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spk04: Good afternoon and welcome to Advantage Solutions first quarter 2021 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Dan Riff, Chief Investor Relations and Strategy Officer for Advantage. Thank you. You may begin.
spk03: Thank you, Operator. Thank you for joining us on Advantage Solutions 2021 first quarter earnings conference call. On the call with me today are Tanya Domeyer, Chief Executive Officer, Brian Stevens, Chief Financial and Chief Operating Officer, Jill Griffin, President and Chief Commercial Officer, and Dan Morrison, our Senior Vice President of Finance and Operations. During this call, management may make forward-looking statements within the meaning of the Federal Securities Law. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in the forward-looking statements. Forward-looking statements are based on the company's current expectations and are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes and results could differ materially due to a number of factors, including those described more fully in the sections titled risk factors and management discussion and analysis of financial condition and results of operation, and elsewhere in the company's filings with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by such factors. The company does not undertake any duty to update any forward-looking statement except as required by law. Please note, management's remarks today will highlight certain non-GAAP financial measures. Our earnings release issued earlier today presents reconciliation of these non-GAAP financial measures to the most comparable GAAP numbers, which can be found on the Investors section of our website at AdvantageSolutions.net. The company has also prepared presentation slides, which are posted on Advantage's Investor Relations website. You may want to refer to the slides during today's call. This call is being webcast, and a recording of this call will also be available on the website. And now, I'd like to turn the call over to Tanya Domeyer.
spk01: Thanks, Dan. Hello, everyone. I'd like to start by thanking our associates who work so tirelessly to help keep our clients' business running safely and smoothly throughout the whole COVID-19 pandemic. I'm so proud of our team's work to help communities in need during these trying times, and our fingers are crossed that we're in the final innings of this pandemic and poised to continue reopening from here. As I did on our last call, I'd like to start by just framing our business for you. We're the leading provider of outsourced sales and marketing solutions to consumer goods companies and retailers. We have a strong platform of competitively advantaged services like headquarters sales and retail merchandising, in-store sampling, digital commerce, and shopper marketing. And this is for brands and retailers of all sizes. Our role is to help get the right products on the shelf, whether physical or digital, and into the hands of consumers, however they're shopping. Creating value on this platform is simple, but it's not easy, and we've talked about this before. At the most fundamental level, we sit at the nexus of consumer goods companies and retailers, and we're a trusted partner and problem solver for both. We help our clients sell more while spending less. We like to say we do it better, cheaper, and faster. We make our clients more effective, and we also make them more efficient. And we win with winners by providing best in class service every single day. And by innovating on a very nimble platform, we operate efficiently providing fuel for reinvestment and growth. And we redeploy capital at attractive returns through tech and acquisitions and organic reinvestment. And as we deliver value to our clients by being better and faster and cheaper, our platform compounds over time. growing profits at more than two and a half times the pace of the S&P. So now I'll hop into today's update. Once I conclude my remarks, I'll turn things over to Brian and he'll discuss our financial results. And then after that, we'll open the call for questions. So we've had a good start to 2021 reporting strong results for a third straight quarter. The sales segment continued to benefit from elevated at-home consumption, from new client wins and e-commerce growth, and the marketing segment enjoyed the early innings of COVID recovery in sampling and also posted continued strength at our digital agencies. We're really proud to be helping clients navigate recovery and reopening, and times like these with uncertainty and change are when our compounding platform at Advantage really shines. We're navigating an omni-channel world that's seen 15 years of e-commerce growth in just over a year, as we've all seen together. And we're working hard to ensure that consumers are truly delighted when they fully return to retail. Across our portfolio of essential services, we continue to have winners and losers from the pandemic, as we talked about last quarter. On one hand, operations related to in-store sampling and food service in our international joint venture are rebounding from virus-related closures. On the other hand, our core headquarter sales and merchandising teams are serving still elevated stay-at-home consumption, with recent numerator surveys, as many of you have seen, of fully vaccinated Americans suggesting that this higher demand persists. and we're emerging from COVID a bigger, stronger business. We've served our clients very well through this pandemic. We've reinforced their trust in us with relentless execution and new service innovation, and we really believe that this will pay dividends over time. As we said during year-end results, we believe that the business will continue to improve throughout the year and will benefit as COVID-impacted businesses are restored to health, especially in the second half of 2021. Here are some highlights from our strong first quarter. We exceeded our plans in the sales segment thanks to elevated at-home demand and new client wins and e-commerce growth as we replicate core bricks and mortar offering online. Our