GlobeNewswire Inc | May 14, 2021 07:30AM EDT

May 14, 2021

First Quarter Branded CPG Segment Revenue Growth of 103%, Reflecting Strategic Acquisitions of Swerve and Wholesome; Both Acquisitions are Fully Integrated

First Quarter Branded CPG Segment Proforma Organic Constant CurrencyRevenue Growth of 10%

CHICAGO, May 14, 2021 (GLOBE NEWSWIRE) -- Whole Earth Brands, Inc. (the Company or we or our) (Nasdaq: FREE), a global food company enabling healthier lifestyles byproviding access to premium plant-based sweeteners, flavor enhancers and other foods through a diverse portfolio of trusted brands and delicious products, today announced its financial results for its first quarter ended March 31, 2021. The Company also reiterated fiscal year 2021 guidance.

Irwin D. Simon, Executive Chairman, stated, Our expanded portfolio of brands continues to outpace the category growth rate and is confirmation of our strong positioning within the sweetener category that is experiencing powerful tailwinds driven by an increasing movement toward health and wellness products. We have completely transformed our Branded CPG business over the past ten months since becoming a public company and Im excited by the speed at which our acquisitions have been integrated and the value our new Branded CPG North America organization is creating. We look forward to continued execution of our growth strategy by our team and are excited about the opportunities in 2021.

Albert Manzone, Chief Executive Officer, commented, Our business is off to a strong start in 2021, generating proforma organic constant currency product revenue growth within the Branded CPG segment of 10% and delivering $17.5 million of Adjusted EBITDA in the first quarter. Our portfolio of natural brands Whole Earth Sweetener, Swerve, and Wholesome Sweeteners Incorporated (Wholesome) each performed exceptionally well with double-digit revenue growth versus prior year. The integration of our acquisitions is fully complete and with our Power of One strategy, our newly integrated North American team is focused on building our brands, bringing innovation to market, increasing our market penetration and transforming our entire supply chain. We are further encouraged by the positive data regarding an economic recovery including for the food service industry, and by the continued consumer preference shifts towards plant-based better-for-you alternatives, all of which provide our business with near-term and long-term tailwinds.

FIRST QUARTER 2021 HIGHLIGHTS

Our consolidated financials reflect both predecessor and successor periods indicative of the June 25, 2020 business combination date. The first quarter results discussed below compare the successors 2021 first quarter results ended March 31, 2021 to the predecessors 2020 first quarter results ended March 31, 2020.

Additionally, we completed the acquisition of Swerve on November 10, 2020 and the Wholesome acquisition on February 5, 2021. Our reported results include Swerve and Wholesome from those dates of acquisition.

-- Consolidated product revenues were $105.8 million, an increase of 60.4% on a reported basis and an increase of 57.2% on a constant currency basis, as compared to the prior year first quarter. On a proforma basis, including the impact of both acquisitions for the full quarter in both the current and prior year periods, organic product revenue grew 7.9%, or increased 6.1% on a constant currency basis, compared to the prior year first quarter. -- Branded CPG segment product revenues were $81.8 million, an increase of 103.4% and an increase of 98.1% on a constant currency basis, as compared to the prior year first quarter. Constant currency results reflect the acquisitions of Wholesome and Swerve and strong growth in our natural brands. On a proforma basis, including the impact of both acquisitions for the full quarter in both the current and prior year periods, organic constant-currency product revenue grew 9.7%, compared to the prior year first quarter. -- Flavors & Ingredients segment product revenues were $24.0 million, a decrease of 6.7% in the first quarter, primarily due to a difficult comparison to the prior year first quarter as the business realized a surge in product orders in March 2020 related to third parties building stock in connection with the COVID-19 global pandemic. -- Reported gross profit was $35.7 million, compared to $25.9 million in the prior year first quarter, and gross profit margin of 33.7% in the first quarter of 2021, compared to 39.2% in the prior year period. Results for the first quarter of 2021 included $10.1 million of gross profit from the Swerve and Wholesome acquisitions and revenue gains, partially offset by $1.6 million of non-cash purchase accounting charges. -- Adjusted Gross Profit Margin, when adjusting for all non-cash and cash adjustments, was 36.9% percent down from 41.8% percent in the prior year driven by the inclusion of Wholesomes lower-margin private label business, partially offset by productivity and favorable product mix within the business. -- Consolidated operating loss was $3.1 million compared to an operating loss of $33.2 million in the prior year and consolidated net loss was $12.0 million in the first quarter of 2021 compared to a net loss of $28.7 million in the prior year. The primary driver of the difference was a $40.6 million impairment charge recorded in the first quarter of 2020 under previous ownership, partially offset by increased SG&A resulting from transaction costs and increased costs of being a public company. -- Consolidated Adjusted EBITDA increased 38.2% to $17.5 million driven by contributions from the Swerve and Wholesome acquisitions, organic revenue growth and productivity, partially offset by public company costs and increased bonus expense. Adjusted EBITDA as a percentage of sales for the quarter was approximately 17%.

