Avery Dennison Corporation

Greetings. Thank you for standing by. Welcome to Avery Jennison's earnings conference call for the third quarter ended on October 1st, 2022. This call is being recorded and will be available for replay from 4 p.m. Eastern Time today through midnight Eastern Time October 29th. To access the replay, please dial 800-633-8284 or plus 1-402-977-9140 for international callers. The conference ID number is 21997967. I'd now like to turn the call over to John Ebley, Avery Jenison's Head of Investor Relations. Please go ahead.

Thank you, Scott. Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures. The non-GAAP measures that we use are defined, qualified, and reconciled from GAAP on Schedules A4 to A10 of the financial statements accompanying today's earnings release. We remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to the Safe Harbor Statement included in today's earnings release. As always, on the call today are Mitch Butier, Chairman and Chief Executive Officer, and Greg Lovins, Senior Vice President and Chief Financial Officer. Also joining us for Q&A today is Dion Stander, President and Chief Operating Officer. I'll now turn the call over to Mitch. Thanks, John, and good day, everyone.

We delivered another strong quarter with revenue up 19% and EPS of $2.46, up 26% ex-currency and in line with expectations. We had strong performance across the company. LGM and RBS both delivered impressive top and bottom line growth. Our strong results come amidst a dynamic environment. Inflation continues, we're raising prices accordingly, and now we see signs of softening demand. The higher inventory levels downstream from us that we called out at the start of the year have begun to finally reduce. Despite these challenges and an incremental 10 cent currency headwind, we remain on track to deliver EPS growth of 10% for the year, 18% X currency. Our ability to consistently deliver impressive financial results rests both on the team's deft ability to execute amidst compounding crises and the strategic foundations we have laid. As you know, a key element of our strategy has been our focus on accelerating the adoption of Intelligent Labels. Enterprise-wide, Intelligent Labels revenue is up 20% and, as you heard us mention a quarter ago, momentum in this business is accelerating. We are now targeting more than 20% growth annually in the coming years, with promising developments in logistics, which is expanding from targeted applications such as special package handling to broad-based use cases, in food, where we are seeing promising pilots in grocery and QSRs, and in general retail, where the technology is being expanded beyond apparel. The benefits of our intelligent label technologies and solutions are clear. They increase supply chain and inventory visibility, lower cost and improve speed of operations, reduce waste, and ultimately enhance the experience of end consumers. We believe the current macro environment will serve to further heighten the value of our tech and solutions here. As the global leader in RFID, we have and will continue to strategically invest to not only capture intelligent label opportunities, but create them. Our strategies continue to pay off. Now a quick update on the quarter by business. Label and graphic materials posted strong top-line growth, driven by higher pricing and low single-digit volume growth. The supply chain constraints we discussed last quarter eased in Europe, enabling us to normalize lead times, whereas in North America, material availability challenges remained, particularly in paper. Overall, volumes remained strong across LPM, up 4% annually versus 2019. LGM's profitability remained strong in the quarter with double-digit operating income growth. Retail branding and information solutions delivered another quarter of strong margins and revenue growth. Robust growth in high-value categories, intelligent labels, external embellishments, and VESCOM was partially offset by a low single-digit decline in the base apparel business. Following several strong quarters, apparel volumes moderated as some brands and retailers brought down inventories that were built up previously. While our outlook assumes further reductions will take place in the near term, we are well positioned to continue to drive profitable growth in the base. As for industrial and healthcare materials, the second segment delivers strong sales growth in the quarter and improved margins compared to prior year and sequentially. as we continue to implement pricing actions to cover inflation. Across the company, I'm pleased with the continued progress we are making towards the success of all our stakeholders. Our consistent performance reflects the strength of our markets, our industry-leading positions, the strategic foundations we've laid, and our agile and talented team. We remain confident that the strategies we formulated will continue to enable us to generate superior value creation through a balance of GDP plus growth and top quartile returns over the long run. And once again, I want to thank our entire team for continuing to raise their game to address the unique challenges at hand and deliver value for all of our stakeholders. Over to you, Greg.

