General Mills, Inc.

Q2 2024 Earnings Conference Call

12/20/2023

spk04: Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Wednesday, December 20th, 2023. I would now like to turn the conference over to Jeff Seaman, Vice President for Investor Relations and Treasurer. Please go ahead.
spk06: Thank you, Dina, and good morning to everyone. Thank you for joining us this morning for our Q&A session on our second quarter fiscal 2024 results. I hope everyone had time to review our press release, listen to the prepared remarks, and view our presentation materials, which were made available this morning on our investor relations website. Please note that in our Q&A session this morning, we may make forward-looking statements that are based on our current views and assumptions. Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call. I'm here with Jeff Harmoning, our chairman and CEO, and Kofi Bruce, our CFO. So let's go ahead and get to the first question. Dina, can you please get us started?
spk04: Of course. If you would 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 1 followed by the 3. Once again, to register for a question, you can press the 1 followed by the 4. Our first question is coming from the line of David Palmer with Evercore ISI. Please go ahead.
spk13: Thank you. The question on North America retail margins, they've been impressive in spite of the volume declines we've been seeing. Do you think that the segment margin can hold near these levels given what's going on with volume trends? And I guess a couple of factors I'm thinking about is some of your high margin categories like dough might be a negative mix effect, but then again, you're talking about accelerating productivity gains. So curious about the margins for that segment.
spk12: Yeah, David, thanks for the question. Just to rewind a bit, we've seen the margin improvement, to your point, largely on the backs of really strong HMM delivery. So one of the features of this environment has been sort of the stabilization of the supply chain environment, which has allowed us to step up HMM more acutely on this business than our other segments, and also to get at some of those disruption-related costs We've made really strong margin progression gains on this business on the backs of those two things. I expect that to abate a bit here as we move forward just as a result of having already gotten at a good chunk of those disruption-related costs. So on balance, I see this business poised for more stability in aggregate.
spk13: And then with regard to the pet business, maybe is there a – comment you want to make there about what the biggest fix will be from here. Wilderness, for example, has been relatively weak, but what do you think the best, earliest fixes will be for that business, and what are some of the long-term things you're looking to do to improve the trajectory? Thanks.
spk03: Yeah, thanks, David. This is Jeff. I would say that in the in the presentation we shared four things we're working on and you know a couple of the things we we know that we can improve upon to improve the profile of the business and you know two of them were we feel good about and that's important um because you know it shows the the blue brand is still strong and so as we look at life protection formula we've changed our advertising on that and the business has responded you know nicely and we've seen steady improvements there We have changed the merchandising on our treats business. And while it's not all the way to bright, we've seen significant improvement throughout the second quarter on that business. And yet the results are still not what we want to be. And so that leads to what needs to come next. And I think there are really a couple of businesses that we need to improve. One is our wet business and our wet pet food. And so you'll see us introduce some value in variety packs in the back half of the year, starting in January. And that You know, we'd like to see improvements in that. And then the biggest fixes, which will take a little bit longer, and they're kind of interlinked, but they're not the same. One is wilderness. And, you know, we really need to reposition the wilderness brand and do some work on that. And that'll take a little while to get back to full health. The other is that, you know, we haven't, the pet specialty channel in itself has not done particularly well. We over indexed in that channel. And there's some things we can probably do to perform better in that channel, even while we keep investing to grow our food, drug, and mass channel, which we're quite pleased with the results and online with the results. The other thing I guess I would add is, you know, we did have, as we look at the back half of the year, you know, the reason we're not saying, you know, recovery or stabilization is that in the back half, we had shipments ahead of sales last year. And so we're laughing. That's particularly true in the third quarter. And so, Even to the extent we see some stabilization in the sales trends in PET, the reported net sales are going to lag that because of some inventory build in the back half of the year. So those are the things that we need to do. Some of them are underway, and we like what we see so far, and there are a couple more that we really need to work on. It'll take a little bit longer.
spk04: Thank you. Our next question is coming from the line of Andrew Lazar with Barclays. Please go ahead.
