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spk10: Good morning and welcome to Newelbrand's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in listen-only mode. After a brief discussion by management, we will open up the call for questions. In order to stay within the time scheduled for the call, please limit yourself to one question during the Q&A session. As a reminder, today's conference is being recorded. A live webcast of this call is available at ir.newelbrands.com. I will now turn the call over to Sophia Tsinos, VP of Investor Relations. Ms. Tsinos, you may begin.
spk07: Thank you. Good morning, everyone. Welcome to Neal Brand's fourth quarter and full year earnings call. On the call with me today are Ravi Saligram, our President and CEO, and Chris Peterson, our CFO and President, Business Operations. Before we begin, I'd like to inform you that during the course of today's call, we will be making forward-looking statements which involve risks and uncertainties. Actual results and outcomes may differ materially, and we undertake no obligation to update forward-looking statements. I refer you to the cautionary language and risk factors available in our earnings release, our Form 10-K, Forms 10-Q, and other SEC filings available in our investor relations website for further discussion of the factors affecting forward-looking statements. Please also recognize that today's remarks will refer to certain non-GAAP financial measures, including those we refer to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP. Explanations of these non-GAAP measures and available reconciliations between GAAP and non-GAAP measures can be found in today's earnings release and tables, as well as in other materials on Newell Investors Relations' website. Thank you, and now I'll turn the call over to Ravi.
spk09: Thank you, Sophia. Good morning, everyone, and welcome to our year-end call. We continued our growth momentum from the past five quarters into the fourth quarter, which helped us achieve an important milestone in 2021 as we returned the company to core sales growth with strong results across each business unit and geographic region. Despite a challenging and disruptive operating backdrop, as well as significant inflationary pressures, we delivered over 12% growth in both core sales and normalized operating income in 2021, with further progress in complexity reduction, productivity, cash conversion cycle, and a robust innovation pipeline. Let me share some highlights from fiscal 2021. Core sales increased 12.5% as each business unit grew versus last year and on a two-year stacked basis. This was fueled by strong consumption in the U.S. relative to both 2020 and 2019. Domestic consumption increased across all eight business units relative to 2019, with writing, food, baby, commercial, home appliances, and home fragrances in the double digits. Even as mobility is returning and some trends are moderating from peak levels, we are seeing stickiness in consumer behavior versus pre-pandemic levels. We believe that the strategic work we've done to rejuvenate our iconic brands, sharpen brand positioning, strengthen our marketing and innovation muscle, while leveraging consumer insights and foresight is enabling us to better capitalize on consumer trends. Our major brands are healthy, And in 2021, each of our top 10 brands grew with Graco, Oster, Coleman, Yankee Candle, Sharpie, and Peppermint, each registering double-digit growth. 2021 was also a stellar year for all our regions, as each one delivered double-digit top-line growth with international outpacing North America. We continue to believe that the international markets abound in opportunity, and we just appointed Maria Fernanda Meya as CEO International. Maria Fernanda has three decades of international CPG experience at firms such as Kellogg's and Colgate and has a track record of accelerating growth and profit. She'll join you at the end of this month with the goal of fully unlocking international growth potential and accelerating profit by leveraging scale, reducing fragmentation, and building up brand franchises outside of the U.S. Strong omnichannel execution allowed us to attract shoppers across all channels, despite consumers' return to brick-and-mortar stores through the year. Newell's global e-commerce sales grew at a low double-digit pace in 2021, as digital penetration for the company remained at about 22% of net sales, similar to 2020, and significantly ahead of prior years. Our go-to-market strategy is yielding strong results and enabling us to forge stronger connections both with our consumers and customers. Although our service levels were challenged due to the supply environment, we saw excellent growth at our top customers and developed strong joint business plans. We're also building momentum on our innovation operating model with tighter integration of consumer insights and foresight into the process. This is yielding more impactful launches. Not only are innovations becoming a larger contributor to sales, we also see opportunity to continue to scale many of the franchises, such as Sharpie SGL, Mr. Coffee Iced, FoodSaver, VS Line, and Rubbermaid Brilliance. In 2021, although Newell's normalized operating margin declined about 10 basis points to 11%, normalized operating profit grew more than 12% despite approximately a 700 basis point inflationary headwind, which was 9% of COPs. Offsetting levers were strong fuel productivity, pricing, and tight cost control. normalized earnings per share grew nearly 2% versus 2020. On a tax-adjusted basis, that would represent over 20% increase in normalized EPS, a remarkable result, particularly in this environment. Our cash conversion cycle improved by five days year-over-year to 68, from a high of 115 in 2018. Strong cash generation, despite strategic inventory build, allowed us to de-level our balance sheet to 3.0 times. As we focus on driving sustainable and profitable growth, we're placing significant emphasis on building operational excellence throughout the organization, with Project Ovid and automation being two major initiatives that we are implementing. We also significantly improved our employee engagement. Based on a Glint employee survey, the company's engagement score moved up significantly to 75 at benchmarks, indicating that culture is becoming a competitive advantage for us. We continue to strengthen our commitment to corporate citizenship, sustainability, as well as diversity, inclusion, and belonging, guided by our core values of truth, transparency, teamwork, and trust. I'm pleased to share that Neal Brands has been named one of Fortune's 2022 World's Most Admired Companies. The company was also recognized on several other lists, such as the Wall Street Journal Management's Top 250 Best Managed Companies of 2021. Forbes World's Top Female Friendly Companies in 21, Forbes Best Employers for Diversity in 2021, Newsweek America's Most Responsible Companies in 2022, and was awarded 100% on the Human Rights Capital Foundation's Corporate Equality Index in both 21 and 22. Last year, we also continued to give back to our communities, donating products worth nearly $17 million. Let me share some insights on 2021 results for each business unit. Writing had a terrific year with double-digit growth, almost double the rate of the total company, and market share gains across each geographic region as schools came back to a more normal cadence. We saw strong domestic consumption relative to both 2020 and 2019. On a two-year stack basis, writing core sales grew despite the delay in return of the commercial channel as new variants continued to disrupt back-to-office plans. The rebound in the writing category in combination with excellent market share gains in the U.S., Canada, U.K., and Australia drove excellent results for the business in 2021. In the U.S., Newell outpaced the market, delivering a seven-plus-year high in market share and over two points in share gains in writing instruments. Sharp ESGL continued to turbocharge our share in pence for the second straight year, resulting in US share gains of nearly 500 basis points in this important category. New share of the writing category also improved by more than two points in Australia and Canada and almost one point in the UK. We're confident writing is well positioned for a great 2022 when we expect more of a rebound in the commercial channel. 