Diversey Holdings, Ltd.

Greetings. Welcome to Diversity Holdings LTD Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Grant Graver, Investor Relations. Thank you. You may begin.

Thank you. Hello, everyone, and welcome to Diversi's third quarter 2022 earnings call. With me today are Phil Wieland, our Chief Executive Officer, and Todd Herndon, our Chief Financial Officer. As a reminder, during this call, we will make forward-looking statements. Some risk factors that may impact these statements and could cause future results to differ materially from our projected results are described in this morning's press release and in documents we file with the SEC. The company does not undertake any duty to update such forward-looking statements. On today's call, the company will discuss certain non-GAAP measures and make reference to supplemental data, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures and referenced supplemental data can be found on our website at ir.diversity.com and in our most recent annual report. I'll now turn the call over to Phil.

Good morning, all, and thanks for joining our call. Recognizing the unprecedented environment in which we're operating, we're going to take a more abbreviated approach to our opening remarks to allow ample time for questions. My comments will first focus on our core business and how the team has been executing. I'll then provide an overview of the macro environment and headwinds we're managing and how they are impacting diversity. And then finally, I'll turn the call over to Todd to provide additional details on the quarter and our outlook for the remainder of 2022. So turning to the core business, Whilst our core business results continue to show strength with 13% constant currency organic top line growth, continued new customer wins, and double digit price increases, the reality is that currency is a significant drag on results. Revenues improved by approximately 4% as compared to the prior year, and over 17% on a constant currency basis. We saw strong revenue growth across both our institutional and food and beverage businesses, which increased by 12 and 33% respectively on a constant currency basis. While input costs have continued to rise, we've been implementing price increases across our various geographies and products. Through the first nine months of 2022, we've realized more than 10% revenue growth from pricing, and it's accelerated to more than 12% in the third quarter. I expect this level of pricing to increase further as we continue to combat the various inflationary pressures. In addition to our pricing actions, we've also added a number of new customers, representing more than 3% in annualized net new wins. We continue to be encouraged by our ability to add new customers and retain existing customers. We believe this is a testament to the strength of our product offering and service, especially in this ever-evolving and inflation-sensitive environment. Finally, we continue to improve our adjusted EBITDA margins from quarter to quarter. 12.8% margin in the third quarter is 40 basis points above the second quarter and 370 basis points above the first quarter of this year, reflecting the continued maturity of pricing actions and significant efforts to manage costs in a challenging operating environment. As we stated last time we spoke, we expect our consolidated margins to improve quarter on quarter throughout this year as our pricing and cost initiatives are implemented. Before I move to the macro environment, I'd like to provide a quick update on our supply chain improvement projects. We've completed our warehouse transition in Europe and have now largely completed our North American warehouse consolidation into our new Kentucky facility. Our efforts are now focused on consolidating our manufacturing into the same Kentucky facility, which we expect to be completed in the first quarter of 2023. As a reminder, by co-locating our main warehouse and manufacturing and adding more capacity to bring currently contracted volumes in-house and optimizing freight lanes, We expect this project to bring roughly 100 basis points improvement to total company margin after it's completed. One last item of note as it relates to our warehouse transitions and in-flight manufacturing consolidation. We made a strategic decision to build up additional inventory and utilize higher cost freight solutions to minimize supply disruption with our customers. While this puts some short-term pressure on our cash flows, we believe is the right thing to do for our customers, and such pressures are expected to be temporary. So moving then to the macro environment, we continue to see certain headwinds persist with increased pressure in this global inflationary environment. Specifically, foreign currency exchange rates continue to be our most significant challenge. In the previous quarter, we updated our full year outlook to reflect an additional $30 million in headwinds associated with existing exchange rates. Our assumption was predicated on a strong US dollar persisting for the remainder of the year. While we transact in multiple currencies, as a point of reference, the euro exchange rate to the US dollar was at a two-decade low, and we assumed no improvement remainder of the year when updating our previous items. Since our second quarter call, the US dollar has further strengthened and we now expect this headwind to impact our adjusted EBITDA outlook by an additional $10 to $20 million. Another macro headwind that we continue to watch as we implement our pricing actions relates to input costs. Whilst most items have begun to show signs of stabilizing, albeit at higher levels as compared to the prior year, costs associated with cost it continue to accelerate and have risen by over 100% in the last 12 months. Accordingly, we believe such costs represent an additional $10 to $20 million headwind to our full year 2022 outlook, but should begin to abate in 2023 when our full pricing actions are reflected. Until we see clear evidence that such macro pressures are beginning to subside, we believe it's prudent to lower our full-year adjusted EBITDA outlook to an estimate of at least $330 million. Whilst we're pleased with our pricing and cost containment actions and the core fundamental growth aspects of our business, the current macro environment continues to present difficult but temporary challenges that we need to navigate. We expect the inflationary environment to eventually stabilize and the majority of our pricing actions to remain intact, supporting long-term growth and margin improvement. The underlying trend of the business remains positive, and we're confident that we will exit this unprecedented environment in a much stronger position than when it began. With that, let me now pass the call over to Todd to give you some additional details for the quarter and thoughts on our outlook for the remainder of the year.

