Q3 2021 Diversey Holdings Ltd Earnings Call

November 5, 2021

[music].

Greetings and welcome to diversity Holdings third quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Mind you. This conference is being recorded I would now like to turn this conference over to your host Mr. Grant Graver Investor Relations. Thank you. Sir you may begin your presentation.

Thank you Hello, everyone and welcome to diverse these third quarter conference call with me today are Phil Whelan, our CEO and Todd Herndon, our CFO our earnings release and the slides we will reference on this call are available on diversity website at IR Dot diversity dotcom.

Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental materials may include estimates of future performance. These are forward looking statements and actual results could differ materially from those projected factors that could cause actual results to differ are described under the risk factors.

Section in our filings with the SEC on this call we will reference certain non-GAAP measures. Please see the accompanying slides and our filings with the SEC for definitions and reconciliations to the most closely comparable GAAP measures and now I'm happy to pass it over to our CEO Bill Wieland.

Thank you grant and good morning to everybody.

I'm happy to report another quarter of strong progress against our strategic plan.

Let me update you on the five key headlines for the quarter.

Firstly, the topline with showing good momentum in both our institutional and SMB segments in F&B very high win rates. During 2020 in 2021, plus the introduction of water treatment are paying dividends.

In institutional the recovery of our base business continues to be encouraging with strong Q3 growth over prior year.

Killed by share gains from new business wins and investment in commercial excellence and our global accounts infrastructure strong innovation pricing I'm of course reopening in some markets.

Page six of the presentation highlights I'll, probably graph returning to pre pandemic levels as we see a strong recovery in North America, an improving position in Europe.

Slow recovery in the rest of the world.

What's the remaining COVID-19 impacts around the world for strike all customers, we remain confident in a full recovery and this will be one of I'll leave us for growth as we head into 2022.

We continue to see infection prevention, well ahead of 2019 with many countries more than double 2019 on a year to date basis.

With a slightly lower increase versus 2019.

This segment of the market has seen normalization from the strong growth we experienced in 2020, but it's still significantly above pre pandemic levels, although difficult to judge exact trends given the complexity of the overall environment. We are encouraged by increased hygiene standards and market receptivity.

Two our differentiated infection prevention portfolio as we deepened penetration in North America and expand into new geographies.

In summary, we believe we will drive growth in our business in Q4 and acceleration into 2022, and we are increasingly well positioned for long term growth.

The second key element of the quarter is around pricing.

Pricing remains critical for us as a result of the cost inflation that we've seen build through the <unk>.

We continued to step up pricing in the third quarter and have good pricing momentum for the fourth quarter and into 2022.

We realized roughly 3% top line growth from pricing actions yesterday and expect to reach mid single digit percent in the fourth quarter. We expect this increased level of pricing to continue into 2022.

The third element margin di.

Divesting continues to execute well in a challenging environment and we are pleased to have increased EBITDA margins from 14, 7% in Q1 to 15, 6% in Q2 to 16.0 cents in Q3 as we signaled we would when we last reported.

Margin improvement has been solid and consistent for several quarters now and provides confidence around our longer term target of 20%.

Number four customer value proposition, we continue to be encouraged by our winning customer value proposition with a stronger than ever pipeline of opportunities very high customer retention and record net promoter scores based on our progress to date, we remain very confident in our ability to take share and.

Drive long term operating leverage in the large and fragmented markets we serve.

And finally number five M&A, we continue to execute against our strategy with M&A in Q3, we closed the Tasman acquisition in Australia that we announced last quarter and we recently closed the deal, but we're excited about in Canada. The acquisition pipeline has never been stronger.

Now I'd like to highlight progress on ESG, We recently filed our annual sustainability report, which we've done annually for more than 15 years. However, this year, we are resetting our strategy and goals.

Our enhanced sustainability strategy is called protect can sustain and it follows the ESG framework commonly used today.

Set out on page eight <unk>.

Protecting the environment caring for society and sustaining good governance will be the focus of our new approach. We are committed to ambitious goals in this area and will measure and report on our progress annually.

Throughout our history.

The sustainability hasn't changed it deeply embedded in the culture of the company.

Find who we are and what we stand for.

I'd also like to say, how proud I am about global teams for the way that responding to the current global challenges our supply chain teams are managing freight tissues opex.

Teams managing it.

Nicole and fast changing raw material landscape and our R&D teams are working tirelessly to reformulate products. All of this is aimed at limiting the impact on our customers, which is being very well handled by our customer facing teams.

This is a time of truly exceptional circumstances diversities deep rooted behavior of being customer driven is putting us in a great position to deliver a fantastic 2022.

Finally, you'll remember that our medium term growth algorithm is to grow organic top line faster than the market right, it's 3% to 2% to the top line through M&A to expand margins to 20% and to generate significant cash to delever and fuels investments in growth.

We're confident that we will enter next year with great momentum due to our market share gains effective management of inflation through price and cost actions ongoing market reopening higher post pandemic cleaning and infection prevention standards and a very robust pipeline of M&A opportunities.

And with that let me pass over to a SaaS I taught tended to discuss Q3 financial results in more detail.

Thanks, Phil Let me start on page 11, with a summary of our consolidated results.

Q3, net sales were down two 4% versus prior year as reported but increased quarter over quarter as expected with sales increasing by $14 7 million or two 3% versus Q2.

As Phil mentioned, the recovery of our base institutional business is progressing well and we continue to win new customers with significant recovery still ahead of us is real openings progress around the world.

Our F&B business continues to win new customers and grow revenue, while improving margins.

Consolidated adjusted EBITDA for Q3 is in line with 2020, and there's 2.1% above 2019.

Overall, we are very happy with the progress, we're making on margins, despite inflationary and supply chain pressures.

On page 12, let's review our segments starting with institutional.

Institutional revenue declined six 7% versus Q3 2020 is the strong recovery in the base business was more than offset by the tough comp to the increased level of infection prevention that we experienced in Q3 of last year.

We have seen strong recovery in the more developed geographies with much more to come as developing geographies and sectors, such as facility services and hospitality continue to recover.

We also believe our infection prevention business is stabilizing after the onetime effects of Covid and is well positioned to grow with our investments in new products and regions.

In Q3 institutional revenue has recovered to within three 4% of pre Covid 2019 levels.

Even with lower revenue and challenging raw material and supply chain environment, we were able to increase our adjusted EBITDA margin over both 2019, and 2020 through operational efficiency programs and pricing.