spk08: Great. Thanks so much. Good morning, everybody. Good morning. Jeff, I wanted to maybe chat a bit about, you know, I realize as you've talked about in the prepared remarks, the company has some EPS flexibility despite the weaker sales, you know, in the form of lower sort of compensation expense versus last year, the HMM that's been stepped up, some more share purchase versus your sort of initial expectations. So I guess my question is, you know, is 24 a year where maybe the company perhaps should lean in even more and maybe be a little less concerned about sort of a specific EPS range, if you will, in order to set it up, set the company up for more sustainable sort of growth in 25 and beyond. That's a question I'm sort of getting a lot this morning. So just wanted to get your thoughts on that, if I could.
spk03: Yeah, Andrew, I'm glad you asked, and I appreciate the fact you're getting a lot. I think it's a really important question because, you know, our job is to maximize long-term shareholder return, not in any particular quarter, frankly, even any particular year. And so one of the things that we, as we look back over time, when the consumer is stressed and results are harder to come by, you know, one of the things we've seen successful companies like ours do is reinvest for the future. And that comes in the form of consumer investment, but also investment in capabilities, things like strategic revenue management and performance marketing and automating supply chains and things like that. And so included in our results is an increase in consumer spending, even though we've guided down on our sales for the year, we'll still invest in consumer spending. And we're still investing all the capabilities that we know will drive our growth, not only for this year, but in years to come. And then that's with regard to growing revenues, but also maintaining our discipline on HMM and, you know, automation and using AI in our supply chains are going to be important parts of that as well. So one of the things that, you know, I want to make sure you can tell your investors is that, you know, while our profit guidance is still 4% to 5% growth on EPS, that's inclusive of making sure we maintain our reinvestment in the business. And we're able to do that. Because our HMM levels are very high right now, we're taking out the cost from our supply chain, and as you mentioned, our admin costs are declining.
spk08: Great. Thanks for that. And then just a bit more on the faster competitor normalization of shelf availability comments that he made in the preparator marks. Is it an issue in a specific category, or is it more broad-based? And is it General Mills actually losing shelf space or really just others now having better availability in the slots that they have? And what have you seen that mean for promotional intensity or not? Thanks so much.
spk03: All right, Andrew, I'm going to try to address all those questions. And if I miss one, come back because I didn't mean to skip it. Yep. On the on-shelf availability, you know, when we put our guidance together for this year, I mean, we grew at 10% last year, and original guidance was 3% to 4% this year. And so we knew that on-shelf availability would be a headwind for us because, frankly, our supply chain held up a lot better than our competition did a year ago. And so we calculate, we factored that into our guidance for this year. But the fact of the matter is on-shelf availability for our competition increased a lot faster, particularly private label and small players, faster than we had anticipated. Importantly, they're now catching up to our on-shelf availability. And so we've actually improved our on-shelf availability this year. So it's not as if we have gone backward. Our on-shelf availability is higher now. And you can see that out because we've reduced our disruption costs. It's just that our competitors have increased quite a bit now have, you know, kind of drawn even with us after trailing for like four years. So, so, you know, that's the, that's the first part of the question we anticipated, but not the, not the rate of change in terms of the, the, and we'll laugh, we'll start laughing that really in kind of late April and may of this year. So that's when we started to see this, this impact. In terms of distribution, one of the things, you know, our teams across the board, certainly in North America retail, are really executing well. Our share of distribution is actually up. And so there's not a problem with our distribution. In fact, the opposite, our distribution looks good. And I will say that I'm really excited about our innovation in the back half of this year, which I'm hoping will bolster that further. We've got good innovation in cereal. We've got good innovation in yogurt and soup and old El Paso and Haagen-Dazs. And so as I look across our big billion-dollar businesses, our innovation lineup is really good and, frankly, better than it was last year. And so as we look to the next half of the year, I think we can see our distribution continuing to build. As to what it means to the promotional environment, it's been a very rational promotional environment against some thoughts to the contrary. We have seen the number of promotions pick up this year, as would be expected, because of on-shelf availability. Importantly, we've also seen the quality of the merchandising, specifically the quality of merchandising that we get. has also accelerated. And because the quality of merchandising has improved for us, we've seen the lists we receive, but also the ROIs we receive have been better than they were a year ago. But importantly, and this is a really important point, even though the level of merchandising has increased in frequency, it has not increased in depth. And even the frequency is still below where it was before the pandemic, and the depth of the promotion is well below. So So, yes, we're seeing increased levels of promotion. We expected that. And, frankly, the returns are better because of the quality of merchandising that we're seeing.