SEGMENT RESULTS

Branded CPG SegmentBranded CPG segment product revenues increased $41.6 million, or 103.4%, to $81.8 million for the first quarter of 2021, compared to $40.2 million for the same period in the prior year. On a constant currency basis, product revenues increased 98.1% driven by the addition of Swerve and Wholesome revenue, which was not comparable to the prior year period. Constant currency results reflect the strong growth in our natural brands. On a proforma basis, including the impact of both acquisitions for the full quarter in both the current and prior year periods, organic constant-currency product revenue grew 9.7%, compared to the prior year first quarter.

Operating income was $10.2 million in the first quarter of 2021 compared to an operating loss of $6.8 million for the same period in the prior year. The increase of $16.9 million was driven by an $11.1 million non-cash asset impairment charge in the prior year predecessor period, which did not exist in the first quarter of 2021, contributions from the acquired Swerve and Wholesome businesses and revenue growth within the segment.

Flavors & Ingredients SegmentFlavors & Ingredients segment product revenues decreased 6.7% to $24.0 million for the first quarter of 2021, compared to $25.8 million for the same period in the prior year. The decrease was driven by a difficult comparison to the prior year quarter as the business realized a surge in product orders in March 2020 as customers were building inventory in connection with the COVID-19 global pandemic.

Operating income in the segment was $1.0 million in the first quarter of 2021, an increase of $25.0 million compared to an operating loss of $24.0 million in the prior year period. The increase was driven by a $29.5 million non-cash asset impairment charge in the prior year predecessor period, partially offset by a $1.7 million restructuring charge associated with the upcoming closure of the Camden, NJ factory, a $1.0 million increase in amortization of intangible assets resulting from the June 25, 2020 business combination and $0.7 million of non-cash purchase accounting charges related to inventory revaluations.

CORPORATE

Beginning with the first quarter of 2021, our corporate office functions are now reported and included under Corporate. Corporate is not a reportable or operating segment. Certain prior year amounts have been reclassified to conform to the current presentation.

Operating loss for Corporate was $14.2 million in the first quarter of 2021, compared to a $2.6 million loss in the prior year. The additional loss reflects $8.1 million of acquisition expenses, $2.1 million of public company expenses, including both one-time and ongoing expenses, $0.8 million of stock-based compensation expense and $0.5 million of increased bonus expense.

CASH FLOW & BALANCE SHEET

Net cash used in operating activities was $5.6 million and capital expenditures were $1.5 million for the first quarter of 2021.

As of March 31, 2021, the Company had cash and cash equivalents of $27.8 million and $389.0 million of debt, net of unamortized debt issuance costs.

