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spk09: Thank you for joining today's first quarter earnings call. To accompany this call, we've posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, President and CEO, and Mike Smith, Executive Vice President and CFO. During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning's press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. Today's presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements. whether because of new information, future events, or other factors. Please refer to our forward-looking statement on slide two for more information. I will now turn the discussion over to Brendan.
spk08: Good morning, everyone, and thank you for joining us. As many of you have probably seen on the news this morning, the Francis Scott Key Bridge collapsed in Baltimore. Our thoughts go out to everyone impacted by this terrible tragedy. We have activated a team and are monitoring the situation. We are pleased to start the year with a strong first quarter. Our performance reflects the early success of our prioritized investments to improve volume trends and drive profitable growth. I will begin my remarks this morning with an overview of our first quarter results, focusing on top line drivers. Next, I will provide perspective on industry trends, highlight some early signposts of success, as well as areas we continue to work on and review our growth plans. Mike will then go into more depth on the first quarter financial results and review our 2024 outlook. And finally, before your questions, I will have some closing comments. Turning now to our results on slide four. In the first quarter, sales grew 2% in constant currency, reflecting a 3% contribution from pricing, partially offset by 1% decline in volume and product mix. primarily driven by the pruning of low margin business and our canning business divestiture. Underlying volume was flat compared to the prior year. Sequentially from the fourth quarter, volume trends improved in both consumer and flavor solutions. We believe this improvement is an indication of continued progress as we remain focused on driving quality top line growth throughout our portfolio. In consumer, volumes improved substantially from the fourth quarter in the Americas, In EMEA, we drove positive volume growth while continuing to benefit from pricing actions. In Asia Pacific, volume performance was impacted by the macro environment in China, as we expected. We continue to expect full-year 2024 China consumer sales to be comparable to 2023. Outside of China, we delivered strong sales growth driven by both price and volume. In flavor solutions, our results were solid and growth was driven by price and the underlying volume growth, partially offset by the impact of our canning divestiture. We are pleased with our performance, recognizing many of our customers, including consumer product companies, or CPGs, and quick-serve restaurant, or QSRs, continue to experience volume softness in their businesses. We are continuing to collaborate with our customers to navigate this challenging environment and we remain optimistic about our growth for the year. It's worth noting that volume trends and flavor solutions typically fluctuate from quarter to quarter, largely attributable to customer activity, including new product launches, limited time offers, and their other promotional activity. As we said at the Cagney Conference, McCormick is a growth company, and 2024 is an important investment year to return to our long-term objectives. Our results demonstrate the early impact of investments we have made to fuel our top line and further capitalize on the underlying growth of our categories. We have a robust set of initiatives and continue to expect share gains in units to lead our trends, and our results will build throughout 2024. Let me share some of our perspectives on industry trends. We are in a unique position with our portfolio's breadth and reach in both consumer and flavor solutions. Our shared insights give us a very strong understanding of consumers' flavor needs, preferences, behaviors, and trends. Consumers remain challenged. Two years of steep inflation has had an impact, and many are exhibiting value-seeking behavior. While food inflation is slowing, its compounded impact is still being felt by consumers. Budgets are stretched, resulting in choiceful spending decisions, a trend that is continuing from the fourth quarter. In the first quarter, with higher inflation in the food service channel and slowing retail food prices, we broadly saw a shift from food away from home to food at home consumption in our major markets. We are also seeing improvement in center store categories and some softness in restaurant traffic across all regions. As we said, the current state of the consumer is not defined by any one trend. It remains dynamic. And we are responding with speed and agility. I am encouraged by the early success of our key initiatives. We have the right plans in place that are continually influenced by what matters most to our consumers and customers and fit within our strategic priorities. Moving to slide five, let me highlight for the quarter some of the key signposts of our success that demonstrate we have the right plans in place. Starting with spices and seasonings, in Americas, EMEA, and Asia Pacific, excluding China, We grew volumes. In the US, our unit share performance continues to improve, and we drove dollar share gains in Eastern Europe. In recipe mixes, we strengthened our performance with volume growth in the Americas, reversing the trends from the fourth quarter. Recipe mixes were a significant driver of UK volume growth, and homemade desserts were also a substantial driver of France's volume growth. In both, we realized both unit and dollar market share gains. Volume growth in our flavors business is strong across key categories, including outpacing the category in alcoholic beverages and performance nutrition. Finally, we grew volume in branded food service and realized market share gains in spices and seasonings and on tabletop in hot sauces. Before I get into our growth plans, let me touch on some areas where there is some pressure. We continue to experience volume declines in the prepared food categories that we participate in, like frozen and Asian. In America's consumer, importantly, these items represent a small part of our portfolio, and the improved volume trends in our core categories is beginning to offset these declines. For mustard in America's consumer, as we discussed in our last earnings call, we continue to experience extremely low price points for private label, which is impacting our consumption. and driving down category dollars. While performance in mustard improved relative to the fourth quarter, we still have work ahead of us. We plan to drive further volume improvement by narrowing price gaps and increasing promotions, new products, including creamy dill pickle, and importantly, through recent distribution wins. Moving to hot sauce, in America's consumer of consumption, volume trends improved from the fourth quarter, particularly coinciding with our successful Super Bowl activation campaign. Reflecting on our first quarter performance, it highlights two dynamics. First, we have underlying strength in our base business and strong consumer loyalty. Our growth plans remain consistent, fueling growth through increasing both Cholula and Frank's Red Hot brand marketing, with Frank's