Thanks, and hello, everybody. As Mitch said, we delivered another strong quarter. with adjusted earnings per share of $2.46, up 15% over prior year, and up 26% excluding currency translation. Sales were up 19% to X currency and 16% on an organic basis, driven by higher prices. Adjusted EBITDA was up 13% and 22% excluding the impact of currency. Despite the impact of inflation, we delivered a strong adjusted EBITDA margin of 15.6%, up 20 basis points compared to prior year. Turning to cash generation and allocation, year to date, we've generated nearly $425 million of free cash flow, with $140 million in the third quarter. Down compared to prior year due to currency, higher working capital, which we deem largely as temporary, and increased capital spending. The higher level of capital spending is in line with our expectations as we continue to invest to support our long-term growth strategy, particularly in intelligent labels. Our balance sheet remains strong with a net debt to adjusted EBITDA ratio at quarter end of 2.1. We have ample capacity to continue executing our disciplined capital allocation strategy. to invest in organic growth and acquisitions while continuing to return cash to shareholders. In the first nine months of the year, we returned $497 million to shareholders through a combination of share repurchases and dividends, up from $290 million for the same period last year. Now, turning to segment results, label and graphic material sales were up 20% on an organic basis. driven almost entirely by higher prices. Label and packaging materials sales were up more than 20% on an organic basis, with strong growth in both the high-value product categories and the base business. Graphics and reflective sales were up mid to high single digits on an organic basis. Looking at the segment's organic sales growth in the quarter by region, North America sales were up mid-teens due to pricing. on lower volume as the region continued to be hampered by material availability constraints, as Mitch mentioned earlier. Western Europe sales were up approximately 40%, driven by strong volume growth and a significant impact from pricing, as this region has seen the highest amount of inflation across this cycle. Emerging markets overall were up high teens. The Asia Pacific region was up mid to high single digits. with approximately 40% growth in India, while China and ASEAN were roughly flat. Latin America grew more than 25%. LGM's profitability remained strong in the quarter, with adjusted EBITDA dollars up 10% and up 19% ex-currency, and adjusted EBITDA margin of 15.6%. Price and actions continued to be implemented to offset inflation. and we anticipate inflation with more than 20% for the year, with a low to mid single-digit increase expected sequentially in Q4, primarily driven by paper and energy. We continue to address the cost increases through a combination of product reengineering and price inaction. Shifting now to retail branding and information solutions, RBI's sales were up 22% ex-currency and 7% on an organic basis, as growth was strong in the high-value categories, with continued strength in intelligent labels and external embellishments, while the base business was down slightly, driven by a decline in the value channel. Profitability remained strong for this segment, with adjusted EBITDA dollars up 19% and up 27% ex-currency, and adjusted EBITDA margin of 18.9%. The positive benefit from higher organic volume and acquisitions more than offset growth investments and higher employee-related costs. Turning to the industrial and healthcare materials segment, sales increased 5% on an organic basis, driven by higher prices. Healthcare sales were up mid-teens, and industrial categories were up mid to high single digits, partially offset by mid-teens decline in retail. Adjusted EBITDA dollars were up 4% and 8% ex-currency. An adjusted EBITDA margin of 14.3% was up 90 basis points compared to prior year and up 60 basis points sequentially. Now, shifting to our outlook for the year, we have narrowed our guidance for adjusted earnings per share to be between $9.70 and $9.85. At the midpoint, our guidance reflects a roughly 10 cent incremental headwind from currency and an operational outlook similar to last quarter. As Mitch mentioned, this outlook reflects 10% earnings per share growth versus prior year and 18% growth excluding currency translation. We now anticipate roughly 16% ex-currency sales growth for the full year, a half point below our previous expectation due to a slightly lower volume outlook. As I mentioned, the anticipated impact from currency translation has increased. It is now a roughly $77 million headwind for the full year based on current rates. Given the dollars continue to strengthen throughout the year, assuming rates remain where they currently are, we'll have an additional headwind of roughly 50 cents in 2023. We continue to anticipate investing up to $350 million on fixed capital and IT projects. and roughly $35 million in operating expense, adding capabilities and new capacity, particularly in key strategic platforms such as Intelligent Labels, which is poised to grow more than 20% annually in the coming years. Lastly, we now anticipate a roughly $0.05 gap to non-gap difference for the year, down $0.05 from our outlook last quarter, reflecting a benefit from a gain on one of our strategic venture investments. In summary, we delivered another strong quarter in a challenging environment. We remain confident that the consistent execution of our strategies will enable us to meet our long-term goals for superior value creation through a balance of profitable growth in capital discipline. We'll now open up the call for your questions.

