Q4 2021 Tupperware Brands Corp Earnings Call
Okay.
Thank you operator good morning.
And welcome to Tupperware brands fourth quarter, and full year 2021 earnings conference call.
Joining me today are Miguel Fernandez, President and CEO , and Sandra Harris, CFO and C. O L. We will all be available for Q&A following our prepared remarks.
Earlier. This morning, we issued a press release announcing our financial results for the fourth quarter of 2021, which is available on our Investor Relations website. In addition to today's press release. We have also published supplemental materials to accompany our prepared remarks and both items can be found on our investor Relations website.
Let me remind you that the following discussion and our responses to your questions reflect management's views as of today February 23rd 2022 and May include forward looking statements actual results may differ materially from such statements.
Additional information about factors that could potentially impact our financial results is included in our Form 10-Q for the third quarter of 2021 subsequent filings with the SEC and in our press release filed this morning. Please review the forward looking statements disclosure on page four of todays press release.
Please note that all references today are being made on a constant currency basis, which reflects the application of the current period foreign exchange rates to any prior period results, enabling comparison, excluding the impact of foreign exchange rate fluctuations.
Also note that all references unless otherwise noted are being made on a continuing operations basis.
During this call we will discuss certain non-GAAP measures, including those we refer to as normalized measures.
Additional disclosures regarding these non-GAAP measures, including explanations and reconciliations of these measures. The most comparable GAAP measures can be found in today's press release, which has been posted to our investor Relations website.
A replay of this call will be available on our Investor Relations Web site later today.
And with that let me turn the call over to you Miguel.
Alexis and good morning, everyone.
It is great to be here with you today to share our fourth quarter and full year 2021 results. Because we ended 2021, we passed the midway point of our three year turnaround plan.
In 2020, our priority was to stabilize the company in 2021, our party wants to build a foundation for Omnichannel growth and in 2022, we will expand our efforts to increase our investments to make our products available to consumers wherever they choose to shop and what we focus on building a strong foundation in 2021.
We reported both top and bottom line growth in <unk>.
22021.
Most important to me and to our board at this point our accomplishments what we've learned and what we see ahead of us in the second half of our turnaround plan.
First what has been accomplished.
We have to rightsize, our cost structure to sort of like the 2020 carried that piece Calgary going into 2021 and successfully stabilized the company, we reorganized and upgraded talent to help us fix and stabilize our direct selling business.
Are brought into the company new tunnel, new talent with retail and CPG experience to help us build an omnichannel business.
We restructured our debt twice first to provide a bridge loan in late 2020 and again in late 2021 to provide critical funding for growth, increasing our financial flexibility and reduce our cost of capital.
We divested non core assets and reclassify the company's beauty business as discontinued operations in our financials as we work to complete remaining sell transactions in 2022.
We implemented proven methods of operations utilizing data and techniques to return part of course direct selling business, which.
We started building new capabilities to open up our iconic brand to new channels of distribution with the goal of dramatically increased consumer access to our products and we.
We have been working with retailers around the world to take limited amount of products into new channels and we closed the year ahead of our objective of 50 million in <unk> revenue, which is product sales.
So through retail in their loyalty programs.
We have accomplished top and bottom line growth in 2021, while continuing to execute on our turnaround plan. Additionally, we made important changes in investments, while navigating unprecedented operating conditions, such as coffee lockdowns throughout the world.
And our gross profit was dramatically impacted both by higher recent resin prices and logistic costs.
Yet despite this outside distractions, we delivered growth in three of our four regions with APAC being the outlier.
It was the hardest hit by the most recent covered batteries.
2021 performance was a tale of two house.
So the first couple of 2021, we were ahead of our internal expectations and really seeing the initial benefits of Houston direct selling methods that we know are successful.
During the second half of a year, we were negatively impacted by disruptions driven by coffee lockdowns, particularly in our developing markets, which we know theres a lower detail Duffy.
Our system issue rolling out our new Salesforce technology platform in the U S and Canada on high resting and transportation cost as well as other inflationary pressures.
That said, we managed controllable expenses as we are exercising more discipline in our spending.
What we've noticed cost pressures, we feel that our local manufacturer model has proven to be an advantage in the current supply chain planning.
We ended the year up 1% of revenue and more than 50% of adjusted income.
Given the unknowns of copied and all that we have on companies to develop a stronger and stable Foundation. We're pleased with the progress our teams are making to prepare for omnichannel pitch. Additionally.