activated year-round for the first time, as well as exciting innovation aligned with consumer trends. and expanding distribution. Second, recently we have seen a surge in $1 price point trial sizes from new and existing small players, which is incremental to the category and is pressuring our share performance. We remain the leader in this attractive, fragmented, and growing category. New buyers present a great opportunity to win new households using our growth levers as well as our scale and capabilities. In flavors, our growth with quick serve restaurants and flavor solutions was impacted by slower QSR traffic in EMEA and Asia Pacific. Finally, some of our consumer packaged food customers continue to experience softness and volumes within their own business in both Americas and EMEA. We are focused on working with our customers to support their innovation plans and continue to diversify our customer base over time. Before I talk to our growth plans in detail, Let me touch on spices and seasonings. At a global level, we are pleased with the growth in consumption we delivered in the quarter. Specifically looking at U.S. spices and seasonings, we are driving significant improvements. Our new packaging continues to increase velocity on shelf, and we are recapturing distribution points, and our sequential improvement led to positive unit share gains at the end of the quarter. In addition, our growth is supported by our increased brand marketing and new products. Lastly, we expect to largely start seeing the impact of our actions in our results during the second half of the year, following most of our customers' shelf resets at the end of the second quarter. Let's now move to our growth plans on slide six, which are leading our strong first quarter performance and will continue to drive our success in 2024 and beyond. Brand marketing, new products, and packaging innovation, category management, proprietary technologies, and customer engagement continue to be the initiatives behind our growth levers. Starting with brand marketing, our plans across all categories are supported by our global brand marketing initiatives. We are prioritizing investments to connect with consumers and fuel growth. Our differentiated brand marketing is driven by a combination of factors. In addition to maintaining a high share of voice, we are committed to having the best content in our categories. content that inspires and educates consumers and reaches them at the right points on their path to purchase and their flavor journey. From flavor exploration and menu planning to shopping and cooking and even to eating and sharing the experience online. In Q1, brand marketing spend was up significantly compared to the prior year as expected. This increase was broad-based across all regions and was an important driver in improving volumes. Through our efforts across multiple channels, particularly in retail media, we are driving further household penetration and increasing buy rates across spices and seasonings, recipe mixes, and condiments. Our holiday campaigns across our regions proved successful. Our marketing campaigns in the Americas highlight our everyday value and point of difference to consumers and are supporting our improved volume trends and share improvements. Our Frank's Super Bowl activation campaign with Jason Kelsey, now a retired NFL player, was very successful. We gained new buyers, and media and consumer sentiment, as well as engagement from other big brands, was incredibly positive. We continue to benefit from new products and packaging. It is one of the primary drivers of our growth, and as we said at Cagney, the performance of our launches continues to improve. We are continuing to realize growth from our 2023 launches. For example, our Cholula salsas and recipe mixes are driving new buyers to the category and are exceeding our expectations since launch. And we continue to build U.S. distribution and are also launching both formats in Canada this year. The rollout of our U.S. Everyday Urban Spice portfolio is on plan and expected to be fully shipped by the end of the second quarter. Our Nadia Hussein range of Schwartz seasonings and recipe mixes continue to drive our innovation performance and expand household penetration with younger consumers. As we look ahead to the rest of the year, with our renovated recipe mixes, we have opportunities to win more dinner occasions with new global cuisine seasonings in both Americas and EMEA, and reshaping the portfolio by shifting offerings to meet consumers' growing preference for non-red meat proteins. In seasoning blends, an exciting growth opportunity we mentioned at Cagney We are launching new Lowry's seasoning blends in large sizes, which offer a value price point to consumers. And we are really excited about the Frank's Red Hot Dips and popular flavors in a squeeze bottle format we just launched and are looking forward to another campaign featuring Jason Kelsey. In flavor solutions, we are leveraging our proprietary technologies to support our innovation in flavors. to win new customers, diversifying our customer base, and drive share gains across our portfolio. Our momentum with our flavors customers continues to be strong and fuel our new product pipeline. We are collaborating with many of our customers to heat up their products from snacking to beverages. Our heat-free wind rates are strong across our regions. We continue to dedicate resources where we have the right to win. In branded food service, we have a strong innovation agenda. including launching a Cattleman's Hawaiian Barbecue flavor, expanding our seasonings portfolio with Ducro line extensions, and extending McCormick Mayonesa, which has had great performance in our consumer segment, into this channel. Let's turn to category management, where I'd like to review our revenue management efforts and expanding distribution. First, revenue management remains a capability, and we have a history of optimizing pricing on shelf to benefit both McCormick and the retailer. we continue to take a surgical approach to managing our price gaps to private label and branded competitors. Our price investments are primarily focused in America's consumer, where they impact about 15% of our portfolio in that segment. Revenue management will continue to be an important tool for driving growth and we will consistently leverage real-time analytics and insights to refine our plans. In terms of expanding distribution, We continue to make progress on restoring a majority of the distribution that was lost due to supply issues. We have secured wins and new distribution. To further strengthen our value proposition, in EMEA, we have grown distribution in the fast-growing discount channel. And in the U.S., our Larwe's opening price point is expanding across the stores of elite and discounted. And in China, we are expanding in small format stores, which have grown rapidly in recent years. as well as into third and fourth tier cities. We are meeting the consumer where they live and shop. Let me briefly mention our heat platform. As you heard in my remarks, heat-infused products span our portfolio and are driving growth. We expect heat to continue to be a long-term growth accelerator globally for McCormick. Consumers, particularly younger generations, continue to drive demand in this labor profile. We are uniquely positioned to win and heat with our global iconic brands and our meaningful scale and expertise that we have been building for