We are also now at the inflection point, where the combination of stronger customer retention new business wins continued reopening.

And increased hygiene intensity will drive further quarter over quarter growth in Q4 and into 2022 absent further supply chain disruption.

Before moving to F&B I'd like to quickly highlight one of our environmentally friendly products ox severe TV, which was rated by Newsweek and the leapfrog group as the best infection prevention products in 2021.

Ochs of your T V is a hospital grade disinfectant that contains our patented accelerated the hydrogen peroxide technology.

It's right. It is the lowest level of hazard and requires no safety warning or P. P. M D.

It's great to be recognized but more important is the feedback from our customers that our infection prevention solutions lower infection rates without compromising employee safety.

It's also better for the environment than other disinfectants, breaking down to just oxygen and water.

On page 13 lets review, our food and beverage segment, where revenue grew by 12% compared to Q3 2020.

More impressive was the 29, 9% growth in our adjusted EBITDA over that period.

Given our continued scale and focus on cost improvement.

As a result, our F&B segment ended the quarter with a strong margin of 19, 3%, which was up 270 basis points compared to 2020.

When comparing to 2019 revenue expanded by 9% and our adjusted EBITDA grew by 25, 6%.

<unk> and the continued momentum we're experiencing closing new business wins around the world along with increasing traction in water treatment.

One of the innovations I'd like to highlight for F&B is D O San H, H, plus which is a sustainable foot bath solution to help prevent lameness and ruminant farm animals.

It's estimated that 25% of cattle suffer from lameness.

Potential treatments used copper sulfates to repair the S bridges and hubs, which is an environmentally damaging heavy metal.

<unk> plus users copper nitrates, which is water soluble and therefore has a much lower environmental impact.

This presents a great upsell opportunity across our global agricultural business.

On page 14, you'll see our financial bridge from Q3 2020 to Q3 2021.

I've already discussed the institutional and F&B movements.

Youll also see we had small favorable FX and a benefit from M&A.

One other item to note in the quarter. During Q3, we had a change in the way we account for income taxes.

It had the effect of increasing our rate in the quarter.

<unk> does not change our full year outlook on adjusted ETR and has no impact on cash flow.

With that let me turn to the balance sheet cash flow and liquidity on page 15.

Beginning with free cash flow Q3, 2021 had an outflow of $41 million compared to free cash flow of $6 million in Q3 2020.

Within the 41 million in Q3, 2021 outflow is $8 million for the purchase of Tasman chemicals, and $12 million of higher cash interest payments, which were accelerated around the refinancing.

Our recent refinancing lowered our interest rates and extended the loan maturities out to 2028 and 2029.

Assuming interest rates on the floating rate debt remained constant we anticipate annual interest expense savings of more than $11 million.

Which could increase to $14 million when we trigger a step down of the interest rate upon achieving our net leverage ratio of four five times.

The overall cost of our debt is relatively low at less than 4%.

We have a strong liquidity profile with over $500 million available as of quarter end.

We view as a strong asset given the fragmented market, we operate in and the very robust M&A pipeline as Phil noted earlier.

Our leverage remains stable at 485 times net debt to adjusted EBITDA compared to $4 704 times last quarter.

The 0.1 times increase was driven by roughly $33 million of refinancing fees.

We believe we will delever by year end as our LTM EBITDA improves and <unk>.

<unk> of this significant investment in our new facility in Kentucky, We announced in Q2.

And our provision for some M&A in the quarter.

In Q4, we expect to generate more than $70 million of free cash flow net of strategic investments and M&A and our supply chain strategic investment.

So let me conclude with some comments on our general outlook.

Our business is expected to be a positive comp year on year in Q4.

Absent further supply chain disruption and continues to improve as markets reopen and we continue to implement new business that we've won over the last year.

Foreign protection prevention, we're seeing demand lower than what we experienced in 2020 during this pandemic.

Still much higher than pre pandemic levels.

Which is likely to continue in the future due to elevated hygiene standards.

In the fourth quarter, we expect to continue quarter over quarter progressive growth in sales adjusted EBITDA and adjusted EBITDA margin.

As mentioned last quarter and accelerating momentum into 2022.

And with that I'll pass it back to Phil for closing summary.

Thanks, Todd as a leading provider of hygiene infection prevention and cleaning solutions amidst the pandemic, we are well positioned to capture significant growth due to elevated cleaning standards as markets continue to reopen.

<unk>, great momentum for 2022, and beyond with an improving top line aggressive pricing to combat inflation and a strong funnel of acquisitions and now I look forward to your questions. Operator would you. Please begin the question and answer session.

At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two chair move your question from the queue for participants using speaker equipment. It may be necessary for you to pay.

Up your handset before pressing the star keys, one moment, while we poll for questions.

Our first question comes from the line of Vincent Andrews with Morgan Stanley You May proceed with your question.

Hi, Thank you good morning, everyone.

Just wondering as we look into the fourth quarter.

If you could just give us a little bit more of a sense of what type of topline growth.

To expect.

And maybe just a little bit more thought on the price cost tradeoffs in the fourth quarter and how that will trend.

Yes, Vincent Thanks for the question Phil.

Let me start with the.

With the price cost of the part of the question you said that we've seen.

Sort of five ish percent cost inflation.

In the in the period to date.

That's up 3% on price, we think off price is going to step up more.

Like sort of mid single digits in Q4, as we as we talked about quite a lot of extra actions going in but it's also likely that all costs are going to step up.

Wow. So we do we do think that we're going to see some more.

Accretion in our margins.

It's not going to necessarily accelerate very significantly as the sort of managing that.

Further cost inflation against the price, we'll put them right.

On the top line look I think we will see some garage.

Ill just mentioned in the fourth quarter.

We've been delivering somewhere like $15 million to $20 million.

Dollars improvement each quarter.

It may not be as much as that in the fourth quarter.

As you know we've got.

Putting happening it's not obvious that that's going to be a huge amount more in Q4 versus Q3 of some of those countries.

With a lot of that.

Writes a vaccination.

Saturday and proving that parents. So in summary, I would say net margin and top line continuing to get better.

But not necessarily huge steps forward I hope that helps.

Alright, that's very that's very helpful. And then maybe just on infection prevention do you think we're now sort of at the run rate or this is sort of where it's going to sort of bounce around that.

Plus or minus but it's.

It is going to indeed normalize at a higher level than you originally anticipated and this is a good.