2021 was a solid year for the baby business, both on the gear and care sides, as core sales grew at low double-digit rate due to distribution gains, innovation, increased stimulus, and child tax credit funding, and continued strength in e-commerce. We saw strong momentum in domestic consumption. There was lots of great innovations throughout 2021, and I'm pleased to share that Newell Baby Gear won four awards at the annual Juvenile Products Manufacturing Association Awards, the most of any company, including the Tried and True Award for the Graco Forever and Green and Environmentally Friendly for Century. Along with writing, Home Fragrance was the best performing business unit during 2021, as consumers focused on their well-being in homes, drove strong double-digit core sales growth supported by healthy consumption relative to both 2020 and 2019. Net sales for the home fragrance business reached record levels in 2021, despite closure of underperforming retail locations and exit from the fundraising business in 2020. We saw a really strong performance from Yankee Candle retail stores this year, with positive comps as consumers returned to in-store shopping. The 2021 launch of the Yankee Candle Signature Collection, as well as added distribution points, helped drive modest share gains in the candle category in track channel. In EMEA, we delivered strong growth across all territories, leveraging e-commerce and added distribution points. Moving on to food, 2021 was another strong top-line year for the food business, even as performance moderated in the second half against very challenging comparisons. And we experienced supply challenges across some businesses. Domestic POS was significantly ahead of 2019 and slightly below elevated year-ago levels. In 2021, two of our brands, Ball and FoodSaver, achieved record sales, and Ball continued to drive significant share gains in the canning category. benefiting from the 2021 launches of ball storage latch pantry jars as well as the nesting jars. We also saw share gains in the Rubbermaid brand drawing upon the successful expansion of the Brilliance line into glass and pantry categories. Our products are also getting external validation as good housekeeping named Calphalon, best nonstick cookware, Rubbermane Brilliance Glass was named best food storage, and FoodSaver was recognized as best vacuum cleaner for 2021. We continue to believe that in a world where hybrid work environments are likely to prevail, at-home cooking and food consumption occasions will remain above pre-pandemic levels and have an exciting lineup of new products for 2022. In 2021, core sales growth for home appliances accelerated relative to already elevated 2020 levels led by Latin America, North America, and EMEA. Domestic construction was up significantly ahead of 2019 levels and up modestly versus 2020. Due to strong demand, we hit an all-time record production of blenders as Oster Blenders celebrated the 75th anniversary in both the U.S. and Latin America. In 2021, our outdoor and recreation business grew core sales in each quarter. demonstrating momentum and the strength of the turnaround strategy we began 18 months ago. For the full year, core sales improved across all regions, with robust growth driven by Japan, U.S., Europe, and Latin America. The iconic and largest brand in the ONR portfolio, Coleman, led this growth, showing a lifestyle brand-building focus is working. We also saw strong results from our portable beverage category, with both Contigo and Baba growing double digits. Key product innovations in outdoor and recreation include the Coleman Peak One platform, Coleman 1900 collection, Contigo hydration, and a new camping gas grill in Europe. Our global marketing campaign with Coleman, the outside is calling, is resonating well with our outdoor enthusiast consumer as brand sentiment and brand health scores continue to rise and helping us win new distribution for 2022 across various channels, including outdoor speciality. In beverage, the Contigo Street Available Desk Mug, which was introduced in 21, has become the number one mug in the coffee mug category, and Contigo is restoring its leadership position. I'm also encouraged by the progress in margins, both in outdoor and recreation and home appliances. In 2022, we will exit some lower margin categories, such as beddings, fans, and aerobeds, which will be a headwind to top line, but will help make further inroads on improving profitability. From a top line perspective, 2021 was another solid year for the commercial business. as core cells grew on top of very difficult comparison fueled by consumption growth. We saw strong consumption performance across major categories, with the exception of washroom, which surged a year ago due to the pandemic. While the business has been amongst the hardest hit by inflation, the team has done an outstanding job in implementing a series of price increases to help mitigate the impact. Given our expectations that resin prices have stabilized, we're confident that we will restore gross margins and drive strong operating profit growth in 2022. Lastly, core sales for connected home and security increased in 2021, driven by strong domestic consumption. Earlier this week, we announced an agreement to sell the CHNS business to Residio Technologies, and it is consistent with our strategy of tuck-out divestitures. We're confident that Residio is the right strategic owner for this business and believe this transaction will enable CHNS to realize its full potential. At the same time, it allows us to bring even greater focus to our core businesses where we see the highest potential for value creation. Since CH&S was not integrated with the rest of NEO, we do not expect this transaction to be disruptive. We're exiting 2021 from a position of strength, and I am confident that the strategic investments behind brand rejuvenation, omni-channel and social media listening capabilities, as well as supply chain resiliency position us well for driving sustainable, profitable growth. As we look to 2022, an overall theme is that if 2021 was a year of top-line growth, 2022 will be a year of margins. We're focused on five key priorities. First, laser focus on improving gross margins as we double down on our efforts to mitigate the significant inflationary pressures and supply chain challenges while improving customer service levels. The strength of our brands has allowed us to take the appropriate pricing actions on all our businesses while ensuring they remain a good value for consumers. In addition, we'll continue to optimize promotional spend, price the innovations to be gross margin accretive, direct A&P spend towards higher gross margin categories, and drive productivity. Second, we'll continue to drive core sales growth and innovations, focus on mastering the 360-degree consumer journey, and delight consumers at each touchpoint with compelling storytelling and joyous brand experiences. I genuinely believe we're making the shift to becoming a consistent growth company. Third, turbocharge international to accelerate growth and profits. Fourth, continue investing in transforming our supply chain through Project Orbit and automation. Fifth, and last but not least, continue to strengthen the One Newell culture and build on our employee engagement momentum. Folks, it is a new rule. Our can-do teams delivered over 12% core sales growth and normalized operating profit growth in 2021. In 22, we're committed to rebuilding gross margins and delivering top and bottom line growth despite a tough macro environment. I'd like to express my sincere gratitude to our employees whose grit, hard work, and agility make it possible for us to deliver on our commitments and pivot as necessary. I continue to believe that Yule's best days are ahead of us and that our focused and deliberate actions will drive sustainable and profitable growth, achieve strong shareholder returns, while being a force for good. Onwards and upwards. And now I'll turn it over to Chris.