On February 5, 2021, the Company entered into an amended and restated credit agreement, in part, to finance its acquisition of WSO Investments, Inc. the holding company for Wholesome. The new agreement provides for a new $75 million five-year revolving credit facility, and a $375 million seven-year senior secured first-lien term loan B. Reducing balance sheet leverage is a corporate priority and the Company expects to achieve a ratio of Net Debt to Adjusted EBITDA of approximately 4.0x by December 31, 2021.

RECENT STRATEGIC ACQUISITIONS

On February 5, 2021, the Company closed on its acquisition ofWholesome, the #1 organic sweetener brand in North America.

The acquisition of Wholesome and its previous purchase of Swerve, a rapidly growing manufacturer and marketer of a portfolio of zero sugar, keto-friendly, and plant-based sweeteners and baking mixes, have doubled the Companys North American market share in only eight months since the closing of its business combination on June 25, 2020. These acquisitions significantly move the Companys portfolio mix toward natural sweeteners, which now represent approximately 87% of its North American Branded CPG business.

ACCOUNTING FOR WARRANTS

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the SEC Statement). As a result of the SEC Statement, the Companys management reevaluated the accounting treatment of (i) the 15,000,000 redeemable warrants that were included in the units issued by the Company in its initial public offering (the Public Warrants) and (ii) the 5,263,500 redeemable warrants that were issued in a private placement (the Private Warrants, collectively with the Public Warrants, the Warrants) in accordance with Accounting Standards Codification (ASC) 815-40, Derivatives and Hedging: Contracts in an Entities Own Equity. ASC 815-40 states entities must consider whether to classify contracts that may be settled in its own stock, such as warrants, as equity of the entity or as an asset or liability. The Company previously accounted for the Warrants as components of equity.

After consideration of the guidance in the SEC Statement, the Company concluded that the Private Warrants should be accounted for as a liability and measured at fair value with changes in fair value each period reported in the Companys statement of operations. The Company has completed its final analysis of this change and has reflected the appropriate adjustments in its first quarter 2021 financial statements. The impact was not material to the Companys previously issued financial statements. The first quarter of 2021 reflects a non-cash loss of $2.4 million related to the change in fair value of the Private Warrants, which is net of a $1.2 million non-cash gain related to the correction of an immaterial error for the fiscal year ended December 31, 2020. The warrant liability included in the Companys consolidated balance sheet as of March 31, 2021 was $8.0 million.

OUTLOOK

The Company is reiterating its outlook for full year 2021, including the impact of its recent acquisitions of Swerve and Wholesome. The outlook includes expectations for growth on a proforma organic basis and margins for the combined business. The Company defines proforma organic growth to be as if the Company owned both Swerve and Wholesome for the full years 2020 and 2021. The Companys 2021 outlook is as follows:

-- Net Product Revenues: $493 million to $505 million (representing reported growth of greater than 78%, and proforma organic growth of 3% to 5%) -- Adjusted EBITDA: $82 million to $85 million (representing reported growth of greater than 50%, and proforma organic growth of 3% to 5%) -- Adjusted Gross Profit Margin: 34% to 35% of product revenues -- Adjusted EBITDA Margin: Approximately 17% of product revenues -- Capital Expenditures: $10 million to $12 million -- Tax Rate: Approximately 23%

CONFERENCE CALL DETAILS

The Company will host a conference call and webcast to review its first quarter results today, Friday, May 14, 2021 at 8:30am EDT. The conference call can be accessed live over the phone by dialing (877) 705-6003 or for international callers by dialing (201) 493-6725. A replay of the call will be available through May 31, 2021 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13718232.

The live audio webcast of the conference call will be accessible in the News & Events section on the Company's Investor Relations website at investor.wholeearthbrands.com. An archived replay of the webcast will also be available shortly after the live event has concluded.

