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spk09: Good morning. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome everyone to Energizer's second quarter fiscal year 2022 conference call. After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star 1 on your telephone keypad. To withdraw your question, please press star then 2. As a reminder, this call is being recorded. I would now like to turn the conference over to Jackie Berwitz, Vice President, Investor Relations. You may begin your conference.
spk01: Good morning, and welcome to Energizer's second quarter fiscal 2022 conference call. Joining me today are Mark Levine, President and Chief Executive Officer, and John Drabek, Chief Financial Officer. A replay of this call will be available on the Investor Relations section of our website, energizerholdings.com. During this call... We will make forward-looking statements about the company's future business and financial performance, among other matters. These statements are based on management's current expectations and are subject to risk and uncertainties, including those resulting from the ongoing conflict between Russia and Ukraine, as well as the COVID-19 pandemic, which may cause actual results to differ materially from these statements. We do not undertake to update these forward-looking statements. Other factors that could cause actual results to differ materially from these statements are included in the reports we file with the SEC. We also refer in our presentation to non-GAAP financial measures. A reconciliation of non-GAAP financial measures to GAAP measures is shown in our press release issued earlier today, which is available on our website. Information concerning our categories and estimated market share discussed on this call relates to categories where we compete and is based on Energizer's internal data, data from industry analysis, and estimates we believe to be reasonable. The battery category information includes both brick and mortar and e-commerce retail sales. Unless otherwise noted, all comments regarding the quarter and year pertain to Energizer's fiscal year, and all comparisons to prior year relate to the same period in fiscal 2021. With that, I'd like to turn the call over to Mark.
spk06: Thanks, Jackie, and good morning, everyone. As you saw in our release posted earlier today, we delivered a strong second quarter, which is a testament to our team's dedication and resilience. Due to the hard work of our colleagues around the world, we are very well positioned and excited about the prospects for our business. Let me start by highlighting some key themes and headlines to take away from today's call. First, we successfully executed pricing actions and growth plans, which generated healthy organic top-line growth. As a result of our performance in the first half of the year and the benefits of pricing, we are increasing our top-line guidance to low single-digit growth for the full year. Second, while we remain focused on preserving gross profit dollars, the combination of our pricing efforts and internal cost savings initiatives should begin to drive gross margin expansion in the back half of the year. From a category standpoint, we operate in categories that are meaningfully larger than pre-pandemic levels with both volume and value up considerably on a two-year stack. And finally, the investments we are making in our global supply chain are paying off. Bill rates are steadily improving, and we have enhanced visibility and connectivity from our digital transformation. These improvements are designed to drive efficiencies to reduce working capital, allowing us to return to normalized free cash flow generation in the back half of the year. Let me take each of these in turn. First, we delivered organic growth of 1.3%, driven by a combination of global price increases and strong growth in auto care. This is over and above the almost 13% organic growth we saw in the prior year quarter. In the battery segment, we experienced normalization in net sales as volumes declined as compared to the elevated prior year period. This volume decline was partially offset by pricing as well as distribution growth in key markets. Our auto care business delivered organic sales growth of nearly 20% in the quarter, with double digit growth across both North America and international, more than offsetting the organic decline in battery. This growth was driven by a combination of pricing, timing of refrigerant shipments, and expanded distribution, particularly internationally, as we continue to execute our international growth plans behind ArmorAll and our portfolio of iconic auto care brands. Turning to margins, the macro environment in which we are operating remains volatile. We recognize the need to generate improved insights early in the pandemic, and our investments in data and analytics have enabled steadily improving fill rates. That improved connectivity is now allowing us to see the inflationary impacts earlier and take quick action on pricing to ensure we are offsetting the dollar costs of these headwinds. Those insights are also highlighting areas where we can be even more efficient, which will drive margin expansion over the balance of the year. Our latest round of broad-based pricing actions took effect in each of our categories toward the end of the quarter. We also announced another round of targeted pricing in areas that continue to experience cost inflation. In general, these pricing actions have lagged the impact of the cost increases we have seen, and as they take full effect, we anticipate meaningful margin improvement in the second half of the fiscal year. Third, our categories continue to perform well and remain larger than pre-pandemic levels. In the battery category, both volume and value remain up double digits on a two-year stack basis. While we saw declines in the latest