Additionally, as you know we're up against very difficult comps in the second half of the year.
I'd also like to mention a few.
Noteworthy recent achievements, we continue to focus on introducing new more sustainable materials to a probe lines new products designed to solve consumer needs identified by data and insights.
And refined product strategy title renewed purpose to help consumers reduce food waste and eliminate the use of single plastic products and packaging.
In 2021 diet Coke plus coffee to go Cup received the fast company's 2021 innovation by design Award and the Green Good Design Award.
The handy spiral also receive high honors by the 2022 German design Award.
We produce appreciable reusable bottle that when protean offers up to eight hours of French fresh pool water for consumers on the go.
We also launched our universal cookware set of product line developed where small kitchens in spaces.
In 2022, we will expand the glass bakeware and source category given the current needs of today's consumers.
With a purpose to nurture a better future in 2020 , one we brought to life our collaborations with Terracycle simpler we use platform called loop producing a one of a kind reusable packaging container.
<unk> for Tim Hortons and Burger King.
Lastly, we continue to make progress in our ESG efforts, we published our 10th and also sustainability report in the fourth quarter, which highlights the degree to which sustainability will be toward cultural meters.
For the first time ever we conducted a materiality assessment intended to guide our efforts towards the ESG targets. The most important to many of our stakeholders.
The New report includes first time, social and governance goals and established 2025, and 2030 environmental targets, including 90% absolute reduction of greenhouse gas emissions by 2030.
As a testament to our sustainability reports were recently recognized by Newsweek as one of America's most responsible companies in 2021 for our commitment to people planet and environmentally responsible products.
Yes.
And last month, we renewed our partnership with the National Park Foundation, providing 2 million multi use donation to create meaningful impact across the National Park system.
As we head into 2022.
And the second half of our turnaround plan. We believe our strategy is the right one to make the company as big as our Frameless Brent.
We will continue to fix our core business continued to enter in June .
Categories and continue to open and expanding to new channels.
All of which we believe will transform this iconic brand.
In our core direct selling business, we're using a more data driven approach to make them better and smarter decisions. This includes segmentation.
We look at our sales force and our customers to personalize their experience with tupperware and in some cases in tradition preferred customer loyalty programs in our biggest markets.
We're also turnaround unprofitable markets to changing our sales models and supplementing with business expansion charges.
When we started the turnaround plan, we had 18 markets that were losing money.
By converting these markets to a more omnichannel approach. This 18th former formerly struggling markets now represent over $180 million revenue on our contributor over 14% operating profit return on sales.
I talked about in prior earnings calls using importers is one of those models, where you've seen more broadly to both expand sales and improve margins at the end of 2021 revenue from quarters was almost $70 million up 12.
Sent from last year.
Our retooled to new markets, excluding China grew 19% in 2021, while while our beta week loyalty programs achieved 56 million revenue over 50% higher than last year.
In 2021, we continue to create the foundation for transforming a business that has been a period pure direct selling business for more than 75 years. We continue to learn as we go and readjust and make investments to accomplish the goal that we said from the beginning bear at the beginning of the turnaround plan.
We're don't doing something no company has done before you've taken a pud direct selling organization and going Omnichannel.
This transformation will take time to execute organically, but we've made progress in 2021 through the expansion of importers studios and B to B loyalty programs.
We believe we are laying the foundation for further retail expansions winter into the next half of the turnaround.
We know the real price is opening up consumer access to our proxy major way and that means meeting consumers wherever they shop, therefore in 2020 , one we invested in retail talent to develop and grow retail partnerships expand with third party distribution partners to close the globe to improve service levels implement detailed.
Tools.
To support our retail business and enhance packaging and labeling.
We also on boarded a new product team and establish a new sourcing and supply chain center of excellence in Singapore and develop a sub brand specifically for this channel.
In summary significant progress has been made in 2021 to build a foundation that can support both.
The direct selling business and the Omnichannel business.
We're confident that we will be sharing exciting expansion use with you throughout 2022, as we win our way into retail accounts in markets like the U S and the U K just to name a few.
Our focus in 2020 twos global license Red selling best practices.
Accelerating new product development, increasing consumer access through Omnichannel efforts, including expanded product access in the U S and Canada SAP.
License China.
The entire tupperware team, our Salesforce, our associates, our board and our executive team is excited about the future.
I will now turn the call over to Sandra Harris, our CFO and COO to provide a full report on the quarter as well as share our thoughts on the year ahead.
