Bunzl plc (BNZL) Earnings Call Transcript & Summary

Hello, and welcome to Bunzl's Investor Insights Series focused today on Bunzl North America. My name is Jim McCool, and I have the privilege of leading Bunzl North America and its 8,700 team members. I'm now in my 25th year with Bunzl, and I've seen us grow from being a leading national grocery and foodservice distributor to a diversified and resilient portfolio of leading businesses serving a broad range of customers across 6 core sectors, now including agriculture, food processor and safety. The growth story in these sectors is both organic and acquisition-driven and we maintain a strong and attractive pipeline of acquisition opportunities in these higher-margin, higher-growth sectors. Today, in addition to providing a high-level overview of the North American business and its growth opportunities, we'll highlight 3 businesses: our ag, food processor and safety businesses which continued to deliver strong margins and growth owing to their customer and sector-focused strategies. Joining me today are the Managing Directors of these businesses who combined have over 50 years at Bunzl. John Murphy, MD of our agriculture and Mexico; Bryon London, MD of Food Processor; and Dale Stokes, MD of Safety. Each joined Bunzl upon Bunzl acquiring the company they worked for, with John and Dale having been partners in their respective companies. These leaders and their businesses are prime examples of the entrepreneurial mindset so prevalent across Bunzl, building and implementing strategies to support their particular sectors and end markets. After and over the North American business, I'll turn it over to John, Bryon and Dale to highlight the expertise and innovation in their business, which helped deliver strong organic growth and double-digit operating margins, and then come back and focus on the expansive acquisition opportunities for North America, following we'll be happy to address any questions you may have. We'll show you today how North America, the largest business in the Bunzl Group has significant opportunity for further growth. Innovation, including expansion of our exclusive own brands and sector-focused customer-tailored solutions will fuel organic growth. And our significant pipeline of acquisition opportunities, particularly in our higher margin, higher growth sectors will continue a strong track record of acquisition growth. Together, these will drive growth and support medium-term upside for our North America margin. The North American business is relatively young, having only entered the U.S. in 1981. In our early years, our primary focus was the grocery and foodservice space, and we had much success consolidating local and regional operator into the leading national supplier of packaging and operating consumables in both the U.S. and Canada, which we entered in 1995. From within grocery and foodservice, we identified adjacencies in food processor and convenience store, adding anchor acquisitions in each in the early 2000s, and which remain today some of the best-performing businesses within Bunzl. Food Processor led us to investing in the agriculture space. And we also leveraged our global portfolio and successes in other parts of Bunzl, building an industry-leading platform for safety in the U.S. and for cleaning and hygiene across Canada. Our 110-plus acquisitions since 1981 have built a broad, resilient portfolio of businesses yet with significant further opportunity for higher margin growth. The North American business is relatively young, having only entered the U.S. in '91. In our early years, our primary focus was the grocery and foodservice space, and we had much success consolidating local and regional operator into the leading national supplier of packaging and operating consumables in both the U.S. and Canada, which we entered in 1995. From within grocery and foodservice, we identified adjacencies in food processor and convenience store, adding anchor acquisitions in each in the early 2000s, and which remain today some of the best-performing businesses within Bunzl. Food Processor led us to investing in the agriculture space. And we also leveraged our global portfolio and successes in other parts of Bunzl, building an industry-leading platform for safety in the U.S. and for cleaning and hygiene across Canada. Our 110-plus acquisitions since 1981 have built a broad, resilient portfolio of businesses yet with significant further opportunity for higher margin growth. Today, the North American business is the largest within Bunzl with 60% of global revenue. And while North America may be best known for its distribution excellence in servicing large national customers in the grocery and foodservice space, it has grown significantly in recent years in sectors such as food processor, agriculture and safety, each with a strong focus on adding value for their customers and end markets through product innovation, and exclusive own brands in addition to their industry-leading supply chain excellence. The North