decades. To wrap up, we believe the execution of our growth plans will be a win for consumers, customers, our categories, and McCormick, which will differentiate and strengthen our leadership. As we look ahead to 2024, we are maintaining our outlook. Mike will share more of the details. At a high level, we expect our top line to be at the mid to high end of our guidance range given the momentum we saw in the first quarter. We are confident in our initiatives, and we have provided proof points of where they are working. That said, we also continue to reflect on the uncertainty in the consumer environment in our outlook for 2024. Before I pass the call to Mike, let me reiterate a few points. We are deliberately focused on attractive, high-growth categories across both segments. resulting in a significant long-term tailwind to drive profitable growth. That said, it's crucial that we continue to capitalize on this position of strength. The long-term trends that fuel our categories, consumer interest in healthy, flavorful cooking, flavor exploration, and trusted brands, continue to be very strong. And importantly, consumer enjoyment in cooking is growing. We remain dedicated to improving volumes. We continue to refine our plans and are prioritizing our investments to drive impactful results and return to differentiated and sustainable volume-led growth. And you should continue to expect improvement over the coming year and into 2025 and beyond. Now over to Mike. Thanks, Brendan, and good morning, everyone. Starting on slide eight, our top-line constant currency sales grew 2% compared to the first quarter of last year. reflecting 3% of pricing benefit, offset by a 1% volume and mix decline. As expected, volumes were impacted by our strategic decision to exit DSD, direct store delivery, of our bagged Hispanic spices in the Americas, the exit of a private label product line, and the divestiture of a small canning business in EMEA. Underlying volume and mix performance was flat for the quarter, reflecting a sequential improvement from the fourth quarter, where our total underlying volume growth was down approximately 3%. In our consumer segment, constant currency sales growth of 1% reflects a 3% increase in pricing actions, offset by a 2% volume decline, which is due to a 1% impact from the DSD business exit I just mentioned, lower volume and product mix in the Americas, specifically in prepared food categories, including frozen and Asian, consistent with our expectations, and the impact of the macro environment in China. On slide 9, consumer sales in the Americas were comparable to last year. Contribution from price was offset by a volume and mix decline of 3%. This decline was fully attributable to the DSD exit and lower volume and product mix in the prepared food categories I just mentioned. In EMEA, constant currency consumer sales increased 8%, with a 5% increase in pricing actions and 3% volume growth. Sales growth was broad-based across product categories in our major markets. We are pleased with the volume growth we delivered in EMEA and expect the momentum to continue through 2024. Constant currency consumer sales in the APAC region were down 5%, driven by a 6% volume decrease, primarily due to the macro environment in China. Outside of China, we drove high single-digit sales growth with price and volume contributing equally. and the growth was broad-based across categories and markets. Turning to our flavor solution segment and slide 12, we grew first quarter constant currency sales by 2%, with pricing contributing 2% and volume contributing 1%, partially offset by a 1% decline due to the devastature of the canning business and the exit of a private label product line in EMEA. In the Americas, flavor solutions constant currency sales rose 3%, reflecting a 2% contribution from price and 1% growth in volume and product mix. Sales growth was led by flavor, most notably in performance nutrition and branded food service. In EMEA, constant currency sales decreased by 1%, including a 3% impact from the divestiture of the canning business. Pricing actions of 4% were partially offset by lower volume and product mix of 2%. primarily attributable to the exit of the private label product line I mentioned earlier. In the APAC region, flavor solution sales grew 5% in constant currency, with a 4% contribution from pricing and 1% volume growth. Outside of China, sales remain negatively impacted by geopolitical boycotts some of our quick service restaurant customers are experiencing in Southeast Asia. As seen on slide 16, Gross profit margins expanded by 140 basis points in the first quarter versus the year-ago period. Drivers in the quarter included favorable product mix, the benefit of our Comprehensive Continuous Improvement Program, or CCI, and our Global Operating Effectiveness Program, or GOE, as well as effective price realization. As we look to the second quarter, we expect gross margins to modestly expand compared to the year-ago period. as we realized our highest level of pricing and cost recovery in the second quarter of 2023. This trend may differ from our historical cadence, where gross margin increases sequentially every quarter throughout the year. However, we continue to expect higher margins in the second half compared to the first half of the year. Now moving to slide 17, selling general and administrative expenses, or SG&A, increased relative to the first quarter of last year, driven by brand marketing and research and development investments, which are partially offset by CCI and GOE cost savings. As a percentage of net sales, SG&A increased 110 basis points. Brand marketing increased significantly compared to the prior year. Our investments are yielding results, and we anticipate continuing to invest behind these efforts. Sales growth and gross margin expansion, partially offset by higher SG&A costs, resulted in an increase in adjusted operating income of 5% compared to the first quarter of 2023 and 4% in constant currency. Adjusted operating income in the consumer segment was up 2% with minimal impact from currency. In Flavor Solutions, adjusted operating income increased 15% and included a 1% currency impact. We remain committed to restoring Flavor Solutions' profitability And in the first quarter, as expected, we drove margin expansion versus the prior year in this segment. Our performance this quarter reflects our commitment to increase our profit realization and positions us well to make continued investments in 2024 to fuel top-line growth. Turning to interest expense and income taxes on slide 18, our interest expense was comparable to the prior year. Our first quarter adjusted effective tax rate was 25.5%. compared to 21.8% in the year-ago period. Our tax rate in the prior year benefited from discrete tax items. We expect these benefits to occur later in the year for us in 2024. As a result, we continue to expect our tax rate to be approximately 22% for the year. Our income from unconsolidated operations in the first quarter reflects strong performance in our largest joint venture, McCormick to Mexico. We are the market leader with our McCormick-branded mayonnaise, marmalades, and mustard product lines in Mexico, and the business continues to contribute meaningfully to our net income and operating cash flow results. At the bottom line, as shown on slide 20, first quarter 2024 adjusted earnings per share was 63 cents, as compared to 59 cents for the year-ago period. The increase was attributable