About Whole Earth Brands

Whole Earth Brands is a global food company enabling healthier lifestyles and providing access to premium plant-based sweeteners, flavor enhancers and other foods through our diverse portfolio of trusted brands and delicious products, including Whole Earth Sweetener, Wholesome, Swerve, Pure Via, Equal and Canderel. With food playing a central role in peoples health and wellness, Whole Earth Brands innovative product pipeline addresses the growing consumer demand for more dietary options, baking ingredients and taste profiles. Our world-class global distribution network is the largest provider of plant-based sweeteners in more than 100 countries with a vision to expand ourportfolio toresponsibly meet local preferences. We are committed to helping people enjoy lifes everyday moments and the celebrations that bring us together. For more information on how we Open a World ofGoodness, please visit www.WholeEarthBrands.com.

Forward-Looking Statements

This press release contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning Whole Earth Brands, Inc. and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of management, as well as assumptions made by, and information currently available to, management.

Forward-looking statements may be accompanied by words such as achieve, aim, anticipate, believe, can, continue, could, drive, estimate, expect, forecast, future, guidance, grow, improve, increase, intend, may, outlook, plan, possible, potential, predict, project, should, target, will, would, or similar words, phrases or expressions. Examples of such forward-looking statements include, but are not limited to, the statements of Messrs. Simon and Manzone, statements related to the Net Debt to Adjusted EBITDA and the projected date, the statements in the Outlook section of this press release, and statements related to the 2021 guidance and long-term sales growth targets. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the Companys ability to integrate Wholesome and Swerve and achieve the anticipated benefits of the transaction in a timely manner or at all; the extent of the impact of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on overall demand for the Companys products; local, regional, national, and international economic conditions that have deteriorated as a result of the COVID-19 pandemic, including the risks of a global recession or a recession in one or more of the Companys key markets, and the impact they may have on the Company and its customers and managements assessment of that impact; extensive and evolving government regulations that impact the way the Company operates; and the impact of the COVID-19 pandemic on the Companys suppliers, including disruptions and inefficiencies in the supply chain.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Companys control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These statements are subject to the risks and uncertainties indicated from time to time in the documents the Company files (or furnishes) with the U.S. Securities and Exchange Commission.

You are cautioned not to place undue reliance upon any forward-looking statements, which are based only on information currently available to the Company and speak only as of the date made. The Company undertakes no commitment to publicly update or revise the forward-looking statements, whether written or oral that may be made from time to time, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:

Investor Relations Contact:Whole Earth Brands312-840-5001investor@wholeearthbrands.com

ICRJeff Sonnek646-277-1263jeff.sonnek@icrinc.com

Media Relations Contact:Wyecomm Penny Kozakos202-390-4409Penny.Kozakos@wyecomm.com

Whole Earth Brands, Inc.Condensed Consolidated Balance Sheets(In thousands of dollars, except for share and per share data)(Unaudited) March31, December31, 2021 2020Assets Current Assets Cash and cash equivalents $ 27,806 $ 16,898 Accounts receivable (net of allowances of $723 and 72,205 56,423 $955, respectively)Inventories 191,837 111,699 Prepaid expenses and other current assets 11,807 5,045 Total current assets 303,655 190,065 Property, Plant and Equipment, net 49,752 47,285 Other Assets Operating lease right-of-use assets 18,749 12,193 Goodwill 236,895 153,537 Other intangible assets, net 283,845 184,527 Deferred tax assets, net 2,479 2,671 Other assets 6,926 6,260 Total Assets $ 902,301 $ 596,538 Liabilities and Stockholders? Equity Current Liabilities Accounts payable $ 36,915 $ 25,200 Accrued expenses and other current liabilities 34,616 29,029 Contingent consideration payable 52,672 ? Current portion of operating lease liabilities 5,074 3,623 Current portion of long-term debt 3,750 7,000 Total current liabilities 133,027 64,852 Non-Current Liabilities Long-term debt 385,257 172,662 Warrant liabilities 7,999 ? Deferred tax liabilities, net 52,722 23,297 Operating lease liabilities, less current portion 16,281 11,324 Other liabilities 16,230 15,557 Total Liabilities 611,516 287,692 Commitments and Contingencies ? ? Stockholders? Equity Preferred shares, $0.0001 par value; 1,000,000shares authorized; none issued and outstanding at ? ? March31, 2021 and December31, 2020Common stock, $0.0001 par value; 220,000,000 sharesauthorized; 38,426,669 shares issued and outstanding 4 4 at March31, 2021 and December31, 2020Additional paid-in capital 322,758 325,679 Accumulated deficit (38,544 ) (25,442 )Accumulated other comprehensive income 6,567 8,605 Total stockholders? equity 290,785 308,846 Total Liabilities and Stockholders? Equity $ 902,301 $ 596,538