Thanks, Danielle we've made meaningful progress in 2021, despite some challenging headwinds in the second half of the year, while continuing to execute on our turnaround plan and lay the groundwork for future expansion and sustainable growth in 2021, we invested in the business to fix the core and set the foundation for expanding into more channels.
We refinanced the debt for more flexibility with more favorable terms and continued our efforts to divest of noncore assets significantly improved our tax rate and remediated the material weakness within our Mexico operation.
Now to our financial results.
As a reminder, we made an accounting change last quarter to classify our sold and held for sale of beauty and personal care businesses as discontinued operations.
Ladies is consistent with our strategy to focus on the performance of our core business and expansion efforts. Therefore during this call and on a go forward basis, our comments will reflect results from continuing operations.
For the full year 2021, we posted revenue of $1 6 million, which represents an increase of 1% compared to 2020.
As Miguel mentioned, we were outpacing our plan during the first half of the year than in the second half we had to manage through the impact of restricted Covid lockdown, especially in Asia and Europe .
We also were challenged in the second half in the U S and Canada business with the implementation of the new Salesforce tool, but still managed to achieve an all time high for revenue in this market in 2021.
We also grew in three of our four regions for the full year with Europe up 2% North America up 6%, South America up 20% and APAC was down 11%, mainly due to China.
This expansion, which includes b to B loyalty programs Importers studios and retail is now approximately 20% of our revenue.
We're pleased to report that the BW loyalty revenue was $56 million for the year exceeding our stated goal of $50 million for 2021 and $37 million in 2020.
Gil also mentioned the significant progress, we've made and importers and studio guys outside of China.
For the year three of our big four markets, Tennessee, Greg with the U S and Canada up, 2%, Brazil up, 9% and Mexico higher than last year by 13%.
China was the only big four market that did not grow and it was down by 21% heavily impacted by fewer studio openings impacts of lockdowns due to COVID-19 and leadership changes throughout the year.
For the year gross profit was $1 1 billion flat compared with last year.
However, gross margin was 66, 7% as compared to 67, 5% last year.
The decrease of 80 basis points was driven primarily by higher resin costs of 200 basis points parse.
Partially offset by manufacturing efficiencies in the first half of the year.
Adjusted EBITDA was $290 million or 18, 1% of sales relatively flat on a reported basis.
Excluding the foreign exchange impact EBITDA would have been lower due to the gross profit impact I just spoke about.
We continue to improve SG&A, despite higher distribution freight and incremental investments.
Adjusted earnings per share was $3.25 as compared to $2 15 last year as reported.
In 2021, we had two favorable one time items for the year.
15 cents related to a favorable ruling from the court in regard to our Brazil, non income tax matter and five or a China grant, which are being partially offset by a deferred tax asset adjustment of 10 cents that we'll talk about in a minute.
Adjusted for these one time items and for tax items in both periods. Adjusted EPS was 315 for 2021 compared to $3 33 for 2020.
The decrease was primarily driven by higher resin costs of 47 cents.
Investments 24 cents.
Partially offset by 53 cents, a favorable manufacturing efficiencies tighter cost control and lower interest.
The operating tax rate was 21, 9% versus 45, 5% in 2020.
As we noted in prior calls we made significant investments in 2021 to accelerate our tax strategies in an effort to achieve our goal of a sub 30% aligned with our peers and our global operating structure.
You can reference a bridge of our adjusted earnings per share in the presentation posted this morning with our earnings release.
Next turning to performance for the quarter.
Overall, the fourth quarter was heavily impacted by Covid, lockdowns, especially in Asia and Europe .
It also had the highest resin costs for the year and a onetime tax adjustment that I'll discuss in more detail in a few minutes.
For the fourth quarter net sales were 395 million, representing a decrease of 10% compared to last year.
The impact of on the criteria of the COVID-19 was significant in the quarter, but partial our country wide lockdowns in various markets affecting our operations, particularly in Asia Pacific and Europe .
Excluding the Covid impact net sales would have decreased 2% in the quarter.
Also coming off a strong second half of 2020, we were facing tougher comps in Q4, particularly in the U S. Due to over $25 million of backlog from previous quarters being shipped in the fourth quarter of the prior year.
On a two year stack fourth quarter revenue increased by 6%.
Q4 was the strongest quarter for VIP loyalty program revenue with $20 million of the full year of $56 million and representing an increase of $15 million compared to the same quarter last year.
Turning now to sales performance by region, including specific performance in our largest markets.
First in Asia Pacific sales decreased by 10%.