to higher operating income, driven by sales growth and gross margin expansion. as well as the results from McCormick to Mexico joint venture, partially offset by higher adjusted effective tax rate. On slide 21, we've summarized highlights for cash flow and the balance sheet. Our cash flow from operations was strong in the first quarter, $138 million, compared to $103 million in 2023. The increase was primarily driven by higher operating income and working capital improvements. We returned $113 million of cash to our shareholders through dividends and used $62 million for capital expenditures. As a reminder, capital expenditures include projects to increase capacity and capabilities to meet growing demand, advance our digital transformation, and optimize our cost structure. Our priority remains to have a balanced use of cash, funding investments to drive growth, returning a significant portion to our shareholders through dividends, and paying down debt. Importantly, we remain committed to a strong investment grade rating and continue to expect 2024 to be another year of strong cash flow driven by profit and working capital initiatives. Now turning to our 2024 financial outlook on slide 22. Our outlook continues to reflect our prioritized investments in key categories to strengthen volume trends and drive long-term sustainable growth while appreciating the uncertainty of the consumer environment. Turning to the details, first, currency rates are expected to unfavorably impact sales, adjusted operating income, and adjusted earnings per share by approximately 1%. At the top line, we continue to expect constant currency net sales to range between a decline of 1% to growth of 1%. Given the momentum in the first quarter, we expect to be closer to the midpoint to high end of our guidance range. In terms of pricing, we continue to expect a favorable impact related to the wrap of last year's pricing actions, most significantly in the first half, partially offset by our price gap management investments that will drive volume growth. We expect to drive improved volume trends as the year progresses through the strength of our brands and the intentional and targeted investments we are making. As we noted, our initiatives will take time to materialize, and we continue to expect to return to volume growth during the second half of the year, absent any new macroeconomic headwinds. Starting in the second quarter, we will have lapped the impact of the DSD and private label product line business exits. The divestiture of the Giotti Canning business will impact us through the third quarter. We expect to continue to prune lower margin business throughout the year as we optimize our portfolio, the impact of which will be reflected within the natural fluctuation of sales. And finally, in China, Our food away from home business, which is included in APAC consumer, is expected to be impacted by slower demand in the first half of the year. And as such, we expect China consumer sales to be comparable to 2023 for the full year. While we recognize there has been volatility in demand in China, we continue to believe in a long-term growth trajectory of the China business. Our 2024 gross margin is projected to range between 50 to 100 basis points higher than 2023. This gross margin expansion reflects favorable impacts from pricing, product mix, and cost savings from our CCI and GOE programs, partially offset by the anticipated impact of low single-digit increases in cost inflation and our increased investments. Additionally, we expect to begin reducing our dual running costs related to our transition to the new flavor solutions facility in the UK in the back half of the year. Moving to adjusted operating income, we expect 4% to 6% constant currency growth. This growth is projected to be driven by our gross margin expansion, as well as SG&A cost savings from our CCI and GOE programs, partially offset by investments to drive volume growth, including brand marketing. We expect our brand marketing spend to increase high single digits in 2024, reflecting a double-digit increase in investments, partially offset by CCI savings. and we continue to expect our increased investments in brand marketing to be concentrated in the first half of the year. Our 2024 adjusted effective income tax rate projection of approximately 22% is based upon our estimated mix of earnings by geography, as well as factoring in discrete impacts. We expect a mid-teens increase in our income from unconsolidated operations, reflecting the strong performance we anticipate in McCormick, New Mexico. To summarize, Our 2024 adjusted earnings per share projection of $2.80 to $2.85 reflects a 4% to 6% increase compared to 2023. As we head into the second quarter, let me summarize some of the puts and takes. We expect to drive volume improvement, with some pressure expected in flavor solutions due to the trends Brendan mentioned earlier. Fully lap the impact of pricing actions we took in the prior year and activated significant portion of our price gap management efforts, and continue our investments in brand marketing as our programs are working and driving growth. As a result, our operating profit will likely be less robust for the second quarter. However, we continue to anticipate strong profit growth in the second half of the year. As Brendan noted, we are dedicated to improving volumes. We are prioritizing our investments to drive impactful results and return to differentiated and sustainable volume-led growth. We remain confident in the underlying fundamentals of our business and delivering on the profitable growth reflected in our 2024 financial outlook. Thank you, Mike. Before moving to Q&A, I would like to close with our key takeaway on slide 23. First quarter results in our volume trajectory demonstrate that we are making the right investments to drive long-term sustainable organic growth and reinforces our confidence. We are executing on proven strategies and investing behind our business with speed and agility and in alignment to consumer behavior and capitalizing on our advantage categories across segments. We are able to do this and continue to make great progress on managing costs led by our GOE and CCI programs to support our increased investments in the business and drive margin expansion. Our performance for the quarter coupled with our growth plans give us confidence in achieving the mid to high end of our projected constant currency sales growth for 2024. Finally, I want to recognize McCormick employees around the world for their contributions and reiterate my confidence that together we will drive the profitable growth reflected in our 2024 outlook. Now for your questions.
spk10: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.
spk06: Great. Thanks. Good morning, Brendan and Mike. Good morning, Andrew. Hi there. Maybe to start off, your first quarter organic sales obviously came in better than I think the street had forecast and sounds like maybe better than you might have initially expected. But of course, it's a seasonally smaller quarter for McCormick as well. And while you did confirm the full year sales growth range, obviously it was notable in your comments about having increased confidence in achieving the mid to high end of your constant currency sales growth range for the full year. So I was hoping maybe you could give us a sense of some of the specifics of what gives you that greater confidence now than when you first gave guidance last quarter.
