DOWNERS GROVE, Ill., Feb. 24, 2022 /PRNewswire/ -- Univar Solutions Inc. (NYSE: UNVR) ("Univar Solutions" or "the Company"), a leading global commodity and specialty chemical and ingredient distributor, announced today its financial results for the fourth quarter and fiscal year ended December 31, 2021.

Fourth Quarter 2021 Highlights

• Net income (loss) of $156.8 million compared to $(33.7) million in the prior year fourth quarter; Adjusted net income⁽¹⁾ of $103.8 million compared to $57.0 million in the prior year fourth quarter.
• Earnings (loss) per diluted share of $0.91 compared to $(0.20) per diluted share in the prior year fourth quarter. Adjusted earnings per diluted share⁽¹⁾ of $0.60 increased from $0.34 in the prior year fourth quarter.
• Adjusted EBITDA⁽¹⁾ of $207.1 million compared to $146.4 million in the prior year fourth quarter. Adjusted EBITDA margin⁽¹⁾ of 8.3 percent compared to 7.2 percent in the prior year fourth quarter.
• Net cash provided by operating activities increased to $175.2 million from $145.3 million in the prior year fourth quarter.
• Leverage ratio⁽¹⁾ as of December 31, 2021 was 2.5x compared to 2.8x at September 30, 2021.
• $50 million of capital returned to shareholders during the fourth quarter through share repurchases.

Full Year 2021 Financial, Operating and Strategic Highlights

• Net income of $460.6 million compared to $52.9 million in the prior year; Adjusted net income⁽¹⁾ of $381.1 million compared to $224.0 million in the prior year.
• Earnings (loss) per diluted share of $2.69, compared to $0.31 per diluted share in the prior year. Adjusted earnings per diluted share⁽¹⁾ of $2.22 compared to $1.32 in the prior year.
• Adjusted EBITDA⁽¹⁾ increased 25.5 percent to $797.7 million, and Adjusted EBITDA margin⁽¹⁾ expanded 70 basis points to 8.4 percent from the prior year.
• Net cash provided by operating activities increased to $290.3 million from $226.9 million in the prior year.

Full year 2022 outlook for Adjusted EBITDA⁽¹⁾ is in the range of $860 million to $890 million.

"Over the past three years, we've transformed the business, putting the customer at the centre of all we do while working to take full advantage of every opportunity to drive growth. We've developed an agile commercial culture, supported by our enviable digital investments, and I'm delighted that these results truly reflect the hard work of our committed workforce. Together, we have overcome constrained supply, transport challenges and the ongoing pandemic to deliver outstanding financial results, all while furthering our ESG progress including our path to carbon neutrality by 2050," said David Jukes, president and chief executive officer. "For 2022, we expect continued strong demand as we capture share growth through our robust supplier relationships, Ingredients & Specialties authorizations, installed asset base, owned trucking fleet and digital backbone. We are targeting a strong full year Adjusted EBITDA in the range of $860 million to $890 million." 

"We also remain committed to our disciplined capital allocation policy to drive growth, including selective acquisitions, as we look to enhance shareholder returns while maintaining strong operational and financial discipline," Jukes added.

Company Performance

Univar Solutions' operating performance results are described below and, unless otherwise indicated, are a comparison of fourth quarter 2021 results with fourth quarter 2020 results.

Consolidated Results

Univar Solutions reported net sales of $2.5 billion, an increase of 22.7 percent on a reported basis and 23.5 percent on a constant currency basis⁽¹⁾ compared to the prior year fourth quarter. Higher sales were attributable to the impact of chemical price inflation, operational execution, and market share gains, partially offset by the Canadian Agriculture wholesale distribution exit and the Distrupol divestiture.

Gross profit (exclusive of depreciation) of $631.9 million increased 30.4 percent on a reported basis and 31.4 percent on a constant currency basis^(1). The positive impact of chemical price inflation, operational execution and market share gains were partially offset by the effects of the Distrupol divestiture. Gross margin expanded by 150 basis points to 25.3% compared to the prior year fourth quarter, driven primarily by the Canadian Agriculture wholesale distribution exit, partially offset by input cost inflation.