The slowdown in China, which was down 14% in the quarter was driven by Covid lockdowns related to research challenges as well as studio closings and a slower pace of new openings.
Partially offset by the successful entry into small kitchen appliances in this market.
We also made an important leadership change and believe that we have the right person now in place.
China remains an important market for the Tupperware brand and holds significant potential for future growth.
We will continue to prioritize the revitalization of this important market, including through new product innovation upgrading the look and feel of our physical studio locations and investments in digital and e-commerce platforms.
Excluding China, the remainder of the Asia Pacific region.
Down 9% in the quarter as we saw continued impact from Lockdowns driven by the pandemic in Malaysia, Indonesia, and the Philippines.
Significantly impacted sales effort, particularly as digital adoption is low and many of these markets.
Thanks, there are significant opportunity to improve performance within the region as we focus on increasing digital adoption.
Excluding the impact of Covid felt in the Asia Pacific region would have decreased by 2%.
In Europe .
<unk> decreased by 7%.
While sales were lower overall 13 million of the $20 million b to b in the quarter within this market as significantly higher profit margins.
The European emerging markets were severely impacted by the lockdown due to the omicron variant of COVID-19, as this market relies heavily on physical gatherings, resulting in lower recruitment and productivity.
Excluding the impact of Covid sales in Europe would have decreased by 3%.
In North America sales decreased by 12% in the quarter with the U S and Canada decreasing by 29%.
The decrease in the U S and Canada was driven by tougher comparable due to a large backlog shipped in the fourth quarter of 2020 that did not reoccur in 2021.
Adjusting for the sales in the U S and Canada would've increased by 11%.
Sales in Mexico increased by 22% in the quarter, 5% for me to be while the direct selling growth was driven by higher engagement and productivity due largely to the implementation of our proven direct selling methods segmenting, our salesforce and sharing best practices as well as returning to in person events during November and December .
<unk> as Lockdowns are lifted in this market.
We believe the success in Mexico reflects our effort methods and tools that we are also implementing in markets around the world to stabilize our direct selling business.
And South America sales decreased by 10% sales in Brazil were down by 21% driven by challenging economic conditions, including household debt levels and the expiration of the government's stimulus in October all of which contributed to lower levels of recruitment and productivity.
Due to macro environment condition and the upcoming October 2022 presidential and general election, we do expect this market to remain challenging for the next few quarters.
Moving now to profit for the quarter.
Gross profit in the fourth quarter with $241 million or 61% of net sales a decrease of approximately 740 basis points compared to last year, largely driven by inflationary pressures.
Of the total approximately 250 basis points was due to higher resin costs with the balance being a mix of downtime and manufacturing inefficiencies due to lower volumes and higher inventories.
Higher inventory reserves and market and product mix.
In the first half of the year, we were offsetting the resin impacts from manufacturing efficiencies How's.
However, as volumes began to decrease in the second half we were no longer able to offset the impact and could not respond fast enough on pricing due to the nature of our catalog based business.
We believe that inflationary pressures will persist throughout 2022, and we will look to raise prices to offset the dollar impact being mindful of relative market dynamics.
We will also continue to look for opportunities to reduce costs and increase efficiencies where possible.
From an inventory standpoint, we ended the year at a higher level than we had anticipated due to the softness in cells and will work to reduce that balance as we move through the first half of 2022.
I should note that our ability to manufacture locally continues to be an advantage in the current supply chain environment, avoiding costly and time consuming shipping delays.
Our SG&A as a percentage of sales in the fourth quarter was 52, 3% versus last year of 52, 1%.
In the quarter, we made approximately $6 million of strategic investments, including information technology, new talent for products sourcing and business expansion to support future growth.
And the tax investments to achieve a sub 30% tax rate.
Adjusted EBITDA for the fourth quarter was $47 million or 12% of sales, reflecting the higher resin costs and investments just discussed.
Our fourth quarter operating tax rate was 40% versus over 80% in the same quarter in 2020.
During the fourth quarter of 2021 as part of a tax control design reassessed that we identified a deferred tax asset balance for stock compensation that included amounts associated with expired or forfeited rewards and other amounts are awards with no expected tax deduction.
These were out of period and related to prior years that are recorded in the fourth quarter of 2021.
We also recorded a reserve related to transfer pricing in the quarter, which is also part of our comprehensive tax planning strategy.
As a reminder, the 2020 Q4 tax rate was impacted by the sale of the Orlando property and early retirement of debt.