spk08: Well, thanks, Andrew, for the question. Maybe just to open up with a couple of remarks that I think drive at the heart of your question. We did have a strong quarter. We drove a little bit more on sales, which does give us confidence to be in that mid to upper half of our range. And I think importantly, we accomplished the things that we said we would do, and we made a lot of good progress. We drove sequential improvement, volume improvement in our core categories, especially on spices and seasonings. And we said this would be a year of investment, and we were able to quickly execute the programs that we intended to get out in the market. And that was, as an example, increased brand marketing, new product launches are performing well from 2023, and that targeted price gap you know, management execution. And at the same time, we did expand margins. So we are pleased with the results, yet it is the start of the year and it's our smallest quarter, as you called out. And so we're keeping it in perspective, you know, but this is strong progress. And so I think that gives us some of that confidence going into the rest of the year. As we noted on the call, you know, or probably as you expect, Our pricing assumptions haven't changed, so this doesn't imply that volumes are improving as we go through the year. We have targeted investments, and we continue to expect to improve those volume trends as the year progresses and to drive volume growth during the second half of the year. We're focused on what we can control, and we're confident in those initiatives that we've called out, and hopefully you've heard the proof points that we've cited. We don't necessarily guide by quarter or segment or region, but we can provide some additional color in that. From the segment level, we'd expect those volumes to be relatively similar. We see that same volume growth in both segments in the second half. And as we did call out, the flavor solutions volume does fluctuate quarter to quarter, so that's something that we still expect to see across our business, largely attributed just to customer activity. But we do feel like there is a lot of good momentum, I think, that we've established. The drivers of what's delivering this, we made substantial investments in the first half of the year on increased brand marketing. So it already happened in Q1. We expect to do some more of that in Q2. We also have new product launches coming out in 2024. You know, for instance, we called out that flavor maker line that's going into bricks and mortar, or we have a lot of Frank's innovation coming out in the marketplace, you know, as we lead into the grilling season. And we're really quite pleased with our category management and renovation, you know, across our portfolio. So, you know, I think that would speak to, you know, our confidence in the year as we continue to move forward.
spk06: Great. Amazing. I know volumes specifically in consumer Americas, I think we're down about 6% in the fourth quarter last year. And as you noted, down a much more modest sort of less than 3% in the first quarter. Would you expect consumer Americas volume to sort of continue to improve sequentially from here? And, again, that segment that it could inflect a positive during the second half of the year? Or are some of the headwinds you pointed out that still exist in consumer Americas still more of a challenge to that?
spk08: Let me give more context around Q1, and then that might also help provide sort of a foundation for how to think about the year to go. The volume decline of 2.6 in the Americas for Q1 was really coming through two key factors. One is that DSD exit that we've spoken about quite a bit. over the last four quarters. So that definitely was one of the drivers of that 2.6%. And then that decline in the prepared food categories, as we noted on the call. So if you exclude those two factors, volume growth in consumer Americas would have been flat to slightly positive. So I think that helps to sort of set a foundation for how we think about the year to go. Also, in our key categories in Q1, you know, growth in spices and seasonings and recipe mixes was, you know, pretty healthy. It was all set by declines in mustard and hot sauce. So, you know, that's other context I think, you know, we would provide against Q1. As we look forward to the year, we expect volumes to continue to substantially improve and, you know, drive volume growth as we get into the second half. That would probably be the best perspective I could provide on that. I think, too, think about, too, this is not just about America's consumer. I mean, we're building volume globally in the consumer side, and a lot of the same brand-building activities, such as increased AMP, we talked about this in the call, is in all regions. So we continue to support those brands globally in each of our regions, not just America's.
spk06: Thank you so much.
spk10: Thank you. Our next question comes from the line of Peter Galba with Bank of America. Please proceed with your question.
spk03: Hey, guys. Good morning. Thanks for taking the questions. Sure. Mike, maybe just to follow up on Andrew's question, I think if you strip out DSD, you know, the exit in the first quarter, you still kind of had a ship ahead or consumption ahead of what the scanner data would have said in North American consumers. So maybe... I know you probably don't want to give basis point level detail, but if you could kind of rank between untracked, some of the co-manufacturing you do, some of the upside drivers relative, I guess, to the scanner data that drove kind of the positive variance in the quarter.
spk08: Peter, thanks for your question on that. On an apples-to-apples basis, our consumption is roughly in line with our sales, and we are shipping to consumption. What's probably driving the U.S. consumption lagging on America's consumer sales. We had good growth in Latin America and Canada, and that contributed to our total growth. But we also delivered growth in unmeasured, excluding that DSD business exit that we talked about. And so we do expect and continue the alignment between consumption and shipments moving forward. We don't really believe that there's any sort of inventory movement that we can call out at this point in time. But it's also important to call out that in that unmeasured growth is primarily driven by e-commerce. You know, it represents just globally for us about 10% of our total consumer sales. And so that's pretty healthy and positive. But we've seen double-digit growth in all of 2023 in e-commerce and did again in Q1. So we continue to believe that e-commerce is a growth channel and, you know, we do continue to put resources up against it. But coming back to sort of the top of your question on You know, the influences on measured channels, I would probably think about that as one thing to consider and think about. But largely, we really believe that our shipments and consumption are broadly in alignment.
spk03: Got it. No, that's helpful. And then maybe, guys, just I wanted to clarify on China because the slide seemed to say maybe two things. I think in the China consumer business, which I know is kind of more branded food service, there was some weakness. But then on China flavor solutions, you talk about strength in QSRs in China. So just wanted to maybe unpack a bit more on those because you seem to be saying two different things and get a better read kind of between those two subsegments. Thanks very much.
spk08: Sure. I'll make a couple comments here, and Mike might have some things to add. We're not thinking about China any differently than what we said last quarter. It largely met our expectations for the first quarter, both from a consumer segment perspective and a flavor solution segment perspective. And we continue to expect that for total 2020, for 2024, China consumer sales would be comparable to 2023. Broadly, our outlook for the Chinese consumer does remain cautious. I mean, there are several reasons to continue to think that way. persisting unemployment with young adults, reduced consumer confidence. Consumers are still somewhat reluctant to spend. In our business, and that falls into our consumer segment, is sales to smaller independent restaurants. They are losing some traffic to the larger QSR chains. That might be where you're hearing us say two different things. And so I offer that as some perspective around that. Yet, like we do with other regions, we have plans in flight to address how we're looking at China and the changing trends of Chinese consumers. And we do expect our flavor solutions business to be stronger in 2024, just based on the trends that we're seeing. So that's, I think, some of the perspective. Mike, do you want to add anything? Yeah, I think we were in China two months ago and saw a lot of these trends where the QSRs, you know, big established QSRs were starting to gain share and drive some traffic into their stores versus that kind of smaller mom and pop type stores. I mean, I would just give you context to this kind of talk as we talk about our whole flavor solutions business. You know, the QSR business in some parts of the world like China is really doing well. Other parts, it's a bit challenging. As you think about our guidance, those are things that you talk about the flavor solutions business is lumpy in part due to the fact that, you know, our CPG customers and QSR customers control new product launches and there's foot traffic and things like that. But China has started off strong on the QSR side, which is great.