Thank you. If you'd like to register a question, please press the 1 followed by the 4 on your telephone. you will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. If you're using a speakerphone, please lift your handset before entering your request. To accommodate all participants, we ask that you please limit yourself to one question, then return to the queue if you have additional questions. One brief moment for the first question. We have a question from Gansham Panjabi with Robert W. Baird and Company. Please go ahead, your line's open.

Hey guys, good day. I guess for my question, you know, Mitch, you touched on the supply chain inventory adjustments downstream rippling through all the way up to you guys. That seems to be pretty pervasive just based on other earnings reports from different companies and so on and so forth. Where do you think you are in that phase, and is it more specific in any particular region, and is there a chance of a more severe destocking in RBIS given some of the excess inventory that a lot of the footwear customers have called out in recent weeks and months?

Yeah, thanks, Gancham. So very high level. We don't know exactly where we are in that. There's not a lot of great data about where inventory levels are outside of the large retailers in the apparel sector. So when we entered the year, we said that we thought that we had an elevated level of inventories downstream from us. It seems like it's starting to clear out. If you look within RBIS and apparel, The value channel, so the large discounters seem to be ahead of others as far as reducing that, and that's been impacting us in Q2 and Q3. And then as we look at the other large retailers and performance athletic companies and so forth, I think they're still in the midst of that right now. So our guidance assumes that that continues going into Q4. As for LPM, where it is, we think that Europe has – They had a very strong Q3, and as the supply chains eased up there, so we expect our guidance has some softening of that here in Q4. And for North America, though, given the supply chain constraints, there's some inventory in the system, but it doesn't seem as much as maybe you would otherwise think. Got it. Thank you.

Our next question is from Anthony Petanari with Citigroup Global Markets. Please go ahead. Your line's open.

Good morning. Just following up on Gansham's question, can you talk about maybe the level of organic volume growth that you're expecting for LGM or what level could be embedded in the view for 4Q and maybe some of the regional differences? I think earlier in the year there was an expectation for volume growth to kind of accelerate in the second half. I'm just wondering, you know, how the cadence from 3Q to 4Q is sort of shaping up.

Hi, Anthony. This is Dion. Overall, our sales grew 20% on organic basis in the quarter, with volumes growing in the low single digits. And just as a reminder that since pre-pandemic times, LGM has actually grown at a 4% CAGR, which is well ahead of GDP. Specifically in each region, Europe saw very strong volume growth, low double-digit growth, as we worked through the backlogs where supply chain constraints, particularly in paper, started to ease. And in Western Europe, as Greg indicated earlier on, we saw high teen volume growth. In North America, continued paper availability challenges drove mid-single volume declines on top of also very tough comps. And we expect the availability challenges to moderate in Q4 and this to improve. In Asia Pacific, our volumes grew low single digits reflecting the COVID challenge in China as well as strong volume in India. And as a reminder, we've recently opened our new greenfield site in Noida, India, that adds capacity to support this future market growth. As Mitch has already indicated, we're starting to see order patterns slightly soften as we go through October, and we anticipate that as inventory corrections adjust, this will continue.

Our next question is from John McNulty with BMO Capital Markets. Please go ahead. Your line is open.

Yeah, good afternoon. Thanks for taking my question. So, you know, had a nice kudo, I guess, yesterday with UPS highlighting how important efficiency in RFID was in helping them to hit their numbers. So, good on that. I guess as a follow-up, maybe, I'd be curious, you know, you mentioned early on logistics is kind of moving to the next level for you guys. Can you help us to understand that? what's kind of in the pilot phase process and how close we may be to seeing other larger players kind of reach that tipping point where it goes on to a full-fledged launch as opposed to just pilots.

John, this is Dion again. You're right. We originally said that what we're seeing in logistics in the early pilot stages was very much around how they would manage special packaging, as an example, hazardous materials. What we're now seeing is is an increased focus on routing optimization and the efficiency that that will bring. And we expect that that will continue to scale from pilot to adoption. And as more of the logistics players get involved, they see the benefits that these two, both individual identification, package identification management, as well as routing optimization, come to bear in the market.