spk06: Thank you, Robbie, and good morning, everyone. The decisive actions we have taken over the past three years as we have executed on Newell's turnaround in combination with strong financial discipline and consumer demand have driven more effective and agile operations at the company. This has enabled Newell to successfully navigate the current environment and deliver full year top and bottom line results that are well ahead of the outlook we shared a year ago, despite significant escalation in inflation and ongoing challenges across the supply chain that are impacting all companies. Before discussing fourth quarter results, let me provide some insights into the operating environment as we expect many of the dynamics from 2021 to persist in 2022. In 2021, Newell experienced unprecedented inflationary costs, largely driven by resin, ocean freight, source finished goods, and labor costs. Inflation accounted for about 9% of cost of goods sold. To mitigate these inflationary headwinds, we accelerated our productivity initiatives, which accounted for close to 4% of cost of goods sold, successfully implemented price increases across each of our business units, with six of our business units communicating several pricing rounds continued to maintain tight cost controls optimized effectiveness of promotional spend and leveraged strong top line trends while these actions helped mitigate the impact from inflation in 2021 newell has not yet realized the full benefits from them particularly as it relates to pricing which lags inflation In addition to the carryover impact from last year's pricing actions, each of our business units are implementing further pricing increases in 2022, as we expect this to be another year of high inflation. While prices for some commodities, such as resin, came off their peak, we expect source finished goods, ocean freight, and wages to be major sources of inflation this year. At this point, we forecast inflation to account for about 8% of cost of goods sold in 2022. Importantly, we plan to more than offset this through pricing and productivity, with gross margin expected to bounce back from 2021 levels. The supply chain backdrop remains challenging, and we expect the disruption from longer lead times for sourced products, port congestion, limited container availability, as well as shortages in components, labor, and truck drivers to continue throughout 2022. To deal with this, we continue to implement a number of offsetting measures that enabled us to deliver a $1.2 billion increase in net sales in 2021 and secure supply in constrained markets. These actions include enhancing the forecasting process and extending planning windows to account for longer lead times, building an inventory on top-selling and high-priority SKUs, diversifying our supplier base and qualifying alternatives to critical components where possible, accelerating automation across our facilities, diversifying ports of entry through Project Ovid, and enhancing compensation benefits, training opportunities, and working conditions for our frontline employees. Although we expect supply bottlenecks to persist, we remain confident that we are taking the necessary actions to both effectively manage them and create more agility within our supply chain in the future. In 2021, we kicked off Project Ovid, a major supply chain initiative, which we expect to transform Newell's go-to-market capabilities, enhance customer service levels, and drive operational efficiencies. We are planning to optimize the company's distribution network in the U.S. by consolidating 23 business unit-centric supply chains into a single integrated supply chain. In 2021, we completed the detailed concept, design, and build phases of the project. The start of this year, we shifted to the testing, refining, and implementation stage, and recently completed the first round of systems integration testing. I'm very pleased to share that our new distribution center in Newville, Pennsylvania, is on track to start receiving initial shipments in March. This summer, we plan to stand up Newell Brands Distribution Company, which will allow us to accept one order, send one invoice, and receive one payment from customers while shipping our products on one truck. Ovid will enhance Newell's supply chain resiliency and agility. As we build operational excellence throughout the organization, it's important to recognize the meaningful progress we've made on the operational front, which has considerably simplified our way of working and put us in a stronger position to manage through this challenging environment. For example, we ended 2021 with about 36,000 SKUs. which represents a 65% reduction from 2018, with plans in place to continue to simplify our SKU portfolio in 2022. We completed another four ERP conversions in 2021 and now expect 95% of Newell's sales to be on two platforms going forward. Let me now move to fourth quarter results. In Q4, net sales increased 4.3% to $2.8 billion as core sales grew 5.8% on top of 4.9% a year ago. This was partially offset by unfavorable foreign exchange as well as business and retail store exits. Core sales increased in six of eight business units and across every major geographic region. On a two-year stack basis, core sales increased in every business unit. Normalized gross margin contracted 280 basis points year-over-year to 30.1%, as approximately 700 basis points of inflationary headwind more than offset the contribution from pricing and fuel productivity savings. Normalized operating margin declined 150 basis points year-over-year to 9.9%, reflecting the reduction in gross margin, which was partially offset by SG&A cost leverage. net interest expense came down by $10 million year over year to $59 million due to debt pay down. The normalized tax rate of 17.4% was significantly above last year's tax benefit of 2.6% due to a lower contribution from discrete items. Normalized diluted earnings per share came in at 42 cents versus 56 cents a year ago with the tax rate difference representing an 11 cent delta. Normalized diluted EPS exceeded our outlook on stronger top line, tighter control over expenses, and a slightly lower than anticipated tax rate. Turning to segment performance, core sales for the commercial solution segment increased 1.7% against a very difficult year ago comparison of 13.8%, with both commercial and connected home and security business units up relative to a year ago. Core sales for home appliances grew 5.6% on top of mid-single-digit growth in the prior year, reflecting strong performance in both North America and Latin America. Core sales for the home solutions segment increased 3.2%, lapping a difficult low double-digit comp. Strong growth in home fragrance, particularly in Yankee Candle retail stores and in the EMEA region, offset a slight decline in food, which faced a tough comp. Core sales for the learning and development segment grew 5.3% as double-digit growth in writing, which continued to rebound, was offset by a decline in the baby business, which lapped its toughest comparison of the year. Core sales in the outdoor and rec segment increased 23.9% versus last year on very strong consumption in the quarter and an improving supply chain situation, with broad-based strength across all regions. In 2021, Newell generated operating cash flow of $884 million, below our outlook of about a billion dollars. As a result of the aforementioned challenges across the supply chain and strong consumer demand for our products, we decided to strategically build inventories on top-selling SKUs. While the temporary investment in inventory resulted in a miss to our forecast on cash, We believe it was prudent as it puts the company in a much better position to service customers and meet consumer demand going forward. Despite the temporary increase in inventory, we improved the cash conversion cycle by another four days versus a year ago. Through our proactive deleveraging efforts, the company's balance sheet is significantly stronger today than several years ago. Newell's leverage ratio came down to 3.0 times at the end of 2021 from 3.5 times a year ago, reflecting a $721 million reduction in gross debt during the year, as well as about 11.5% growth in normalized EBITDA. Before going into the outlooks for full year 2022 and Q1, I'd like to provide some context for the forecast and discuss the connected home and security transaction. Our planning