Whole Earth Brands, Inc.Condensed Consolidated and Combined Statements of Operations(In thousands of dollars, except for share and per share data)(Unaudited) (Successor) (Predecessor) Three Months Ended Three Months Ended March 31, 2021 March 31, 2020Product revenues, net $ 105,825 $ 65,972 Cost of goods sold 70,174 40,112 Gross profit 35,651 25,860 Selling, general and 32,907 16,048 administrative expensesAmortization of intangible 4,151 2,534 assetsAsset impairment charges ? 40,600 Restructuring and other 1,657 ? expenses Operating loss (3,064 ) (33,322 ) Change in fair value of warrant (2,362 ) ? liabilitiesInterest expense, net (5,078 ) (172 )Loss on extinguishment and debt (5,513 ) ? transaction costsOther income, net 310 1,721 Loss before income taxes (15,707 ) (31,773 )Benefit for income taxes (3,682 ) (3,118 )Net loss $ (12,025 ) $ (28,655 ) Net loss per share ? Basic and $ (0.31 ) diluted

Whole Earth Brands, Inc.Condensed Consolidated and Combined Statements of Cash Flows(In thousands of dollars)(Unaudited) (Successor) (Predecessor) Three Months Ended Three Months Ended March 31, 2021 March 31, 2020Operating activities Net loss $ (12,025 ) $ (28,655 )Adjustments to reconcile net loss tonet cash provided by operating activities:Stock-based compensation 1,639 ? Depreciation 969 679 Amortization of intangible assets 4,151 2,534 Deferred income taxes 3,402 (648 )Asset impairment charges ? 40,600 Pension (115 ) ? Amortization of inventory fair value 1,619 ? adjustmentsNon-cash loss on extinguishment of 4,435 ? debtChange in fair value of warrant 2,362 ? liabilitiesChanges in current assets and liabilities:Accounts receivable (1,341 ) 312 Inventories (4,903 ) 3,959 Prepaid expenses and other current 665 (949 )assetsAccounts payable, accrued liabilities (7,052 ) (431 )and income taxesOther, net 597 (2,791 )Net cash (used in) provided by (5,597 ) 14,610 operating activities Investing activities Capital expenditures (1,544 ) (894 )Acquisitions, net of cash acquired (186,601 ) ? Net cash used in investing activities (188,145 ) (894 ) Financing activities Proceeds from revolving credit 25,000 3,500 facilityRepayments of revolving credit (47,855 ) (5,000 )facilityLong-term borrowings 375,000 ? Repayments of long-term borrowings (136,500 ) ? Debt issuance costs (11,589 ) ? Funding to Parent, net ? (12,430 )Net cash provided by (used in) 204,056 (13,930 )financing activities Effect of exchange rate changes on 594 314 cash and cash equivalentsNet change in cash and cash 10,908 100 equivalentsCash and cash equivalents, beginning 16,898 10,395 of periodCash and cash equivalents, end of $ 27,806 $ 10,495 period Supplemental disclosure of cash flow informationInterest paid $ 4,491 $ ? Taxes paid, net of refunds $ 3,535 $ 1,070