Yeah, and just as far as other large players and so forth that might be doing things, We're not going to comment on given how concentrated some of the industry is, where things are overall. We see this as a significant opportunity long term. We actually want to make sure there's a good cadence of how this gets deployed across the industry. So this is a huge significant opportunity in logistics as well as the other categories we've talked about of food and general retail and apparel still is driving significant growth from a very high base.

Our next question is from Jeffrey Zakowskis with JP Morgan Securities. Please go ahead, John Tobin.

Thanks very much. You talked about raw materials being sequentially higher. Propylene and propylene derivatives are really coming down meaningfully now. And there even is some energy abatement in Europe in terms of natural gas costs. But you talked about having higher inflationary costs in the fourth quarter. Is that the peak? Is it really driven by paper? And do your average prices continue to go up sequentially?

Yeah, thanks, Jeff, for the question. So, as I said, we saw some sequential inflation, Q2 to Q3. That included a bit of slight deflation on the chemicals and film side, just as you said, petrochemical inputs starting to come down. We expect a bit more favorability on those from Q3 to Q4. So the increases we've been seeing here in the back half are really largely paper-driven, with much of that also coming in Europe, really driven by what you've seen as, just as you said, energy costs are up. They've started to come down for now. depending on how you look at those projections. Some expectation, depending on how the winter goes, that those could come back up. So they've come down recently, very recently. Not sure how that will continue to play out. So our approach has been continuing to manage that through both pricing and productivity. So we did have some sequential price benefit, Q2 to Q3. Continuing to increase prices here as we move through the back quarter as well. So we would expect more price in Q3 to Q4. So overall, we continue to see generally inflationary pressure driven by paper. with some relief on the petrochemical side. At the same time, we do see, even though utility costs or energy costs have come down a little bit now, still a bit of a headwind as you move into next year for suppliers, as well as our own operations. Not a big impact for our own operations, but bigger for our supply base, as well as just continued inflationary pressures in areas like wages that are a bit higher than what we normally would have seen from an inflation perspective. So kind of broad set of inflationary pressures still, we think, and we've continued to increase prices to manage that.

Our next question is from George Staffos with B of A Securities. Please go ahead. Your line's open.

Hi. Thanks very much. Hi, guys. I hope you're doing well. Thanks for the details. I want to come back to the question on IL and adoption. So you're obviously optimistic on the outlook. You're calling for 20% or better growth, more than 20% growth, looking out into the future. How do you think that evolves or varies if we are in a bit of a downturn in next year? Partly, as I would imagine, some of your target customers' return profiles on adoption and a trial might come down early on if there's less traffic to track through IL. How should we expect that? Do you expect to see better than 20% growth next year? Thank you.

We expect better than 20% growth in all. Various economic scenarios. The benefits, as we said, are clear, and there's a very quick payback coming from a multitude of areas around increased revenue lifts from enhanced consumer experiences through productivity because of automation and just increased speed. So we expect that in a number of scenarios. And there's a lot of questions around where are we in the inventory cycle and so forth. We entered the year expecting that there's some excess inventory We have scenario plans about how to manage through these various elements. We are not phased by that. We are as confident as ever at the long-term prospects of the company, continue to invest. We've got great growth drivers such as Intelligent Labels, the addition of Vescom. Most of the companies focus within staples categories. So we're as confident as ever going to continue to lean forward here and continue to deploy our scenario plans depending on which economic environment we're in.

And George, this is Dion, I'd also add that as it relates to various sub-segments, while apparel has had significant growth, we continue to see great growth prospects as we move forward, not least because we're going to see new customers come on board, expansion in additional categories, and expansion in new use cases such as loss prevention during next year. And then if you look in food and logistics, Both these segments are much, much larger than apparel overall, and we're just starting to see the adoption profile there as specifically some of the solutions we're bringing up are starting to resonate. As an example, in grocery, a pilot we've run has really helped drive significant initial results around store labor efficiency and freshness visibility across the supply chain. And we remain confident in the outlook. We continue to invest both in innovation capability and capacity. We believe this business will be a billion-dollar business in 2023.

Our next question is from Josh Spector with UBS Securities. Please go ahead. Your line is open.

Yeah, hi. Thanks for taking my question. I'm just curious if you'd comment on the backlogs in LGM by the regions or to the extent that there is a backlog existing given the growth you saw in Europe. Just curious how the length there changed, and have you seen any change in pricing behavior from the competitors as their material availability improves as well? Thanks.