three-month data, we expect price increases executed across the category will drive an increase in value over the balance of the year. Our iconic brands outpace the category, resulting in a 2.8 share point gain versus last year, with growth across each region in total batteries. In particular, we experience growth in the U.S., driven by expanded distribution, as well as strong performance internationally, including share gains in 17 of our top 20 markets. Turning now to auto care, where the fundamentals of the category remain healthy. The number of cars in the car park, the average age of vehicles, and the number of miles driven are all growing compared to pre-pandemic levels. As we look ahead, we are excited about the growth engine we are creating in auto. Our business continues to grow rapidly, and the platform is designed to support our future growth aspirations while also improving margins. The growth will come from a robust innovation pipeline, which is full of products containing new, exciting technology designed to deliver the performance, value, and convenience expected by our consumers. We are also connecting with consumers through marketing communication and efforts to drive engagement with our brands. A great example of how all of this comes together is our Armor All partnerships with the Formula One champion Red Bull racing team, and Formula One racing legend Jenson Button. Formula One is truly a global sport and resonates in every market, and our sponsorship has led to millions of impressions through everything from new in-store displays to presence in social media in markets around the world. We have the right combination of product innovation, marketing efforts, and operational excellence to continue to grow this business in the years ahead. And finally, we are starting to see some early dividends from our investments in digital transformation. I talked earlier about the benefits of greater visibility and faster insights on our margins. We also expect these investments to enable us to maintain acceptable fill rates while prudently reducing our inventory levels as we continue to see stability in the global supply chain. While our heightened inventory levels remain important to serving our customers and consumers, We believe this combination of a stabilizing global supply chain and better data and analytics will enable us to decrease inventory toward the end of the fiscal year, unlocking free cash flow to continue to invest in our business and reduce debt. As you can see from our results, our business is strong and our strategy is paying off. We have overcome significant challenges, and the investments we have made position us well for the future and will allow us to emerge stronger than before the pandemic. I am incredibly proud of our colleagues around the world and the results we delivered this quarter, which are a testament to our team's commitment to success. Now let me turn the call over to John to provide additional details about our financial performance.
spk07: Good morning, everyone. I'll start this morning with some highlights on progress we are making in a few focus areas, followed by an overview of our financial performance this quarter and our outlook for the remainder of the year. We, like many others, have experienced significant cost pressures as inflation has proven to be more permanent and pervasive than many anticipated. As such, we are redoubling our efforts to address the drivers of gross margin across our businesses and regions. We have historically employed dedicated teams focused on pricing and revenue management, as well as ongoing efforts to optimize costs in our supply chain. Given the fast-paced environment in which we have been operating, we consolidated those efforts to prioritize the preservation and expansion of gross margin. By bringing those teams together at the beginning of the year, we were able to execute incremental pricing and focused cost savings projects that we expect to help deliver the outlook we initially provided in November, despite continued inflationary pressures. By further coordinating these efforts and expanding cross-functional involvement, we were able to deploy resources towards our highest ROI opportunities. We have already identified a substantial pipeline that we can undertake over the balance of this fiscal year and future years to enhance our portfolios, improve pricing, and reduce costs. This program is designed to ensure we maintain the healthy growth in both batteries and auto care while accelerating margin improvement. Based on the work we have done to date, we already expect incremental gross margin improvement in the back half of the year and remain on track to deliver the full year gross margin rate as guided in our first quarter earnings. Our working capital has been elevated throughout the course of the pandemic. The increase is primarily due to incremental investments in inventory attributable to inflation, the impact of a more elongated supply chain, increased safety stock, and more recently, pre-build for the auto care season. These investments were critical to ensure customer service in the volatile environment of the last two years. However, improved visibility from our digital investments, as well as improved stability in the global supply chain, should allow us to reduce the heightened levels of inventory and lower our working capital needs. As a result, we expect to return to more normalized free cash flow generation in the second half of the year and will prioritize debt reduction as our cash flows recover. Finally, over the last two years, we have made significant strides in our digital transformation, which has elevated the quality of our data, the visitability we have over multiple aspects of our business, and our analytic capabilities. As you have already heard, these tools are yielding substantial benefits, and as we seek to