Univar Solutions reported net income of $156.8 million, or $0.91 per diluted share, compared to a net loss of $33.7 million, or $0.20 per diluted share, in the prior year fourth quarter. The increase was primarily due to higher gross profit (exclusive of depreciation) and pension mark to market gains in the current year, partially offset by higher Warehousing, Selling and Administrative (WS&A). The higher WS&A was primarily a result of higher operating and variable compensation costs, as well as higher taxes.

Adjusted earnings per diluted share⁽¹⁾ of $0.60 in the quarter increased from $0.34 in the prior year fourth quarter driven primarily by higher net income.

Adjusted EBITDA⁽¹⁾ of $207.1 million increased $60.7 million, or 41.5 percent, compared to the prior year fourth quarter, or an increase of 42.3 percent on a constant currency basis⁽¹⁾. The increase was primarily driven by chemical price inflation, operational execution, market share gains and the realization of Nexeo net synergies, partially offset by higher WS&A and the effects of the Distrupol divestiture.

Net cash provided by operating activities increased to $175.2 million from $145.3 million in the prior year fourth quarter, primarily driven by higher net income.

Liquidity as of December 31, 2021 was $1,021 million, consisting of $252 million of cash-on-hand and additional availability under committed, asset-based credit facilities.

Segment Results

USA:

• USA external sales increased 31.8 percent during the quarter, primarily due to chemical price inflation, operational execution and market share gains.
• Gross profit (exclusive of depreciation) increased by 38.7 percent. Gross margin increased by 130 basis points to 26.0 percent, primarily driven by chemical price inflation, operational execution and market share gains. The gross margin increase was partially offset by input cost inflation.
• Adjusted EBITDA⁽¹⁾ increased 43.4 percent to $130.6 million, driven primarily by higher gross profit, partially offset by higher WS&A. The increase in WS&A was primarily due to higher other operating costs and variable compensation. Adjusted EBITDA margin⁽¹⁾ increased by 70 basis points to 8.1 percent primarily due to higher gross margins and partially offset by higher WS&A.

EMEA:

• EMEA external sales increased 12.4 percent, or 19.3 percent on a constant currency basis⁽¹⁾. The increase was primarily due to chemical price inflation, operational execution, market share gains and higher consumer solutions end market demand, partially offset by the effects of the Distrupol divestiture.
• Gross profit (exclusive of depreciation) increased 12.0 percent, or 18.8 percent on a constant currency basis⁽¹⁾, and gross margin decreased 10 basis points to 24.4 percent driven by input cost inflation.
• Adjusted EBITDA⁽¹⁾ increased 28.6 percent to $37.8 million on a reported basis, or 36.1 percent on a constant currency basis⁽¹⁾, compared to the prior year quarter. This increase was primarily driven by higher gross profit, partially offset by the effects of the Distrupol divestiture. Adjusted EBITDA margin⁽¹⁾ increased 100 basis points to 7.9 percent primarily due to cost management.

CANADA:

• Canada external sales decreased by 5.1 percent, or 8.5 percent on a constant currency basis⁽¹⁾, primarily due to the effects of exiting the Canadian Agriculture wholesale distribution business and divesting the Canadian Agriculture services business, partially offset by chemical price inflation, operational execution and market share gains.
• Gross profit (exclusive of depreciation) increased by 21.0 percent, or 16.8 percent on a constant currency basis⁽¹⁾, and gross margin increased 540 basis points to 24.9 percent, largely driven by the exit from the Canadian Agriculture wholesale distribution business. The gross margin increase was partially offset by input cost inflation.
• Adjusted EBITDA⁽¹⁾ increased 40.3 percent to $28.9 million on a reported basis, or 35.4 percent on a constant currency basis⁽¹⁾, compared to the prior year. The increase in Adjusted EBITDA⁽¹⁾ was primarily due to higher gross profit. Adjusted EBITDA margin⁽¹⁾ increased by 380 basis points to 11.8 percent, primarily due to higher gross margins.