stance is that the divestiture will be completed at the end of the first quarter so that Q1 results still include the contribution from this business. Core sales outlooks for both Q1 and full year exclude CH&S. The company expects to use after-tax proceeds to both repay debt and buyback shares with the goal of maintaining Newell's current leverage ratio. Considering the anticipated use of proceeds, the divestiture is expected to have an approximately neutral impact on the company's normalized earnings per share in 2022. We are entering 2022 from a position of strength. We've seen healthy top-line momentum early in the year and are encouraged by the quality of our innovation funnel. Although consumer behavior will continue to evolve as mobility improves and government stimulus is lapped, we think many of the recent habits will persist, even as some categories continue to normalize. We are assuming a moderate level of volume elasticity from price increases, although thus far we have not seen much of an impact. On the cost side, we expect inflation to remain elevated, albeit slightly below 2021 levels. We also anticipate continuation of the supply chain challenges that plagued the industry throughout 2021. As previously discussed, we have mitigating actions in place to address both inflationary and supply-related dynamics. We will maintain disciplined cost and cash management throughout the year and continue to build operational excellence as we accelerate automation and move into the implementation stage of Ovid. For full year 2022, we are forecasting net sales of $9.93 to $10.13 billion as compared to $10.59 billion in 2021. This outlook assumes core sales are flat to up 2% and a more than 6% headwind from the sale of the CH&S business, exits from low-margin categories, particularly in the outdoor and rec and home appliance businesses, closure of some Yankee Candle retail stores, as well as unfavorable currency. We expect normalized operating margin to expand about 50 to 80 basis points versus last year to 11.5% to 11.8% ahead of our evergreen target. This outlook assumes that pricing, along with productivity and mix optimization actions, more than offset a roughly 500 basis point headwind from inflation, as well as higher investment in advertising and promotion spending. For 2022, we are forecasting normalized earnings per share of $1.85 to $1.93 versus $1.82 in 2021, reflecting a mid-teens normalized effective tax rate and a 1% to 2% reduction in diluted shares outstanding as we deploy deal proceeds. We are budgeting for operating cash flow in the $800 to $850 million range, which includes the year-over-year headwind from the loss of profits on CH&S once the divestiture is completed, and one-time cash tax payment on this transaction. We expect to continue to improve Newell's cash conversion cycle, with a particular focus on drawing down on the strategic inventory build in 2021. Capital expenditures for 2022 are estimated around $350 million above normal levels due to one-time capital costs supporting infrastructure bill for Project Ovid. For Q1, our outlook assumes net sales of $2.25 to $2.3 billion as core sales growth of 2% to 4%, is offset by a 3 to 4% unfavorable impact from currency, exits from low-margin categories, and closure of some Yankee Candle retail stores. Due to external dynamics, some retailers have accelerated their orders on seasonal merchandise into Q1, which is reflected in this outlook. We are forecasting normalized operating margin of 8.9% to 9.3% as compared to 10.1% in the year-ago period. Although in Q1 inflation is still expected to exceed pricing and productivity, the gap is much narrower than Q4 2021, and we expect operating margin performance to turn positive in Q2 2022. Our Q1 outlook assumes a normalized effective tax rate in the low 20% range and normalized earnings per share in the 26 to 28 cent range. We have driven significant progress over the past several years and continue to see tremendous opportunity for value creation ahead. We believe Newell is a much stronger company today and better equipped to successfully navigate the external dynamics with a focus on driving sustainable and profitable growth. Operator, let's now open the call for Q&A.
spk10: Thank you. And if you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. Again, that is star one to enter the queue for questions. We will now take our first question from Peter Grom of UBS. Please go ahead.
spk11: Hey, good morning, everyone, and I hope you're doing well. So I kind of just wanted to ask around the comfort, you know, around the core sales guidance for the year. There just seems to be you know, a lot of uncertainty out there around price elasticity, you know, pull forward of demand across many of your categories and kind of what the health of the consumer looks like as we lapse stimulus in the coming weeks here. So, you know, what gives you confidence around delivering growth against these tough comps given the uncertainty that lies ahead? And I guess, you know, is there enough flex in the range should things deteriorate from here that this, you know, core sales outlook would still be achievable?
spk09: so peter good morning and happy new year um both chinese and regular um so um what i would say is yes we had 12 and a half percent uh growth in 21 which is quite awesome. And when you look at the top end of our range, let's say 2% or so, we're talking a stack growth of nearly 15. And then against 19, about 14, against 20, about 14%. So yeah, it is definitely high numbers. But look, here's the thing. We strongly believe we've turned the corner to becoming a sustainable growth company. The strength of our brands is, I think, quite high. We've got robust innovation pipelines. And then when you look at the full year 21, our consumption levels were pretty high. We're also gaining market share. So when you look at that, and then we had some supply challenges, I think some of those will get mitigated, not all, but some. And so, when you look at all of that, we feel pretty comfortable. The other thing is, there are certain consumer behaviors that started after the pandemic that we believe will continue. So, on one hand, you have Homer's Hub, and the hybrid work environment, I think, is here to stay. Most companies, I think, are adopting like a flex schedule, three days a week or so. So that means in-home cooking will continue. And so I do think that is a positive. And then on the writing business, on the other hand, even though the opposite side, which is the hybrid, at least people are going back, that will help us to bring some growth on the commercial channel. Then the other business I'd point out is outdoor, which we were really struggling in the past. The team has really done a remarkable job of moving forward. Our Coleman brand is sort of back to its iconic days with this lifestyle positioning. And the fact that we grew almost 25% in fourth quarter, which is not the seasonally high business, is just, I think, terrific. The Contigo and Baba businesses in beverage are doing very well. So when I look at all of that, I think the only places where there are two businesses which there was some, I think, forward acceleration from both consumers and customers, which would be appliances. And so there we are more muted. And then, of course, Baby really had a breakout year last year because of the stimulus. So I think those will be a bit softer. But other businesses, I feel very good. And look, on the candle business, the consumption was just incredible with this whole tranquility thing. So that may be a bit more muted, but we're launching so many innovations and expanding geographically. And that's another thing you should look at as my final comment. We're turbocharging international, so that should help the growth. So, look, I feel pretty comfortable with our stance. If anything, I'm hoping that there is some upside.
spk06: Peter, I would just add one comment, which is, and I alluded to it in the prepared remarks, which is, we are expecting a significant impact from pricing in our top line this year in 22. And we have assumed that there is volume elasticity. So we've assumed that, you know, because of the pricing, that volume is going to be down. We haven't seen that so far. And so, you know, I think that also gives us comfort that our guidance we view as prudent and not something that, you is likely that, you know, is very aggressive.