Once we lap this rate, we'll stop talking about it.

Well I'm not sure I want to stop talking about it because.

Fair enough.

But to get to get to the core of your question yet.

Honestly, it's just so hard to say because as we look at different countries.

As we look from month to month.

There's just some rail.

Diversity and spread.

Full minimums.

It's certainly true that we've seen in a reasonable amount of normalization and infection prevention side.

Whether that's a bit more to come.

I think that certainly could be.

Offices, maybe globally not yet in the aten and until we see that again, it's going to be hard to get a full picture.

No that's very complete answer, but probably the best we can do at this stage is things are still unfolding.

I appreciate that thank you very much for your comments.

Our next question comes from the line of George Tong with Goldman Sachs. You May proceed with your question.

Hi, Thanks, good morning.

Wanted to dive deeper into whether or not youre seeing impact from supply chain disruptions are you seeing any delays or difficulty in obtaining supplies or seeing pricing impact.

Cost impact from some of the supply chain disruptions that we're seeing across the across the economy.

George the short answer that question.

Yes.

It's really tough out there and I think anyone that says otherwise probably moving in a different world.

We do see labor challenges.

We do see raw material.

Challenges transportations difficult it is.

Just.

A daily weekly monthly ongoing challenge.

We're assuming this is going to continue as well.

Into 2022, so whilst we are focusing on all elements of our strategic plan, we talked about before.

This is something that we are extremely focused on managing I think if I was looking for a positive I'd say, we're well equipped to deal with this versus some of our smaller competitors, but I don't want to let them to stage.

This is a challenge I think what we're doing well but.

Yes, it's not going away anytime soon.

Okay, maybe just a follow up on that point a little bit.

Some strategies that you have too.

To mitigate the risk of supply chain disruptions and and what kind of impact could further supply chain disruptions elongation of the timeframe of those disruptions have on either top line or margin performance.

Yes, so we were.

We're doing a lot.

As you would imagine.

So for example.

Our R&D team are working on a whole range of lead formulations.

Outside of the registered products to make sure that we've got the more readily available materials going into our products world side.

Using the S Ku range, where we can where it doesn't have a significant impact.

Customers are really just focusing on making sure that the matteo with whatever available we can use as flexibly as possible to make sure that we're getting.

And satisfying.

All our customers as fast as possible.

But we're really focusing our crops.

Every part.

Some of the supply chain, but what makes you think pretty created with some of the solutions here as well.

Got it very helpful. Thank you.

Our next question comes from the line of <unk>.

Andy Wittmann with Baird. You May proceed with your question.

Oh, great. Thanks for taking my question I thought I would talk about or ask about the.

Food and beverage segment in particular in.

The margins there I think it's kind of stuck out to me as being fairly positive. So I was wondering Phil or Todd if you could talk about.

What are the what are the reasons for the margin expansion. Obviously, you had decent top line growth here. So I have to think some of it was leverage but its a mix.

Are you seeing other factors that are driving that and if you could talk about the sustainability of the margin profile that you realized in the quarter.

Sure.

Basically asking was there anything kind of unique to the quarter that wouldn't be expected to occur.

Yeah, Let me, let me take let me start by saying.

There hasn't been anything would take issue with positive.

Yeah.

We're excited about that.

And he's driving.

Why why are we doing well and that could be either.

Part of it.

We have been winning business some of which is last year that we've rolled out this year.

More than that with one this year, so that's adding to the top line.

But also we're winning at nice margins.

South.

It's helpful and the additional volume.

Honestly.

Yes.

Would you agree with that.

He was suggesting as for whether.

It's sustainable certainly expect.

As to continue to deliver some really nice.

Line growth, albeit yeah.

I mean from these inflation challenges and I think it's fair to say that the cost pressure in SMB is even greater than it is in institutional side.

It's going to be a battle too.

To continue to drive that margin accretion that we've seen in us likely probably to slow a little bit, but it will keep going forward.

That's helpful. Thank you for that purchase for my follow up question I guess I wanted to talk about the overall kind of.

Outlook for growth in terms of like a net new basis, you mentioned high retention I don't know if theres any more detail you can give on that.

Your retention rates overall certainly.

Last year, there wasn't a lot of switching.

Things are getting more normal so I'm wondering if retention is changed from those very high levels, but we realized.

During the depths of the pandemic and then if you could talk maybe about some kind of sales force productivity, you mentioned kind of subjectively a couple of times.

But new sales have been good maybe there's other commentary you can give us that give us a little bit more detail on that so we could just kind of a sell side as well.

Yes sure.

On retention I would say no change.

We talked about 90, 899%.

That's really continued we really haven't seen any.

Material losses that I can think of one off top of my hedge which was.

Hum.

Resulting from a bit of pricing that we pushed through a competitive was prepared to take a price cut which we wouldn't.

Outside of small examples like that the retention remains.

Really strong.

In terms of new business.

Hey.

Despite the fact with what a lot of pipe.

Pipeline is also got much stronger.

So it's very hard to.

To give predictions that but all I can say is that we feel we got momentum and we feel that it's going to keep going.

We've got new leadership in our global accounts business, we're focused a lot on commercial excellence I think 30 days, but it seems to be maybe in the right direction.

Alright, Thank you very much.

Our next question comes from the line of Edlin Rodriguez with Jefferies. You May proceed with your question.

Thank you good morning, guys.

Good morning. Thank you you've talked you've talked about the cost pressure and Katharine b being greater than institutional is that well you trying to push most of the price and is it just a little more challenging to get pricing there and then on the other.

Institutional.

Our job here is to maintain the percentage margin.

To the extent the cost inflation is higher so our price needs to price increases need to be higher because over time.

The only way we can maintain percentage margins. So yes to the extent the costs are higher and.

And based on a lot prices need.

I need to be high at two and that's what we're that's what we're getting on with.

And just a follow up on that I mean, clearly I mean, I think for this year your price is still going on a lag.

We'll know more.

Cost inflation as we get into next year like how long do you think it's going to take you to kind of recover.

The costs.

Yeah look it's a really tough one because what we don't know is how much more cost is coming so you know what.

When we were you know.

Sitting in the summer we were thinking.

Places that we could see that we were going to have it fully passed through probably even the first quarter of next year.

What's unfolded of course is another wave of cost inflation. So that obviously is going to take another wave of pricing to recover but it's really hard to predict.

You know, what's going to happen with the cost pressure we are now planning.