LATAM:

• LATAM external sales increased by 27.1 percent, or 23.8 percent on a constant currency basis⁽¹⁾. The increase was largely due to chemical price inflation, operational execution, and market share gains.
• Gross profit (exclusive of depreciation) increased by 26.9 percent, or 25.1 percent on a constant currency basis⁽¹⁾, and gross margin remained flat at 21.8 percent as higher chemical price inflation, operational execution and market share gains were offset by input cost inflation.
• Adjusted EBITDA⁽¹⁾ increased 16.0 percent to $12.3 million on a reported basis, and also 16.0 percent on a constant currency basis⁽¹⁾. Adjusted EBITDA⁽¹⁾ increased primarily due to higher gross profit and contribution from the Sweetmix acquisition. Adjusted EBITDA margin⁽¹⁾ was 7.8 percent, lower by 70 basis points, primarily due to higher WS&A given increased corporate cost allocation as a result of the SAP implementation and input cost inflation.

Outlook

The Company expects Adjusted EBITDA⁽¹⁾ to be between $260 million and $280 million for the first quarter of 2022 as compared to $182.2 million for the first quarter of 2021. For full-year 2022 Adjusted EBITDA⁽¹⁾ is expected to be within a range of $860 million to $890 million, as compared to $797.7 million for full year 2021. Our forecast versus prior year reflects anticipated continued strong business conditions, market share growth and benefits from Nexeo net synergies. Net Free Cash Flow⁽¹⁾ is expected for the year in a range of  $430 million to $445 million.

As outlined at the company's recent Analyst Day in November 2021, we recently highlighted the following 2024 objectives:

• Ingredients & Specialties (I&S) organic growth of greater than 200bps above economic consensus
• Chemicals & Services (C&S) organic growth above economic consensus
• Improving Adjusted EBITDA⁽¹⁾ margins to greater than nine percent
• 50% Net Free Cash Flow⁽¹⁾ conversion
• Maintain leverage between 2.0x-2.5x
• Average annual capital return to shareholders of 20%-30% of Adjusted Net Income⁽¹⁾

The Company continues to expect to achieve the targeted $120 million in annual Nexeo net synergies by early 2022 and is forecasting continued strong liquidity. The majority of the Company's debt obligations mature in 2026 and beyond and the Company is in full compliance with the covenants under its credit agreements as of year end 2021.

Univar Solutions to Host Webcast on February 25, 2022 at 9:00 a.m. ET

The Company will host a webcast with investors to discuss 2021 Fourth Quarter and Full Year Financial Results at 9:00 a.m. ET on February 25, 2022, which can be accessed on the Investor Relations section of its website at http://investors.univarsolutions.com. After the live webcast, a replay of the webcast will be available on the same website.

Use of Non-GAAP Measures

In this press release, the Company's financial results are provided both in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the Company presents the non-GAAP financial measures of gross profit (exclusive of depreciation), adjusted gross profit (exclusive of depreciation), gross margin defined as gross profit (exclusive of depreciation) divided by net sales on a consolidated level and by external sales on a segment level, Adjusted EBITDA, Adjusted EBITDA margin defined as Adjusted EBITDA divided by net sales on a consolidated level and by external sales on a segment level, Adjusted net income, Adjusted earnings per diluted share, leverage ratio, net free cash flow, net free cash flow conversion (defined as net cash provided by operating activities, less capital expenditures divided by Adjusted EBITDA) and results on a constant currency basis. The non-GAAP financial measures are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help investors' ability to analyze underlying trends in the Company's business, evaluate its performance relative to other companies in its industry and provide useful information to both management and investors by excluding certain items that may not be indicative of the Company's core operating results. Additionally, the Company has used, and may continue to use, Adjusted EBITDA and Adjusted earnings per diluted share in setting performance incentive targets to align management compensation with operational performance.