implement new tools and capabilities, we will remain focused on areas with the highest return potential. For instance, we have been able to greatly improve the quality of the analytics on our ocean freight spend and have identified areas to reduce transportation costs and optimize container utilization, which can lead to cost reductions as well as more efficient inventory management. We have stayed disciplined and focused on short- and long-term priorities while managing through the crisis. Our digital transformation is starting to pay dividends by focusing our efforts on high priority areas like gross margin and working capital management. And by continuing to develop our digital capabilities, we are confident that we will continue to generate improvement in our results in the quarters and years to come. Now turning to our financial results, reported sales of $685.4 million were essentially flat, while organic revenues were up 1.3%. Pricing actions globally delivered roughly 5% to organic growth, and additional distribution contributed another 1%. While volumes were better than expected during the quarter, they declined roughly 4.5% as we lapped elevated COVID-related demand in the prior year. Looking at our two segments, battery and lights organic revenue was down 3.5%, primarily due to elevated comps with the prior year quarter, as last year grew roughly 15%, driven by that elevated COVID-related demand. We were able to partially offset these volume declines with our first round of pricing actions and distribution gains. As a reminder, our first round of pricing went into effect in the December quarter, and we have executed additional pricing that went into effect mid-March. AutoCare continued its strong performance with organic sales up 19.4%, primarily due to pricing actions, a shift in timing of AC Pro shipments from the third quarter to second quarter, and distribution gains in both the U.S. and international markets. We have implemented numerous price increases across our portfolio, with the most recent round going into effect in early April. As expected, adjusted gross margin decreased 560 basis points to 34.9%, as increased input costs, including material, transportation, and labor, were partially offset by the impact of our pricing actions. A&P as a percent of net sales was 2.9% for the quarter, and 4.7% for the first six months, While the second quarter is typically our lowest quarter for A&P spend due to the seasonality of both of our businesses, this year we made a conscious decision to shift more of our auto care investment to the third and fourth quarters as both periods created higher ROI for our investments last year. As a result, we anticipate A&P spending for the full year to trend more towards our historical norm as we continue to prioritize investment in our brands. Excluding costs associated with acquisition and integration and exiting the Russian market, SG&A as a percent of net sales was 17.2%, up from 16.7% in the prior year. On an absolute dollar basis, SG&A increased $3.5 million due primarily to higher IT spend related to our digital transformation. Similar to the first quarter, segment profit for both battery and lights and auto care benefited from continued strong demand, pricing actions, and distribution gains. However, inflationary input cost pressures more than offset the stronger-than-expected top-line performance, resulting in segment profit declines of $30.1 million for battery and $4.6 million in auto care. Interest expense declined roughly $800,000 as the benefit of our refinancings over the last year more than offset an increase in debt, which was used to finance investments in incremental inventory. In March, we took the opportunity to term out our revolver and completed a $300 million bond offering at 6.5%. As a result, we expect slightly higher interest expense in the remainder of the year. Our debt capital structure is now 86% fixed at a blended average interest rate of 4.2%, with minimal maturities prior to 2027, which positions us well in the current rising interest rate environment. As we mentioned on our last call, our mandatory convertible preferred stock converted to approximately 4.7 million common shares on January 18th. Weighted average shares outstanding were 71.6 million for the quarter, And for fiscal 22, we are anticipating weighted average shares outstanding to be approximately $72 million. Based on our outperformance on the top line in the first half of the year and the success of our pricing actions across the globe, we are increasing our outlook for net sales to low single digits. While the operating environment remains volatile, the pricing actions we have taken along with cost management efforts are expected to offset inflationary pressures. As a result, we are reaffirming our outlook for adjusted earnings per share of $3 to $3.30 and adjusted EBITDA of $560 to $590 million. I do want to note that these results exclude any one-time charges related to the exit of our Russian operations during the second quarter. Now, I would like to turn the call back to Mark for closing remarks.
spk06: Thanks, John. Through the first half of the year, our team's execution has been exceptional. Our categories continue to perform well globally. and our pricing initiatives have delivered as expected. We have laid the groundwork over the last several quarters to restore the profitability and cash flow generation this business is capable of, and we are optimistic about the days ahead. We remain well positioned in the marketplace and have complete confidence in our team's ability to win the day by staying focused on the consumer, delivering for our customers, and doing so despite any challenges which may come our way. With that, I will open the call for questions.
spk09: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question is from Wendy Nicholson with Citi. Please go ahead.