spk04: Thanks for that. I'll pass it on.
spk10: We'll take our next question from Kevin Grundy of Jefferies. Please go ahead.
spk00: Great. Thanks. Good morning, everyone, and congratulations on a strong year, particularly in this environment. Question for Ravi, just on satisfaction with the portfolio. You know, the organization obviously went through a period of great change. It went from a $16 billion company, post the merger, roughly half of that was divested through a period of sort of a fire sale period, almost, if you will. You came in, you and Chris have done a great job of sort of mending the culture and stabilizing the portfolio. So, you know, the divestiture is sort of noteworthy, I think, within that context of the home security business. So can you just comment overall on your level of satisfaction with the portfolio as it stands? Should we expect further divestitures? What's kind of the role in M&A? And then, Chris, I have to ask, too, just sort of the role of buybacks and share repurchases here and how you're sort of weighing that relative to M&A as you sort of look at the portfolio more broadly. And then I have a quick follow-up. Thank you.
spk09: Great. Let me start, and then Chris can address the buyback question. Overall, I'm... I think we've got a really resilient and good portfolio. And the good news about this portfolio is that they, A, feed off of each other, but we've got, like, think about solar training. When the pandemic hit, the food business and commercial business really grew. As did appliances, and writing suffered because of all the school closures. Twenty-one, you've seen writing have a blockbuster year, food and commercial a bit more muted. So I think this portfolio where each business helps the other out, and our aim is that all our businesses grow, they may just grow at different levels. Second, we went through a strategic planning process and classified our businesses into three buckets. First being the value accelerator growth engines, and those were food, home fragrances, and riding. And clearly, those are the businesses that we have higher gross margins. Very satisfied with that. And the innovation funnel on all of those businesses is very robust, so feel very good. The second was we had said Baby and CH&S, which are sort of solid and commercial, which are solid businesses, steady-eddy businesses. And so in that CH&S, the issue for us there was it was really not core. and didn't connect with the rest of the businesses, but a solid business nevertheless. So we just felt, look, that, hey, divesting that was, we had always said we'll look at tuck-in acquisitions and tuck-out divestitures. And so we decided to do that. But we're a very happy commercial business. I really think it has got tremendous potential in the long term, as does Bailey. And then outdoor and appliances, these were our troubled businesses, but the teams have done a marvelous job. And we've identified, hey, what is the big issue on these businesses? It's all about gross margins. And so it's a tale of two cities in both those businesses, U.S. versus international. International, both outdoor and appliances flourish. There is a huge gap between gross margins. So our job is how do we improve, and that's because the brands are a lot stronger. But I think the teams are now really doing some real good work. As you're seeing, I was a little concerned about appliances and outdoor when I started, and both teams and this year outdoor has really lived up to my expectations. So I would say overall, I feel very good about this portfolio, and we think we've got enough juice here to really continue to drive shareholder value. So with that, and then look, we'll always look at tuck-in acquisitions as we, especially our top tier. It'll be more on are there some complementary businesses. But I think we're just, you know, those are going to be small and we'll wait for the appropriate time. We've got plenty of great brands to work on internally before we go on the acquisition machine.
spk06: Yeah, just on the capital allocation question, I think our stance on capital allocation remains consistent, which is we think we've got significant opportunity to drive continued strong operating cash flow because we continue to see opportunity to reduce the cash conversion cycle of the company. With that operating cash flow, our first priority is to invest in the business where we see strong opportunities to drive high returns. Beyond that, we expect to pay the dividend and maintain the dividend at the current level for the foreseeable future. And then beyond that, I think that's where we get into share repurchase and or tuck-in acquisition. I think you'll see share repurchase feature more prominently in the near term versus tuck-in acquisition. And the other comment that I would make is We also think that after having paid down $721 million of debt last year and after we finish the allocation of proceeds from CH&S, we think our level of gross debt will remain consistent and we'll start to move into share or purchase going forward. and get our net debt to EBITDA leverage ratio from the 3.0 down to the 2.5 long-term target through EBITDA growth rather than debt reduction.
spk00: Makes sense. Good to hear. If I could just slip in one more, because I think it's important around the long-term margin opportunity. Chris, you've spoken a lot about this, and your team has done a good job. And so, you know, kind of taking a step back, understanding the volatility of the environment we were in last year that we're still in this year, you know, there's an opportunity for margins here to be, keep it down, margins 17%, 18% versus 13% now. How big of a priority is that for the organization? What's the timeline you think you can achieve it? You know, assuming we sort of get to sort of a more steady state in the environment looking out to next year, and how are you sort of balancing that with strategic investment and top-line growth? So thank you for that. I'll pass it on.
spk06: Yeah, so I would say we see that opportunity. It is a major focus of the company and the organization. We've done a couple of things. We've changed the company's compensation system this year to bonus business units on gross margin in addition to top-line growth and operating income to put a more specific focus on it. You've seen a lot of the actions we're taking, whether it's SKU count reduction, whether it's the comments Ravi made around margin accretive innovation, the low margin category exits are all designed to drive the company's margin up. We also are continuing to aggressively go after overhead. We've taken the company's overhead rate down by, I think, 450 basis points from 2018 to where we ended this year. And we still see opportunity ahead of us there. So we think margin improvement is a major source of opportunity for the company for the next three to five-year period at a minimum. But I don't see...
spk09: Top line growth versus margin improvement as being either or. We have to walk and chew gum at the same time. And our teams realize that. And the key is it can't just be growth for the sake of growth. It really has to be profitable growth. And that's what we've emphasized to all our VPs of marketing and is putting the gross margin in. If there's one focus in this company right now, if there's one word you ask people, it is gross margin.
spk00: That's great to hear. Thank you both. Good luck.
spk10: We'll take our next question from Lauren Lieberman of Barclays. Please go ahead. Great. Thanks. Good morning.
spk02: I was curious. I was really overwhelmed when you were running through, Chris, all the progress made on Ovid over the last six plus, I guess, six to 12 months. And it just kind of struck for me because I think productivity in general has been an area that companies have really, whether it's struggled with or really had to take a step back from in order to just focus on, you know, making product and getting it from point A to point B. So I was curious if you could comment a bit, I guess, on how it is that you've been able to make so much progress. Same goes for the productivity in the quarter itself. And as you look out over 22, I mean, what's the risk that focusing on these, you know, very important operational changes for the long-term is you know, sort of divert attention from the here and now, you know, and just, again, this necessity to, you know, keep up with the current pace of play, given all the challenges coming at you. Thanks.