sales segment growth was broad-based, up low mid-single digits in our headquarter sales and merchandising business and strong double digits in digital commerce services. Food service and international, we're still down year over year, but slowly coming back. Both volume and pricing trends remain healthy across consumer goods. Surprisingly healthy, in fact, as our CPG and retail clients sustain elevated at-home demand and take pricing to offset commodity and wage inflation, they're emerging a bit stronger out of COVID. Just one word of caution as we continue through the second quarter, last April's pantry loading presents the toughest comp of the year in the sales segment. Our marketing segment also came in better than forecast as we brought back in-store sampling events in a safe and measured way with our retailer partners and saw impressive digital agency growth. Here, I'd like to remind investors that bringing event teams back in a surprisingly strong Q2 labor market is complex, and it's also expensive in recruiting and training and ongoing wage rates. A healthy pricing environment helps offset this, though. As we sit here today, just under halfway through this second quarter, We continue to see solid consumption patterns in the sales segment as the baseline remains elevated from pre-COVID levels with consumers working and consuming more from home. And as I noted earlier, the April comp is especially challenging in Q2. But we are seeing supply chain stabilize, quite a bit of innovation, and product news steadily return, price hikes tied to commodities, and wage inflation flow through and promotions remain muted. While we're still being flexible as we resume in-store sampling with retailers in the marketing segment, we continue to receive strong support in our rollout, and consumers are very pleased to see the events that they've missed. Brands are eager to invest to drive sales, and we've seen event counts continue to grow, running at roughly 176,000 in March 2021 versus a low of 23,000 last April and 133,000 events in February of 2021. So we're almost halfway back to March 2019 event levels of nearly 400,000 events. Again, the caveat here is that standing up armies of tens of thousands of trained workers, something that we're uniquely good at, is complex and costly. The pace of vaccine rollout has been encouraging. virus count trends have been more mixed, but we continue to see the pandemic disruption to subside further into the second half as the state of health improves. Based on the strength of the business and the flexibility of our model, we are very confident in our 2021 EBITDA outlook of 515 to 525 million. This represents very healthy mid to high single digit EBITDA growth year over year. And it takes us above the pre-COVID 2019 EBITDA of 504 million. This guidance range continues to assume that in-store sampling builds back towards pre-COVID levels in the second half of 2021. And guidance also assumes that at-home demand reverts meaningfully toward pre-COVID levels, an assumption that may prove conservative. Looking out a bit further, We'll be entering 2022 with mid single digit profit tailwinds from an annualized COVID recovery and self-help initiatives on top of our normal organic growth and tuck-in acquisition algorithm. It's early, but consensus estimates show a further acceleration in EBITDA growth next year to just over 10%. Now let's quickly touch on some of the key metrics from our first quarter. Q1 revenue declined 10% year over year and 10.8% year over year organically to $791 million. Nice progress versus our three prior quarters of minus 30, minus 20, and minus 16. An adjusted EBITDA of $111 million was even more impressive. It was up 4.8% year over year overall against a tough positive 10.9 Q1 2020 comps, better than 2020's minus 3% trend. Favorable mix and disciplined cost management have helped us sustain earnings despite the tough revenue headwinds from the pandemic. This result was ahead of our forecast. Our net debt to EBITDA came in at 3.9 times, and we continue to expect progress towards three times by the end of 2022. We're very excited about our momentum to start 2021. In terms of the shape of the year, we expect marketing spend to stand up demo and sampling teams and a tough April sales segment comp in Q2. And the broader outlook remains back half-weighted as COVID recovery unfolds. Finally, we remain very focused on our mission to create value for all of our stakeholders and continue to win on the advantage compounding platform that i mentioned earlier to recap there are really three fundamental pillars of our platform first we always operate with excellence this means we deliver best-in-class services to our clients while driving productivity reducing costs and increasing our margins over time second we take a portion of the productivity savings that we generate and the ample free cash flow our business model produces and reinvest in our services to widen our moat, accelerate innovation, and drive growth. Third, we really nurture and protect our evolutionary culture. This builds the business to suit our clients' changing needs, and it really helps ensure that we remain, A, partners of choice for brands and retailers, and B, very importantly, nimble and opportunistic when fortune presents itself with compelling propositions to build a better, more valuable advantage. I am very excited about our future. We're well positioned to win under multiple recovery scenarios. We serve a historically stable and resilient consumer goods and market, a market that's just weathered a once-in-a-century disruption and is emerging stronger. For us, this means tailwinds over the next couple of years from a recovery from temporary COVID-19 softness in portions of our business tied to in-person shopping, accelerated omni-channel service adoption during COVID that we believe likely sticks and continues to grow, like online grocery pickup and delivery sampling, and growth and adoption in our margin of creative digital and e-commerce solutions. With that, I'll now turn it over to Brian to cover our first quarter financial results in more detail.