Thanks, Phil, and thank you all for joining us.

As Phil mentioned, I plan to provide some additional color on the quarter, along with some select balance sheet details. I will then move to our outlook for the remainder of 2022 prior to opening the line for Q&A. First, and starting with our quarterly results. Net sales for the quarter were $689 million, an increase of $24 million, or 3.6%. as compared to the third quarter of the prior year and 17% on a constant currency basis. Our institutional business, which is roughly 70% of our revenue, was $479 million, a 1.6% decrease over the prior year quarter. On a currency-adjusted basis, our institutional business revenues increased by 12%, driven by a combination of new customer wins, pricing actions, and expansion with existing customers as we continue to progress towards a return to pre-pandemic levels. Our F&B business, which is roughly 30% of our revenue, has also generated positive momentum, supporting our long-term growth goals. We continue to experience high customer win rates for new business, and our water treatment products are further expanding our organic growth. Our revenue of $210 million in the quarter is an 18% increase over the comparable prior year quarter and a 33% increase on a currency adjusted basis. As it relates to adjusted EBITDA, consolidated adjusted EBITDA for the third quarter was $88 million, a 17.4% decrease as compared to the prior year quarter or a 2.5% decrease in constant currency. Our institutional and food and beverage segments delivered adjusted EBITDA of 69 million and 27 million, respectively, representing declines of 18.4% and 21.6%. Both segments were substantially impacted by the strengthening of the U.S. dollar, as we previously discussed, and high input cost inflation, particularly in Europe due to the war in Ukraine. We continue to take aggressive pricing actions to address the price-cost gap. Now let me touch specifically on cost for a moment. The current reality is that inflation is difficult to predict and has progressed at an unprecedented pace. While cost volatility can put pressure on margins in the short term, over time it will eventually turn positive as inflation recedes and we continue to price for the value we provide to our customers. To offset and get ahead of costs as we progress towards 2023, we initially discussed in our first quarter earnings call that we expected our full year pricing for 2022 to be an increase of greater than 8%. Considering continued inflationary pressures, coupled with the success of our rate increases to date, we now expect full year pricing for 2022 to be greater than 10%. Combined with our steady productivity gains, we anticipate offsetting inflation first in dollars, and as inflationary pressures moderate, we expect to capture margin improvement. Moving to our balance sheet, free cash flow was a net outflow of 50 million in the quarter, which brings year-to-date to 60 million, compared with a net outflow of 141 million in the first nine months of last year. While free cash flow is lower than expected, it was heavily impacted by investments in our supply chain projects. We continue to expect positive free cash flow in the last quarter of the year, consistent with historical cash flow seasonality. Given the current environment, we will likely be selective in the short term when considering opportunities in our strong pipeline of accretive M&A. At quarter end, we had cash and cash equivalents of $249 million and available liquidity of $692 million, which we view as a solid position in the current environment. On the debt front, we have approximately $2 billion in gross debt, with roughly 50% fixed and 50% floating debt after interest rate swaps. We also previously established interest rate caps that have significantly mitigated our exposure on roughly two-thirds of the floating component of our debt. We have already hit our interest rate caps as of our previous earnings call. For the remaining $350 million of floating debt that is currently not hedged, every 1% increase in rates represents approximately $3.5 million in annualized incremental interest expense, which we believe is manageable considering our strong cash position. Our net debt leverage ended the quarter at five times. We continue to target leverage of three times, which we expect to achieve over the next several years as our pricing actions take hold and the current inflationary and foreign currency exchange environment abate.