spk03: Great. Thanks, guys.
spk10: Thank you. Our next question comes from the line of Max Gumport with BNP Paribas. Please proceed with your question.
spk01: Hey, thanks for the question. The last quarter you talked about making, hey, good morning. So last quarter you talked about making good progress on restoring distribution that was lost to past supply issues. And it sounded today like you're reiterating that commentary and that you still have line of sight to making some good progress on getting that distribution back following customer resets the middle of this year. I was just curious if you could give us a bit more color on some of the updated insights you've gotten over the past couple months as we last heard from you on what you're seeing, what you're hearing with regard to customer wins in U.S. spices and seasoning.
spk08: Thanks. Thanks for the question, Max. Yeah, as a reminder, you know, the proactive discontinuations, you know, over the course of those last two years, you know, make up roughly 50% of the TDV losses that we experience. So just a reminder as background on that and then of the TDP that we lost really due to supply. We've recovered really quite a bit of it, not entirely all of it, but a lot of it. I think the context I would add on top of that in terms of what we're seeing right now, across our core categories, we're really making pretty good progress. So, for example, just on recipe mix, our total distribution points were up again in Q1 and Q2. At this point, we probably have the highest TDPs that we've seen in that category, probably compared to the last three or four years. And our share of TDPs is really quite healthy and strong. On hot sauce, again, our TDPs were up in Q1. And we have the highest total TDP points on that business, too, in the last three years. Mustard, similar situation. TDPs were up again in Q1. And we have the highest total TDPs. And on that one, the share of TDPs in the last three years. So a number of those categories, we feel like we're doing quite well and progressing quite nicely up against this. And spices and seasonings, we're also making pretty good progress. In about five of our top six segments, we're seeing TDP growth. Broadly right now, TDP shares is flat for us, but we expect that to improve as we go through the year. A lot of these resets, when you think about any category, tend to happen in the middle of the year. We think towards the end of Q2, those will start to reflect on shelf. And so I wouldn't say for all of Q2, but definitely as we go into the back half of the year, we think there will be more full reflection of the gains that we think we want. Great.
spk01: And then one more on flavor solution. So it was nice to see the positive volume growth to start the year. It was a bit earlier than we all expected, at least from RC. And I know you called out that this segment can have fluctuations, whether it's due to limited time offerings or promotional timing, new product launches, what have you. Was that common? Are there any things you know about right now that would make you think we could see some step back in 2Q? Or is it more just trying to let us know that this is a segment that is more volatile and there's potentially reason to think that we could see a dip back to flatter performance in 2Q? I'll leave it there. Thanks.
spk08: Yeah, this is Mike. I think you're right. We're really happy with the first quarter performance there, the sequential improvement. But some of our regions, the QSR business is pretty material, such as the EMEA. And, you know, it's very public. Some of the customers coming out and talking about the foot traffic. So, you know, I think as Brenda said in the call, your second quarter, there is a bit of headwind there on the flavor solution side, so I wouldn't be surprised by that. But, you know, as Brenda said, too, second half, both for consumer and flavor solutions volume, we're expecting strength. I think about, you know, I think about our performance, too, in halves, you know, versus quarters, because quarters, you know, you get very – can get very – A week makes a difference sometimes. So within the first half, we're still calling for kind of flash drawings, second half line growth across the business. So think about it in those terms too. Thanks very much.
spk10: Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.
spk07: Yes, thank you. Good morning, everyone. Good morning, Adam. Good morning. So I guess I wanted to dig in a little more on the America's consumer business and just maybe provide a little bit more context, friends and Mike, on the point on spices and seasonings and the unit share kind of improvement. Just was that coming through faster than you expected? Is that tracking as you thought and just retail sales broadly in January in particular? accelerated for the for the whole industry a little bit of weather and some of that channel shift that you alluded to um seems like it's gone back to the same similar trends through february's the unit was that do you think you've held that unit share through um exiting the quarter through february or was there some a bigger uplift um towards the end of the quarter there yeah and i'm happy to provide more context on spices and seasonings uh just maybe
spk08: speaking first to broadly what we saw in the industry, I think, through the first quarter. As our prepared remarks noted, if we think about what appeared to be a very sort of challenging, difficult Q4, we started to see more center of store improvement compared to Q4 broadly, and maybe that came at the expense of food away from home to some degree. Certainly a cold winter always benefits McCormick. We like to see people make a lot of chili, and so that always is great for part of our recipe mix business. But we're speaking specifically to spices and seasonings here, so we tend to think about this from a different perspective. What's really driving, I think, our performance right now is, I would point out maybe a couple of things that are benefiting our business. Our new packaging continues to increase velocity on shelf, and we're rolling out more of that. It's just flowing through, and more of it will be complete by the end of the second quarter. So we're at 75% at the end of Q4. We believe that we're obviously somewhere between 75% and 100% at this point in time, and so that's driving improvement. We are recapturing distribution points, too, and we think that sequential improvement led to some positive results. you know, that plus our increase in advertising and the velocity of our new, coming from our new packaging, led to unit share gains at the end of the quarter. And, you know, that increase in advertising, I think, certainly was, you know, one of the things that we think led a lot of our positive trends in our business and spices and seasonings. And so, you know, these are some of the things that we've spoken to, I think, from not only the fourth quarter call, but also at Cagney, and I would just reiterate them here, the collection or the integration of all of that together we believe is driving the right level of performance on the business overall.