spk06: Thank you, Tanya, and good afternoon, everyone. It's great to be speaking with you. Tanya touched on the first quarter highlights, so I'll share a bit more color at the segment level and speak again to our high confidence for full-year guidance. As mentioned earlier, we grew adjusted EBITDA 4.8% year on year, despite the pandemic-driven revenue decline of 10%. This outstanding result is a testament to the nimbleness of our operating platform and the team's discipline in managing the business effectively during the pandemic quickly realigning expenses and scaling service innovation to adapt to changes in short-term demand. Sales segment revenue grew 5.2% year-on-year, $534.3 million, up 4.7% organically, quite remarkable against the 11.2% prior year comp. Sales segment adjusted EBITDA was $84.1 million, up 7% year-on-year, with 20 bps of margin expansion. Marketing segment revenues were down 30.9% year-on-year to $256.7 million and down 32% organically. This follows three prior pandemic-impacted quarters of minus 59%, minus 49%, and minus 39%. Discipline expense management yielded adjusted EBITDA in marketing that was down just 1.6% year-on-year to $27.4 million. As demonstrations and sampling return rapidly, non-economic revenue tied to that will normalize segment margins a bit. But our highly flexible variable cost model here and the margin lift from digital will help offset this. Turning to overall margins, first quarter adjusted EBITDA margins came in at 14.1%, up 200 basis points from last year's first quarter, and driven by 20 BEPS gain in the sales segment and 320 BEPS higher margins in the marketing segment. The year-over-year margin improvement is primarily attributable to the higher margin revenue mix in the current year and some smaller permanent savings from real estate optimization contributing in the quarter, partially offset by anticipated higher personnel-related investment that will ramp further in Q2. As previously disclosed, based on April 12, 2021, SEC guidance regarding technical accounting for warrants issued by SPACs, Advantage Solutions will be revising its 2020 financial statements to account for this recent directive. The revisions are expected to result in a non-cash, non-operating financial statement adjustment that have no impact on our current or previous reported revenue, cash position, operating expenses, or total investments, investing, or financing cash flows. Additionally, there is no anticipated impact on our non-GAAP operating metrics, including adjusted EBITDA, adjusted net income, and net debt. Moving to a summary of our capitalization, as Tanya indicated, our net debt to EBITDA finished the quarter at approximately 3.9 times. Free cash flow should ramp solidly with profit growth in the back half. Our delevered balance sheet will yield meaningful cash interest savings of over 70 million on a pre-tax basis in 2021 when compared to 2019. As noted last quarter, we have no meaningful maturities for the next five years. At the end of Q1, our total funded debt outstanding was down approximately 2.1 billion after paying off 100 million of the ABL borrowings that were outstanding following the close of the D-SPAC transaction. A summary of our debt capitalization can be found on slide eight in the supplementary slides in Q1 results that are posted to our investor relations website. Our latest equity capitalization in today's filing is also captured on slide eight of our supplementary slides. Turning to fiscal 2021 outlook, as Tanya noted, we are highly confident in our fiscal 2021 adjusted EBITDA guidance range of 515 to 525 million. Some items to keep in mind. One, Q1 got us off to a strong start. Q2 has a heavier marketing reinvestment to stand up the business, shuttered by COVID, and tough April sales segment come. The large in-store sampling business has the widest range of COVID recovery outcomes for the year. We expect most of the recovery to come in the second half. Historically, we've driven more than half of our growth from high ROIC tuck-in acquisitions That pipeline is quite robust again, and we are proceeding choicefully. Along that, we plan to make room for moderate amount of medium term investment through the P&L this year, betting on strong organic growth ideas and projects from our talented leaders. These will pay off in 2022 and beyond. Setting all this up, we have outperformed in Q1. We've got some spending ahead in Q2. We remain confident in the second half weighted COVID recovery. Our guidance for normalization of at-home demand by the end of 2021 might prove conservative, and we will continue to deliver steadily. With that, I'll turn it back over to Tanya.