Hi, Josh. As we anticipated, we knew that there were excess inventories in the supply chain. And as we have worked through our backlogs, we started to see supply chains more normalized, particularly in Europe, less so in North America where the material availability challenges. And as those lead times normalized, we're starting to see softening in all demands as inventories are corrected at our customers. As it relates to your second question, we're not going to comment on competitive activity. Suffice to say, we still see strong growth and opportunity in the market as well as managing our pricing relative to our inflation that we continue to see as we move through Q4.

We have a question from Adam Josephson with KeyBank Capital Markets. Please go ahead. Your line's open.

Thanks. Good morning, everyone. Dion, just to follow up on that, when you talk about softening order patterns in October, can you be any more specific in terms of region, segment? And then is that because converters are reducing their label stock inventories? Is it because of end market demand that's weakening? Can you give me a little better sense of what you think is the reason for those slowing order patterns?

Well, Adam, as I said, I think there's two elements at play here. One is that as supply chain constraints abate, we've tended to see some of the risks disappear and our converting customers are starting to normalize their inventories that they have, which then has an impact on some of our order patterns as we've gone through October. It's not necessarily region-specific. It's more pronounced initially in Europe because this is where we've seen the biggest moderation in the supply chain volatility that we had, and we've seen more normalized order, some normalized lead times as we've gone to market during October.

And I think it's important to look at, so we expect October to come in where it's coming in. The supply chain challenges in North America, we, even a month ago, knew that it would basically be end of October when that would start to ease up a little bit, allow us to be able to get the product out the door. To be quite frank, Europe came in stronger volumes than we had anticipated in Q3, and so we think that was a little bit just pull forward from Q4 as far as the temporary inventory build on top of whatever was there. So there's been a lot of matters when you look at growth and so forth just because of comps around supply chain challenge over the last couple of years, timing of price increases that would cause temporary pull forwards and so forth. It's why we go back and look at what's our compound annual growth rate been since pre-pandemic levels And that's been 4% pretty consistently throughout the year here. We're anticipating it again being 3%, 4% here in Q4. So that's really the thing to focus on. Overall, volumes remain strong when you look at it relative to GDP and consumption.

I could just clarify one other point. I think at a company level, and Mitch already talked about this a little bit, but the bigger inventory drawdown is most likely on the apparel side. So Dion talked a little bit about LGM. Where we're seeing more of that, of course, as we talked about already, is more on the apparel piece of the business.

We have a question from Mike Roxland with Truist Securities. Please go ahead. The line's open.

Thanks very much, guys. Congrats on the quarter. Last quarter, your company benefited from portfolio shifts in the RBIS. You called that out with high value segments comprising about 50% or so, resulting in less exposure, obviously, as you noted, to the value channel, excuse me, Can you talk about plans to further increase the portfolio to higher value categories and to minimize your exposure to this value channel?

Sure. Overall, that's the base premise of our overall strategy. The first pillar of our strategy is to drive outsized growth in higher value segments, and we've talked about it over time, about how the portfolio has been shifting as a company. And as you called out, specifically with an RBIS is where you've seen it play out to the greatest extent. because of the growth within intelligent labels, significant organic growth, as well as the acquisitions we made there, as well as the acquisitions we made around Vescom and other areas have been disproportionately weighted towards high-value segments. So that's a direct result of the execution of our strategy, and over time that we see that continuing to lift the average growth rate of the company and improving the margin profile, which is what we've seen over the last number of years.

And we have a question from George Staffis with B of A Securities. Please go ahead. Your line's open.

Hi. Thanks, guys. Thanks for taking my follow-on. If I could, I'll put two in here real quickly. First of all, Greg, you gave us the potential headwind if we mark to market for foreign exchange into next year. Could you remind us on financing, you know, what your fixed versus variable is? And if we did a mark to market, would there be much change in your interest outlook, interest expense outlook for 23 relative to what we've been seeing year to date? And then Dion, could you just give us a quick update on how Vescom is doing? What are the pleasant surprises? Where are some things to work on? Thanks very much, guys, and good luck in the quarter.