American business has an expansive footprint with national coverage across each of the U.S., Canada and Mexico. Servicing customers across 6 core segments are 49 focused operating companies, supported by 8,700 team members with each sector accessing a discrete distribution network within our 190-plus locations. Our teams are sector-focused with over 1,600 sales experts and customer service specialists providing customized sales solutions and support for customers both national and local, large and small. Our supply chain is equally broad, leveraging both global and local supplier relationships to provide our customers with innovative, exclusive own brands as well as leading manufacturer brands across the vast array of categories, with an ever-increasing focus on both sustainable packaging as well as the sustainability of our supply chain. Over the last 10 years, the North American business has delivered strong growth with 7% revenue CAGR and 8% operating profit CAGR while increasing operating margins by 50 basis points. This doubling of the business was fueled both organically and via acquisition, with acquisitions accounting for 55% of the overall growth over that period. As I indicated earlier, we've seen significant growth in higher-margin, higher-growth sectors over that time, and the operating margin increase is reflective of that sector mix. And while we're pleased with the results of the past 10 years, we're also very optimistic for the coming years, given the significant opportunities ahead, both organically and with our strong pipeline of acquisitions. North America serves a diverse range of sectors with further breadth of end markets within each sector, supporting resilience across the business and the economies it serves. Despite several large national customers, the overall customer base is fragmented, with less than 30% of revenue from our top 10 customers. And our customer relationships are strong with average partnerships exceeding 20 years across our top 40 customers. Our operating margin of 6.9% reflects the sector mix with lower double-digit margins for processor, ag and safety, balancing mid-single-digit margins in sectors such as grocery, foodservice and retail. Despite the margin differentials though, the return on assets of both groupings are largely in line with the North America group average of 45%, owing to structurally higher inventory turns, particularly in grocery and foodservice. While at different stages of penetration and consolidation, each sector affords significant opportunity for growth in the coming years, driven by a strong focus on exclusive owned brands and sustainable packaging. Macro tailwinds from investment in infrastructure and nearshoring in Mexico as well as a pipeline of accretive acquisitions. We are a trusted partner to our customers because we are a specialist distributor with a value proposition, both broad and deep. We combine industry-leading distribution excellence and a broad product range, highlighted by our exclusive own brands and sustainable packaging alternatives with data and analytics designed to provide our customers actionable insights with which to manage their business. In short, we are an extension of our customer and their teams, crafting tailored solutions to meet our customers' specific needs. Our Canadian team says it best, the power of global sourcing, the efficiency of a national network and the advantage of local relationships and expertise. Our own brand portfolio is a core strategic advantage for us, often demanded by the end user and is a key driver of our higher-margin, higher-growth businesses. The ranges are designed and built for the end segments and customers we serve. And our range offers value and differentiation at each level of a good, better, best product assortment. Certain of our sectors like Safety, source and sell nearly 100% exclusive owned brand range, while other sectors have only single-digit penetration of exclusive own brands, which affords significant opportunity for margin-enhancing growth. The group of businesses we'll hear from today are great examples of both the organic and acquisition growth opportunities available and share a common formula for success. An innovative product range designed to meet their sector and customer-specific needs, sector-focused sales and customer service specialists delivering tailored solutions and an entrepreneurial mindset, investing in exclusive own brands, talent and technology to deliver value-added tailored solutions. These businesses have delivered for our customers and they've also delivered for North America with 7% organic revenue CAGR and 16% total revenue CAGR since 2012. With an average 14% operating margin driven by 50% owned brand penetration, these businesses combined to deliver 40% of North America's adjusted operating profit. Now let's take a deeper look at the value we bring our customers across our processor, agriculture and safety businesses. Please welcome John Murphy, MD of our agriculture business and Mexico. John?