spk08: Great. Thank you so much, and have a great holiday. Thanks. You too.
spk04: Our next question is coming from the line of Ken Goldman with J.P. Morgan. Please go ahead.
spk10: Hi. Thank you. Good morning. When you visited New York a couple months ago, you mentioned that you're you may lean in a little bit harder to share repos. So I don't think today's announcement on that line item was a huge surprise. But I guess I'm curious, you've also spoken about your ongoing desire to be flexible for potential strategic acquisitions. And I'm just wondering, is there any read through from your willingness to purchase more shares than you initially expected into how you kind of see the ripeness of M&A opportunities, I guess, in today's markets?
spk03: Yeah, I can. This is Jeff. Let me start with that question. And Kofi, if you want to add any color commentary, that would probably be helpful too. But no, the fact that we repurchased more shares in the quarter than originally anticipated at the beginning of the year is not a reflection of a change in how we view capital allocation. We're investing quite a bit in the business. And then increasing our dividend. And then if we see M&A, we'll certainly do more M&A. And if not, we said we repurchase shares, which is what we're doing. And TAB, Mark McIntyre:" You know, importantly, our net debt to EBITDA levels are in a good place and. TAB, Mark McIntyre:" And so, to the extent that we see something that we think can create shareholder value in terms of portfolio reshaping we're more than capable of doing that, so what you've seen is really a reflection of our executing against the the capital allocation priorities very stated.
spk12: And I think, Ken, the only other thing I'd add is just to state one of the obvious sort of underlying points. We're getting additional leverage out of our repurchase activity. So dollars are going further because of the pressure, obviously, on the stock and as much as the stock has come down since the beginning of our fiscal year. So that's also amplifying the impact in terms of the diluted share count and the acceleration into the front half of the year. But I think I'd reiterate Jeff's point. We expect to have more than ample flexibility for M&A should we see the right project or set of projects. None of the things we're doing on share or purchase, we would expect to take our leverage above three times net VET to EBITDA.
spk10: And then changing subjects, one of the more appealing elements of pet food as a category has been the high level of switching costs, especially in premium where there's less price sensitivity, too. Just curious, though, given some of the challenges facing Blue, is it fair to wonder if maybe the cost to switch isn't quite as high as we all thought and that premium isn't quite as protected? Or do you think maybe, hey, we're just in a unique time when the specialty channel is kind of lagging at the same exact time that the consumer is suddenly worse off?
spk03: Yeah, Ken, that's a fair question. I think there are two things at play here. And one of you pointed out, but I'll start in another area. As we look at the pet food business, the feeding business, and certainly that was a majority of the business we bought when we bought Blue Buffalo as feeding, is relatively inelastic. And when we see that with our dry pet food, both cat and dog food performance, but treating, and we bought into that when we bought the pet food business from Tyson a couple years later, that is actually more elastic. and is more of an impulse purchase. And that's why when you see the economy as it is, people trading down to less expensive treats if they're still treating and trading a little bit out of treats because they're trying to economize on that, but they stick with the feeding. And so the first part of the question, the first part is that the feeding part is actually not more inelastic than we had thought. But, you know, treating is more elastic. The second piece is a combination, as you say, I mean, I don't remember the last time we've seen 30% increase in costs, you know, over three years. And while it's relatively inelastic, it's not completely inelastic. And so the combination of the, you know, the tremendous increase in input costs combined with the pet specialty channel where we over-index, you know, there's no question that those two things have had an impact on our business in the short term. But importantly, as we look over the five years we've owned the business, we've doubled the business. The blue brand is really strong when we execute well against it, whether it's on life protection formula advertising or holiday treats or things like that. We see that business really respond well. And it's very clear to us this humanization trend is going to continue and that blue is well-paced to capture that over the course of time.
spk04: Our next question is coming from the line of Nick Motti with RBC Capital Markets. Please go ahead.
spk05: Yeah, thanks. Good morning, everyone. On the promotional, I want to follow up on the promotional comment. You know, one thing we're hearing from retailers is, you know, the lift doesn't seem to be as good as we've seen historically, Jeff. So I just I was hoping you can just comment on that. And is that something you're seeing in the marketplace? And does that kind of maybe send a signal that perhaps absolute price points have become too high? I just love your comments on that.