As I stated earlier on a full year basis, our operating tax rate was 21, 9%.
So as you can see we've made great progress toward our goal of sustainably lowering our tax rate in achieving our goal of a sub 30 <unk>.
It's clear that our tax planning strategies are working.
Now to earnings per share adjusted EPS was <unk> 38 cents in the quarter compared to 22 last year.
Adjusting both years for the tax impact adjusted EPS would've been 49 per share versus 89 per share in 2020.
In 2021 higher costs related to resin manufacturing inefficiencies and higher inventory reserves resulted in a negative impact of 27.
While lower profit RG self was 12.
Turning now to other notable financial matters for the year.
On a reported basis for the full year operating cash flow net of investing with $130 million compared to $198 million last year.
As we've previously discussed cash flow benefited last year by aggressive cost savings actions, including pandemic specific actions, such as furloughs and significantly lower spending on inventory and higher payables in order to preserve cash.
For 2021 cash flow was impacted by investments we made in the inventory in an effort to improve service levels given current global supply chain issues, while also reverting to a more normalized level of capital spending.
Moving to the balance sheet.
We ended the quarter with a healthy cash balance of 267 million, which compares to $134 million last year, and we ended the quarter with a total debt balance of $712 million.
At year end, our consolidated net leverage ratio was two one times well below both historical levels and our required covenant of 375 times.
We mentioned on our last call that we would look to favorable market conditions present opportunities to further improve our capital structure and I'm pleased to report that we were able to do just that in the fourth quarter.
Refinancing our credit facility <unk>.
Reducing our cost of debt improving liquidity and extending our maturities.
Our new $880 million credit facility consists of a five year $480 million revolving credit facility, a five year U S. Dollar term loan of $200 million and a euro term loan of 176 million Euro.
The entire facility extends maturity out by two and a half years to 2026 and crazy liquidity by approximately 100 million through a higher level of revolver capacity and reduces the interest rate on our term loan by more than six percentage points.
In addition, the new facility resets, our financial covenants to enhance operating flexibility, including capital allocation flexibility and leverage ratio calculation on a net basis, allowing for up to $100 million of cash to be applied toward debt balances.
We are also pleased to have the support of a new lead bank and banking Syndicate, which is comprised of 10 banks and led by Wells Fargo.
We are also pleased to have made significant progress over the past 18 months and strengthening our balance sheet refinancing our debt investing in our business and selling our noncore assets.
In June of 2021, our board authorized a $250 million share repurchase program and.
And in the third quarter of 2021, we returned $25 million to our shareholders under this program for stock buybacks.
This 25 million was the maximum amount of share repurchase allowable under our prior credit facility covenants.
Under our new credit facility, we are no longer subject to the same restriction covenants as long as we remain below certain leverage thresholds.
Therefore, as we continue to generate strong cash flow.
And given our confidence in our future growth trajectory given the enhanced flexibility. We now have to utilize this facility. We may opt to more aggressively support the stock at current levels always being mindful to deploy capital effectively and efficiently as possible.
While we remain in a challenging operating environment and our only at the halfway point of our three year turnaround.
We feel we have sufficient visibility to provide a more tangible view into the coming year.
Given the uncertainty that COVID-19 inflationary pressures volumes in response to pricing actions and a host of other variables.
We will only be providing our view on profitability and cash flow for 2022 at this time.
We previously shared that at a quarterly run rate of $470 million of revenue and a tax rate of 28%. We believe we could sustainably deliver quarterly adjusted earnings per share of approximately a dollar for dollar 20.
That range was provided prior to the reclassification of our beauty businesses to discontinued operations.
If we adjust that range to reflect continuing operations only we believe a reasonable quarterly range to be approximately 85 to a dollar.
Which assumes a tax rate in the mid to upper twenties.
As we move into the expansion stage of our turnaround plan, which will require further investments and given the persistent persisting uncertainty of the pandemic. We believe that for 2022 adjusted earnings per share will be approximately 65 to 80 cents per quarter, reflecting 5% to <unk> 20 per share.
Per quarter lower than the normalized estimate.
You can also see this guidance in the presentation posted in the materials for this release.
We also believe that 2022 will be another tale of two halves the trending opposite of 2021.
Our comps in the first half.
<unk> by Covid and persistent cost pressures followed by relatively easier comps in the second half.
Also expect our pricing actions to catch up with cost increases by the second half and for results to benefit from business expansion efforts that began to take root in the latter part of the year.