spk01: Thanks, Brian. As you've heard, we're enthusiastic about 2021 and beyond here at Advantage. With tuck-in acquisitions and stepped-up reinvestment through the P&L, we're going to accelerate our journey from a labor-intensive franchise to a data-intensive one. bringing technology-enabled services to meet our clients' needs. As we've talked about, we evolve to meet our clients' needs, and that's exactly what we've historically done and will continue to do at Advantage. And we'll continue to deliver both cost efficiency and sales effectiveness, real growth, to serve existing clients and to generate new business wins. Dan, any final thoughts before we kick off Q&A?
spk03: Thanks, Tonya. I'd just reiterate that we see a clear path in the short term to close the gap to fair value. Advantage is still a relatively undiscovered COVID recovery story that's gaining momentum. And we see an even more exciting opportunity to unlock future value with this amazing team. At this early stage in our life as a public company, we traded a three to three and a half turn discount to the broader market and CPG players. And we traded just over half the multiple of world-class services peers. So there's plenty of runway left. And two final notes to both owners and prospective investors. We have a great slate of conferences ahead in May and June where we'd love to catch up and tell you more. And we expect to see our float and liquidity grow in a disciplined and orderly fashion this year and next. With that, I'd like to ask the operator to open the call for questions.
spk07: Thank you.
spk04: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. If you would like to remove your question from the queue, please press star 2. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
spk07: Our first question is from Jason English with Goldman Sachs.
spk04: Please proceed.
spk05: Hey, good afternoon, folks. Congratulations on a great start to the year. I was particularly surprised to see the robust growth off of the first quarter 19, kind of benchmarking to pre-COVID levels. But I'm equally surprised to see your guidance at the midpoint suggesting that for the next three quarters, we're going to see EBITDA levels roughly flat for 19. It sounds like you're talking about the labor challenges as one of the headwinds and the impediments for sustaining the growth, the bottom line growth. So some questions around that. First, I've got labor costs pegged at just under $2 billion. Is that roughly right? Second, how much inflation are you looking at on that front? And third, is it transitory, like going out sort of bonuses to recruit? Or are we looking at just a permanent step up in the cost of that labor? And if so, How do you cover it? Are you able to pass that through?
spk01: Yeah, that's a great question. So first of all, thank you for your compliments on the quarter. And we've all seen the same jobs reports and, you know, understand the short-term supply demand mismatch that's tied to low unemployment. And I think we also see hospitality racing to fill slots alongside our own hiring. And, uh, It can make for a challenging environment, but it's one that we're, I think, uniquely equipped to navigate. Given the size of our hourly workforce, we monitor and manage what's going on with hourly wages very closely, as we've talked about in the past. And just for context, our hourly associates earn 30% more than local minimum wage levels on average. So that helps us. And if minimum wage increases, we work with brands and retailer partners to reflect those higher costs and then provide the benefit of our scale in outsourcing more cheaply. I think what you're pegging at labor, plus or minus, is directionally correct. And I think most importantly, we also use technology and tools to help our associates get more productive, and we share those benefits with clients. And I think underpinning it all, the services that we offer are essential. They're not nice to have. They need to have services. And brands and retailers really depend on them to sell more products. So this is a big reason that we've been able to offset wage inflation while maintaining both the client ROIs, which is so important, and healthy advantage margins over time. And, of course, we're cognizant of it, but this is something that we've dealt with you know, in cycles for many years.
spk05: That's helpful. Thank you. In turning to a different topic that you touched on in your prepared remarks, inflation amongst your customers. It's the CPG industry faced with broad-based inflation. It's been probably a decade, if not more, since we've seen this magnitude of inflation. The pricing that will follow presumably should benefit your sales segment. Can you confirm that? And secondly, can you give us a sense of expectation? It sounded like you were saying you were seeing some price already come through. But in terms of order of magnitude, slope of the build, what are you expecting? How long is it going to take to really start seeing a meaningful price in the system? And how beneficial do you think it could be?
