about other categories and other innovation on how you leverage the brands that you have.
Do you foresee some of that incremental innovation.
Coming out either later this year or is that a multiyear process and we shouldnt be too excited about it but just trying to kind of gauge that timing and kind of the speed at which you can actually expand the brands.
Our brand net.
Yes.
That's a great question and as.
As they did.
Mentioned in previous calls strength, we are extending into adjacencies and they'd mentioned them earlier, that's our chocolate snacks.
On <unk> in over in the international markets and actually James as you say then we are getting very strong results in Europe, even though Australia, New Zealand, Indonesia, what we like about this.
Aside from those incremental business is also on the strategic intent behind it. They are really helping you to drive household penetration because you essentially get to users in those over categories that accumulates on top of the ones you already have so this is a big driver of awareness.
That's in the store with multiple touch points, it's a very big driver of household penetration of awareness, which is really <unk>.
If you think about the brand building, it's really about generating the awareness pins into trial and then the household penetration so as they build their business.
I'd say essentially has to create the virtuous circle. So we're doing this we sequel, we scan to rail we from pure beer.
In Europe strength that we have lots of success in the U S.
<unk> told you and what we can publicly say is that we're starting with wholesome and square due to the baking mixes expect to see those products in more places very soon since we got the number of leads as I told you before I can tell you that we're winning a number of those things are not worrying to you yet.
And we are the pace of expansion for assets is that we detailed both mind and so I think you are going to see those categories. I mentioned this year and you would start to see more next year. Some obesity is going to be done organically. Some of it is going to be done through M&A as I mentioned in my <unk>.
Opening remarks, but we're working both fronts because with our own brands. There is a lot to do and they have the added benefit this HSA to bring new customers consumers and increasing household penetration.
Okay, Great and then one last quick one is just on the M&A front I know you said it is an ongoing part of the strategy.
Would you say.
Armed and ready.
Opportunity is there or.
Integration on.
Recent acquisitions is more priority in maybe forthcoming acquisitions would be something down the road more about.
Next year 'twenty three event, that's all thank you so much.
Yes, as I say the thank you.
As I said in my opening remarks, and as Irwin mentioned, we came a long way from.
Less and less in the year, we did acquire two companies in eight months I'm very happy to say that those businesses are now being integrated.
In about 60 days and we have actually.
He was leading.
Those are those the integration meetings weekly and we actually stepped in.
Because all of the work streams. Since there were many have been completed very successfully the teams are working very well together to your point before on the power of one we do have one sales organization we have seen.
Senior guys. The brokers were very strong.
And essentially we are always looking at opportunities being our core business office Weekenders feeding adjacencies that you referred to and given the right opportunity we reserve the right to move.
Next year or sooner.
Alright, Brian.
We're right.
We are.
Out there in the marketplace always looking for the right strategic accretive deal to align and I think again.
It showed that by which were then the wholesome deal and just even putting this together so.
And I think.
Again, we're better even position.
We werent noticed in June maybe did swoop, we werent noticed when we get wholesale.
But I think there's a lot of <unk>.
Brands are companies today that are recognizing.
It wouldn't be so bad to be part of the whole family.
Yes.
And the thing I will add there because I should have stated earlier, but it's just that.
As I have mentioned several times and I'm happy that we could demonstrate is a lot of I just want to salute the team who is doing a fantastic job.
And as I mentioned many times there is a lot of people in our organization that that's significant.
On experience, having led acquisition and integrated acquisitions, and I think doing dose tuning 60 days.
Embracing the new organization that joined US successfully demonstrates that this is a competency that we do have and can leverage continue to leverage going forward.
Thank you.
We ask that you. Please limit your questions to one question and one follow up question. Our next questions come from the line of George Kelly with Roth Capital Partners. Please proceed with your questions.
Hi, everybody thanks for taking my questions.
So if we could start with the synergies.
Reviewing the slide deck you commented in your prepared remarks.
How about the kind of near term and longer term opportunity around it.
Synergies to supply chain reinvention, so hoping you could tell us more about whats actually happening than in phase one of that plan.
And.
And I know phase III it seems like there is less.
Detail right now, but can you tell us just more generally what what that could involve.
Sure I'm happy to start and then Andy if you want to maybe to back it with some with some I am happy to take you through the concept.
<unk>.
As as you have mentioned series in the supplemental deck.