Moving to our outlook for the remainder of the year.

We continue to be encouraged with the resiliency of the core business and our ability to capture market share while implementing aggressive pricing actions reflective of the inflation environment we are tackling. While our execution in the first nine months of the year has been consistent with our expectations, the macro background continues to be broad-ranging and unpredictable. As Phil mentioned, we believe it's appropriate to update our outlook to reflect the fast-changing exchange rate environment. Our current outlook now assumes a full-year headwind of more than $270 million to revenue and over $50 million to EBITDA associated with the continued strengthening of the US dollar. While we have a number of exchange rate hedges in place, we are obviously not in the business of predicting foreign currency swings and when they may revert. We have assumed such volatility will continue to persist and potentially worsen for the remainder of the year. We have also included an additional 10 to 20 million headwind for input costs with the majority of the increase related to cost . We plan to reflect such cost increases in future pricing actions. Based on these items, we're updating our full-year revenue guide to mid-single-digit percentage growth, which would be mid-teens growth in constant currency, and we're lowering the adjusted EBITDA outlook for the full year to at least $330 million. As Phil mentioned, the underlying trend of the business is positive, and we remain confident that our business will exit this unprecedented environment in a stronger position than when it began. With that, operator, please open the line for questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you ask one question and one follow-up question. Our first question is from Manav Patnik with Barclays. Please proceed.

Hi, how are you? This is actually Ronan Kennedy. I'm from Manav. May I ask, guys, if you're able to disaggregate for each of the divisions the volume with commentary on winds and penetration, price, and FX for the third quarter results?

Yeah, good morning, Ronan. Yeah, I can do that for you. It's Phil here. So look, in total... constant currency was 17% and pricing 12%. So obviously the balance of 5% was volume. If I break that down for institutional, which was 12% on a constant currency basis, the pricing was around 9%, meaning the volume was 3%. And on food and beverage, the constant currency growth was 33%. with about 20% of pricing and 13% for volume. Obviously, all those volume numbers I quoted do include some M&As. And maybe most significant on the food and beverage, that 13% volume is about 8% due to M&A and 5% due to sort of underlying business volume growth. Maybe a bit more color there. Of that 5%, about a third Of that was water treatment that you might remember we introduced proposition the start of last year. And the other two-thirds was just a result of underlying growth in the business.

Hope you got all that.

Yes, thank you for that. I appreciate it. And then, you know, obviously you've spoken to the resiliency of the core business in the face of significant challenges, COVID-19. and inflationary supply chain constraints exacerbated by geopolitical events. Of course, there's FX. Can you just remind us about overall recession resiliency in the downturn playbook? And then also, if you have your views on outlook and when, from a timing standpoint, you could recover the dollar cost of inflation and start to expand, start margin expansion?

Yeah, sure. I mean, let me start by saying if we look at history, this business has been pretty resilient in recessionary times. And I think there's good logic for that if you think about the part of the business that's in food and beverage manufacturing, in healthcare, in schools. These things are not really impacted by any recessionary demand and consumers. Of course, we do have a little bit of... exposure there on food service and hospitality. So when you roll all of that together, if you look at previous recessions, we've kind of seen a flat top line. If I then try and answer the question, what are we seeing at the moment, and maybe try to give you a bit of geographical insight into that. If I start with emerging markets, I think the business is is really not seeing much impact at all. We're seeing most of the emerging markets continue to grow. Obviously, China would be the exception where they're still really in the grip of COVID. If I look at North America, I'd say it's a shade softer than when we last spoke, albeit not too much. And I think there, it's tough to disaggregate the labor impact from any kind of true recessionary impact. And what I mean by that is, you know, example in our healthcare business, you know, we're selling really strongly in infection prevention, but much less in our building care. The reason being that the customer doesn't always have the labor that they would want to carry out all of the processes that they would want to. And then I guess coming over to Europe, again, I say it's a touch softer, but a similar point, you know, most of the any change that we've seen has actually been in the UK, where, you know, despite some strange political goings-on and the economy, again, I think Brexit is having a real impact and our hospitality, food service customers are complaining, again, about the lack of labour. If I look into southern Europe in particular, actually volume's holding up quite strongly. So I think it's fair to say that we're very cautious You know, we're planning for tougher times ahead. But at the moment, it feels like the labor issue is a bigger one than underlying recessionary impact on demand.