Thank you, Jim. My name is John Murphy. I'm the Managing Director of Bunzl Agriculture and the Country Manager of Mexico. I'm thrilled to be here today to present a section on Bunzl's Agriculture and the dynamic businesses that we're operating. This group of companies represents a critical position North American food supply chain. When you think about these businesses, think about strawberries, raspberries, loose leaf lettuce, spinach, tomatoes and celery. All the things that are nutritious that arrive on your dinner table each and every night. And if you were to walk the major supermarkets in North America, you'd see our products in the vegetable and fruit sections. We focus on products that growers use to harvest their crops. In that regard, think of flexible packaging for carrot, for lettuce, clamshell for the berry category, which is strawberries, raspberries, blueberries and the entire tomato category. Additionally, we have a large segment of products that are corrugation focused. Thousands of items that support the growers harvest events each and every day. Most recently, we've added to the group our farming supplies. We now sell specialized mulch film, stakes, twine system for the growers to prep their crops along with certain crop protection systems. Our customers are the who's who of the fruit and vegetable industry. Think of Driscoll's berries, the largest berry grower in the world. Bolthouse Farms, the largest grower of carrots in North America and a significant producer of fresh juices in North America. Naturipe Farms, Taylor Farms, just to mention a few leading customers in this group. As we'll discuss shortly, Being close to our customers is key, and we operate in 18 warehouses concentrated in California, Florida, Michigan, Mexico and Canada. We've enjoyed double-digit CAGR growth since 2012, and we're proud to be a high-touch value-add business partner to our customers. Our expansion has been achieved through strategic acquisition and organic growth, following our customers as they've grown. Bunzl entered the agricultural business in 2010 with the anchor acquisition of Cool Pak. Cool Pak is a business historically focused on rigid clamshell in the berry and tomato categories. They've been very successful in the Western U.S., primarily operating in California and have enjoyed a large organic growth story in Mexico. Our next acquisition was Netpak in 2011. They also focused in the berry category, but they brought us a line of corrugated products, which we're very interested in. They're located in Vancouver, Canada, and serve Western Canada and the Pacific Northwest of the U.S. The third acquisition in 2012 was Destiny Packaging. Destiny operates in a central part of California and Yuma, Arizona. Their product line was new to us and focused on flexible packaging, bags and pouches for various vegetable and produce products. In 2018, Monte Packaging company joined Bunzl, and I'm proud to say that Monte Packaging is near to celebrating its 100th anniversary in 2025, which gives you a sense of the type of businesses that we're buying. They're located in Riverside Michigan and serve growers in the Midwest, Northeast and Southeast. Monte has a very range of products to address their customer needs. And lastly, but not least, in 2021, we acquired Intergro. Intergro is a group that primarily focuses on farm supplies for the growers that prepare their fields. Those products, as I mentioned, can be mulch films, stakes, twine and various irrigation products, integral to crop preparation. They represent a unique adjacency for us and allow us to cross-sell those new products into our portfolio of existing geographies. Bunzl agriculture is full of entrepreneurs, often former owners who seek new opportunities to serve their customers in a diverse North American footprint. The story of organic growth is germane to Bunzl Agriculture, and we've taken a strong position in Mexico by following our customers into new geographies. Many of our customers have made investments in Central Mexico; Baja, California, and certainly, Sonora and Sinaloa. To serve them, we've added strong personnel to the region. We'll stand up facilities where required, we'll add local manufacturing, we'll add equipment and automation we'll add label printing and we'll scale these organic opportunities appropriately. It's key to understand that 75% vegetables consumed in the U.S. are grown in Mexico and 50% of fresh fruit consumed in the U.S. are also grown in Mexico. We anticipate further investment in this marketplace. We have grown organic revenue at 11% on a compounded annual basis since 2012 and with half of this driven by our expansion into Mexico. We also see strong opportunities for continued growth supported by strategic acquisition in both agriculture and other Bunzl sectors. Bunzl Agriculture is also supported by a strong focus on innovation and sustainability. We have an independent innovation center that all our business units utilize, and it's a fantastic resource for our customers. I'd like to walk you through a small sample of that innovation and give you a sense of how we take that journey with our customers. Initially, we engage with the customers as they're seeking packaging improvements and innovations. We're really looking for feedback. We're listening to these customers about what they're trying to achieve. We have packaging engineers, in-house software for product rendering and high-speed 3D printing. We help develop the package by focusing on many variables, which include retail merchandising specifications, cooling requirements, internal volume, substrate materials and modified atmosphere requirements. Once the design is and the tool or mold is built, we hand it off to our contract manufacturer for final production. That finished product returns to our group where we customize it through high value-added services, high-speed labeling assembly, embedded trace and track technologies. We introduced unique water soluble adhesives, so labels separate from the recycling process efficiently. Bunzl then hands the finished product back to our grower just in time. They harvest and you and I buy these items in the grocery stores through various recycling processes, the package finds its way back into the circular economy. As mentioned, sustainability is a very important part of our