spk00: Hi, good morning. I had two questions, if that's okay. First, on the battery business, it sounds like your market shares are strong there, which is awesome. I'm curious if you see any, sort of even just recently, any tick up in private label shares, just given the economic situation and maybe increasing price sensitivity on the part of consumers. So anything that you're seeing happening there would be helpful. And then on the auto business, again, demand, I know you said it was really strong, but I'm wondering if you anticipate in the summer months, you know, when it's seasonally a bigger business, again, just with the higher gas prices, you know, are you hearing from the trade any comments that they expect fewer people to be on the road, fewer people driving for vacation, anything like that, just given where gas prices are? Thank you so much.
spk06: Good morning, Wendy. I'll start and then I'll turn it over to John to maybe talk about the growth expectations we have in the back half. On your first question as it relates to trade down, we really haven't seen it yet. We maybe have seen a slight trade down in terms of pack sizes, but consumers are really sticking with premium brands. In fact, private label and batteries were down in the U.S. about two and a half share points and globally just over two share points. That's obviously something we're not going to take for granted. We're going to watch it carefully to the extent it happens. Any trade-down were to happen, we have value brands in our portfolio and can leverage those as we move forward. On auto care, the underlying fundamentals of the category are really healthy. Number of miles driven exceeds pre-pandemic levels. The size of the car park also is going up, as well as the age of the fleet now exceeds 12 years old. All of those factors are healthy drivers for category growth. And as a result, we expect great things for this business over the balance of the fiscal year. John, you want to talk about sort of growth in Q3, Q4?
spk07: I think we called up organic growth for the rest of the year, Wendy, and that is driven in large part by what Mark had talked about. So I think we're pretty optimistic about, you know, the pricing that we've taken and the continued performance. So we're expecting that growth to happen in the back half.
spk00: Terrific. That's very helpful. Thank you so much.
spk09: Thanks, Wendy. The next question is from Bill Chappelle with Truist Securities. Please go ahead.
spk05: Thanks. Good morning. Morning, Bill. Hey, Bill. On the auto care, certainly good start. Can you maybe just quantify the pull forward? Maybe I missed that. And also, has there been any negative impact from just weather we've seen from the garden companies and some of the pet companies that it's been a late start to the spring season? you know, colder, wetter than expected kind of in the southern half of the country. And so, you know, could the numbers have even been better?
spk07: Well, I think maybe let's break down, you know, so the growth on that 20%, it's about a little more than half was pricing. A little bit, you know, less than half was that pull forward of the AC Pro. And that's a shift from the prior year where I think we were having trouble getting our hands on some of that. So we shipped earlier this year than we did last year. So, I think it was a good quarter. I don't know if there were things left on the table, and I haven't heard that we've really been impacted by weather to this point, although it has been colder.
spk06: Q2, Q3 bills always tend to be a bit of an inflection point in terms of shipments for us, and they tend to shift back and forth year to year. It has been a little bit, you know, from a weather standpoint, a later start to the season, but it's really starting to pick up. You're seeing the weather turn, and as long as If you recall, a couple of years ago, we had an unusually long and cold spring. And as a result, sales suffered. We're not seeing that same dynamic play out. Retailers, to the point of John on pull forward, have continued to invest in inventory to be ready for when the season starts. So Q3 is really when it gets going. And if the weather cooperates, we should be fine.
spk05: Got it. And then on the distribution gains, I think you alluded, it's primarily international. Are you seeing distribution gains in battery? And then maybe, you know, kind of any thoughts on how Rayovac's doing in terms of that trade down?
spk06: Rayovac's been holding steady. As we mentioned, we haven't seen trade down yet in the category to the extent, you know, that we've taken pricing and the pricing continues to go into effect. Typically, you may see some trade down. We're prepared for that with both Rayovac and EverReady value brands in our portfolio. Distribution gains in batteries, fairly broad-based. You're seeing it in just in every international trade group. You're seeing share gains across both modern developing and distributor markets. You're also seeing share gains in the U.S. Our distribution gains in the U.S. should start to cycle off late Q3, and as a result, we should plateau. We wouldn't expect it to go down, and we'll be in line with the category.
spk09: Great. Thank you. Thanks, Bill. The next question is from Andrea Teshir with J.P. Morgan. Please go ahead.