We're assuming we're going to have the cost inflation right through 2022, and therefore, we've got further price positive if that happens then of course, it's going to be.

Beyond that before we fully got the margin recovery, although we feel good that we'll get that suddenly got the dollars in the yard.

As it comes straight.

Okay. Thank you very much.

Yeah.

Our next question comes from the line of.

Jeff Zekauskas with J P. Morgan you May proceed with your question.

Thanks very much.

I think infection protection revenues were $815 million or so in 2020, what are they going to be this year.

It's impossible to give you an accurate answer on that question I mean, if I if I.

I step back and say how are things unfolding versus what we expected.

You know I would say that infection prevention is probably normalized a little bit faster than we would've expected.

But yeah exactly what happens beyond.

It's hard to say, yes overall.

New business water treatment pricing M&A, good infection prevention, a little bit lower than we expected at this stage, we are planning for it to come down further in 'twenty, two how that how that pans out.

Really tough to say, but yeah. It will.

We'll update you when we can as the facts layout.

Order of magnitude like what's the revenue decrease and when do you expect the quarterly revenue in.

Infection protection to begin to go up.

So I think the we'll probably see the.

Reductions in infection prevention into Q.

Q4 this year.

And I think we'll see.

A little bit more normalization certainly into the first part of next year.

I think we'll start to see it growing I think will will flatten out and then the investments that we've made outside of North America I think we'll start to see those accelerating and infection prevention globally starting to grow.

A little bit more the other thing that's hard to predict is what's happening with hand, sanitizers because what we're seeing is as markets react to such that certainly the hanging sanitize it picks up in line with that.

As those markets in the developing world reopen let's see what happens.

That too.

Great. Thanks, so much.

Yeah.

Our next question comes from the line of John Roberts with UBS. You May proceed with your question.

Thank you.

Would you expect any primary shares to be part of any follow on offerings.

And kind of I cant answer that question at this stage I think all options are.

Yes.

But it's tough for me to answer that at this stage.

Okay.

On slide six is that the combined institutional and F&B, excluding infection prevention or is that just.

Institutional excluding infection prevention.

Yes, good pipe, that's institutional John sorry on SMB.

The Covid impact was more modest you did have some.

But that was in any single.

It's a low double digit millions size not that material. This page really represents institutional.

Thank you.

Our next question comes from the line of Gary Bisbee with Bank of America. You May proceed with your question.

Hey, good morning.

I guess the first question just on margins, obviously, youre doing a nice nice job delivering expansion there despite the cost headwinds and certainly understand the pricing dynamic and how they can help but can you give some color on.

What strategies are really the key drivers of that I know you called out a number of them in the pre IPO process.

Have you stepped on the gas faster on some of those strategies such that maybe.

You're pulling some of that future opportunity forward into this year I guess I'm just wondering if given all of these things.

Youre thinking about the medium term margin story from here relative to how you.

Told it in the IPO process.

Sure Tom do you want to pick that one up.

Sure I can I can do that.

Think that.

Our outlook for our margin opportunity is not any different than it was at the time of the IPO.

The things that we control are clearly still in our control there were.

Three or four different areas that we said we would focus on.

We've.

Focused on those areas and are driving them.

It would be our operational effectiveness program or our earnings improvement program as we call it internally.

We're making significant progress this year on G&A in particular as we look at.

How we deliver continued functional cost savings.

The current supply challenges.

With.

With respect to acquisition of raw materials has actually helped us accelerate some of the work we're doing on portfolio, which we mentioned.

Wasn't important component going forward of <unk>.

Generation further procurement synergies.

Because we're now.

Looking at ways to harmonize the portfolio a potentially faster so that we can aggregate that demand and look at the composition of the cost of our products that we go to market with.

We announced in Q2.

The establishment of a lease in Kentucky related to a footprint.

Opportunity in North America, which we see as a significant opportunity to improve margin.

And the 2023 period and so all of that.

Work that we're working on.

And our continuous improvement.

All of our key five behaviors that still launched last year.

Is on plan with what we had viewed.

Viewed in the IPO as an opportunity for us to reach our mid to long term target.

So we believe that we're doing a good job controlling what we control and executing well within the company on that end.

With the challenging.

Environment this year.

Pretty pleased with where we are on the cost base.

The other thing I would say just as we think forward to 2022.

We would hope that.

With our outlook too.

Some growth next year that we've become a more efficient company during the Covid time and can leverage our fixed costs over growth that we fully anticipate coming in 2022.

Okay. That's helpful. And then if I could go back to an infection prevention just with one more question can you give us an update on how the global rollout.

H b products going in is reopening helpful to that.

And then it's easier to get in and sell or is it.

Challenge to the extent that you start to be passed the worst of it theres less like incentive for people to aggressively upgrade and change what theyre doing or add more more use of these products. Thank you.

Sure so.

<unk> global rollout so.

We are now manufacturing right around the world and selling.

Right around the world in terms of reopening it's mixed because clearly.

Businesses.

Those are not buying anything so there's no opportunity.

It's certainly true outside of health care that when.

When businesses open.

Heavy focus on Covid, that's the height of the opportunity.

And that comes down a little bit with a normalization that we talked about earlier and were seeing that trend.

Both in North America, where the product was first launched and in many other places around the world.

Okay, and if I could just sneak one more quick one in the tax commentary does that imply that the Q4 tax rate would likely be lower I think you said the full year unchanged, but it was much higher this quarter or could you just level set what might be a reasonable expectation in Q4. Thank you.

Yes, let me take this Todd.

I guess, what I would start with is saying our nine month adjusted ETR lands at about 31%.

As of Q2 on a year to date basis, we were at 20 on our ETR. So a higher ETR was expected in the back half of the year.

While we originally expected the higher ETR to blend in over Q3 and four our tax accounting change we described in our 10 Qs.

Wired, we take the full impact of the differential rates into Q3.

Our full year view Hasnt changed we continue to expect to land.

30 to 31.

<unk> percent for the full year adjusted ETR.

So it's really a quarterly phasing.

No comment.

Great. Thank you.

Our next question comes from the line I ruin Vishwanathan with RBC capital markets. You May proceed with your question.

Yeah.

Great. Thanks for taking my question.

Morning.

Two questions. So first off on the raws side, what can you do to mitigate the impact there.

Are there a surcharge mechanisms that you'd want to implement.

I guess I'm just.