spk07: Okay, that's helpful. Then maybe just to follow up from Mike, just the comments on the second quarter and the gross margin that will be up modestly year over year. I guess I'm just trying to make sense of from a should we be thinking about SG&A percent of sales similar to the Similar to the first quarter, it doesn't seem like your top line, maybe a little bit of setback in flavor solutions sequentially in terms of the top line, but it doesn't seem like you're talking about a big step back broadly in terms of the overall company sales. I know last year was a tougher comp on price-cost, but I guess I'm trying to just make sure I understand why it would seem like the profit growth, if not the profit dollars themselves, decelerating.
spk08: I think, Adam, maybe think about it this way. I mean, second quarter is kind of an inflection point for us. You know, the pricing, you know, which for the first quarter was about 2.7%, and think about it for the year, it's going to be about 1%. So second, third, and fourth quarters, it's coming down. While volume is turning positive and we're getting sequential improvements, in that second quarter, you don't have as much cover for pricing, and your volume, while it's improving, isn't to the level it is in the second half. So in the second quarter, as I said in the remarks, we're activating some of our price gap management activities more than in the first quarter, so that puts a little pressure on the sales line and the profit line. But we're confident those investments, including increased A&P, which we had in the first quarter but also in the second quarter too, will contribute to driving sequential volume improvement in both Q2 but in the second half. I think what you're getting a little bit is a bit of a, like I said, it's an inflection point before the volume growth, which we'll talk about in the second half. So it puts a little pressure on margins. We're still having positive margin improvement versus last year, but if you think about last year, that was like the sweet spot of when our pricings were really going in, overcoming the cost impacts. We talked about that last second quarter. So that was, at that point, our margins were up 300 basis points from the prior year, I think it was. But we still see, again, back to the first half, second half, you know, really good margin improvement in the second half for the first half. This is, you know, the first half is about investments. You know, the benefits in the first quarter also, the wrap of GOE programs, things like that too, which did help the first quarter. But, you know, a lot of moving parts in the second. That's why we tried to move it, give you a little bit of kind of summary in the script.
spk07: The color is appreciated. I'll pass it on. Thank you.
spk10: Thank you. Our next question comes from the line of Robert Moscow with TD Cowan. Please proceed with your question.
spk02: Hi. Just a couple of follow-ups. Thanks. Can you remind us again, what percent of the portfolio in the U.S. are you executing this price gap strategy? I think you said it's 50%. And maybe a little more color on what segments you're working on right now and you know, what you're learning from that. Secondarily, I think you mentioned some dollar trial sizes in hot sauces. I haven't seen that. Can you explain a little bit why you think that's incremental to the category? Is your competition doing it? And if so, are they gaining any share as a result, or is it really just helping everybody? Thanks.
spk08: Thanks, Rob. So let me address... I just want to make sure I don't forget your second question as I address your first. With regard to price gap management, I mean, I think I just would go back to confirming what we've said also at Cagney is that That program and those efforts, which is quite targeted on a skew-by-skew basis, represents less than 15% of our America's Consistency. Sixteen percent, okay. And it's one five, not five-oh. I thought you maybe said 50, and it's one five percent. And it's really being applied to targeted parts of our spices and seasonings category and recipe mixes. You know, we're also taking price gap management efforts selectively across other regions. I would say EMEA is an example of that. But, you know, this is just part of, I think, a good tactical blocking and tackling on, you know, the parts of our portfolio where we think maybe a price point just simply isn't at a place where it could be successful. So that's the color I would add to that. Now, specifically on your question on hot sauce, In the background, I would first provide, hey, this is an attractive category. There's always, particularly more so than most categories, a lot of new competition always entering in the category. So this is something that we live and operate with all the time. We do have underlying strength in our base business on hot sauce and really healthy consumer loyalty. And our plans remain pretty consistent. We're fueling a lot of growth through increasing both Cholula and Frank's brand marketing In fact, Frank's is going to be activated all 12 months of the year in terms of being on air, and that's the first time we're doing that, really to really tap into the growth that we've seen in this segment. And we're also expanding distribution, but our underlying trends are pretty good. Now, more recently, particularly in like the end of the fourth quarter, the beginning of the first quarter, we've seen retailers push the concept of trial sizes, like at a dollar price point, And it's created, obviously, a lot of consumer value when you have just a really low opening price point of a dollar for something that's like an ounce or less of product. But it's resulted in significant unit growth. And it's been driving down sort of the category volume and dollar growth that maybe we had been seeing going into this time period. So that is pressuring our share performance, particularly on units, if you might imagine. A lot of this is driven by gifting during the holidays. And so you could see So there's a big spike, and then it's kind of decelerating since then. But we still believe it's something that's contributing positively to the category because it's adding new users to the category. We've evaluated how much of it's coming from new households versus existing households, and the majority of it's coming from new households into the category. So that's always a positive. We're taking some of these learnings and looking at – our own efforts are having a trial size and competing in this kind of promotional area because we think it's obviously anything that drives trial and awareness in the category we think is healthy and importantly it's also building upon actions that we already have in place behind hot sauce which is a lot of innovation coming out this year I would say you know particularly a lot on Frank's but also Cholula we're increasing the A&P support on all the brands and You know, where we have traditional promotional periods for these categories, we're just making sure they're at the right times during the year and on key use education. Obviously, the summer certainly lends itself to that, like Cinco de Mayo, too. So that's the context and the hot sauce.
spk02: Okay, I got it. And just to follow up on the 15%. As you make it through the year, just optically we see market share data that still doesn't look like it's where you want it to be from a dollar basis in spices and seasonings. Is it possible that the other 85% of the portfolio might also need to be addressed in terms of price gaps, or are you comfortable that you don't need to take any action there?