On page eight because there is first of all our phase one if you look at our supply chain, we essentially expanded significantly the total amount of volume would spend to about $150 million index represents for us the number of open machine somewhere leveraging as we speak.
And there are benefiting guests this year.
On against inflationary pressure, which is essentially a significant productivity in what we buy both from a packaging standpoint from an ingredient standpoint from a transportation total standpoint, and those are senior <unk> that we do right away, including manufacturing so remember that we're asset light.
Uh huh.
Which means that we have multiple co manufacturers from co Packers and we are in this phase in the process of optimizing that so if we do Sashaying free places maybe we could do it in one if we do bags into places maybe we can do it in one and so we're sorting out.
Optimizing our asset light network.
That really benefits us greatly the second phases of phase that.
Okay essentially addresses the total.
A more structural way I would say network, which is as you can imagine day next eat duration think about if you are less sensors. So productions. If those centers. So productions are closer to the harbor or French receives a lot of our ingredients come from the same locations is the warehouse.
It is co located with the center of distribution. If you go into a crude truckload versus <unk> truckload. Those are things that would take us a little bit more time, and you will see those benefits in 'twenty, two 'twenty free which are a little bit more structural than the first phase that we do right away.
So I subs here.
Happy to have any follow up on this.
If you were to quantify the impact of.
Phase one I don't know if youre prepared to quantify phase II, but could you just generally talk to how big of an impact it could be.
I think when we say the phase one on the supplemental deck is free to for reaching 2020 free and they really phase two is significantly more I don't think we're prepared to talk to it.
But essentially this is a big driver.
For us on productivity, which.
Which is a big benefit that we do have.
In the marketplace versus competitors and over companies Andy anything to add.
No no I think you said it well.
Yes.
Okay. That's very helpful. I'll hop back in the queue. Thank you.
Thank you. Thank you. Our next question comes from the line of Pablo <unk> with Cantor Fitzgerald. Please proceed with your questions.
Good morning on.
Operations on this start to the year.
But yes can you hear me.
Yes, good morning.
Good morning.
So I guess one for Andy first so the guidance for the full year is three to one 3% to 5% pro forma organic growth. If you can explain wanting to in the first quarter.
Easy comp on food ingredients I showed on the comp issue for CPG in the second quarter, but in the back half.
Cavalry post COVID-19.
Have a day CV expansion that you've talked about.
Right.
I would think that there's room for the number to accelerating six points as a percentage. So if you can just give some context to that it just seems that you should be well ahead on the guidance this year.
Same question in case with EBITDA the guidance what are you getting close to 17 percentage of the first quarter of EBITDA margins from 18%.
On the synergies kick in.
On dilution from wholesome fourth quarter now in the second.
But you would think that it will also be ahead of it. So just a brief answer on that it seems to me the day modular imply that youre well on track to be due on our guidance can you go on from that.
Sure No great question, Pablo and so first of all I mean, we're very confident in the year.
For the reasons Albert alluded to from the operational plan with the innovation and the distribution opportunities Yeah. Pablo that you. Just you just alluded to so we're very very confident in that and we look to see that throughout the the balance of the year.
Youre absolutely right on on the back part of it the second quarter or is it is a tougher comp. So you can expect the growth rates obviously.
For that to be to be lower than what we've seen in Q1, and then would have higher growth rates in the back part of the year.
Look I think as we get through the year, obviously there is.
There is volatility still on the rest of the year. So we're being prudent and so I would say in the end you can see with our guidance that we're confident in it but we're also just being we're also being prudent as we look for the balance of the year. So.
But again, we've got a lot of exciting things that as Albert alluded to that Youll see come through from a P&L perspective, both on the top end.
And the bottom line and we'll continue to look for look at it as we get further along in the year Butler. Okay. Thank you that's very helpful and just a quick follow up.
It was on ask you too.
If I look on the nine seven almost 7% pro forma growth in CPG excellent growth in the first quarter, then I look at slide nine right whole narrowed its up 33% North America retail Swift twenty-two wholesome 18 that alone that naturally 70% of your U S business right. So that gives me the late 14 points of growth went up 7%.
So in total on I'm looking at 16% growth for CPG on jewelry reported 10% internationally on a drag on what are your sales something that when we might mark there. It seems that the CPG could also low 10% of course is a great number could have been even much better than that.
Yeah, no on hobby in Alberta, I'm happy to take that one Albert.
So the short of it is obviously when you're showing on slide nine we've had great performance.