Asking mainly about chlorine and.

Caustic just given some tightness there that.

It looks like it will persist into into 'twenty, two just given the capacity rationalization and logistical issues. So.

Yeah, maybe we can just address that first.

Yeah, no you're right.

Right.

We've been taking a lot of prices, we talked about that offset in.

Materials example, being the one you mentioned.

Some element of surcharge.

Also exist.

Because sometimes it's faster for us to get a surcharge into the market and the movement in these roles.

That's.

It's also true to say that on some of those products, particularly in the SMB business.

Contracts with customers are directly related to the index and therefore, there's a natural movement in reflection of what's going on in the underlying.

Index anyway.

Okay, great. Thanks for that and then just maybe if you could review kind of how we should think about leverage and how that evolves over the next year. Thanks.

So if you want to take that long.

Yes, I can take that one.

Our thought processes following our we.

Higher of course to reduce our net debt leverage and that Hasnt changed.

With respect to how we think about it with M&A tuck in acquisitions will require cash, but wont material increase our leverage profile, a pro forma basis as post synergies.

Two roughly that net debt level that we have today and create a lot of equity value.

Yes.

We do understand the importance of Delevering over time.

The uptick in leverage in Q3, again was driven by the refinancing which clearly has.

Benefit going forward of roughly $14 million in cash interest savings going.

Once we hit the four five times net debt level.

And we were able to extend those towers out to 2028 and 2029, we do expect to Delever in Q4.

In addition to funding our investment in the Kentucky facility in M&A, which we referenced.

We would also expect to further delever in 2022, as we generate strong free cash flow and grow EBITDA.

We're going to continue to focus on Delevering in the mid to long term towards three times as we communicated early earlier this year. So that's how we think about leverage.

Going forward.

Thanks.

Our next question comes from the line of Christopher Parkinson with Mizuho. You May proceed with your question.

Hi, Good morning, this is Kevin on for Chris.

I was just wondering overall for the business if you could discuss the opportunities that youre seeing on a regional basis.

If you see more opportunities for new business wins as well as.

To gain market share I guess in some of the reopening economies as opposed to the more mature economies or that's just broad based and you're winning and most geographies tanking.

Yes sure.

I think we're seeing good momentum.

I'm good.

CRO graph around most of the world Sydney across North America.

Ross.

Your.

India I think the tougher areas right now.

In Southeast Asia, and Zag, just because they'd remained in a in a tough situation and that sustained for a long time.

But we're pretty confident you know Australia has just started reopening that very early signs.

Southeast Asia coming in coming out of that locked down so hopefully we'll be able to get step back into some more growth type of that but really that's been the story of the.

The last couple of quarters and stuff.

And then maybe just a quick one on sustainability. It seems like there's a big demand pull for more sustainable solutions from customers. I mean can you discuss a little bit what youre seeing kind of a new product pipeline looks like in terms of sustainable solutions and how we should think about mix from those new products as well as your <unk>.

<unk> gained share through those products going forward.

Yeah.

This is big I mean, we put on.

Page seven in the pot, how we're starting to think about E. S. G. In the in the new plan that we've put in place.

Is really big.

I think in just in the last six or 12 months the amount of customers coming to us asking for help.

How can we be at the heart of that ESG strategy.

And seeing us as a really key partner to.

Helping them make progress is actually really heartening and I'm really encouraging so yeah, we're really redoubling our efforts on.

Ways to save water energy packaging.

In particular, and it's going to be it's going to take some time and some of these developments take some time and I know that it takes some time, but I think this is going to be a.

And even bigger driver of growth going forward and probably before 12 months ago.

Great. Thank you.

Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn the call back over to Mr. Phil <unk> for closing remarks.

Yes, thank you for that and in summary, I would just say, we're really pleased as we close out the third quarter and why we are a new business and share gains on our pricing on our cost and efficiency drive on M&A.

And the base.

And the base coming back.

As we talked about seeing some normalization in infection prevention.

We think that at least for all of that we're going to see some growth in Q4, both in revenue and margin and then we're going to see an acceleration of our top line in 'twenty two as that claim that we showed in the pack.

Really starts to come through.

Europe.

And rest of world and that Allied with the ongoing price share in M&A.

Makes us feel really good about the top line.

We head into 'twenty two.

Thanks for listening thanks for attending I hope we've answered your questions.

Have a good day.

This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation enjoy the rest of your day.

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One should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn this conference over to your host Mr. Grant Graver Investor Relations. Thank you. Sir you may begin your presentation.

Thank you Hello, everyone and welcome to diversity third quarter Conference call with me today are Phil Wieland, our CEO and Todd Herndon, our CFO our earnings release and the slides we will reference on this call are available on diversity website at IR Dot diversity dotcom.

Factors that could cause actual results to differ are described under the risk factors section in our filings with the SEC on this call. We will reference certain non-GAAP measures. Please see the accompanying slides and our filings with the SEC for definitions and reconciliations to the most closely comparable GAAP measures.

And now I'm happy to pass it over to our CEO Bill Wieland.

Thanks, Grant and good morning to everybody.

I'm happy to report another quarter of strong progress against our strategic plan let.

Let me update you on the five key headlines for the quarter.

Firstly the top line, we are showing good momentum in both our institutional and SMB segments in SMB very high win rates. During 2020 in 2021, plus the introduction of water treatment are paying dividends.

In institutional the recovery of our base business continues to be encouraging with strong key three growth over prior year. This.

This is fueled by share gains from new business wins investment in commercial excellence and our global accounts infrastructure strong innovation pricing and of course reopening in some markets.

Page six of the presentation highlights our progress returning to pre pandemic levels as we see a strong recovery in North America and improving position in Europe.

Lower recovery in the rest of the world.

What's the remaining COVID-19 impacts around the world for strike all customers, we remain confident in a full recovery on this will be one of our lead us for growth as we head into 2022.

We continue to see infection prevention, well ahead of 2019 with many countries more than double 2019 on a year to date basis, and others with a slightly lower increase versus 2019.

This segment of the market has seen normalization from the strong growth we experienced in 2020, but it is still significantly above pre pandemic levels, although difficult to judge exact trends given the complexity of the overall environment. We are encouraged by increased hygiene standards and market receptivity.

Key to our differentiated infection prevention portfolio as we deepened penetration in North America and expand into new geographies.

In summary, we believe we will drive growth in our business in Q4 and acceleration into 2022, and we are increasingly well positioned for long term growth.