spk10: Thank you. I was just trying to break down the pricing that obviously you give us a good bridge for the pricing of the quarter, but hoping to get a little bit of color into the second half. What are you betting in pricing? How much of that is already in the trade or coming up? And then on that also part of it, like you got some distribution gains. So I was hoping to see if you believe things will flip right from the battery side coming into positive. And then if we should expect, it doesn't look like you're sounding that auto care will continue, but you have a tough comp. So I was just trying to re, it's a second part question on the auto care and going back to Bill's question. And you mentioned that you see pro shipments from last year. how we should be thinking on auto care, the puts and takes, and how to think about the auto care numbers into the third quarter. Thank you.
spk06: I'll start that, Andrea. I think in terms of pricing, all pricing that we have initiated with retailers is built into the outlook. We've also built in the historical elasticities associated with price increases into that outlook. In terms of auto care, you know, we are, as you mentioned, we do have tough comps in large part because of the pricing actions we've taken on batteries and auto care. We do expect, you know, organic growth for both of those businesses going forward. John, any other color?
spk07: Maybe it's a little more color on the back half. I mean, you know, Andrea, we were roughly flat through the first six months. We're called up our top line. I would, you know, we're looking at organic growth in the back half of probably mid to high single digits. So it does grow substantially with that pricing.
spk10: No, that's great. And best of luck. Thank you both.
spk09: Okay. Thank you. The next question is from Lauren Lieberman with Barclays. Please go ahead.
spk03: Great. Thanks. Good morning. Two questions for me also. First is just I was curious if you could articulate the degree to which your inflation forecasts have changed. So knowing, you know, you held the expectation for bottom line, but just was we think through those building blocks, how much more the sort of, you know, micro level inflation is impacting the business versus how much you're hedged and so not experiencing that inflation. So that was one. And then the second was, as you've talked about, starting to work through some of the inventory that you've been holding, how we should be thinking about operating leverage as you start down that path. So it's at end of the year that starts to happen, not to look forward into 23, but should we be thinking about there being some drag on margins from working through that inventory? Thanks.
spk07: Yeah, Lauren, maybe I'll start with the first one real quick on what we've seen. So last quarter, We had kind of called full year 22 almost $250 million of inflationary cost pressures. As of today, and kind of as we finish up the quarter, we still think we're roughly in line with that. Now, there's been puts and takes, and so some items have gone up more, but we've seen some pullback in others. So all in, I think we've plateaued a bit over the last quarter from an inflationary standpoint. And as, you know, so I think we feel like, you know, we're in a pretty decent place there. As you think about operating levels as we go forward, there will be some, you know, actions that we'll take to work down inventory. And we've taken that into account as we look at 22. Not going to give 23 guidance, but, you know, we're mindful of the impacts of slowing things down in order to get through that. So, you know, we'll give better outlook as we get to the end of the year, but it is something that we're working on.
spk03: Okay, great. All right, cool. Thank you.
spk09: Thanks, Lauren. The next question is from Javier Escalante with Evercore ISI. Please go ahead.
spk08: Hi, good morning, everyone. My question is to see whether you can give us a breakdown or a bridge of gross margin change in the second quarter versus year ago, the impact of commodities, logistics, and the benefit of pricing, and how that's locked into the second half when margins is going to expand. Secondly, and related to that, is the run rate of pricing. So it's 5% in Q2. What was the exit rate? What is the level that you are aiming at with the third round? And whether that third round is enough to get you back to gross margin recovery. Thank you.
spk06: On that, the last point, Javier, I'll cover that really quickly, and then I'll turn it over to John for sort of talk through the bridges and the quarters. But on the third round of pricing that we mentioned, it's a targeted price increase in a subset of our categories, and we'll continue to monitor those. But I would say in terms of all of our price increases, the original expectation as we go into it is to preserve gross margin dollars, and then over time we'll be able to work on gross margin rate going forward. But, John, on the breakdown?
spk07: Yeah, Javier. So we had gross about 920 basis points of cost increases. That was really transportation of about 470, raw materials of 340, and labor of 110. We were able to offset about 60 basis points with productivity improvements. And then we took pricing of a little under 300 basis points that came through. And as Mark talked about earlier, that's rolling in over time. So we'll look for that to continue to improve as the year goes on. I think what we're expecting is If you look at our first half gross margin rate, you know, we think that the back half will be up about 200 basis points and roughly in line with where we had said we'd be kind of at the end of the first quarter. So we're still calling for that, you know, mid 37, you know, 37.5% range.