customers' journey. Everybody in our supply chain is required to have a point of view on sustainability, this journey we continue to leverage our in-house innovation center to surface opportunities. Our market, much of the sustainability momentum is directly connected to national, regional and local legislation. Leading retailers accelerate the desire for alternative materials each and every day. As an example, I'll take you through the life cycle of a tomato package. In pre-2018, this PET clamshell would be made of 100% virgin PET resin, and it would have a non-water soluble branded label attached. As you moved into 2018, this product might evolve into a plastic lid and be replaced with a branded flexible film, giving you a 30% reduction in overall plastic and the package would become 100% recyclable. By 2022, that lining film may remain and the base would be replaced by essentially a paperboard base delivering 100% recyclable package. Bunzl has a significant advantage in sustainability of this revolution. Bunzl is flexible and using different packaging materials that fit its customers' needs. That flexibility enables us to pivot from substrate to substrate and deliver the customer a unique solution for their market demands. As a prime example of addressing our partner's market needs, I'm happy to turn the presentation towards a special customer testimonial from Bolthouse Farms. After the video, my colleague, Bryon London will introduce you to Bunzl Processor division. Thank you. [Presentation]

Thank you, John. Hello, everyone. I'm Bryon London, and this is my 21st year with Bunzl Processor division. I was a leader with the Catch Supplies business, which was the anchor acquisition by Bunzl into the food processing industry. It's my pleasure to introduce you to our business. And as I do this, I think you'll see 3 themes in our business: First is industry expertise, the second is innovation, and the third is continuous improvement. The products that we distribute are broad and include material handling, packaging, cleaning and hygiene, cutlery and all types of PPE. Many of our large customers are known worldwide, and they include companies like Tyson Foods, Smithfield, JBS, Kraft Heinz and Hormel. Now we also partner with thousands of other customers, both big and small, who process food all across North America, including categories like proteins, seafoods, fruits and vegetables, dairy products and candy plants. The map you see on the right is a partial illustration of our distribution centers, our field sales representatives and customer locations. The customer locations noted in blue are a fraction of the actual plants we service. We consolidated them by ZIP Code because there were far too many to show on this map. Now to help everyone get a better understanding of our processor business. We have a brief video we'd like to share where you can hear directly from our associates. And after that, we'll look at some numbers. [Presentation]

Okay. Now for some numbers. We carry 33,000 unique items in stock. And it's interesting to note that over 5,000 of these items are new in our business since 2022. This is a reflection of our continued growth in the new categories with our current accounts as well as entirely new accounts in different sectors of food processing, and they all have unique needs. Our largest customers are also some of our longest relationships, as shown on average, well over 20 years. Lastly, for this page, we've built our business, expanded our distribution footprint and staffed our team members all around our customers' locations, resulting in our being able to service 97% of our customers within 24 hours. Industry experience is a large driver of our success. And to be clear, I'm not talking about expertise in distribution, that's a basic expectation. The expertise we'll look at is in our customers' operations. Within our business, over 50% of our people require specialized training focused on food processing plants and their unique set of requirements. For example, a person at sales or product development cannot effectively do their work unless they fully understand the unique needs of these plants and the conditions in which the plant employees operate. Now once our people gain in that knowledge in this area, they become very effective at driving value for our customers. I'll show you specific examples of that shortly. On average, our team has a tenure of 8.5 years, and on average, we see our customers once per month, but that number doesn't really tell the story. One customer may need us at the facility several times a week and others may only want us to see them quarterly. Additionally, the customers regularly increase or decrease these needs as their priorities shift. The important thing to know here is that we're structured to adapt and fill those needs on demand as they change. So, so far, we've talked about our specialized industry knowledge, utilized by highly tenured people and our constant presence in the customers' facilities. Let's look at what happens when we add innovation into that mix. Here are 2 specific examples of our innovative culture. On the left is our Boning Knife from our INOX PRO line, which is our brand. Now in a protein processing plant, these knives are in use for 8 to 16 hours per day, and they run through grinding and sharpening machines 1 or 2 times daily. So as a result, it can last as little as 10 to 12 days on average. Our INOX PRO line is a step forward, lasting 15% longer. It has improved ergonomics for the users and the manufacturing is done with sustainable materials, 0 landfill manufacturing. On the right is our new our EdgeMaster slicing blade and again, that's our own brand. These blades are attached to machines for applications, including slicing meats for fajitas or slicing bacon. Now OEM blades or original equipment blades are excellent, but they're very, very expensive. And aftermarket blades are cheaper, but they tend to be less consistent than the OEM. Our EdgeMaster line fills the need for a less expensive blade than the OEM, but with consistency of the product that matches the OEM results. Now in addition to the blade itself, take a look at our packaging because it's unique. It's a recyclable box, which is used for the safe transport of those blades to and from the equipment where they will be used on the production