spk06: Yeah, thanks, Lauren. So I'll just make a couple of, or give you a couple of thoughts. I think one of the things that we did as part of the turnaround plan, when we put it in place back in at the beginning of 2019, is we really wanted to go after productivity And we knew that we needed to change the culture to try to unlock the productivity and change the culture in a way that we enabled ideas from the bottom up. And so we went through this journey that we internally call PEAK, where we effectively have enabled people throughout the organization to come with productivity initiatives. So when we look at the productivity savings from last year of 4% of cost of goods sold in 21, that is a remarkable achievement, but it comprises probably 2,000 or 2,500 different projects. And it's important that, and it's not one thing that's driving it, It's the people, the person who's running a factory line who knows the factory line better than others is coming with an idea, and we've created a culture now that encourages that person to come with an idea and then enables us to act on it at pace. And so it's a broad program that's embedded in the culture throughout the organization, and I think that's what's enabled us to sustain it. To your point, for 2022, I would mention that we are seeing in our plan, we have assumed a little bit of a step back in 22 on productivity, and let me describe that. We think on manufacturing and distribution productivity, we're going to have another very strong year. We think on... on what we call value-add, value engineering of products, we're going to have a very strong year in line with the last few years. But on the sourcing side, our plan assumes that we have a little bit below average year because of the inflationary pressure. It's unlikely that we're going to be able to drive as much cost reduction from suppliers because of the inflation that they're fearing. And so what we're doing instead is we're pivoted to this is the year of implementation on OVID, and we think that that will set us up to then bounce back with another very strong productivity year in 2023. Relative to OVID itself, We are being very prudent in our approach. We've got an incredibly robust testing program. I mentioned that we completed in the month of January our systems integration testing, which went very well. We've got our first distribution center, new distribution center, starting up at the beginning of March to receive product. We already have product that's on the water from China now being shipped to the East Coast for the first time. So when we look at that, we actually think it's going to enable us to navigate the current supply environment better. And I'll just give you one example. Last year, we shipped 80% of our imports from Asia shipped through L.A. and Long Beach. Once we get fully into the OVID model, we're going to be 50-50 between the West Coast and the East Coast. So our ability to navigate different ports of entry and move product to the ports that are most equipped to receive our product is going to go up substantially. We also are going to move, as I mentioned previously, from less than truckload shipments to full truckload shipments. And it is much easier to secure a full truck delivery than a less than truckload delivery in the current environment. So we think that we're being rigorous on the testing. We think as we move into the new OVID model, it actually systemically makes things easier for us to navigate.
spk09: I'll just add one thing, Lauren, which is sort of stepping back. Really the sea change in the company, which is enabling us to really walk and chew gum at the same time, regardless of which area, is that the culture, we have ignited the passion of our people. And when you look at a score like 75 on engagement, uh and it came up i mean it used to be a few years ago about like 45 and when you look at our frontline workers their engagement was actually at 78 which is pretty incredible in this environment and so what's really happening in this company our hybrid structure and uh creating alignment against the vision of what we're trying to do empowering On the front side, with consumers for the business units. On the back, unifying. We have 600 people involved in Aave, for instance. And laser focus on execution. I think that those are the things, because you asked the question, hey, how do you also do the day-to-day? I think we just have to do these things. And the secret sauce is our people and our leadership teams that are driving this.
spk02: Okay, that's really helpful. And then the one other thing I was going to ask, because I think, Chris, back at our conference and talking about OVID, you'd mentioned, I think it was like a 30% reduction in miles driven. There was something specific you gave it as an output on the logistics side of OVID. And I was just wondering, you know, when you think about payback, you know, given elevated transportation logistics costs, which I think it's a sort of consensus view that it's not going the other way. How has the current environment changed the payback, you know, or payback period on this work? I'd love to hear anything about that you can offer.
spk06: Yeah, just at a high level, the statistic we shared at the conference was 40% reduction in miles driven, we believe, in the U.S. once we get fully into the OVID network model. What we've seen is that the savings from OVID are actually now going to be higher than what we originally thought when we started the project. And the reason for that is there's a significant amount of savings in transportation. And with the rates being up, the amount of money that we expect to save is going to be higher. Now, I will say that the capital investment is also a little bit higher because the cost to build the two new distribution centers, not build them, we're leasing them, but the cost to put racking in and buy equipment has also gone up. But I would say the payback overall from the program is looking even better than when we first started the program. So we were fortuitous in starting it at the time we did. And I think the program is going to deliver better than what we thought in terms of financial return.
spk02: Great. Thank you so much.
spk10: We'll take our next question from Andrea Teixeira of JPMorgan. Please go ahead.
spk03: Thank you, and congrats on your results. I wanted to just go back to your comments on balancing pricing, elasticity, and margin progression. Could you share some of data points on volume share across all channels most recent against the levels that you had in 2020 or perhaps even before COVID? I understand that you also started taking pricing some categories back in the second quarter of last year. So I think for investors probably will be useful to see how you could retain some volume share there. And related to that, I know your appliances business grew well in LATAM, and it became a pretty strong area for you within that segment. And I think Maria Fernanda probably will be part of that initiative. So I was wondering if you're – obviously, there's a high inflationary environment that we all know of for – So is this something that you are accounting for in terms of elasticity, in terms of like what Ravi's comments were? And I think, Chris, you too alluded to some elasticity embedded in your guide. So I was wondering if you can kind of like help us bridge all of that. Thank you so much.
spk09: Yeah. Let me take a shot at that, Andrea. Look, when we look at... and versus 20 versus 19, definitely in a lot of our categories, we've been gaining dollar share. And the writing business, the food business, many of the brands that I cited in my prepared remarks. and growing better than the categories. When we look at consumption trends, clearly last year we had very strong consumption along with sales. Sales and consumption keeping track, but it's not just last year. When we look at pre-pandemic versus 19 as well, there's been consumption So, and we've participated in all of that. So I think that really sets the brands in pretty good health. When we then look at 22, it's very early. And in our planning, look, we did expect January to be a little soft because there was a huge surge last year, and everyone, all the retail industry expected some softness because of what would happen. But in the early weeks of February, we're seeing it pick back up. So it's right now very early to tell where all of this is going to land. But we're just confident that with sort of the overall trends we're seeing, And so when we look at, for instance, Contigo as just an example, you look at four weeks, 13 weeks, gaining share, gaining consumption as we're driving those innovations. So yeah, we have in our models put in some volume shortfalls because the price increases. The big question will be, how much is that going to be? That's a bit of an unknown. Tough for us to tell. But overall, we feel pretty confident in the guidance we've given, as I mentioned earlier. Next one, I'll just quickly hit on your Latin America question. Look, the thing about Latin America, especially on appliances, As you would know, Oster is such a strong brand. And that's the big difference. Oster is really considered a MPP low HPP brand. It's been driving innovations for so many years. We had record production of blenders. And so we're able to manage the inflationary environments with the right levels of pricing just because of our brand strength and the innovations we're driving. Chris, was there anything you wish to add? I think you can have it.