The Company evaluates its results of operations on both an as reported and a constant currency basis. The constant currency presentation is a non-GAAP financial measure, which excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing information on a constant currency basis provides valuable supplemental information regarding its results of operations, consistent with how it evaluates its performance. The Company calculates constant currency percentages and other information by converting its financial results in local currency for a period using the average exchange rate for the prior period to which it is comparing.

The non-GAAP financial measures noted above are not calculated in accordance with GAAP and should not be considered a substitute for net income or any other measure of financial performance presented in accordance with GAAP. Additionally, other companies may calculate Adjusted EBITDA and other such metrics differently than the Company does, limiting their usefulness as comparative measures. For further information related to the Company's use of non-GAAP financial measures, and the reconciliations to the most directly comparable GAAP measures, see the schedules attached hereto.

About Univar Solutions 

Univar Solutions (NYSE: UNVR) is a leading global commodity and specialty chemical and ingredient distributor representing a premier portfolio from the world's leading producers. With the industry's largest private transportation fleet and technical sales force, unparalleled logistics know-how, deep market and regulatory knowledge, formulation and recipe development, and leading digital tools, the Company is well-positioned to offer tailored solutions and value-added services to a wide range of markets, industries, and applications. While fulfilling its purpose to help keep communities healthy, fed, clean and safe, Univar Solutions is committed to helping customers and suppliers innovate and focus on Growing Together. Learn more at univarsolutions.com.

Forward-Looking Statements

This press release includes certain statements relating to future events and our intentions, beliefs, expectations, and outlook for the future, which are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding the impacts of the effects of COVID-19 on the Company, the Company's anticipated future results and financial performance, liquidity position and cash flows, actions regarding expense control and cost reductions, expected net synergies from the Nexeo acquisition, capital expenditures and other statements regarding the Company's Streamline 2022 Program and other initiatives. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company's control. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions. A detailed discussion of these factors and uncertainties is contained in the Company's filings with the Securities and Exchange Commission. Potential factors that could affect such forward-looking statements include, among others: general economic conditions, particularly fluctuations in industrial production and consumption and the timing and extent of economic downturns; the ongoing and evolving COVID-19 pandemic, including impacts on the global economy, our employees, customers, vendors and suppliers, and our business, results of operations and financial condition; significant changes in the business strategies of producers or in the operations of our customers; increased competitive pressures, including as a result of competitor consolidation; potential supply chain disruptions; significant changes in the pricing, demand and availability of chemicals; our indebtedness, the restrictions imposed by, and costs associated with, our debt instruments, and our ability to obtain additional financing; the broad spectrum of laws and regulations that we are subject to, including extensive environmental, health and safety laws and regulations and changes in tax laws; potential cybersecurity incidents, including security breaches; an inability to generate sufficient working capital; transportation related challenges, including increases in transportation and fuel costs, changes in our relationship with third party transportation providers, and ability to attract and retain qualified drivers; accidents, safety failures, environmental damage, product quality issues; delivery failures or hazards and risks related to our operations and the hazardous materials we handle, potential inability to obtain adequate insurance coverage; ongoing litigation, potential product liability claims and recalls, and other environmental, legal and regulatory risks; challenges associated with international operations; exposure to interest rate and currency fluctuations; possible impairment of goodwill and intangible assets; an inability to integrate the business and systems of companies we acquire, including failure to realize the anticipated benefits of such acquisitions; negative developments affecting our pension plans and multi-employer pensions; labor disruptions associated with the unionized portion of our workforce; our ability to attract or retain a qualified and diverse workforce; and the other factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, as well as other filings with the Securities and Exchange Commission. We caution you that the forward-looking information presented in this press release is not a guarantee of future events or results, and that actual events or results may differ materially from those made in or suggested by the forward-looking information contained in this press release. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek, "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.