Therefore, we expect our second half to be our stronger half for 2022.
Our cash flow expectations follow a similar story line we.
We had originally shared that normalized annual free cash, which we define as operating cash flow net of investing cash flow to be approximately $200 million.
Adjusting for discontinued operations that normalized number now moves to a range of roughly 140 million to $160 million on a continuing operations basis.
For 2022, we anticipate a similar range of between 125, and 150 million, giving anticipated investments into the business for our turnaround plan.
Lastly, and as we alluded to last quarter, we look forward to conducting an in person Investor day. This year and given the current COVID-19 trends, we've decided to push it to the second half of 2022, hoping to meet face to face and share many of the exciting initiatives that are underway and designed to leverage our brand expand our distribution and reach more consumers.
<unk> than ever before.
We will also provide a more comprehensive view into the business strategy and tangible proof points of progress as well as a longer term framework and outlook.
Look for more details in the coming months.
Looking back throughout 2021, we continue to fortify our financial foundation, which enables us to strengthen our core business, while also increasing consumer access to our products by entering new sales channels and product categories.
Despite a year of challenging and rapidly changing operating conditions, we have firm to our plan and executed on a number of important strategic initiatives that further strengthened our capital structure and positions position us well for future growth.
We refinanced our debt at very favorable terms, so additional noncore assets and announced the opening of a new global sourcing and supply chain center in Singapore.
We are entering the new year on solid footing and we believe that our consistent execution will result in a stronger more resilient and durable business capable of delivering long term sustainable growth and value.
Thank you and now we will conduct the question and answer session.
As a reminder, the Wassa question. Please press star one on your telephone keypad.
To withdraw your question press the pound key please stand by while we compile Laguna roster.
Your first question comes from Anthony You said dog they basinski from Sidoti Your line is open.
Hi, good morning, and thank you for taking the questions.
So first of all just the.
Looking at the fourth quarter there was a.
Rather wide divergence.
When I look at the Salesforce numbers between the Americas, and Europe and Asia Pacific is this only due to COVID-19 or was there anything else going on.
Hi, Anthony This is this is miguel good morning, Susan.
The main reason is coffee definitely we got.
You know a big headwind in Asia, and EMEA, but also you know you'll see the difference, let's say with Mexico, because we're going to call Mexico. The liter marketing direct selling so a lot of the good methods and practices that we know we know they work.
Been implemented in Mexico, and that's why you see so much positive in Mexico.
You know a different story in EMEA and.
In APAC.
Gotcha, Okay and then.
In terms of the.
The strategy to stabilize sorry that I know of Sandra you mentioned that there is a change in leadership is there anything else you can share with us as to what Youre looking to do the stabilized China, yes, absolutely. So you know obviously, we have a new leader there but.
Before when we were opening new stores or outlets around China. It was more.
Financial burden Euro type of letting you know the intrapreneur do it by themselves now, we're providing a very professional guide.
Guidance around the look and feel of the store the location of the store.
Obviously hard the best in the World.
In retail to help us develop those are met I guess.
Guidelines too to have before the intrapreneur to follow so that is going to maximize or at least you know elevate our chances of success of each of the outlook of the.
Our lives that we have in China.
So weird.
Andre mentioned in her in her speech.
We're doubling down in innovation, new products and smart you know mostly in the small kitchen appliances that we know we have a lot of traction in China and finally, the biggest one is e-commerce right and we're enabling all the stores on everyone.
There to start operating also through an e-commerce that we know that it's a <unk>.
Big part in China or more so under these conditions around COVID-19 .
Gotcha, and then I guess last question for me.
As far as the timing of the new products that boosted sales channels is that going to be most of the back half of this year or can you give us a little bit more color about your strategy with that as far as.
Also product pricing and.
No just timing that'd be very helpful. Thank you.
The timing just in one word is that in the second half of the year.
We're setting the foundation to get ready and make sure that that we that we are ready for these other channels and the on were in essence, we're building a company and a new company that serves these other channels.
I mean, I think you asked about pricing to some pricing actions are going to happen in the first half but.
But the timing of the new channels and products that someone else David.
Got it okay, well, thank you and best of luck.
Thank you Anthony.
Your next question comes from Doug Lane from Lane Research Your line is open.
Yes, hi, good morning, everybody.
Can you talk a little bit about where we are with our in person meetings are you able to hold in person meetings, yet anywhere or are you still pretty much locked down on that front.
Towards that end, how does that look for 2022 and resuming live meetings, assuming that you haven't yet.
