Year-over-year Adjusted EBITDA growth outside the USA
2017 marked a turning point for Univar as we put our Company squarely on a growth trajectory. During the year, we made great strides toward building a company that delivers consistent, superior profitability growth, creating value for our customers, supplier partners, employees and shareholders. I’m pleased with the progress we’ve made, and while we still have much work and opportunity ahead of us, I am confident we have the right plan and people in place to achieve our vision.
Stephen D. Newlin
Chairman and Chief Executive Officer
"2017 marked a turning point for Univar as we put our Company squarely on a growth trajectory. During the year, we made great strides toward building a company that delivers consistent, superior profitability growth, creating value for our customers, supplier partners, employees and shareholders. I’m pleased with the progress we’ve made, and while we still have much work and opportunity ahead of us, I am confident we have the right plan and people in place to achieve our vision." - Stephen D. Newlin, Chairman and Chief Executive Officer
Since becoming Chairman and CEO, I have been laser focused on creating a growth culture at Univar where discipline and rigor are a way of life. Culture change is among the most difficult challenges an organization can undertake, but building a high-performance culture is the most impactful change I can make as a leader. I’m pleased with the progress we are making in transforming our Company:
Now, our path for growth is clearly defined. At our Investor Day in May 2017, we presented our vision for the future of Univar—to be the most valued chemical and ingredient distributor in the world through Commercial Greatness, Operational Excellence and One Univar. We also outlined the key actions we would take in the short term in order to extend the turnaround we started early in the year. Our results in 2017 demonstrate that our plan is working as our Adjusted EBITDA growth accelerated this year.
To achieve our vision, we defined a comprehensive five-year Global Strategic Plan, marking the first time we have assembled a data-rich evaluation of our end markets and lines of business. We now have the tools and insights to make fact-based decisions regarding resource allocation and investment to target the highest value opportunities. Our plan is focused on the following five pillars.
Superior commercial execution to profitably grow our core business
Accelerated growth through a focus on chosen industry segments
Digital marketplace leadership
Market expansion and acquisitions
One Univar collaboration, rigor and discipline
Within this framework, we have identified and prioritized our targeted growth areas; we have confirmed our short- and long-range financial targets; and we are progressing toward those objectives.
We finished the year with our fifth consecutive quarter of Adjusted EBITDA growth, and for the full year, our sales grew for the first time since early 2014. In addition, we improved our execution and working capital productivity. In order to better serve the needs of our customers and supplier partners, our USA segment was reorganized into four distinct lines of business: Focused Industries, Local Chemical Distribution, Bulk Chemical Distribution and Services. We also invested in our sales force through hiring and training and with technology tools, and these investments are improving our effectiveness in the marketplace. As a result, our USA segment exited the year with double-digit Adjusted EBITDA growth, providing evidence that our transformation is taking hold. Outside the USA, our segments in aggregate grew Adjusted EBITDA by 13.1 percent.
We also announced two acquisitions in 2017. First, we acquired Tagma, expanding our strong agricultural business and establishing a presence in the growing agricultural market in Brazil. Later, we announced our agreement to acquire Kemetyl, bolstering our competitive position in Sweden and Norway and strengthening our position in pharmaceuticals and water treatment in the EMEA region.
As we have invested for growth, we have also strengthened our balance sheet, reducing our net debt to $2.4 billion from $2.6 billion. We reduced our leverage ratio from 4.7 to 4.0 (Net Debt/Adjusted EBITDA), and we earned credit rating upgrades from S&P and Moody’s.
These encouraging results further reinforce our commitment to our three strategic priorities.
In addition, we made great strides in deploying a new go-to-market strategy in the USA, which was a key contributor to our recent Adjusted EBITDA growth. Under this strategy, we have deployed dedicated teams serving key end markets and lines of business, which allows us to leverage deep knowledge and experience and to better serve our customers and supplier partners. This proven model has been in place in EMEA since 2014 and has delivered consistent double-digit growth.
We also launched our new digital commerce platform, achieving an exciting early milestone in our digital transformation. MyUnivar.com simplifies our customers’ experience, providing them access at any time to Univar products and valuable documentation from the convenience of their desktop or mobile device. Although we are still early in our digital transformation, it is our goal to be the number one destination for digital content and commerce in our space.