spk08: And a follow-up on the inflationary situation, when you talk about the plateau, you are referring more about the logistics side with the freight and the elongated supply chain, or you're talking more about spot prices for raw materials? Thank you.
spk07: Yeah. Well, I would say it's both. So we have seen some plateauing and some opportunities on ocean freight. And as I think we mentioned in the prepared remarks, there's a lot of work we're doing on ocean freight and other areas where we've seen, you know, dramatic increases over the last year to try to drive those down as much as we can. So I think both macro and our own actions, we see some opportunity there. So I think we're in pretty good shape.
spk06: And Javier, I think on the ocean freight rates, for instance, as well as the North America freight rates, you're starting to see premiums come down. You're starting to see a reduction in the accessorial fees that you'll incur as a result of that. So while the base rates may be plateauing and staying the same, you are seeing some favorability in terms of the premiums you're having to pay in order to move goods.
spk04: Thank you very much.
spk09: The next question is from William Reuter with Bank of America. Please go ahead.
spk04: Good morning. Last quarter you had mentioned that you had about 30% of your costs fixed for the remainder of the year. At this point, based upon what either contracted inputs or hedges you have in place, where are you guys in terms of how much exposure is left on those items?
spk07: That's right, Bill. For fiscal 22, we should be mostly fixed. We've got pretty good visibility to our cost structure for the rest of the year, and that's a combination of inventory on hand and a little bit of hedging that we've got in place.
spk04: Okay. Okay. And then secondarily for me, you've had some increased shelf space. I guess, is there an expectation that you think that you have an opportunity, given the strong velocity of units that you've had, that you may be gaining additional space? Do you have any ongoing RFP processes? Any thoughts there?
spk06: Well, I would say that's an ongoing effort of our commercial teams across the world. We're continuing to look for improved visibility as well as expanded distribution. and partner with retailers to make sure that we can bring that to life. All distribution gains or shifts have been built into the outlook that we provided. We do expect, you know, we've had very healthy share gains over the last 12 months. You're going to start to see some of that expanded distribution start to plateau in Q3, towards the end of Q3. And as a result, we would expect our share gains to level off. But we wouldn't necessarily expect them to decline either because we continue to have healthy distribution and we'll continue to fight for more.
spk04: Got it. Helpful commentary. Thank you.
spk06: Thank you. Thanks, Bill.
spk09: Again, if you have a question, please press star then one. The next question is from Carla Casella with J.P. Morgan. Please go ahead.
spk02: Hi. On the inventory front, did you give us a sense for how much of the increase is units versus costs, and if we should expect that to be up through the remainder of the year to a similar degree?
spk07: Yeah. So, as we break it down, a fair amount of the increase this year is cost. A lot of those cost increases came through in the fall, and so the next turn of inventory obviously went up. So, you know, the other part would be more days driven, and that's of the supply chain. You know, that's safety stock that we've built. So I think a lot of that's going to hang around for the, you know, good portion of the year, although we're looking to address that as much as we can, obviously, in the macro environment. That'll be tough, but we're continuing to push there.
spk02: Okay, great. And then revolve our borrowings, and are you expecting, are we, should we be past the peak after... at this point?
spk07: Yeah. So revolver borrowings, I think as of today, are zero. And I mentioned we termed out most of that short-term debt during the quarter. I think what we're expecting is to return to free cash flow generation in the back half, and we're going to prioritize debt pay down as that starts to happen.
spk02: Okay. Great. And then just last one. Did you give your... Any comments on zinc? I may have missed it, the sequential trends in zinc.
spk07: Yeah, zinc is one of those commodities that it's been pretty volatile. It's gone up a lot over the last year. It continued to go up throughout the quarter. We've seen it come back a little bit, but it has been one that has gone up.
spk02: Okay, great. But is raw material still around 40% of COGS, or has that ticked up just given all the raw material inflation?
spk07: I think it's roughly 40%. That's right.
spk02: Okay. Great. Thanks.
spk09: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mark Levine for any closing remarks.
spk06: Thanks, everyone, for joining, and have a good rest of the day.
spk09: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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