spk03: So, you know, when we talk about historical, it kind of depends, Nick, on what we mean by historical. I don't mean to be cute with this. But if we look relative to where we were a year ago, you know, what we see is our lifts have actually improved vis-a-vis where they were a year ago. if we look to see where the lifts are versus where they were four years ago they're not quite at the levels of where they were four years ago and i i don't have a fact that i can point to is why exactly that is the case but i would i would tell you that you know neither we nor consumers have seen inflation the way we've seen it over the last few years and consumers are you know are still getting used to new prices in the marketplace And I suspect, you know, whether that's food or gas or rent or any number of things, that that is absolutely the case. And it'll take a little while for consumers to settle into what new price points are to the extent we continue to see inflation, which we do, even if at a more modest level. So, Nick, I would say that relative to a year ago, we're pleased with the progress of our lifts. But relative to historic pre-pandemic, they're a little bit lower. And I would surmise that it's the consumer catching up to a new reality.
spk05: Great. Thanks. I'll pass it on.
spk04: Our next question is coming from the line of Pamela Kaufman with Morgan Stanley. Please go ahead.
spk01: Hi. Good morning. Morning. Morning. I had a follow-up question on the guidance for this year. Just wanted to see if you could walk through the puts and takes of the updated outlook. So your org sales outlook implies about $800 million less in sales this year at the midpoint versus before, but you narrowed your EBIT growth guidance slightly compared to your prior expectations. So can you just walk through? I know you have the higher HMM savings, but where else are you finding offsets in the P&L? Because H&M wouldn't seem to explain the full picture. impact on, you know, the lower impact on EBIT changing.
spk03: So, Pam, Kofi and I are going to tag team this. Let me talk about that. Let me talk about the revenue, and then Kofi's going to take the rest of the P&L side. On the revenue side, the way I think about our guidance is that in order to hit the low end of our guidance, let's call it, you know, minus 1%, that would indicate that we'd see a continuation of the top line performance we saw in Q2. which would indicate a little bit better volume and a little bit less price mix than we saw in the second quarter, but in absolute terms, about the same as we saw in the second quarter. The higher end of our guidance would suggest that the categories get a little bit better, which we think they certainly could, due to lapping the SNAP emergency reductions from a year ago, January through March, and from our lapping pricing activity from March and April of last year. So those two things combined with you know, a little bit better share performance based on the out-of-stock situation changing near the end of the year, you know, we could hit the top end of the guidance we suggested. So that kind of brackets the top line. I'll let Kobe talk a little bit more about the profitability.
spk12: Sure, Pam, and thanks for the question. I would just note that the HMM adjustment is pretty significant. As a reminder, the past two years we've delivered below our historic levels of kind of 4%. at three percent for each of the the prior two years due to the supply chain disrupted um environment um we're now on pace to deliver five percent against uh an early expectation of four that is the biggest single contributor but we are seeing um you know improvement in our inflation but not significant enough to change the rounding so that's a modest contributor as well but the other component Mike SanClements, In growth margin is the supply chain related disruption costs so as I mentioned earlier, one of the features of this environment is. Mike SanClements, Supply chain stability has allowed us to get at some of those embedded costs we took on to operate and. Mike SanClements, In this environment and we've made sequential improvement over the last four quarters on this and in most acutely within our North America retail business. And then lastly, the adjustment of our incentive off of last year's peak level. So as you know, last year, a really strong year of performance, historically high levels of incentive-based comp, which is variable and based on the top and bottom line projections, as that's both normalized at the start of the year to a base expectation of planned targets. And now as we take the top line down, that's almost $100 million in reduction in admin expense. So as you take all of those, That gives us the confidence to keep within the range, albeit a little tighter as volume expectations come in from the top of the year.
spk01: Thanks. That's very helpful. And just a follow-up question on gross margins. They're now back to pre-pandemic levels. How are you thinking about the potential for a gross margin expansion from here? On one hand, you have the benefit from HMM, but I'm assuming there will be some volume deleverage. So how should we expect gross margins to progress? And do you kind of see them at the right levels here?