Thank you.

And then, sorry, may I just ask on the timing for the expectation of timing for recovery of dollar cost of inflation and then margin expansion?

Well, so look, we're there. So we are recovering, you know, on a dollar basis. And, you know, obviously we are seeing our margins overall improve sequentially. In order to get fully back, you know, fully recover the inflation in percentage, you know, is going to take longer. And really the key determinant there is when we see the top, So you'll know that things like ethylene, I think we've kind of seen the top, and we're seeing some signs of reduction. But on other products like caustic, it just continues to increase. I mean, since we last spoke to you, we had a big surge in caustic. We've had a further increase that's come out over this week. So it's hard to give you a clear view of when we can cover percentage caustic. But what I can tell you is, as we see those increases, so we're taking pricing. We took a big caustic-related price increase on the 1st of October, and we're going to take another one on the 15th of November. So we're just going to keep pricing for this inflation. But until it stops, we're not going to get to full margin coverage.

Thank you. Appreciate it. No worries.

Our next question is from Steven Haynes with Morgan Stanley. Please proceed.

Hi, guys. Thanks for taking my question. I wanted to ask on the kind of the 4Q guidance and what's implied in terms of volume growth. And, you know, as we're kind of thinking about the EBITDA run rate that the 4Q guide implies, like, do you kind of view this as a bit of a bottom or... Would you kind of expect continued improvement off of that level? Thank you.

Yeah, so look, I think, you know, the adjustments that we've made today, as we said, are predominantly to do with Forex and inflation, only to a very small extent, you know, any view of that softness that I mentioned on volume. It's incredibly tough to predict what's going to happen to Forex next year. Of course, we're going to have a year-on-year impact if the Forex rates don't change. As I said, on the inflation, I think if you look back, since the war broke out and we gave a guide on what we thought would happen with inflation and pricing, we said we thought we'd cover most of it. In fact, inflation ended up being a lot higher than that. but all of that extra we covered with price. The challenge here is that when the inflation comes so late in the year, it becomes very difficult to cover it in the year. But as I just said, in answer to Ronan's question, we are taking the pricing actions this year and therefore we'll cover those inflationary impacts going into Q1 next year. So overall, as we look at volume, I think it's the other part of your question, You know, we're reflecting, you know, a touch of the softness that I mentioned, but we're not including for Q4 any, you know, significant change. We are reflecting, though, some more price.

Got it.

And then maybe just as a follow-up on the Kentucky transition, how much of a headwind – were you kind of seeing in the third quarter? And in terms of EBITDA, is there any expectation for further headwind in 4Q?

Sure. So I think when we last spoke to you, we said we might have 20 to 30 million of top line that would move potentially out of the third quarter into the fourth quarter just because there could be some backlog in delivering to customers. In the event, we actually were able to move a bit quicker than that, and the number at top line was about $10 million. So we saw $10 million move from Q3 into Q4. So at EBITDA, obviously not a significant number. As we sit here today, we are almost completely caught up, that $10 million. So I wouldn't anticipate any impacts coming out of Q4 into Q1 next year.

Thank you. Thank you.

Our next question is from Christopher Parkinson with Mizuho. Please proceed.

Good morning. This is Kieran for Chris. I was just wondering in terms of pricing, can you break out out of that kind of 10, 12% that you're seeing this year, what percent is coming from the surcharges as opposed to kind of the core pricing initiatives? and then how we should think about that resiliency once those raw materials start coming down in terms of your ability to keep some of that core pricing. Thank you.

Yeah, sure. So, look, I think we said before about 20% of the overall pricing is related to the surcharges, and I don't think anything's changed. I think, you know, what we're now looking to do as we do the Q4, sorry, the Q1 price increase in institutional is to replace the surcharge with structural price. So we'll be making an overall increase and doing that conversion for the institutional business. But for the food and beverage business, which remains obviously significantly exposed to cost, which continues to go up, we'll be continuing with the processes that we've had through this year and retaining a balance of structural price and surcharge.