floor. This is an industry first. Now you likely noticed that both the products we're showing here are not simply a replication of industry standards. They are, in fact, better products. The improvement of specifications for our own brands whenever possible, is a key to our own brand success. So we've looked at 2 specific examples of own brands innovation. Now let's take a step back and look at the bigger picture. The processor division now carries 1,400 SKUs own brands, driving innovation into our industry, driving value to our customers and, of course, attractive returns for our investors. Our focus here has been a key contributor of growth and success of our business with profit from owned brands increasing tenfold since 2015. Innovating improved products is challenging. But once the new product design is finalized and specifications are set, the challenges have only just begun. Next comes a global search for factories with high quality, fair costs, they need good working conditions for their people and sustainable manufacturing processes. This factory search is normally a daunting task, which can slow or stop product development projects, but not at Bunzl. Own brand success is accelerated with the partnership of the Bunzl global Importing Office. Bunzl's global sourcing expertise allows us to focus on our next round of innovations. So you see that combination allows us to drive innovation and value for our industry at a very strong base. So all the areas I've discussed so far come together in our most critical area, which is where our business makes contact with our customers, it's our sales and service teams. These teams utilize a model known as CI, or continuous improvement. With this model, we demonstrate our company's ability to do 3 things: One is we drive immediate value for our customers when we're partner up; second, as you can see, we innovate customer-centric solutions; and then third is we drive significant annual documented cost reductions, again, documented cost reductions for our customers. As our sales team consistently delivers on these promises, our relationships with customers evolve. As it doesn't take long for a traditional sales and buyer relationship to become a relationship of a strategic partnership. And soon thereafter, our customers bring us opportunities when their other suppliers are not adding similar value. So this, in turn, drives opportunities for wallet share through additional product lines to current accounts as well as entirely new categories. Okay. So we've covered the industry specialization, the innovation of own brands and the continuous improvement. Now let's take a look at a specific example of how these all come together to drive organic growth. And a recent example of that is Tyson Foods. We were not the primary supplier for Tyson. But in the areas where we did supply them, we stood out because of our CI model and more importantly, our consistent execution of that model. In time, they gave us opportunities outside of our previous scope, and we again delivered improved products at lower costs. So thus, when their contract with the previous supplier expired, we were awarded that business, which more than doubled our relationship. So supported by this approach, we've been able to drive 7% organic revenue CAGR since 2012. I'm excited about the future for the Processor business and continuing to drive this momentum. We expect to be able to continue to deliver wallet share gains, win new customers, and we're looking to expand into new industrial food segments. So on behalf of all 327 of our team members, I want to thank everyone for your attention. We're honored to serve a critical role in North American food production as well as our role in creating attractive returns for our investors. And with that, I'll turn the floor over to my friend, Dale Stokes, Managing Director for our Safety division.

Thank you. As Bryon said, I'm Dale Stokes, and I'm privileged to lead and support our Safety division in North America. I've been fortunate to enjoy a varied Bunzl career to date selling my distribution business into the group 10 years ago and moving to lead our Cleaning and Safety division in the U.K. before relocated with my family to the U.S. in late 2019 for my current role. Our division comprises 13 businesses that between them own over 40 leading brands. We design and bring to market a diverse range of head-to-toe personal protection equipment, or PPE, and have more recently entered the adjacent asset protection category. Today, we have 47,000 products across all categories, spanning the full spectrum of value and premium positioning and have a particular strength in the industrial sector, where workplace risks and therefore, usage of our products is greater. In 2022, the division contributed GBP 870 million of revenue at constant currency which was 12% of our North American business area. And the division has grown significantly in recent years through acquisition, broadly adding at least 1 business per year since 2014 and to achieve high double-digit revenue and profit CAGR since then and trading at profit margins above both business area and Bunzl group averages. Head-to-toe PPE is literally that. PPE designed to protect different parts of the body from potential injury and in doing so, allow employers to achieve legal compliance and manage business risks and costs arising from worker injuries. I'd like to share a short video provides greater insight into our products and approach. [Presentation]