The second key element of the quarter is around pricing.

Pricing remains critical for us as a result of the cost inflation that we've seen build through the year.

We continue to step up pricing in the third quarter and have good pricing momentum for the fourth quarter and into 2022.

We realized roughly 3% topline growth from pricing actions year to date and expect to reach mid single digit percent in the fourth quarter. We expect this increased level of pricing to continue into 2022.

The third element margin.

Divested continues to execute well in a challenging environment and we are pleased to have increased EBITDA margins from 14, 7% in Q1.

18, 6% in Q2 to 16.0% in Q3 as we signaled we would when we last reported.

Margin improvement has been solid and consistent for several quarters now and provides confidence around our longer term target of 20%.

And drive long term operating leverage in the large and fragmented markets we serve.

Now I'd like to highlight progress on ESG.

We recently filed our annual sustainability report, which we've done annually for more than 15 years. However, this year, we are resetting our strategy and goals are enhanced sustainability strategy is called protect can sustain and it follows the ESG framework commonly used today.

Set out on page eight <unk>.

Protecting the environment caring for society and sustaining good governance will be the focus of our new approach. We are committed to ambitious goals in this area and we will measure and report on our progress annually.

Throughout our history.

And then to sustainability hasn't changed.

Embedded in the culture of the company. It defines who we are what we stand for.

I'd also like to say, how proud I am about global teams for the way that responding to the current global challenges.

Supply chain teams are managing price issues, our procurement teams are finding it difficult and fast changing raw material landscape and our R&D teams are working tirelessly to reformulate products. All of this is aimed at limiting the impact on our customers, which is being very well handled by our customer facing teams.

This is a time of truly exceptional circumstances diversity deep rooted behavior being customer driven is putting us in a great position to deliver a fantastic 2022.

Finally, you'll remember that our medium term growth algorithm.

To grow organic top line faster than the market right, it's 3% to 2% to the top line through M&A to expand margins to 20% and to generate significant cash to delever and fueled investments in growth.

Pass over to SaaS I taught handed to discuss Q3 financial results in more detail.

Thanks, Phil Let me start on page 11, with a summary of our consolidated results.

Q3, net sales were down two 4% versus prior year as reported but increased quarter over quarter as expected with sales increasing by $14 7 million or two 3% versus Q2.

Our F&B business continues to win new customers and grow revenue, while improving margins.

Consolidated adjusted EBITDA for Q3 is in line with 2020 and is two 1% above 2019.

Overall, we are very happy with the progress, we're making on margins, despite inflationary and supply chain pressures.

On page 12, let's review our segments starting with institutional.

We've seen strong recovery in the more developed geographies with much more to come as developing geographies and sectors such as facility services and hospitality continues to recover.

We also believe our infection prevention business is stabilizing after the onetime effects of Covid and is well positioned to grow with our investments in new products and regions.

In Q3 institutional revenue has recovered to within three 4% of pre Covid 2019 levels.

Even with lower revenue and challenging raw material and supply chain environment, we were able to increase our adjusted EBITDA margin over both 2019 and 2020 through operational.

<unk> efficiency programs and pricing.

We are also now at the inflection point, where the combination of stronger customer retention new business wins continued re openings and increased hygiene intensity will drive further quarter over quarter growth in Q4 and into 2022.

Further supply chain disruption.

Before moving to F&B I'd like to quickly highlight one of our environmentally friendly products <unk> TV, which was rated by Newsweek and the leapfrog group as the best infection prevention products in 2021.

Ochs of your T V is a hospital grade disinfectant that contains our patented accelerated hydrogen peroxide technology.

It's right. It is the lowest level of hazard and requires no safety warning or PP&E.

It's great to be recognized but more important is the feedback from our customers that our infection prevention solutions lower infection rates without compromising employee safety.

It's also better for the environment than other disinfectants, breaking down to just oxygen and water.

On page 13 lets review, our food and beverage segment, where revenue grew by 12% compared to Q3 2020.

More impressive was the 29, 9% growth in our adjusted EBITDA over that period.

Given our continued scale and focus on cost improvement.

As a result, our F&B segment ended the quarter with a strong margin of 19, 3%, which was up 270 basis points compared to 2020.

When comparing to 2019 revenue expanded by 9% and our adjusted EBITDA grew by 25, 6%.

Exhibiting the continued momentum we are experiencing closing new business wins around the world along with increasing traction in water treatment.

One of the innovations I'd like to highlight for F&B is D O San H, H, plus which is a sustainable footbath solution to help prevent lameness and ruminant farm animals.

It's estimated that 25% of cattle suffered from lameness.

Potential treatments used copper sulfates to repair the S bridges and hubs, which is an environmentally damaging heavy metal.

<unk> plus users copper nitrates, which is water soluble and therefore has a much lower environmental impact.

This presents a great upsell opportunity across our global agricultural business.

On page 14, you'll see our financial.

From Q3 2020 to Q3 2021.

I've already discussed the institutional and F&B movements, if you will.

Also see we had small favorable FX and a benefit from M&A.

One other item to note in the quarter. During Q3, we had a change in the way we account for income taxes.

It had the effect of increasing our rate in the quarter, but not does not change our full year outlook on adjusted ETR and has no impact on cash flow.

With that let me turn to the balance sheet cash flow and liquidity on page 15.

Beginning with free cash flow Q3, 2021 had an outflow of $41 million compared to free cash flow of $6 million in Q3 2020.

Within the 41 million in Q3, 2021 outflow is $8 million for the purchase of Tasman chemicals, and $12 million of higher cash interest payments, which were accelerated around the refinancing.

Our recent refinancing lowered our interest rates and extended the loan maturities out to 2028 and 2029.

Assuming interest rates on the floating rate debt remain constant we anticipate annual interest expense savings of more than $11 million.

Which could increase to $14 million when we trigger a step down of the interest rate upon achieving our net leverage ratio of four five times.

The overall cost of our debt is relatively low at less than 4%.

We have a strong liquidity profile with over $500 million available as of quarter end, which we view as a strong asset given the fragmented market, we operate in and the very robust M&A pipeline as Phil noted earlier.

Our leverage remains stable at $4 85 times net debt to adjusted EBITDA compared to 474 times last quarter.

The 0.1 times increase was driven by roughly $33 million of refinancing fees.

We believe we will delever by year end as our LTM EBITDA improves inclusive of the significant investment in our new facility in Kentucky, We announced in Q2 and.