Great. And then maybe just a quick follow-up on cash flows. How should we think about kind of that normalizing now that you're through some of the initiatives with Kentucky and maybe working capital normalizing a little bit in 2023 and the uses of cash now given the economic backdrop? I mean, it does still seem like you have this M&A pipeline, which is probably robust. Things might be attractive at these price levels. Do you still kind of focus a little bit more on some of those bulletins, or is there more of a focus now on maybe reducing debt in the near term based on the kind of backdrop that we're looking at? Thank you.

Yeah, thanks. This is Todd. Let me take that one. First, I think our cash flow was a little bit less than we wanted in the third quarter, mainly driven by these footprint projects. We spent more than we expected or anticipated. Some of that will bleed into Q4 as we finished the warehouse but also started up the manufacturing. And, you know, just for some color on that, you know, we had incremental inventory of about $20 million when you look at the queue in Q3. That was kind of by design so that we could service our customers in the transition as best we could, understanding it's not an easy thing to convert and move warehouses, hire a bunch of new people who don't understand your picking process. And so we wanted to make sure that we had as much inventory as we could to help soften the landing on that transition. So that was about $20 million in the quarter. We also had a longer period in terms of crossover of running multiple warehouses at the same time, which drove some higher duplicate costs in those transitions, both in Europe and in North America. And so that was the preponderance of the cash flow challenge in Q3. And like I say, we would expect some of that to spill over in Q4, but the good news on that is it's one time in nature and linked specifically to these two transition projects, which will come to, as Phil mentioned, almost full completion here in the next several weeks. So that's that. As we look out you know, and think about the inflection going forward, you know, with some expected earnings improvements next year and the takeout of those significant one times this year, year on year, you'd expect to see a pretty decent free cash flow next year.

Great. Thank you. Thank you.

Our next question is from Joshua Spector with UBS. Please proceed.

Good morning. This is Lucas Beaumont. I'm for Josh. So I just wanted to go back to pricing if we could. So it looks like you guys had probably like a mid-teens kind of two-year stack in the quarter and that you might kind of get to a high-teens two-year stack in the fourth quarter as your exit rate. So just based on the annualization of that heading into next year, does that mean we should see sort of at least mid-single-digit pricing or are you thinking it's going to be higher than that even with what you've got coming in the fourth quarter?

Yeah, Lucas, firstly, spot on with those two-year stack numbers. We're kind of mid-teens in the third quarter. It'll be high teens in the fourth quarter. So, yeah, look, I think there is going to be quite some significant rollover pricing. And as I just mentioned, we're also expecting to take some further price at the start of the year in Q1. So I think the overall pricing number, you know, probably be a little bit ahead of mid single digits, which I think was what you said. So, yeah, I think we'll have some quite nice pricing again for next year, which I think we're going to need because obviously there's also some rollover on the inflation. And therefore, it's going to be really important that we have both the rollover price and the new price.

Great, thanks. And just on the role of material side, so I think we sort of previously talked about the expectations there was kind of like a 45% two-year stack in the second half. So I was just wondering if you could tell us kind of, I guess, what the third quarter was and then are you expecting that to kind of accelerate further into the fourth quarter, I guess, in line with what your competitors are kind of seeing at the moment? I think where they're kind of, they've probably ended up above, 50% on a two-year stack. And I think sort of at this stage, you guys, it's going to be a couple of the few probably, especially chemicals that are still seeing like market increases sort of sequentially as we go from sort of 3Q to 4Q. So if you could just kind of help us understand your outlook there.

Yeah, sure. So you're absolutely right. Last time we said Q3 would be around 45% on the two-year stack. That Q3 number is actually 50%. And again, I think you're right. We could see that nudge up a little bit in Q4. It really just depends on what else happens to cost it as we close out the year.

Great. Thank you, Matt.

Our next question is from Edlin Rodriguez with Credit Suisse. Please proceed.

Thank you. Good morning. Phil, quick question. Going back to the surcharge question, one, how successful have they been? Have you been able to fully implement them? And two, can you talk about the receptive of your customers? How receptive are they in converting those surcharges into structural pricing? What is the rationale for them to accept that?