A key difference between our division and some other parts of the Bunzl Group is our position in the value chain, where we operate at the highest level as a brand owner. Positioning ourselves as an innovative brand owner is one of the key reasons behind this division being one of Bunzl's higher-margin sectors. Our decentralized product development teams innovate to design products that maximize where a protection combined with the highest levels of comfort since comfort encourages where a compliance and therefore, consumption. We work closely with third-party manufacturers. And in many instances, we are a select licensee of leading raw materials allowing to use high-performance branded fabrics and coatings in our designs. Our approach also ensures a highly flexible supply chain with no long-term contractual commitments. And we use push and pull sales strategies to grow our businesses. We seek to have distributors list and stock our product and push it through the supply chain and their sales resources while simultaneously stimulating end users to demand and pull our products from those distributors. And our distributors are a diversified mix of national and regionally focused firms across a spectrum of distributor types. Some are safety specialists, some are broad-line industrial distributors and some specialized in specific vertical sectors such as automotive or welding. And through those distributors, we support a wide range of end-use markets, providing further revenue diversification. And the diversity of those end-use markets is demonstrated by the chart on this slide, which within showing strong organic growth potential. It is also worth noting the limited cyclicality in the higher PPE consumption end markets such as infrastructure construction and utilities. Ultimately, the provision of PPE to workers is not discretionary. It is a legal obligation for employers to supply it. So switching to market drivers. We wanted to highlight 3 growth tailwinds ahead: Firstly, we continue to see strengthening of PPE legal standards and certification, which is favorable to well-resourced and quality-orientated brand owners such as ourselves. Our teams participate in the consultations that set the national technical standards for PPE, and we are further encouraged by the growing investment in OSHA, the government agency here in the U.S. that is responsible for enforcing health and safety standards, which can only increase we're at compliance and therefore, PPE consumption. Secondly, we see the user experience in the U.S. PPE market evolving from a position where PPE is simply provided to achieve compliance to a place where comfort and overall well-being is a prime consideration. This provides organic expansion opportunities, such as dedicated PPE for female workers or higher price point items that bring comfort and functionality over and above the base compliance need. And finally, the U.S. government's Infrastructure Investment and Jobs Act has committed $1.2 trillion of investment into exactly the kind of infrastructure projects that have high PPE consumption with around $550 billion of this being incremental spend. And set against both structural drivers and market growth potential, our division has a strong list of competitive advantages. We have trusted brands and innovative products. Personal safety is at the heart of our offering, and it takes time to build the levels of brand reputation people require to trust products will protect their own personal safety. While we have been custodian to these brands only a decade or so now, some of our origins is far back as 125 years and have a long-standing reputation for quality, reliability and compliance against all relevant risks. We have a polish, flexible and balanced supply chain. In conjunction with the Bunzl global importing office, we manage our manufacturing partner network to reduce business and supply risks. We seek to appropriately balance supply between near, mid and far shore sources of Mexico, Latin America and Asia. Doing so offers a key point of difference to our distributors and end-user customers providing confidence on supply continuity. And further, by collaborating with other Bunzl Safety businesses around the world and our global importing office, we are able to achieve purchasing scale synergies. And of course, all suppliers are subject to our sustainability commitments and fully audited for compliance to our ethical standards policies. We have transitioned to digital selling. Our businesses collaborate to efficiently deploy digital tools such as a PIM platform containing all of our product information management data tags and assets. This indicates high-quality, rich product data such as photography and video, directly to our distributors selling websites to ensure the end user customers and their employees are able to easily find and select our product over that of our competitors. And finally, we also benefit from working closely with our 57 Bunzl Safety businesses across 26 countries. I'm proud to chair our global safety network, a powerful alliance between those businesses, the best practice knowledge sharing on global trends, certification, supply chain opportunities and group-wide initiatives, such as digital trading and sustainable product solutions. And that last point is an excellent example of the unique competitive advantage within this unparalleled network. With sustainability awareness and legislation progressing in different countries at different speeds, some of our businesses benefit from the experiences of those operating in countries at the forefront of change in this space. This allows them to execute new solutions more quickly and efficiently than if there are otherwise operating independently. As shown, we have a very successful track record when it comes to acquiring an integrated businesses into Bunzl, building a $1 billion revenue division in just a few short years. And while the average multiple paid for our acquisitions between 2012 to 2019 was around 8x EBITDA, we are proud of how our model is able to bring about significant performance improvements in each business, such that if you take the enterprise value paid set against for 2022 EBITDA earnings are at the same group of acquisitions, there is an implied multiple of around 5x. This performance improvement is delivered by allowing our acquisitions to thrive as decentralized entities, yet ensuring we leverage those competitive advantages outlined to optimize performance and accelerate returns. And across the leading head-to-toe PPE categories, we have very significant headroom and a strong pipeline of potential acquisitions. Further, we remain open to adjacent opportunities as demonstrated by the acquisition of asset protection specialist, McCue. Another example, adjacent markets under review include traffic safety products and wearable smart tech PPE. So while we have built a substantial safety business in North America, we remain infused at the even greater opportunity ahead. On behalf of the 2,500 talented team members across our businesses, thank you for the opportunity to share more about our Safety division, and I'll now pass back to our CEO, Jim McCool.