spk12: Yeah, well, look, I think it, you know, implied within our guidance would be, you know, a little bit less operating margin expansion bolstered, obviously, by gross margins in the back half. as we see a step down, a sequential step down in the contributions from price mix as we last year's SRM actions fully by Q4 of this year. You know, I just note we've made significant progress at the gross margin level and bolstered in part not just by HMM these past two quarters, but in part by the disruption costs that I mentioned earlier. 170 basis points, 120 basis points in the Um, the, the, the back half of last year and the first half of this year respectively. So I, I would expect we'd see more normalized levels of gross margin expansion, um, going forward, kind of off, off of this, uh, off of this base. There's still a little bit more, um, disruption related costs to get out, um, primarily in, in some of our other businesses outside of NAR. Um, so that that'll give us a little bit of, of, of tailwind, but to your point, Given the volume environment, that's largely going to go to offset the impacts of deleverage.
spk07: Thank you.
spk04: And our next question is coming from the line of Matthew Smith with Stiefel. Please go ahead.
spk02: Hi, good morning. I wanted to follow up on the elevated level of HMM savings here in the year. You mentioned it's a step up relative to the prior two years where it was a bit lower because of inflation and supply chain issues. But how much of the elevated rate here this year is a pull forward from savings that you would expect next year? Or I guess that's another way of saying just how sustainable is this elevated rate of HMM savings as you exit fiscal 24?
spk12: Well, I would expect that If the supply chain environment remains stable and continues to stabilize even a little further, we will have the ability to deliver at least in line with our historic levels of about 4% HMM, 4% of COGS. I would expect that the contributions from getting out some of those other disruption-related costs that sit in COGS to decrease a bit here as we've gathered a good chunk of them on the back of our NAR business, and as we see maybe a smaller base of costs in the other three segments. So all things equal, I think 4% would be a good long-term estimate for us to migrate back to, provided the supply chain environment continues to cooperate.
spk02: Thank you, Kofi. And Jeff, maybe a follow-up. about your share performance as you begin to lap the rebuild of competitive distribution, which I believe you said that begins to move into the base as you exit fiscal 24. You're holding and gaining share in the majority of the distribution of your category. So would you expect your dollar market share performance to improve as you lap that competitive rebuild? Or are there other concerns like consumer value-seeking behavior or list price gaps that may need to be addressed as the share of shelf normalizes?
spk03: Yeah, one of the things that I'm most pleased with is that over the last five years, particularly in North America retail, we've gained share in 60% of our categories. And we continue to execute well. And, you know, the key to our success once we start to lap the on-shelf availability and once we lap the pricing activities from March and April will be to the question that Andrew proposed, which is making sure we maintain our brand building support and really good brand building. Make sure we execute against what I think is really good innovation and continue to execute in-store. And if we do those things, and I would expect us to do those things, then our share performance will certainly improve over time. And hopefully as we're exiting this fiscal year and beginning next fiscal year, we'll see that happen. Interestingly, our dollar share performance has not been what we need it to be. In terms of pound share, we are growing pound share at about 40% of our categories. And then that's because even though our pricing trailed inflation so we responded to inflationary pressures we're actually more agile than our competitors and so that that provided us a dollar share benefit last year and you know this year it's a it's a headwind but we are growing pounds here on roughly 40 percent of our categories thanks jeff i'll leave it there and pass it on thanks our next question is coming from the line of michael lavery with piper sandler please go ahead
spk09: Thank you. Good morning. I wanted to have a couple of follow ups on the shelf availability. You said it's improving for competitors. Would you say that it's that there's still headwinds to come there or is that sort of all caught up to a normal level? And then on the promotional sort of dynamic related to that. You gave some color on how that environment looks, but just given your guidance update, it would seem like strategically you'd rather take a little bit of the volume hit than push promo much harder. I suppose first, is that a fair characterization? And what would make you lean in more on the pricing side?