spk10: We will now take our next question from Olivia Tong of Raymond James. Please go ahead.
spk05: Great. Thanks. Just first on pricing, if you could just talk a little bit about when you expect the pricing to sort of layer in sort of range of pricing, maybe from top to bottom, since obviously lots of different businesses in there. And then with respect to sales, can you talk a little bit about the flat to plus two in aggregate? But my sense is there's going to be a fairly wide range of growth expectations by business. So can you just talk about that? Obviously, the home-related category decelerates some as we hopefully get to spend more time outside of the home. But it sounds like you don't think it will fall off meaningfully. Can you talk a little bit about what commercial looks like? if you, you know, once connected home security is out and then, you know, your views in terms of back to school for 22 and timing of return to office. Thanks.
spk06: Chris, why don't you stop at pricing and I'll hit some of the categories. So on pricing, and maybe this will be helpful, the 12.5% core sales growth that we reported for 2021 had about three or four points of pricing in it. And, you know, the balance was volume and mix that were contributing to the growth. With respect to our outlook for 2022, you know, we're expecting the pricing contribution to be in the high single digit range. And so it's a much bigger contribution from pricing to the top line in 22 than was in 21. Most of that pricing has already been announced. I think in our plans, virtually all of our pricing will be announced by the end of the first quarter. And so what you'll see is that in Q1, not all of the pricing is yet effective. But in Q2, the vast majority of the pricing will be in effect. And that's why in the guidance, we're expecting in Q2 our operating margin performance to turn positive. And as we said, I think in the third quarter call, the third quarter was sort of the low point relative to operating margin trend versus prior year. It got better in Q4. It's going to get better in Q1, and then it will start to turn positive in Q2. So that's where we are on pricing today. You know, I would say broadly the range this year is sort of high single digits on average across the company is the financial impact.
spk09: So let me quickly go through the businesses to just highlight our quick views. Writing, we think, is going to have another great year. We're, in fact, seeing acceleration of retailer orders in anticipation of a strong BTS, and our brands are very strong. A big upside, and it'll all depend on how the office is open, is the commercial channel. And so we'll need to see where the offices will open up, and that's a significant portion that we didn't have for 20 and 21. So I feel very good about our prospects and writing. You asked about the commercial business. Right now, other than washroom, A lot of the categories on commercial actually did very well in 21, and we were comping on 20 because of all the hygiene issues, the workroom surge occurred in 20. So in 21, as offices open up, as well as the hospitality sector opens up, we think that the commercial business should be in good stead as well. On home fragrance, consumption could be a little bit more muted just because during the pandemic and after that, there was a lot of fragrance use. But then we're innovating into a lot of new categories outside of candles, and we're also geographically driving it. So we expect that to be a good business. Food, I think we've got a lot of innovations. And as I said, in a hybrid model, people are going to continue to cook. And this Rubbermaid bakeware that we're launching is going to be great. We're doing a big restage on Calphalon. I think that should help. So I feel pretty good about that. So the two businesses, and then ONR, look, it's on a tear. And as you said, people are going to go outdoors, and we're seeing that. So I feel, and given that we're making the turnaround, the one brand left there to turn around is Marmot, which we're now making some progress. But Contigo, Bubba, and Coleman are all in great shape, both domestically and internationally. So those five businesses feel very good about their prospects. The two businesses... baby because the very strong comps, the stimulus, the child tax credit, et cetera, is not going to be there this year, so that time a little bit more muted. And then home appliances, there was just consumer so much acceleration and just given that these are long purchase cycles, so that could be a little bit muted. But our goal is to try and grow each business they may just grow at different paces so we feel and look all the businesses have taken price increases so great thanks so much we'll take our next question from Chris Carey of Wells Fargo Securities please go ahead hi hi good morning good morning
spk08: Good morning. Can I just follow up on that, that, you know, Olivia's question there. And so I guess I'm just trying to, you know, understand maybe the level of elasticity that you're building in, or if it's about comps, because I mean, high single digit pricing and it sounds like, you know, I think you said, you know, inflation is 500 basis points to gross margin. I mean, pricing is going to be well ahead of that. It sounds like you're almost implying that, you know, volumes are going to be down 68 points, which seems quite a bit more than modest elasticity. And so I guess, you know, I'm trying to understand if you're seeing something in the business, which it doesn't sound like you're seeing on elasticity, if you're concerned about, you know, the trajectory on comps. And basically what I'm trying to do here is just to dimensionalize you know, the comment on modest elasticity, I think, in the prepared remarks with what seems like pretty significant elasticity if you kind of take the outlook on pricing. So, thanks so much for that.
spk09: I'll just hit one quick point, and then Chris can elaborate. Don't forget, we are also exiting some businesses which affect core sales in terms of because it's it's there may be particular SKUs because they're low margin. So we did talk about some of that.
spk06: And so with that, Chris, why don't you. Yeah, so what I would say overall is that, you know, The high single-digit pricing that we've got in the plan, if you were to back into core sales, would say that, you know, our planning for volume is sort of down mid-single digits. And pricing we expect to more than compensate for the volume down mid-singles. Now, the down mid-singles on volume – I think is an assumption on our part as we talked about relative to volume elasticity. We have not seen that so far. So we have not seen, we've seen volume growth and continued volume growth, but we also are trying to be prudent in our planning for the fact that stimulus is coming off. As Robbie mentioned, we have a couple of categories that we expect trends to normalize in. And we know that pricing is going to have some impact on the consumer at some point. You know, if we continue to see no volume impact from pricing or limited elasticity, we would have upside to our guidance range on top line. But we don't think that it's reasonable to assume no impact on volume elasticity. And so, we've tried to set that in sort of a prudent range, recognizing the comps, recognizing the pricing, and recognizing the macro environment. Obviously, it's a more challenging planning environment heading into this year, but we think it's important to set the top line in a place that still allows us to deliver very strong profit growth, earnings per share growth, and not overbuild working capital. And if we see the top line coming in stronger, we'll be in a position to react to that and supply it.