So.
So good morning, Doug.
We're going to start full swing in Q1, we're starting to already Mexico already starting in Q4.
Okay distribute some of our successes in Mexico.
The fact that we're having people together, but basically we're going to start in Q1, and so on you know it depends on the country, but that's our intention.
Okay.
Okay. Good.
So in Mexico, I noticed that you have an agreement to sell Fuller there.
He terms been disclosed and I assume that's going to be a cash deal.
Yes, Doug So we are in our agreement to sell a fuller and we expect that that will bottom.
Finalizing the first part of March and we've received the clearances that we need from the competitive conditions in its label for it and yes, it will be a cash deal.
Okay. That's helpful. Thank you and then can you give us any early learnings from the.
The debenture with Tim Hortons in Canada.
So it looks the rest of it.
Just what's the rest of the <unk> of consumers, putting a deposit down on our food container.
We're still in a pilot phase.
The feedback that we've.
We have received so far is positive, but we're still in limited amount of stores.
But so far so good.
Okay.
And then when you you know them.
Obviously interested in the multichannel strategy and so you mentioned retail in markets like the U S. Can you just give us a little bit more color on how.
You are looking to approach retail keeping in mind that the potential channel conflict with your direct selling salesforce.
Yeah, absolutely. So the first step is obviously we.
We're going to launch products with a different <unk>.
L brands, so there's going to be.
A couple of our essentials.
Then another one is that we're going to be doing products.
Would be part of our collection, so youre going to find one or two products and the retailer and the rest of our collections youre going to find it in the direct selling so that's how we're going to make both channels to be synergistic.
Also obviously, where we're sharing on developing all of this plan in conjunction with the Salesforce and with our leaders into Salesforce. So they know what's coming on how we are trying to approach it.
What we've found in some other countries is that are you.
You know the Tupperware brand becomes so top on top of mind, so customers that used to purchase from one of our direct sellers in the market. They go to the retail did you see the product they see one SKU and then they called their old friend to buy other products because obviously the retailers, we're gonna be able to you know.
To sell 10 to 12 for Skus, whereas we carrying in a catalog of over 180 Skus. So it's a combination of those of those so for us the ones that we believe are.
We're going to minimize the conflict.
And we're very happy because in three countries in Mexico, and some in Europe and some in APAC, we already did that and he is working really well.
In some cases, even last year around 40% of our profits came from this other channels with no direct impact into our direct selling channel. So we're very excited about that.
Okay. Thanks.
Thanks, and just one last thing.
You mentioned the B to B was $56 million in 2021, and historically, that's been a bit of a lumpy figure so from where you sit today.
Do you expect 2022 to be at or above that level.
Okay.
Yes, absolutely we see at least you know 30, 40% above that number.
Good alright, thank you.
Thank you.
Thank you.
And as a reminder to ask a question. Please press star one on your telephone keypad.
Your next question comes from Linda Bolton Weiser from D. A Davidson.
Yes, hi.
Just a couple of housekeeping things, but what's the tax rate that youre, assuming in your EPS guidance.
For 2022, and can you give us an estimate of interest expense.
Yeah, Linda we're assuming a mid to high tax rate previously we had quoted.
The 8% that we're ranging at mid to high <unk> mid to high Twenty's at this point and then in regard to the second question on interest based upon our new it is actually in the presentation. We posted to the website you can see the difference in interest rates, it's about half of where our interest expense has been trailing with our new your debt agreements that we just entered into.
It's around 15 plus million of everything.
Okay.
And then.
So maybe I missed it but have you given our constant currency sales growth estimate for the year end.
I mean, you know by my projections, I'm still assuming kind of down double digit in first half and maybe some growth in second half, but for the full year do you think the constant currency revenue can grow or or not.
Yeah, we that's the one thing we chose not to guide on Linda just because of all of the uncertainty that still exists with the pricing changes how much of it.
<unk> volume, we do you know reminding everybody, where 80 plus percent international for Tupperware and I'm, even though you know things in the U S are getting better with the pandemic. We we talked about the Q4 impacts that we had and some of that is continuing into Q1. So you know a lot of those uncertainties and it is making us more cautious around providing a fair.
Number, but we did feel a bit.
We can control profitability and expenses more depending upon whether sales are and so we do feel confident in the EPS guidance and cash flow guidance, we provided.
Okay.
And.
Just in terms of the pricing.
I mean are you can you give us a little more color like is it across the board or is it a certain percentage of use how.