Whole Earth Brands, Inc. Reconciliation of GAAP and Non-GAAP Financial Measures (Unaudited)

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, management believes that also presenting certain non-GAAP financial measures provides additional information to facilitate the comparison of the Companys historical operating results and trends in its underlying operating results, and provides additional transparency on how the Company evaluates its business. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Companys performance. The Company also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends. The Company considers quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of its ongoing financial and business performance and trends. The adjustments generally fall within the following categories: constant currency adjustments, intangible asset non-cash impairments, purchase accounting charges, transaction related costs, long-term incentive expense, non-cash pension expenses, severance and related expenses associated with a restructuring, public company readiness, M&A transaction expenses and other one-time items affecting comparability of operating results. See below for a description of adjustments to the Companys U.S. GAAP financial measures included herein. Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, the Companys non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.

DEFINITIONS OF THE COMPANYS NON-GAAP FINANCIAL MEASURES

The Companys non-GAAP financial measures and corresponding metrics reflect how the Company evaluates its operating results currently and provide improved comparability of operating results. As new events or circumstances arise, these definitions could change. When these definitions change, the Company provides the updated definitions and presents the related non-GAAP historical results on a comparable basis. When items no longer impact the Companys current or future presentation of non-GAAP operating results, the Company removes these items from its non-GAAP definitions.

The following is a list of non-GAAP financial measures which the Company has discussed or expects to discuss in the future:

-- Constant Currency Presentation: We evaluate our product revenue results on both a reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our product revenue results, thereby facilitating period-to-period comparisons of our business performance and is consistent with how management evaluates the Company's performance. We calculate constant currency percentages by converting our current period local currency product revenue results using the prior period exchange rates and comparing these adjusted amounts to our current period reported product revenues. -- Adjusted EBITDA: We define Adjusted EBITDA as net income or loss from our consolidated statements of operations before interest income and expense, income taxes, depreciation and amortization, changes in fair value of warrant liabilities, other income and expense, losses on extinguishment and debt transaction costs as well as certain other items that arise outside of the ordinary course of our continuing operations specifically described below:Asset impairment charges: We exclude the impact of charges related to the impairment of goodwill and other long-lived intangible assets. Impairment charges during the calendar year 2020 were incurred only during the predecessor period. We believe that the exclusion of these impairments, which are non-cash, allows for more meaningful comparisons of operating results to peer companies. We believe that this increases period-to-period comparability and is useful to evaluate the performance of the total company.Purchase accounting adjustments: We exclude the impact of purchase accounting adjustments, including the revaluation of inventory at the time of the business combination. These adjustments are non-cash and we believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Transaction-related expenses: We exclude transaction-related expenses including transaction bonuses that were paid for by the seller of the businesses acquired by the Company on June 25, 2020. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Long-term incentive plan: We exclude the impact of costs relating to the long-term incentive plan. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Non-cash pension expenses: We exclude non-cash pension expenses/credits related to closed, defined pension programs of the Company. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Severance and related expenses: We exclude employee severance and associated expenses related to roles that have been eliminated or reduced in scope as a productivity measure taken by the Company. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Public company readiness: We exclude non-recurring organization and consulting costs incurred to establish required public company capabilities. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Brand Introduction expenses: To measure operating performance, we exclude the Companys sampling program costs with Starbucks. We believe the exclusion of such amounts allows management and the users of the financial statements to better understand our financial results.Restructuring: To measure operating performance, we exclude restructuring costs. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.M&A transaction expenses: We exclude expenses directly related to the acquisition of businesses after the business combination on June 25, 2020. We believe that the adjustments of these items more closely correlate with the sustainability of our operating performance.Other items: To measure operating performance, we exclude certain expenses and include certain gains that we believe are operational in nature. We believe the exclusion or inclusion of such amounts allows management and the users of the financial statements to better understand our financial results.

Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of product revenues for that period.

We use Adjusted EBITDA to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.