spk03: On the on-shelf availability, I mean, you know, the competitors have kind of caught up to our levels and that's been pretty stable for, you know, for the past few months. And I wouldn't expect that to accelerate. So I think we've seen a stabilization in that. Now we'll see that their on-shelf availability, you know, kind of, which is equal to ours, I'll remind you. So we're actually, we're doing quite well. So it's equal to ours. You know, we'll see, they will see that benefit for the next, you know, three or four months until they start to lap it, you know, a year from now. And so while it has stabilized, we'll see some of our competitors see a benefit for that for the next few months, and then they won't. In terms of the pricing environment itself, I'm not really going to get into specifics of future pricing. What we do see is that, I think importantly, we see an inflationary environment ahead of us. I know there's been talk of deflation in some cases, and that may be true for things like commodities like milk and eggs. But it's certainly not true for restaurants. Their inflation is actually outpacing ours. And we see inflation in the low single digits. So you look at the category pricing and it's somewhere in the 2% to 3% range. So we see continued inflation even at a lower level. And usually pricing tends to follow inflation because that's the basis on which we increase prices if we see an inflationary environment. As we look at trade-offs, our job is to create long-term value for shareholders, and we do that by serving consumers. And we'll do that by making sure that our brands are strong and by innovating and making sure the products are available when and where people want them.
spk09: Okay, that's really helpful. And just one quick follow-up on PET. You had mentioned the retailer inventory destocking and characterized it as a temporary headwind. Is that just because there's only so low they can go, or do you expect it to reverse?
spk03: I do not expect it to reverse. I think it's only so low that it can go. And we may see a reduction again in the third quarter because I suspect that our reported net sales are going to lack our sales out to consumers. And so we may not have seen the bottom of that as we look at our third quarter. But it really is a more of a, I don't see a rebound in inventory levels, and especially as some of our retailers specifically look to manage their working capital.
spk09: Okay, great. Thanks so much.
spk04: Our next question is coming from the line of Chris Carey with Wells Fargo Securities. Please go ahead.
spk11: Hi. Good morning, everyone. Morning. Morning. Morning. So, just a couple quick follow-ups for me. You know, I guess, number one, and I think you've been clear about this, but maybe just to, you know, put a bow on this. I mean, in your prepared remarks, You mentioned that price mix will remain positive in fiscal 24. You know, I'm not sure if I'm reading too much into this, but is there an expectation that price mix could turn negative in any given quarter ahead, you know, near or medium term because of, you know, mixed dynamics or potentially some, you know, steps up in promotional activity? And just secondly, Jeff, you mentioned an expectation for some improvement in category growth. Is any of that just associated with lapping SNAP benefits as you get kind of deeper into your fiscal 24?
spk12: Oh, I'll take the first part of that question and then I'll let Jeff get you on the second. So look at our expectations on price mix are really built around fact that will be will be sequentially stepping down as we lap pricing actions that we took throughout last year. We should fully lap those by the time we get to the end of the fiscal year. We're not expecting any of the quarters to deliver negative price mix, but merely just a step down in the contribution from price mix to total R&S.
spk06: And, Chris, this is Jeff Seaman. One point I'd add there is what you're seeing over the last couple quarters is mix, even at the segment level, is more of a headwind, you know, as, for example, our pet business, you know, is growing slower than the other parts of the business. That's a high price per pound business. as our food service business, which is low price per pound, is outperforming. And so there are mixed elements within the segments that do depress the overall enterprise price mix.
spk03: Edwin, you asked a question about growth at the category level. You know, there are a couple of headwinds. One is just a little bit of consumer behavior and feeling the economic pressure and a little bit less discretionary spending. And I don't frankly know when that will turn around. Consumers are certainly still stressed right now. They feel the impact of inflation over the past few years, and we certainly understand that. The thing that's more discreet really is the lapping of the SNAP emergency allotments benefits from last year. And those kind of go state by state, but they took place last year between January and March. And that may be a one-point benefit to the categories that we're in. And so it's not, you know, it's not a heroic increase, but certainly a stabilization of the categories. And, you know, we'll start to, as I said, we'll start to lap that here in the next month or so throughout our fiscal third quarter.
spk11: Okay. Helpful. Pass it on. Thank you.
spk06: Okay. Unfortunately, I think that's all the time we're going to have this morning. Thank you for all the good questions and discussion. Appreciate your time and attention. And we will look forward to catching up in the new year. In the meantime, happy holidays to everyone. And please reach out if you have any follow-ups to the IR team. Thanks.
spk04: That does conclude the conference call for today. We thank you for your participation. I ask that you please disconnect your lines.
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