Especially in those in those brick and mortar retailers that you see on slide nine where we've grown above the category and the category is robust.
Both on both then.
In measured channels that you see on slide nine but also in non measured channels like e-commerce and so forth.
The Delta is simply is on.
The first quarter, we still had to help headwind when it comes to foodservice right. So foodservice.
It was still strong.
In 2020 in January and February and the first part of March.
And so from our U S performance. It was overall that was that was a headwind. So when you think about the category.
Well as our performance that foodservice was definitely a headwind I will say you know you mentioned on the international side, our international businesses actually grew very well in line with kind of the North America business.
And so we saw actually scrub you'll start robust growth.
Across the world in Q1, but generally it's a channel mix.
Pablo to be able to answer your question to reconcile the strong brick and mortar performance versus say foodservice from a from a comparison versus first quarter last year.
Got it. Thank you I wanted to ask one thing if I can squeeze one here just a I don't have the day, but.
Do you have on market share in North America from wholly owned versus true via where do you see that youre showing the HCV numbers there right. It could also be friends, but just rough rough numbers on that can you comment.
Yes, I'm happy to take this day market share is strong we have gained market share across most of our top.
Markets around the world and our market share in the U S is was it was 11.2.
Five.
Year to date, two crude mouth Julia.
I can come back to you on that.
Another way to ask the question on Alberta.
Obviously big on ACP opportunity Youre thinking about 50% you're at a 28% range with whole Earth, so notice from foot absolutely.
But.
On Hulu on until we have benefits industrial market share from them from the larger ACB, but I'm just trying to think in terms of velocity, whether you have a sense of whether they're on a huge different assessing growth.
I'm looking on.
To your questions.
Your question, obviously as Robert mentioned earlier, those means that's where scoring we're scoring them now.
So you know.
Walmart is reset things are modeling September which means that we're going to ship in August. So you are going to see.
A lot of that performance coming.
Coming to <unk> going forward and what I'm happy to say that the overlap is that these positive but essentially you can expect that to continue to grow we're very happy with the velocity to your point, which points to the extension I was mentioning for.
Earth and the very significant pickup we had on all our innovation with.
<unk> and.
In wholesale so again that goes back to.
To what they say to before about about the power of one.
Got it thank you.
Thank you our next questions come from the line of Bill Newby with D. A Davidson. Please proceed with your questions.
Good morning, guys. Thanks for taking my questions and congrats on a great start to the year.
Good morning Bill.
Thanks Bill.
Yes, Albert just wanted to just start and ask you about the baking.
Baking category in general I mean, obviously a lot of momentum there.
On out of 2020, and I guess, thus far through the year I'm wondering.
With mobility picking up with vaccination picking up foodservice reopening.
Any impression on how sticky some of that growth.
On gained and baking in 2020 has been throughout the first part of this year and kind of expectations moving forward.
That's a great question and.
First of all as I said, we have.
The right strategy on the right vision and the right time.
So you know that the move that we've made the vision we have for our company.
Climbing so consumers to want to eat more natural more plant based keenly, but no what some of the products. The number of people in our family and the same households that have different needs different diets et cetera is exponential. So we're in the right place at the right time, and if you look we just need to.
Some some checks and we said guest check on exactly your questions then.
Today, you have 47% of millennials net for low official day, you had 58% of many deals that look for healthy ingredients and food and Bev range in clean label and see if you look at the banking specifically you have 46% of consumers that are looking to make more meaning at least one or two.
Twice a month.
So I think it's at least on mobility, which will benefit by by the way because you know quite as Grace on the mobility side is we're going to go back into foodservice and.
What is great about foodservice is consumers are going to ask for natural options, which before were not offered.
And we swerve in wholesome, we have even the opportunity to play in the back of the kitchen and those are all the things that were nothing <unk> seen before because where I've been on some didn't head to foodservice.
Foodservice business.
So we're going to benefit from that but at the same time.
On the consumers' mobility is not going to impact I think their desire to eat healthier and that's 47% of consumers. So so this banking more with products like wholesale.
Which are really fantastic product in our new campaign on that on the whole some is less.
Bake things better which is going to come out in June we have a five is fantastic.
<unk> quality baking mixes, which are getting very positive feedback.
Feedback simply R&D sportswear, if you want to go into the zero calorie no added sugar. So I think we are excited and again there is opportunity to it's a huge category.
To bring a differentiated innovation.