Thank you, Dale. John, Bryon and Dale have clearly articulated the strong value proposition and competitive advantage for their business and within their sectors and the higher growth in margins, which they deliver. The foundation for success in each of these sectors was built from acquiring strong businesses with talented leaders, which Bunzl then cultivated leveraging its global sourcing, operational excellence and strong cash flow to invest, both organically and via further acquisition to accelerate growth. Our compounding strategy and management structure are both empowering and supportive to the newly acquired business. Our decentralized management structure sustains the entrepreneurial mindset of the former independent business. And the overarching resources and scale of a large global organization foster accelerated growth. Given this and the overall strength of the group's cash flow and balance sheet, we see many opportunities to acquiring more fantastic businesses across North America. We have many great examples of strong and sustained growth post acquisition, perhaps none better than Food Processor, which Bryon spoke to you today. Let's review 2 other acquisitions, which exemplify our acquisition strategy and integration success and continue to deliver higher growth, higher margins and strong return on assets. Destiny Packaging was acquired in 2012 in our Ag sector. Following on the anchor acquisition of Cool Pak in 2010, Destiny provided both category and capability expansion, as John explained. Over the years, the Cool Pak and Destiny teams have collaborated on packaging design, global sourcing and supporting customer transitions to more sustainable packaging alternatives. And recently, as many growers have expanded into Mexico, the teams have been able to work together to identify local infrastructure and sourcing. These collaborations augment Destiny's in-house packaging expertise and global sourcing of value-added flexible packaging solutions, driving strong double-digit margins and consistently high growth with 9% adjusted operating profit CAGR since joining Bunzl. These margins, combined with well-managed inventories produced returns on assets at Destiny consistently above 100%. Another great example is our investment in safety businesses primarily servicing the welding end market. In early 2015, we acquired John Tillman, the recognized leader in welding hand protection, offering both categorical and end market expansion and a very strong exclusive own brand. Later in 2015, we acquired Steiner Industries, which provides a broad assortment of welding focused PPE and accessories including welding screens, again, expanding our category offering. Lastly, we acquired Revco in its strong Black Stallion brand, further enhancing our leading position in welding focused hand protection and PPE. Though these businesses maintain their brand identity and remain decentralized, we offer our customers the leading portfolio of user demand and exclusive own brands and accessories. And like Cool Pak and Destiny, these teams collaborate around product innovation, global sourcing and value-added customization services. In addition to co-locating distribution centers and sharing investments in technology around digital engagement with customers as well as operational effectiveness. Again, the leading exclusive owned brand positioning supported by Bunzl, global scale and expertise has driven higher growth and strong double-digit margins with 8% adjusted operating profit CAGR. These are just 2 of many great examples of successful and accretive acquisitions within the Bunzl group. So can we continue to acquire strong businesses with talented leaders and successfully and profitably integrate them into Bunzl? Absolutely. Across North America, we have significant opportunity for further acquisition growth in our existing segments, whether from category or end market expansion, geographic expansion or new capabilities. We've also identified segments where we have little presence today, such as health care, with rich opportunity to carve out a meaningful market niche, utilizing our proven strategy of strong exclusive own brands, specialist support and tailored customer-focused solutions. Our teams maintain an active pipeline of 300-plus near- and medium-term acquisition targets with combined revenue in excess of $14 billion. Now we certainly don't expect that we're going to acquire them all, and we will remain disciplined in our acquisition approach. But our strong track record of attracting sellers to Bunzl leaves us confident that we'll continue to drive significant growth in North America from acquisition. Dale spoke of the significant opportunities within the still highly fragmented Safety sector, a prioritized area of investment for North America. From rounding out a head-to-toe category offering of exclusive own brands, as well as expanding into near adjacencies with asset or traffic safety and technology-enabled PEE. Agriculture has significant opportunity for geographic expansion and supporting our other grower end segments. While Processor looks to niche opportunities to expand categories and capabilities