Adjusted EBITDA should not be considered as an alternative to net income or loss, operating income, cash flows from operating activities or any other performance measures derived in accordance with GAAP as measures of operating performance or cash flows as measures of liquidity. Adjusted EBITDA has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.

The Company cannot reconcile its expected Adjusted EBITDA to Net Income under Outlook without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Companys control and/or cannot be reasonably predicted at this time. These items include, but are not limited to, share-based compensation expense, impairment of assets, acquisition-related charges and COVID-19 related expenses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.

Adjusted Gross Profit Margin We define Adjusted Gross Profit Margin as Gross Profit excluding all cash and non-cash adjustments, impacting Cost of Goods Sold, included in the Adjusted EBITDA reconciliation, as a percentage of Product Revenues, net. Such adjustments include: depreciation, purchase accounting adjustments, long term incentives and other items adjusted by management to better understand our financial results.

The Company cannot reconcile its expected Adjusted Gross Profit Margin to Gross Profit Margin under Outlook without unreasonable effort because certain items that impact Gross Profit Margin and other reconciling metrics are out of the Companys control and/or cannot be reasonably predicted at this time. These items include, but are not limited to, share-based compensation expense, impairment of assets, acquisition-related charges and COVID-19 related expenses. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.

Whole Earth Brands, Inc.Adjusted EBITDA reconciliation(In thousands of dollars) (Unaudited)

(Successor) (Predecessor) Three Months Ended Three Months Ended March 31, 2021 March 31, 2020Product revenues, net $ 105,825 $ 65,972 Net Loss $ (12,025 ) $ (28,655 )Benefit for income taxes (3,682 ) (3,118 )Other income, net (310 ) (1,721 )Loss on extinguishment and 5,513 - debt transaction costsInterest expense, net 5,078 172 Change in fair value of 2,362 - warrant liabilitiesOperating Loss (3,064 ) (33,322 )Depreciation 969 706 Amortization of intangible 4,151 2,534 assetsAsset impairment charges - 40,600 Purchase accounting 1,619 - adjustmentsTransaction related expenses 210 - Long term incentive plan 2,093 402 Non-cash pension expense - 152 Severance and related - 188 expensesPublic company readiness 454 283 Brand introduction costs - 753 Restructuring 1,657 - M&A transaction expenses 8,472 - Other items 890 335 Adjusted EBITDA $ 17,452 $ 12,631



Whole Earth Brands, Inc.Constant Currency Product Revenues, Net Reconciliation(In thousands of dollars)

Three Months Ended March 31, $ change % change Product Constant Foreign Constant Foreignrevenues, 2021 2020 Reported Dollar Exchange ^ Reported Dollar Exchange net (2)Branded CPG $ 81,797 $ 40,219 $ 41,578 $ 39,445 $ 2,133 103.4 % 98.1 % 5.3 % Flavors & $ 24,028 $ 25,753 $ (1,725 ) $ (1,725 ) $ - -6.7 % -6.7 % 0.0 % IngredientsCombined $ 105,825 $ 65,972 $ 39,853 $ 37,720 $ 2,133 60.4 % 57.2 % 3.2 % Proforma Organic^(1)Branded CPG $ 102,177 $ 91,183 $ 10,994 $ 8,832 $ 2,162 12.1 % 9.7 % 2.4 % Flavors & $ 24,028 $ 25,753 $ (1,725 ) $ (1,725 ) $ - -6.7 % -6.7 % 0.0 % IngredientsCombined $ 126,205 $ 116,936 $ 9,269 $ 7,107 $ 2,162 7.9 % 6.1 % 1.8 % ^(1) Product revenues, net shown on a like for like basis, including the impactof both acquisitions for the full quarter in both the current and prior year periods^(2) The "foreign exchange" amounts presented, reflect the estimated impact from fluctuations in foreign currency exchange rates on product revenues.