Yeah. So, look, I think... The surcharges have been very successful. It's worth maybe just reminding you that they weren't in every geography. So, for example, a lot of the emerging markets where surcharges, sorry, where there's often been high inflation and customers are used to that, we've continued purely with structural price. The main place that we've used surcharges additionally this year is in Europe. where obviously it's traditionally been very modest inflation, and now we've seen very significant inflation. So I think the surcharges worked well. We were able to put it in quickly, more quickly probably than we could have done with structural price, and therefore I think it served us well. But I think now feels like a time to move to structural price, and I think the conversation having is I think we're operating in a new world, in a new environment where costs are elevated and I don't think there's any expectation in the short term that we're going to go back to 2019 cost levels and therefore I think it's better that we move back to a structural relationship with customers and therefore take the surcharges out. So that's the the process that we're going through at the moment.

Okay. And if you get into a downturn next year, will it become more challenging to raise prices?

Look, I think, as I said earlier, I think, you know, we're not anticipating, you know, really significant downward volume movements. And we're extremely committed, you know, to maintaining the profit pool for ourselves and for the industry over the medium term. And therefore, we'll be very clear that we need to pass price through. The other thing I think that's worth saying is, if you think about what we do, we provide cost and efficiency savings for our customers. So to that extent, a new higher cost base is an opportunity for us to deliver more value to customers. And we're certainly seeing the solutions that we can offer to save on water and energy and labor. Customers are even more receptive, I would say, now than they were before. And I think in that context, and given that our costs are a very small proportion of a customer's cost base, I don't see any reason why we can't continue to take take price increases as we continue to deliver real value for customers that they can see, we can measure and prove.

Okay. Thank you for the insight.

Thank you.

As a reminder, to star one on your telephone keypad if you would like to ask a question. Our next question is from Ashish Sabudra with RBC Capital Markets. Please proceed.

Hi, this is John filling in for Ashish. Could you just quickly touch on customer receptions, the price increases, and maybe retention just by segment if possible? Thanks.

Sure. Look, I think on customer receptivity, it's felt like a long process, an attritional process, both for us and our customers. But I have to say, I think the team have done a really fantastic job of really explaining to customers what's happening to input costs and demonstrating to customers the value that we give. And therefore, I think that process has gone actually really well, particularly given we've done wave after wave. In food and beverage, I think we've probably had six waves of pricing this year. And on retention, we haven't really seen much change so I think we last reported a 99% retention rate for the large customers that hasn't changed so we haven't seen a real drive to churn as a result of the pricing it's clearly something we're enormously vigilant of and we're talking to the customers very very regularly through this difficult period but as we sit here today retention or churn is no different to how it was before

Great, thank you. And maybe just quickly, could you just touch on, again, M&A, given the globally fragmented market and multiples coming down, given the strong equity profile, is there any areas you're more focused in today, or is there just kind of the same playbook as always? Thanks.

Yeah, in terms of our approach to M&A, I don't think that's changed what we target. Just as a reminder, we've been targeting companies 10 to 50 million in size, We'd expect to spend six to ten times for those companies. We do have a funnel that we're actively and currently working. The good news is that in that funnel on the ones we're talking with, we're in a proprietary discussion on almost every one of them. So that allows us to actually control some of the timing. Clearly, we're cognizant to the opportunity, but also to our current net debt leverage. And you're not likely to see us close a deal in the fourth quarter here, but that does not mean we don't have an active funnel and we'll act appropriately if something is strategic to us and makes sense and has a high return. So that's how we're thinking about it. It hasn't changed. The opportunity hasn't changed. Our excitement hasn't changed about it. We're just being prudent in the current market situation to make sure we have the right balance between free cash flow and cash flow and M&A.

Great call. Thank you.

We have reached the end of our question and answer session. I would like to turn the call back over to management for closing comments.

Yeah, look, thank you for that. In closing, I would just like to say, you know, I'm really proud of the team here and what they've done this year so far in pricing, in managing costs, in customer retention, and in winning new business, particularly in our strategic drivers around global accounts of water treatment and US food service. Of course, we're having to grapple with inflation and currency, but I think we all believe at some point those issues are going to abate. So we're going to remain steadfastly focused on our strategy. And I think you've seen the underlying business numbers that we're doing a good job of delivering against that. So thank you all. Hope you have a good day. And thank you for listening.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.