Yeah, thanks, George. So as you said, currency right now, if rates stay where they are now for next year, we'd have about a 50-cent headwind. If debt levels kind of stayed around the level they are now, we would see probably a 5- to 10-cent headwind as well just from the increase in interest costs as we head into next year. So those are a couple specifics looking at next year. I think year over year we have a number of things, like we talked about IL continuing to grow. Mitch mentioned that a few minutes ago, as well as a key growth driver for us, of course. A number of ins and outs as we look at next year and the uncertainty of the macro, but specifically 5 to 10 cent, we would think interest heading into current debt levels.

George, as regards Vescom, we've been extremely pleased with the acquisition and the Vescom team joining the Avery Dennison family. Business continues to grow and thrive. and particularly the talented team that Vescom have have added enormously to the broader capability that Avery Dennison have. In particular, we're seeing a lot of collaboration between our Vescom team and our identification solutions team as there's a strong overlap on solutions, broader solutions that benefit some of our end retail markets like food and logistics and apparel as well. And I'd also say, George, as a final point, that Vescom brings to the RBS portfolio a balance as well as it's less cyclical. And so make sure that their portfolio at our RBS level becomes more resilient as we move forward as well through cycles.

We have a question from Chris Kapsch with Loop Capital Markets. Please go ahead. Your line is open.

Yeah, thank you. And my question is focused on the LGM segment. I realize there's limited visibility into 23, but there's a scenario where you could see continued inflation and say paper and energy and then maybe more moderation in the petro-derived raw material costs. Just wondering what your thoughts are based on experience in prior cycles about the ability to keep pricing in excess of the raw material cost inflation as a means to improve margins in that segment. And given all the cross-currents, should we expect that mix would continue to be a positive contributor to LGM segment margins? Thank you very much.

Yeah, Chris, so a couple things there. So, of course, we've gone through a lot of things we've managed through the last couple years. One is the unprecedented inflation, but also supply chain challenges at the same time. And I think our teams have proven the resilience of being able to manage through a number of those challenges like that and feeling well-prepared for any type of downturn that we may see next year. I think when you back up and look at LGM from a margin percentage perspective, Certainly the margin percent has been impacted just by the magnitude of pricing we've been putting in. We said it's roughly 20% here in the third quarter versus last year on top of pricing we were putting in last year. So just the math on the margins has led to a margin percentage impact there. But when you look overall at LGM, I think you heard Mitch and Dion both say about a 4% compound growth rate from 2019 to this year from a volume perspective. At the same time, if you look at LGM EBITDA dollars, they're up in the 9% to 10% range. compound growth range when you look over that period. So that business has done a tremendous job really driving strong EBITDA growth over the last many years, despite the impacts on margin percentage from the pricing math. And we know, and we've talked about before, that in LGM, we've got strong capital efficiency there, strong margins, strong growth opportunities, and that business generates significant EVA, and we expect to be able to continue delivering significant EVA into the future there.

We have a question from John McNulty with BMO Capital Markets. Please go ahead. Your line's open.

Yeah, sorry. Just one, I guess, area of clarification around the raw materials in your outlook. So if I understood right, it sounds like pet chems are starting to come down, may come down more. The paper supply chain issues seem to be improving, but you guys are actually guiding to raw materials up sequentially. Do I have all that right? Is that right? And is there something in terms of the timing of when you might see raw material leaf that it lags a bit and it drags into, say, one Q, because it seems like the arrows are pointing favorably, and yet your arrow is pointing negatively.

Yeah, so you have those pieces right, John. I think the paper inflation is really most recently largely driven by Europe, and a lot of that's been driven by the energy cost inflation that we've seen over the last couple quarters. We talked a few minutes ago, Jeff said that energy prices have come down a little bit over the last week or so. Not sure how that will continue or how that will play out. It may depend on how the winter goes in Europe and how that energy prices play out. So right now we expect some sequential inflation here in Q4. How that plays out going into the beginning of next year I think will be determined largely by how those energy prices evolve over the next few months.

And Mr. Boutier, there are no further questions at this time. I will now turn the call back to you for any closing remarks.

Excellent. Well, thank you, everybody, for joining the call today. We remain confident that the consistent execution of our strategies will enable us to continue to deliver superior long-term value creation for all of our stakeholders. I know there's a lot of questions about what's going on in the macro. We're as confident as ever. If you look at the performance of the company over the last number of years with compounding crises, we've been laying the foundation to continue to drive superior profitable growth, both in the near and long term. So we're Look forward to talking to you all again and come in court.

That concludes the call for today. We thank you for your participation. I say please disconnect your lines.