How long will it take to flow through the system is it certain geographies can you give us like a little more color on the pricing actions.
Yes, Linda this is miguel so pretty much across the board.
Obviously, we're going to take advantage of.
New products to make sure that we price accordingly.
We literally started pricing towards the end of Q4, but absolutely every single market is increasing prices effectively in Q1.
There's a few of them very little little later portion of that in Q2, but.
In all of them, we are going at least with the rate of inflation and again, we're going to be opportunistic and if we find a way to.
Through new products to surprise them.
Obviously grow our gross margins will take a bunch of that but you have to remember that we're pricing.
<unk> to market to market. So we don't want to price ourselves out of the of our competitive.
<unk> scenario, we know that we are a premium brand, we always want to be around 15% to 20% above our.
Competition because of our quality of our products, but again, it's it is it's a balance right.
And Linda I want a route back one on that last question quickly and just clarify one thing I think you actually said it yourself, but we do want to emphasize that due to the tougher comps in the first half we do expect the cells to be more backend loaded. So I just want to make sure that I got it.
Yes.
Okay.
And then.
Do you have a launch in the UK already if I'm not mistaken in the fourth quarter can you just give us an update on how that initiative in the UK is going.
So it's going great.
Started as you said in Q4 now we are expanding we.
You know if everything goes as planned and everything is going as planned.
Being the major retailers in the U K, probably in a quarter or two from now but not only the retailers were also in <unk> and other channels.
Our brand is showing that he is very strong and it has a lot of acceptance with the consumer.
So everything is looking just as good as C. As we thought about.
So just to be clear you are in some retailer in the UK in the fourth quarter, no well, yes, but with very limited amount of products youre going to see a meaningful and material sales probably towards Q2 and Q3 of this year.
Can you say, which retailer in the UK you're in.
We we we I don't think we can just yet.
But as soon as we as we signed the last the last letter, let's just put it away, we'll announce it and Youll know pretty fast.
But.
That's the product in the store in the fourth quarter, you said the product was in the store in the fourth quarter. So well. The DTI is the one that is in the U K market the retail.
Physical stores is going to be in the next in the next few weeks.
So just thank all of the major just think about the major retailers in the UK and that's where we're going to be.
Okay.
And then.
I guess also.
I guess I was curious about.
Just on the resin cost.
Our resin costs for you like still going up year over year are they stabilized.
Yes, it's a two part answer on Windows. So the resin cost is tied predominantly to the indices, which have been going down but then on top of the index factor. There's also the factors of logistics and freight any adders to go see the resin to to the market. So what we saw in 2021 was clearly the impact of what was happening in the indices.
In 2022, we do expect a 5% increase in resin, but it's predominantly tied to the pressures that are happening related to the logistics and adders that go on top of the indices as it comes into the business. So a 5% increase on resin cost equates to about a one.
1.5% of an increase in cost of goods sold and then our total cost of goods sold we're estimating it was in line with many others that you've probably heard is around 8% to 10% with other inflationary factors that are happening throughout our supply chain, including increases our source product wishes and more than 40% of what we buy.
We're going up in line with what others are seeing around that.
Sent to 10% and then we also are expecting more pressures on logistics and freight and other.
Sherri factors like wages and factories and things of that nature, So roughly 8% to 10% as I look for 2013.
Okay, and just one one more question on the U S.
Retail launch I think you've said in the second half.
Did you say just a couple of items. So are you are you talking about just like a very few number of Skus are you talking about a whole range of items.
At retail.
Okay.
We're talking about.
Specific to with one of the major retailers in the U S 16 Skus.
Pretty much in the categories that you know that we were very strong.
And the way we see that this is the first step of many.
We're going to expand our presence in that category and then into different categories.
Okay sounds good thank you very much.
Thank you.
Yes.
There are no further question at this time I would now like to turn the call over to Miguel Fernandez.
Thank you in closing 2021 was a year of challenges, but we continue to execute against our turnaround plan, making fundamental changes and investments necessary for our unprecedented transformation. We're proud of our progress and enter the second half of our year.
And the turnaround on a strong foundation that will enable us to enter into new channels and product categories and increase consumer access to our iconic products. Our goal is to make this business was because of our brand and I have confidence in our ability to achieve that thank.
Thank you for your time today and I'll look forward to speaking to you pretty soon thank you.
Yes.
This concludes today's conference call. Thank you all for joining you may now disconnect.
Okay.
Yes.
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Sure.
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