And our provision for some M&A in the quarter.

In Q4, we expect to generate more than $70 million of free cash flow net of strategic investments and M&A and our supply chain strategic investment.

So let me conclude with some comments on our general outlook.

Our business is expected to be a positive comp year on year in Q4.

Absent further supply chain disruption and continues to improve as markets reopen and we continue to implement new business that we've won over the last year.

Foreign protection prevention, we're seeing demand lower than what we experienced in 2020 during this pandemic.

Still much higher than pre pandemic levels.

Is likely to continue in the future due to elevated hygiene standards.

In the fourth quarter, we expect to continue quarter over quarter progressive growth in sales adjusted EBITDA and adjusted EBITDA margin.

As mentioned last quarter and accelerating momentum into 2022.

And with that I'll pass it back to Phil for closing summary.

Thanks, Todd as a leading provider of hygiene and infection prevention and cleaning solution amidst the pandemic, we are well positioned to capture significant growth due to elevated cleaning standards as markets continue to reopen we're building great momentum for 2022.

And beyond with an improving top line aggressive pricing to combat inflation and a strong funnel of acquisitions and now I look forward to your questions. Operator would you. Please begin the question and answer session.

At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two chair I move your question from the queue for participants using speaker equipment, it may be necessary to pay.

Up your handset before pressing the star keys, one moment, while we poll for questions.

Our first question comes from the line of Vincent Andrews with Morgan Stanley You May proceed with your question.

Hi, Thank you good morning, everyone.

Just wondering as we look into the fourth quarter.

If you could just give us a little bit more of a sense of what type of topline growth.

To expect.

And maybe just a little bit more thought on the price cost trade off in the fourth quarter and how that will trend.

Yes.

Vincent Thanks for the question Phil.

Let me start with the.

With the price cost of the part of the question you said that we've seen.

Sort of five ish percent cost inflation.

In the in the period to date.

About 3% on price, we think off price is going to step up more.

Like sort of mid single digits in Q4, as we as we talked about quite a lot of extra actions going in there, but it's also likely that all costs are going to step up as well. So we do think that we're going to see some more.

Accretion and on margins.

But it's not going to necessarily accelerate very significantly aspects of managing that.

Further cost inflation against the price we're putting forward.

On the top line I think we will.

See some garage as Todd just mentioned in the fourth quarter.

We've been delivering somewhere like 15% to 20 million.

Improving each quarter.

It may not be as much of that in the fourth quarter.

As you know we've got reopening happening, it's not obvious that that's going to be a huge amount.

More in Q4 versus Q3 as some of those countries.

With a lot of that.

Writes, a vaccination not necessarily improving and that parents.

Somewhere I would say net margin on top line continuing to get better.

But not necessarily huge steps forward I hope that helps.

No. That's very that's very that's very helpful. And then maybe just on infection prevention do you think we're now sort of at the run rate or this is sort of where it's going to sort of bounce around that.

Or minus but.

It's gonna indeed normalize at a higher level than you originally anticipated and this is a good.

Once we lap this rate, we'll stop talking about it.

Well I'm not sure I want to stop talking about it because we.

Fair enough.

But to get to get to the core of your question.

Honestly, it's just so hard to say because as we look at different countries.

As we look from month to month, yes.

There's just some rail.

Diversity and spread.

Four months.

It's certainly true that we've seen in a reasonable amount of normalization and infection prevention side.

Whether that's a bit more to come.

I think that certainly could be.

Offices really globally, not yet in the aten and until we see that again, it's going to be hard to get a full picture.

No that's very complete answer, but probably the best we can do at this stage is things are still unfolding.

I appreciate that thank you very much for your for your comments.

Our next question comes from the line of George Tong with Goldman Sachs. You May proceed with your question.

Hi, Thanks, good morning.

To dive deeper into whether or not youre seeing impact from supply chain disruptions are you seeing any delays or difficulty in obtaining supplies or seeing pricing impact.

Cost impact from some of the supply chain disruptions that we're seeing across the across the economy.

George the short answer to that question.

Yes.

It's really tough out there and I think anyone that says otherwise it probably moving in a different world.

We do see labor challenges.

We do see raw material.

Challenges transportations difficult it's just.

Daily Weekly monthly ongoing challenge.

We're assuming this is going to continue as well.

2022, so whilst we are focusing on all elements of our strategic plan, we talked about before.

It is a challenge I think we're doing well, but yes.

It's not going away anytime soon.

Okay.

Okay, maybe just a follow up on that point, a little bit what are some strategies that you have too.

To mitigate the risk of supply chain disruptions and.

And what kind of impact.

Through their supply chain disruptions elongation of the timeframe of those disruptions have on either top line or margin performance.

Yes, so yes, we are.

We're doing a lot.

As you'd imagine.

So for example.

Our R&D team are working on a whole range of which formulations.

Outside of the registered products to make sure that we've got the more readily available materials going into our products world side.

Using the S Ku range, where we can where it doesn't have a significant impact.

Customers really just focusing on making sure that the Matteo whatever available we can use as flexibly as possible to make sure that we're getting.

And satisfying.

All our customers as fast as possible.

But we're really focusing our crops.

Every part.

Of the supply chain, but what's actually being pretty created with some of the solutions here as well.

Got it very helpful. Thank you.

Yeah.

Our next question comes from the line of <unk>.

Andy Wittmann with Baird. You May proceed with your question.

Oh, great. Thanks for taking my question I thought I would talk about or ask about the <unk>.

Food and beverage segment in particular.

The margins there I think it's kind of stuck out to me as being fairly positive. So I was wondering Phil or Todd if you could talk about.

What are the what are the reasons for the margin expansion. Obviously, you had decent top line growth here. So I have to think some of it was leverage but its a mix.

Are you seeing other factors that are driving that and if you could.

Talk about the sustainability of the margin profile that you realized in the quarter.

Yes.

Basically asking was there anything kind of unique to the quarter that wouldn't be expected to occur.

Yeah.

Yeah, Let me, let me take let me start by saying.

Our F&B later would take issue with positive.

Thank you.

More excited about that.

<unk> is driving.

Why why are we doing well it has to be at.

Part of it.

We have been winning business some of which is last year that we've rolled out this year.

More than that with one this year, so that's adding to the top line.

But also we're winning at nice margins.

South.

It's helpful and the additional volume is obviously, giving us some language familiar with it.