spk08: I appreciate the perspective. Can I ask just one quick follow-up? Very quick. From a gross margin perspective, obviously operating margins seen up this year, you know, there's a comment around ways you're focused on gross margins, and I appreciate there's been commentary on various kind of puts and takes as we get through the year. But with this level of pricing, would you expect gross margins to build and also be up for the year? I apologize if I missed that earlier in the call, but I don't recall hearing it.
spk06: Thanks. Yes, so just maybe some additional perspective, and obviously we don't guide gross margin specifically, but we've guided operating margin to be up 50 to 80 basis points, and I think, you know, our expectation is gross margin will be up more than that because we are planning, you know, higher investment in advertising and promotion as well. Thanks so much.
spk10: We'll take our next question from Wendy Nicholson of Citi. Please go ahead.
spk01: Hi. Thanks very much. Just a housekeeping question, Chris, maybe on home fragrance. I mean, the growth there has turned out to be, I think, better than a lot of us expected. But can you just remind us, are you finished with the distribution changes, the closing of the stores, and pulling back in some locations? So are the headwinds there now behind us, and are you happy with where your distribution sits today. But then my second bigger picture question is just on international. It's exciting that you're now kind of moving forward, but can you just, number one, give a sort of, you know, a 20,000-foot view of which markets you think are the ones that have the most potential? How quickly can you move to build out that international business? And is there any risk to your margin expansion goals over the next couple of years? as you maybe invest in some of those newer markets. Thanks.
spk06: I'll hit home fragrance, and then Ravi can come on international. On home fragrance, we feel very good about the transition that we've made in that business to an omnichannel business. We have a very strong and growing direct-to-consumer business with our online website. We have rationalized our store footprint, and I'll come back to that specifically in a minute. And we've grown our business with leading retailers and feel very good about the position. That change has allowed us to not only get the business back to growth, but to dramatically improve profitability in the business. From a stores perspective, when we started this journey, I think in 2017 or 18, we had over 500 stores. We ended this year with about 300 stores in 2021. And I think our plan is to close maybe 30 stores or something in that range in 22. So the pace of store closures is clearly slowing down. And I think you'll see that most of that store rationalization is behind us at this point, although there is still a little bit to go.
spk09: So, Wendy, on international, yes, it is exciting. And look, as my past life having been a president of international twice, for me, it's a natural bias. I think we have a lot of opportunity here. I think the thing about it is, For us, we actually see this not only as a growth opportunity, but a profit improvement opportunity. Right now, our gross margins actually in international are slightly better than the U.S., and particularly when you look at outdoor and appliances. So I think, but here's the issue. Whereas we're becoming more and more one mule in the United States, we're still very fragmented internationally. So we'll have each, we've got a lot of offices that we've been rationalizing them, but you don't have that one mule view. So it's a lot of fragmentation and we don't go to market leveraging our strengths. So in the UK we'll have different sales forces calling on the different, on the same retailers And so one of the opportunities is, hey, leverage our scale and go to market to those retailers as one new. And so on the other hand, we have a very strong infrastructure of people and great country management systems in Latin America, but it's all on appliances. We have not really leveraged that for the other businesses. So close business adjacency, food, how can you drive that in? so it is really leveraging our current infrastructure and people as well as uh so to drive top line the way we'll focus i think there's tremendous opportunity in latin america to take our existing stuff to drive the writing business the outdoor business and the food business and but when you also ask specific countries one of our big focus points will be focus on the top 10 countries. You know, with our kinds of brands, you need countries which are developed and have good discretionary incomes, so places like, for us, UK, Canada, Australia, New Zealand, France, Brazil, Mexico, Japan. These are the kinds of places that we're putting a lot of focus on because we already have infrastructures there. And so it's not a lot about, hey, let us go make huge investments into developing markets. It's being very focused. In fact, we'll probably exit certain countries and also move to a distributor model in many countries. We don't think we need to be in as many countries. So it's all about depth rather than breadth. And now we've got the right person who's done this many times. Maria Fernanda is just amazing. I think she will really turbocharge this.
spk01: Terrific. Sounds exciting. Thanks so much.
spk10: Our final question comes from Nick Mori of RBC Capsule Markets. Please go ahead.
spk12: Yeah, thanks. Good morning, everyone. So, Robbie, I just want to ask you, I mean, Newell historically has competed in very fragmented markets. A lot of your competitors are much smaller in scale, and obviously the environment's been tough for everyone, but more so for smaller companies that don't have the resources or the capabilities to kind of manage and navigate what's been going on. So, I just wanted to get kind of your state of the union on what you've seen in the competitive environment and if that could foster even better market shares as we kind of move forward in a more normalized environment.
spk09: Yeah, I think, look, yeah, it's both a plus and a minus because the The key is never to get complacent, because sometimes a smaller competitor can be more agile, and then if we get complacent with our size, we can get not, as has happened maybe back in the past. So I always have our teams be a little paranoid and say, who's going to disrupt you, and let's disrupt ourselves first. one of the biggest advantages that Newell had not taken advantage of in the past is that we didn't take advantage of our scale. We acted like eight, now it's seven, but eight sort of billion-dollar-plus companies instead of being a $10 billion company. And we didn't take our cloud to drive it with customers. We didn't use that to come up with, so we had very fragmented distribution. So, in many ways, we competed with the competitors just coming down to their size as opposed to really being leveraging the scale size that we have. Today, Avid is the perfect example of what Chris has talked about, 23 supply chains into one. This whole concept, one truck, one invoice, one order, because our customers in the past have gone nuts a little bit saying, gee, we have eight people calling on us, and it's so many different rules. I think that is changing now. I think that will really help us. And also, this very... focused way of saying, where are we going to take our A&P spend and put it against really those high growth margin businesses? I think that'll give us traction as we're doing. And that's why you're seeing shots on these share gains. So rather than just being sort of peanut butter and spreading it all across. So I think, but look, we respect our competitors. You've got to be very, we look at each category and fight it out. But the fact that we're seeing share gains in so many different brands and that all our top 10 brands grew in 2021 and 13 out of our top 15 grew is all really positive for us. And I think we'll bring that strength as we go forward.
spk12: Excellent. Thank you, Ravi.
spk08: Thank you, Nick.
spk10: A replay of today's call will be available later today on our website, ir.newellbrands.com. This concludes our conference. You may now disconnect.
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