spk01: Yeah, so that's a great question. I think it's still early. You've heard much of what we've seen announced, but Not, you know, anywhere near what we expect in terms of actually executing that. You know, we all see the data and the surveys that suggest an optimistic, hyper-stimulated consumer being able to weather price hikes driven by commodity and wage inflation. And, you know, we see inflation building. You know, as at-home volume normalizes, we do believe price will be an offset that will help our clients comp the comp. and aid portions of our sales segment that's tied to client revenue, but it's really early. Our clients seem aligned on the need for it and the willingness to push it through, and the conviction seems there. We just can't tell you more than that because it's early innings.
spk05: No, that makes sense. I appreciate the candor. I'm going to try not to be too greedy and stop there and pass it on. Thank you.
spk07: Thank you.
spk04: Thank you. Our next question is from Tony Coplin with Morgan Stanley. Please proceed.
spk08: Thank you. Just wanted to ask about M&A. You know, I guess, when would you expect to start see that ramping up again to sort of more historical levels for you? And are there any areas of the portfolio where you feel like you have a gap that you want to fill with capabilities from an acquired company?
spk01: Well, I'll give you the 30,000-foot answer, and then I'll turn it over to Brian to talk a little bit about, to the extent that we can, about the pipeline. But as we've talked about, M&A is an important part of our value creation strategy. We have a very full pipeline, and our model is beautiful in that we evolved to where pain points and the needs for solutions are for brands and retailers. So you can see there are a lot of pain points in the ecosystem today. Everything from e-commerce to pricing to trade to navigating how to comp last year, all of the solutions that we offer can and will be enhanced as we see opportunities to do tuck-in M&A to buy capabilities to solve both some of the problems that we're facing today and more importantly in the future. I wouldn't call it a gap so much as us always trying to stay ahead of the curve to get where we believe the pain points are and solutions will be needed. And I think a perfect example of that is the way that we've been able to evolve over time from what was first a sales company to now a sales and marketing and technology company solving pain points that are very different today than they were one, five, seven or eight years ago. Does that answer your question, Toni, or do you want a little more detail?
spk08: No, I think that's great. I wanted to also ask about digital. You mentioned a couple of things that you're doing and that digital has been accelerating in both marketing and e-commerce within sales. You know, basically, is there a way to sort of quantify, you know, I guess how much that has has improved year over year or any sort of quantification in terms of magnitude for both of those, like segment by segment?
spk01: Yeah, digital has been an exciting area of growth for us, and I am very thankful that we had the foresight to invest early so that we could capitalize on the accelerated trends. I'll turn it over to Jill to give you a little bit more color about some of the exciting things that are happening in digital.
spk09: Sure. As I said, we did have some good foresight to invest in solutions and tools before the pandemic hit that would translate our services both within our marketing businesses and our sales businesses into digital e-commerce, omni-channel solutions. And then, of course, the pandemic accelerated everything so tremendously, and we were really in the right place at the right time to help our brands and retailers navigate this very quickly evolving space. And really what we've done is just that we've translated our traditional sales and marketing merchandising solutions into an omnichannel landscape so that we can do provide those services to our brands, mostly whether they are having a traditional brick and mortar conversation with a retailer, or an omni-channel conversation with a retailer e-tailer or a Fair Play e-tailer. And our brands can turn to us for that consistent service fleet across both of those environments. And that is continuing to accelerate as brands are recovering from the initial workload produced by the pandemic and now actually thinking about how to be more strategic in this landscape.
spk08: That's great. Thanks so much, and congrats on the quarter.
spk07: Thank you, Tony.
spk04: Thank you. Our next question is from Sameer Kalucha with Deutsche Bank. Please proceed.
spk02: Hi. Thanks for taking my question. Great quarter. I was wondering if you could provide some color about the wins during the quarter, The second thing you mentioned was in the second half and going forward, you're going to be investing in some innovations. So I was wondering if you could provide more color on what are the areas you're investing in and how do you expect them to drive growth going forward? Thank you.
spk01: Absolutely. Well, I'm not going to talk about specific innovation investment because from a competitive standpoint, we'd prefer to have that private. But what I can tell you is that the innovation spans sales, marketing, and e-commerce, mostly in digital and e-commerce, if I had to say where they're weighted towards those are the areas where our brands and retailers are really looking for solutions. So you'll see the majority of our innovation in those areas. We also have significant productivity innovations using our scale at retail against sales and marketing. and we have had a number of wins and we're excited about those but again won't announce those individual wins by brand but we'll tell you that the new business opportunities have been fairly significant i think i mentioned on our last call that you know after nine national new lines in the sales business in 2019 things got pretty quiet and In the first quarter of this year, we started to see brands and retailers need additional help and more opportunities and more opportunities to win business and do more services for brands and retailers. So the pipeline is full and have secured a number of wins.