In 2017, we strengthened Univar’s leadership team and enhanced our management structure with the creation of several new executive roles. We promoted David Jukes to the newly created position of President and COO. We hired Ian Gresham as Univar’s first Chief Marketing Officer to champion marketing excellence and lead the development of our corporate growth strategy. We also promoted Jennifer McIntyre to the newly created position of Chief Supply Chain Operations Officer. In this role, she will lead our Global Supply Chain, Operations and Quality teams to define and leverage best practices and drive operational excellence across our global business segments.
Year-over-year Adjusted EBITDA growth outside the USA
Our most important leadership change was announced more recently on February 1, 2018, when we announced that David Jukes will succeed me as the CEO, effective May 9, at which time I will assume the role of Executive Chairman of Univar’s Board of Directors. I am so very proud to have served as Univar’s Chairman and CEO during this pivotal period in our Company’s history. Our business transformation is well under way, and we are becoming a high-performance, innovative, growth company that consistently delivers unsurpassed value for all our stakeholders. Jukes is a 35-year veteran of the chemical distribution industry and has held multiple leadership positions within Univar. He is a transformative leader who shares my vision and goals for Univar and has earned the respect of our employees, supplier partners and customers. I am confident that he has the skills, experience and capabilities to lead our Company to continue successfully executing the vision and strategy we have outlined.
Year-over-year Adjusted EBITDA growth outside the USA
Throughout this transformational year, and especially as we made the important decision regarding our CEO succession plan, the Univar Board of Directors has provided invaluable leadership and support. I am deeply grateful to each of them for sharing their insights and expertise.
Lastly, I want to thank the employees of Univar for the dedication and passion they bring to our Company. I am more confident than ever that we are well positioned to deliver sustainable, double-digit growth, and we are on the path to achieving our vision of being the world’s most valued distributor of chemicals and ingredients. I also want to thank our shareholders for their commitment to the execution of our strategy and for their confidence in our ability to achieve our vision.
This is an exciting time in Univar’s history. I am humbled to be part of such an incredible organization and team, and I am excited about the opportunities that lie ahead for our Company
On February 1, 2018, Univar announced that its Board of Directors selected David Jukes as the Company’s President and CEO effective May 9, 2018. Stephen D. Newlin, the Company’s current Chairman and CEO, will become Executive Chairman of Univar’s Board of Directors. The Univar Board of Directors also expects to appoint Jukes to the Board at the time of his promotion.
When appointed CEO in April of 2016, the Board of Directors asked Newlin to focus on three key areas:
Developing a strong global strategic plan
Reestablishing and accelerating growth by developing a performance culture
Finding and developing an outstanding CEO successor.
Newlin explained, “The Board and I conducted an extensive search. Through this robust process we reviewed numerous external candidates and interviewed several outstanding individuals. As the process continued, it became clear that David is uniquely qualified to lead Univar and undeniably the best leader to continue our success.”
William S. Stavropoulos, Lead Director of Univar’s Board said, “We are deeply grateful to Steve for accepting this unplanned responsibility and taking on the role of Chairman and CEO for the last two years, and we are pleased that he will continue to provide support as Executive Chairman of the Board. We are confident that this is the right time to transition responsibility to his successor, and David is the right leader with the right team behind him to continue executing Univar’s strategy and vision.”
Since joining Univar in 2002, Jukes has been recognized for his leadership and business acumen, holding various roles of increasing responsibility. He was named President of Univar EMEA in 2011 and then President of Univar USA and Latin America in 2016. In May of 2017, Jukes was promoted to President and COO of Univar Inc. where he oversees the day-to-day operations of all of Univar’s business segments, including the USA, EMEA, Canada and Rest of World.
“I am looking forward to leading Univar, and I am honored that the Board of Directors has entrusted me with this opportunity,” said Jukes. “Over the last two years, we’ve defined our three strategic priorities, Commercial Greatness, Operational Excellence and working as One Univar. I am committed to these and firmly believe they provide the foundation for growth and high performance that will create tremendous value for our shareholders, employees, customers, and supplier partners.”
“I am looking forward to leading Univar, and I am honored that the Board of Directors has entrusted me with this opportunity.”
President and Chief Operating Officer