And healthier options into ones that are being proposed today.
I appreciate that very helpful. Thanks for the color there and then I guess, maybe one for Andy.
Obviously pretty hot topic throughout the earnings season, this quarter as inflation and Havent heard you guys really comment on how maybe your expectations. There have changed I mean could you maybe just talk about how you think about your coverage there through the rest of this year.
And maybe just.
Remind us.
Why this model might be a little more insulated than others in terms of handling.
The rapid increase in inflation, you've seen over the last couple of months.
Yes Bill.
Do you want to start or.
Yeah, Yeah, I can take it if you want Albert.
And now I'm happy to so Bill I think it's a great question I think first and foremost I don't think we don't have the same.
Inflationary type of pressures that maybe youre seeing another consumer package good companies.
Don't have the same exposure to some of the commodities that youre seeing from probably other companies you cover or what have you. So that's number one number two for what we do have the team as Albert alluded to before we've got a great team and we've been out in front of it so.
Pre bought materials, where we saw inflation coming.
To help minimize the impacts on our productivity has been.
Then very robust to be able to offset any inflation and then third the team from the commercial side has done a great job managing that with with different tools that we have at our disposal from a pricing perspective, so we have taken some price.
Around the world to get ahead of it and so we're we've been doing a great job managing that inflation, both from the standpoint of productivity as well as pricing Albert I don't know if you want on anything else to Tibet.
Now you're saying it.
Thank you our next questions come from the line of Mark Smith with Lake Street Capital. Please proceed with your question.
Hi, guys I just wanted to follow up real quick on new product sounds like a good pipeline of products coming later this year, but that Albert can you update us on kind of how the mix is on current of new products or innovative products that are in that are out now.
Yes.
New products essentially as the early they alluded to at the beginning it is something we invested in for some time.
It's like E Commerce, and we started investing in them in having a top notch R&D, which seeks R&D centers with an organization that round awards received sourcing the best ingredients being at the forefront of new ingredients and we consistently de lever at both 15% of our innovation.
Our net sales coming from innovation last year, I think I reported 16% I think this year, we say 15, I think we're going to be way on both and those innovations are essentially what is driving our success in the marketplace. If you take melting baking mixes, but if you take on baking.
And you take essentially take on the whole Earth, what we have been able to do on baking. It is essentially we need to establish this brand that they say that we've seen.
A year of 'twenty as we're going to grow at 50.
It's the fastest growing stevia brand in the market.
Year to date.
One of the fastest the natural to brands in the markets we are on that.
<unk> disclosed, but we have scored significant wins that you are going to start to see.
End of Q2 and that is true around the world I mean, if you look at the and this brand the natural in baking and then you had a few more but if you take baking in the UK. We became after three years number two brand in natural in the fastest growing and we would become number one in Australia, we became.
From zero, the <unk> brand and we are growing 200% and we just.
At least the five skus or around baking and that's just one example, because another big trend that we see is really the one that ROM fortifications have round, adding benefits. So you know one of the be crazy right now is tumeric and we have a holdover from weeks to Mary we have order with Kona.
Adjourn coming out so I wouldn't say that.
We do we do see significant we have significant expansion, we serve with the Brown line, which is doing very well.
On some as I say, we're number one we are going to re launch a whole new we're going to relaunch I gather more just introducing the baking mixes. So this is part of the story those are by the way as Andy mentioned earlier about the different revenue growth management.
<unk>, obviously innovation.
It provides you with price pack architectures opportunity, which we're safety look on and those are highly incremental to to do retailers.
And therefore, we get the appropriate space and we're happy with the performance that they have in the marketplace. They are what these.
Bringing new life into into a category. We came into 2016, believing you need to know thinking at places and expanding into Adjacencies.
Thank you ladies and gentlemen that is all the time, we have for questions today I'd like to turn the conference call back over to Mr. Mann zoning for any closing comments.
Yes, I just wanted to thank you all for joining the call I'm looking forward to have more discussions we saw all of you and you know as I said I think we have a great strategy and a great vision at the right time, which is always important.
And we are very excited by our brains building initiatives, our innovation, our distribution and our top notch supply chain and I just wanted to again hats off to the team who is you know I'm Blessed we've been doing a fantastic job and so we're excited by the year ahead of us and thank you very much.
All of you.
Thank you that does conclude today's conference call. We do thank you for attending you may now disconnect your lines.
Okay.
Okay.