He was suggesting as for whether.

It's sustainable I certainly expect.

As to continue to deliver some really nice topline growth, albeit.

Yeah.

I mean from these inflationary challenges and I think it's fair to say that the cost pressure in SMB is even greater than the AZ and institutional side.

It's going to be a battle too.

To continue to drive that margin accretion that we've seen and that's likely probably to slow a little bit but.

It will keep going forward.

That's helpful. Thank you for that purchase for my follow up question I guess I wanted to talk about the overall kind of.

Outlook for growth in terms of like a net new basis, you mentioned high retention I don't know if theres any more detail you can give on.

Your retention rates overall certainly.

Last year, there wasn't a lot of switching.

Things are getting more normal so I'm wondering if retention is changed from those very high levels, but we realized.

During the depths of the pandemic and then if you could talk maybe about some kind of sales force productivity, you mentioned kind of subjectively a couple of times.

But new sales have been good maybe there's other commentary you can give us that give us a little bit more detail on that so that we could just kind of assess that as well.

Yes sure.

On retention I would say no change.

We talked about 90, 899%.

That's really continued we really haven't seen any.

Material losses that I can think of one off top of my hedge which was.

The resulting from a bit of pricing that we pushed through a competitive was prepared to take a price cut which we wouldn't.

Outside of small examples like that their retention remains.

Really strong.

In terms of new business.

Despite the fact with what a lot of pipeline is also got much stronger.

So it's very hard to to.

To give predictions that but all I can say is that we feel we've got momentum we feel it's going to keep going.

We've got new leadership in our global accounts business, we're focused a lot on commercial excellence I think it's early days, but it seems to be moving in the right direction.

Alright, Thank you very much.

Our next question comes from the line of Edlin Rodriguez with Jefferies. You May proceed with your question.

Thank you good morning, guys.

Good morning.

You've talked good morning, you've talked about the cost pressure in F&B being greater than institutional is that were you trying to push most of the price.

Is it just been a little more challenging to get pricing there and then on the other.

Institutional.

Hum.

Our job here is to maintain percentage margin.

To the extent the cost inflation is highest seller price needs to price increases need to be higher because over time.

Any way, we can maintain percentage margin so yes to the extent the costs are higher.

In F&B sell our prices.

Need to be higher too and that's what we're that's what we're getting on with.

And just a follow up on that I mean, clearly I mean, I think for this year.

Price is still going on lag.

No.

Cost inflation, I guess, we'd get into next year like how long do you think it's going to take you to kind of recover.

The costs.

Yes, it's a really tough one because what we don't know is how much more cost is coming so when we.

Sitting in the summer we were thinking.

The inflation that we could see that we were going to have it fully passed through probably in the first quarter of next year.

What's unfolded of course is it not.

The way the cost inflation side that obviously is going to pay another wave of pricing to recover but it's really hard to predict.

What's that going to happen with further cost pressure, we are now planning.

We're assuming we're going to have further cost inflation right through 2022, and therefore, we've got further price upon big even if that happens then of course, it's going to be.

Beyond that before we fully got the margin recovery, although we feel good that we'll get that suddenly got a $1.

Is it as it comes great.

Okay. Thank you very much.

Our next question comes from the line of.

Jeff Zekauskas with Jpmorgan you May proceed with your question.

Thanks very much.

I think infection protection revenues were $815 million or so in 2020, where does that going to be this year.

Jeff it's impossible to give you an accurate answer on that question I mean, if I, if I step back and say how are things unfolding versus what we expected.

You know I would say that infection prevention is probably normalized a little bit faster than we would've expected.

But yeah exactly what happens beyond.

You know it is hard to say, yes, overall, new business water treatment pricing M&A, good infection prevention, a little bit lower than we expected at this stage, we planned for it to come down further in 'twenty, two how that how that pans out.

Really tough to say.

But we'll.

We'll update you when we can.

Flat.

Order of magnitude like what's the revenue decrease and when do you expect the quarterly revenue in.

Infection protection to begin to go up.

So I think we'll probably see the reductions in infection prevention into Q.

Q4 this year.

And I think we'll see.

A little bit more normalization certainly into the first part of next year.

A little bit more the other thing that's hard to predict because what's happening with hand sanitizer, because what we're saying is as markets reopen such that certainly the hand sanitizer picks up in line with that.

As those markets in the developing world reopen let's see what happens.

That too.

Great. Thanks, so much.

Our next question comes from the line of John Roberts with UBS. You May proceed with your question.

Would you expect any primary shares to be part of any follow on offerings.

John I kind of iconic scent that question at this stage I think all options are.

Alright.

But it's tough for me to add to that at this stage.

Okay.

On slide six is that the combined institutional and F&B, excluding infection prevention or is that just.

Institutional excluding infection prevention.

Yes, good pipe that institutional John say, an excellent day.

The Covid impact was more modest we did have some of that.

And.

<unk>.

It's a low double digit million side not that material. This page really represents institutional.

Thank you.

Our next question comes from the line of Gary Bisbee with Bank of America. You May proceed with your question.

Hey, good morning.

What strategies are really the key drivers of that I know you called out a number of them in the pre IPO process.

Have you stepped on the gas faster on some of those strategies such that maybe.

You're pulling some of that future opportunity forward into this year I guess I'm just wondering if given all of these things.

How youre thinking about the medium term margin story from here relative to how you.

Pulled it in the IPO process.

Sure Tom do you want to pick that one up.

Sure I can I can do that.

Thanks.

Our outlook for our margin opportunity is not any different than it was at the time of the IPO.

The things that we control are clearly still in our control.

Three or four different areas that we said we would focus on.

<unk>.

Focused on those areas and are driving them.

It would be our operational effectiveness program or our earnings improvement program as we call it internally.

We're making significant progress this year on G&A in particular as we look at.

How do we deliver continued funky.

Functional cost savings.

The current supply challenges.

With.

With respect to acquisition of raw materials has actually helped us accelerate some of the work we're doing on portfolio, which we mentioned.

Wasn't important component going forward of <unk>.

Generation further procurement synergies.

Because we're now looking at ways to harmonize the portfolio potentially faster. So that we can aggregate that demand and look at the composition of the cost of our products that we go to market with.

We announced in Q2.

The establishment of a lease in Kentucky related too.

Our footprint.

Opportunity in North America, which we see as a significant opportunity to improve margin.

Q3 2021 Diversey Holdings Ltd Earnings Call

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