spk02: Got it. Thank you.
spk07: Thank you. Thank you.
spk04: As a reminder, if you would like to ask a question, please press star 1 and the confirmation tab will indicate your line is in the queue. Our next question comes from Jason English with Goldman Sachs. Please proceed.
spk07: Jason, we get you again. I'm excited. Jason?
spk05: Sorry. That mute button gets me sometimes. So, yes, thank you for letting me back in for round two. I had a long list of questions. I just didn't want to be a call hog earlier, so I passed it on. So a couple of those questions. Building off the last couple of points on digital, clearly a lot of focus on e-comm from the industry at large. And a lot of the money flow right now seems to be going into this broad bucket called retail media. Can you talk about how you're participating in that, if at all?
spk01: Absolutely. I'll turn that over to Jill. She's at the center of it.
spk09: Sure. Thanks, Jason. Yes, it is a very... noteworthy, but currently everybody's talking about it and trying to figure it out. I think it's important to note that this is a nascent marketplace for our retailers and our brands. And as with all of these situations, because we're at the center, we are helping both our retailers and our brands navigate each of their part of this. So on the brand side, Because we are either acting as their agency, helping them determine how to spend their media and marketing dollars. We are strategically advising them on how best to spend the dollars in these emerging channels to get the best results. And also where we're their sales agency because we're part of that sales strategy planning. We're having that same advisory role in that conversation. On the retailer side, where we are often their agency of record in helping them create, claim, sell, and execute major marketing platforms on their behalf, we're helping advise them. on how to package up their media solutions in a way that will be valuable to brands and that brands will invest and then obviously achieve the retailer's objective in being an attractive media vehicle. So it's really, again, early days in terms of how these media vehicles will develop, how they will be measured, how they will evolve, how brands will spend. And we're really excited to be in the center of the conversation, helping all of the parties navigate. And we feel that we will continue to provide that service in a more differentiated way as we start to develop custom platforms for the smaller, the big size, and the larger retailers. I hope that helps, Jason.
spk05: Yeah, that helps a lot. There's a lot going on there. Thank you for that. And, Tanya, I want to come back to the pricing question because I realize I missed an opportunity to ask a slightly more wholesome question earlier. So we're hearing the narrative from CPG companies that they're going to push through price. We're hearing the narrative from retailers that they're going to push back. And I'm also cognizant that last time last year and throughout COVID, promotional levels were incredibly subdued and your commission rate is off at net sales. So fast forward. We've got this tension on list prices, but presumably, as volume retraces, the promotion should come back in the system. And actually, it begs the question of whether or not, despite the cost inflation out there, whether we're really going to see a whole lot of net price appreciation. I'd love to hear your opinion kind of weighing in on those three vectors of tension in the system.
spk07: Sorry, retailers aren't fighting price.
spk01: You know, we haven't seen this play out yet. Of course, there's always a healthy dynamic and tension, but price is likely to come and brands seem to have conviction against that. You know, if you go back to your question, because they converge about labor dynamics that you asked earlier, You know, the pressure that we face is mostly transitory. It's recruiting, it's training, it's standing up new teams and mostly concentrated in Q2. And, you know, we've also maintained our guidance after a strong start because like Coke and Nestle and so many others, we're going to still see a wide range of COVID outcomes in the second half. And it's our style to plan cautiously and execute cautiously. relentlessly. But I think, you know, so many of these things are left to play out. And we don't have a crystal ball to know exactly how pricing is going to go. We think it could be a tailwind of our business. But certainly we're managing against all of these other things, standing up and how expensive it is. And you know what, nobody does it better than us. But it's not inexpensive. And it takes time, skill and money to be able to stand up programs with thousands of people.
spk05: Yeah, yeah, no doubt that makes sense. Great. Thank you for letting me in for round two. I will officially pass it on now. Thank you.
spk01: Thank you, Jason.
spk07: Thank you.
spk04: Ladies and gentlemen, we have reached the end of the question and answer session, and this will end today's conference. You may disconnect your lines at this time. Thank you very much for your participation, and have a great day.
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