Whole Earth Brands, Inc.GAAP to Adjusted EBITDA Reconciliation(In thousands of dollars)

$ in Thousands Three Months Ended March 31, 2020 Three Months Ended March 31, 2021 GAAP Non-cash adj. Cash adj. Adjusted GAAP Non-cash adj. Cash adj. Adjusted $ Change % Change EBITDA EBITDAProduct $ 65,972 $ - $ - 65,972 $ 105,825 $ - $ - 105,825 $ 39,853 60.4% revenues, netCost of goods 40,112 (706) (1,027) 38,379 70,174 (2,835) (556) 66,783 28,404 74.0% soldGross profit 25,860 706 1,027 27,593 35,651 2,835 556 39,042 11,449 41.5% Gross profit 39.2% 41.8% 33.7% 36.9% (4.9%) margin %Selling,general and 16,048 (152) (934) 14,962 32,907 (1,943) (9,374) 21,590 6,628 44.3% administrativeexpensesAmortizationof intangible 2,534 (2,534) - - 4,151 (4,151) - - - - assetsAssetimpairment 40,600 (40,600) - - - - - - - chargesRestructuringand other - - - - 1,657 (358) (1,299) - - - non-recurringexpensesOperating $ (33,322) $ 43,992 $ 1,961 $ 12,631 $ (3,064) $ 9,287 $ 11,229 $ 17,452 $ 4,821 38.2% incomeOperating (50.5%) 19.1% (2.9%) 16.5% (2.7%) margin %

Note Q1 2020 is a predecessor period and Q1 2021 is a successor period.

Whole Earth Brands, Inc.Adjustment to Operating Income by Income Statement line and nature(In thousands of dollars)

$ in Thousands Three Months Ended March 31, 2020 Three Months Ended March 31, 2021 Non-Cash Cost of Amort. Of Asset Operating Cost of Amort. Of Asset Operatingadjustments Goods SG&A Intangibles impair-ment Restruct-uring Income Goods SG&A Intangibles impair-ment Restruct-uring Income Sold SoldDepreciation 706 - - - - 706 969 - - - - 969 Amortizationof intangible - - 2,534 - - 2,534 - - 4,151 - - 4,151 assetsAssetimpairment - - - 40,600 - 40,600 - - - - - - chargesRestructuring - - - - - - - - - 358 358 Non-cashpension - 152 - - - 152 - - - - - - expenseLong termincentive - - - - - - 247 1,943 - - - 2,189 planPurchaseaccounting - - - - - - 1,619 - - - - 1,619 costsTotalnon-cash 706 152 2,534 40,600 - 43,992 2,835 1,943 4,151 - 358 9,287 adjustmentsCash adjustmentsRestructuring - - - - - - - - - - 1,299 1,299 Long termincentive 47 355 - - - 402 (22 ) (75 ) - - - (97 ) planTransactionrelated - - - - - - - 210 - - - 210 expensesSeverance andrelated 188 - - - 188 - - - - - - expensesPubliccompany 283 - - - 283 - 454 - - - 454 readinessBrandintroduction 753 - - - - 753 - - - - - - costsM&Atransaction - - - - - - - 8,472 - - - 8,472 expensesOther items 227 108 - - - 335 578 313 - - - 890 Total cash 1,027 934 - - - 1,961 556 9,374 - - 1,299 11,229 adjustmentsTotal 1,733 1,086 2,534 40,600 - 45,953 3,391 11,317 4,151 - 1,657 20,516 adjustments

Non-cash adjustments The Adjusted EBITDA reconciliation includes certain transactions that are non-cash in nature. Such items include depreciation, amortization of intangibles, asset impairment charges, non-cash pension expense, long-term incentive plan expenses (stock based compensation) and purchase accounting adjustments.

Cash adjustments The Adjusted EBITDA reconciliation includes certain transactions that are one-off, non-recurring in nature, but have been or will be settled with Company cash.