to support their strong organic growth platform. From a geographic perspective, we have significant opportunity for growth in Mexico across all sectors. Using our existing market penetration levels in Canada and U.K. as a benchmark, our business in Mexico is market growth upside of 4x to 5x its current volume. And John is quickly developing a robust and actionable list of targets in his new responsibility as MD for Mexico. Across North America, our passionate and dedicated teams have delivered sustained growth and strong revenue and the future is equally bright. Organically, our segment-focused specialists are uniquely positioned to support our customers with exclusive own brands, innovative and tailored supply chain solutions, including a strong focus on sustainability. And the data and the analytics to deliver actionable insights to help our customers improve their business, well supported by our global sourcing expertise and trusted national distribution networks. While many of our businesses are well penetrated with higher-margin own brands, other businesses are only modestly penetrated, providing ample opportunity for higher margin growth as they integrate this proven strategy. From an acquisition standpoint, the opportunity is broad and deep, 300-plus targets, $14 billion in combined revenue. We've effectively used acquisitions in recent years to enter higher margin, higher growth sectors and successfully integrate and leverage them for post-acquisition organic growth. Many of our sectors remain fragmented, and our highly cash-generative business affords us significant headroom for further market consolidation. So both organically and from acquisition, you can expect further growth and margin upside from Bunzl North America. On behalf of John, Bryon and Dale, thank you for letting us share with you the competitive advantage fueling significant growth in margins in their respective segments, and we look to leverage this across our broader North American business. We're happy to take your questions on Bunzl North America and its growth opportunities in just a moment. Thanks again. [Presentation]

And welcome back. Again, thank you for your time and attention and allowing us to share the competitive advantage of our North American business and in particular, our Processor, Ag and Safety businesses. We welcome your questions and look forward to further conversation.

[Operator Instructions] The first question from the phone comes from Oscar Val from JPMorgan.

I had two questions. The first one on Food Processor and Ag. Can you just give us a sense of how much of that end market is outsourced versus still done in-house? And how does that compare to grocery, for example? So is there still a big opportunity to kind of take share from new outsourcing? That's the first question. And then the second question is going on to Safety. It sounds like all the acquisitions you've done in the last 10 years are still run relatively decentralized. How should we think about the opportunity to build a kind of a bigger integrated Bunzl Safety business in North America? Will those businesses be integrated into a bigger business at some point? And how should we think about kind of benefits from sharing warehouses and sharing sales and back office in the Safety business?

Thank you. So I'll start on the Food Processor and Ag piece. From a kind of an outsourced standpoint, most of our relationships in both the Processor and the Ag statement are with the users of our products. So while we have significant penetration, for instance, in the processor space, there is plenty of space, both from a category standpoint and also expanding beyond the core. As Bryon spoke to, we have a significant position in protein today, but we also deal with bakery processors, salad processors, candy processors. So taking the value add and the continuous improvement model that is such at the core of their value proposition across a broader swath of processors is a significant opportunity for us. John, do you want to touch on that from an Ag standpoint?

Yes, absolutely. We really deal directly with the farmers and we deal directly with these different leaders and geographies. We have a huge opportunity with adjacencies. So as I mentioned, Intergro is a new acquisition, really provides us an opportunity to serve kind of the products that they need to prepare their fields versus the harvest products. So as an opportunity, we look at that as a very, very big opportunity downstream.

Significant geographic expansion within the Ag space as well.

And to the Safety question, yes, we absolutely want to build a bigger safety business, but not necessarily a single consolidated Safety business, part of a Bunzl secret source, there's the way in which we -- our businesses thrive as decentralized entities. And that helps each of those groups to focus on their customers and solving their customers' needs, and that's how the growth comes about. So we definitely want to preserve that. We do take opportunities to share overheads and scale behind the scenes on areas like sharing property and sharing technology costs, but absolutely remaining that decentralized ethos.