spk08: I think we're comfortable. that we don't need to take any action, and we are pretty precise, if I might say, in terms of how we apply this and where VFS needs to be applied. But I also have to say, we're constantly evaluating this. So every month we're looking at data and results and deciding whether or not something's in the right place. But I think we have a lot of confidence that we're focusing on the right percentage of the business. But to speak more specifically, I think, to just share perspective around that, while we don't guide to market share with specificity, I think the trends in our business right now are going in the right direction and in many ways delivering against what we would expect to see, which is that focus on share improvement for us as we're looking at our business plans first begins with improving unit growth. And then we expect dollar to sort of follow on top of that. But, you know, like in U.S. spices and seasonings, you know, we're seeing that type of performance right now. And so just also appreciate this is a big integrated effort with a lot of other activities too, including, you know, increased brand marketing, innovation, price back architecture, you know, other category management efforts that we're putting forth. So I wouldn't single out any one of those levers, but actually they all work together. And that's sort of the perspective I would add on top of your question. Got it.
spk02: Okay, thank you.
spk10: Thank you. Our next question comes from the line of Matt Smith with Stifel. Please proceed with your question.
spk00: Hi, good morning. I wanted to ask a follow-up question on that targeted price gap management in the U.S. consumer spices and seasonings business, particularly in terms of phasing as you've built up or are you targeting 15% of the portfolio, meaning Was it more targeted in the fourth quarter? You made some progress against the 15% that you're targeting in the first quarter, and there's still some more to go in these categories where you see the opportunity to use your price gap management tools to improve shares. Should we expect that to continue to build into the second quarter?
spk08: Hey, Matt. Let me kick off. I think as you think about that 15%, again, I would stress 1.5, not 5.0. that is a total look at the year. So indeed, I would say our Q1 isn't necessarily at that level yet, and we would expect to start to hit that type of percentage of our business as we go through the year. So just quickly off the top, I wanted to help provide some of that context around your question mike no and matt good question and you know just as i said in the script you know the second quarter is a bit of pressure because it does more activation in the second quarter so you're right a little bit in the fourth more in the first second quarter is when it's really almost fully activated quite nicely so but again these are investments that drive that volume growth building throughout the year, which we, you know, the early results of the first, fourth, and first quarter investments have been very positive, combined with the AMP and things like that Brendan just mentioned. So that holistic program.
spk00: Thank you for that. And you talked about some particular portions of the portfolio in the U.S. that are challenged, particularly mustard or your frozen prepared foods. Can you talk about some of the your outlook for the improvement in those categories? Do you have plans in place to address some of the lower price points in mustard? And is it really just the consumer recovery that's going to drive the improvement in your frozen prepared foods?
spk08: So I'll speak first to mustard. You know, we just, again, readdressed sort of the context and the background on this. You know, we definitely are seeing sort of a lot of low price points with private label, fairly low. which impacted our consumption, and it's driving down the category dollars, but importantly, it's impacting our trajectory on consumption. So we do plan to improve those trends in 2024. Largely, I think we're going to look at increasing promotional programs. We have a big grilling season, quite excited, actually, about the grilling season coming up. Mustard's a big part of that, as are a number of items within our portfolio. That plus just making sure we are at the right price points, I think, across that business. We're also strengthening distribution, too, which will strengthen trends on top of that. So that's a perspective on musters. It will continue to get better. But, you know, as we were talking about in the fourth quarter, I don't know that we saw what we saw in the first quarter was, you know, contrary to what we were expecting as we start to implement those plans, particularly as we get to the grilling season. On the prepared foods category that we spoke to, we're riding the trends right now in the marketplace, and I think that's what you would expect to see us, how we would see us perform. It's a smaller part of our portfolio. We would not kind of call it this part of that core. And so we are really, I think, just watching the trends, making sure we follow what's going on in the category, and we're treating it much like in that manner. Yeah, think about it too. We've talked about our portfolio management, and this is part of that. We're making sure the items we have in our portfolio, whether on the consumer or flavor solution side, we prune business that doesn't meet our target. So you'll see some of that probably in this area too. But we won't be calling it out as a separate item.
spk00: Thank you for that. I can pass it on.
spk10: Thank you. Our next question comes from the line of Tom Palmer with Citi. Please proceed with your question.
spk04: Good morning and thanks for the question. I wanted to ask on just the shelf resets coming later in the second quarter. Is this incremental from a shelf space standpoint? I mean, is there going to be, depending on how the timing goes, the potential for some favorable shipment timing as we think about the second quarter? I would assume that's not factored into your outlook. I just want to understand the moving parts there and also if that's the key driver of this expanded shelf set.
spk08: Thanks. Well, we do believe that when we gain in TDP distribution, we do that as incremental to our presence in the market at that time. So speaking to its impact on the second quarter, we feel like we've got that called in our outlook for the rest of the year. So I don't know if there's anything specific I want to identify for the second quarter behind this and when exactly all that stuff ships, et cetera. I think that's a level of detail we just probably wouldn't be getting into at this point. I think, Thomas, maybe as you're – I think you're kind of focusing on the shelf renovation with the new bottles. That's been rolling out. you know, from the end of last year to this year. And that's really not a big shipment. That's what we're replacing. It's kind of going – it's not a big reset. It's the same size bottle, basically. It fits on the roll bin. So we're just kind of filling the pipeline with that. So you're not going to see a big spike. Now, you will see better velocity and things like that, which is why we did it, and that will build throughout the year. Some of the resets we talked about with winning new business and other categories, those shelf sets happen – sometime in the second quarter and will benefit us in the second half. So there's kind of two different thoughts there as you think about it. Got it. And welcome to the call as your first call with us, Thomas. Thank you. I'll leave it at that. Thank you.
spk10: Thank you. Our final question this morning comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.
spk05: Great. Thanks. Just one upfront question, two mechanical ones. So I just want to go back, I guess, for the last time, the last question, just to kind of the delta we're seeing in the track channel data, which clearly all of us look at. And then what you did in overall consumer in America was better. And I think I heard you say Latin America was doing well. I know EECOM sounds like it's growing double digit, but I'm still trying to get a little bit more color because I feel like if EECOM had been growing double digit or Latam had already been doing well, there's got to be some delta in there that's driving the difference between what we're seeing in that track channel data. relative to what you report, because it clearly was much better, you know, in Q1 versus, let's say, the prior three years. So then, as we're all looking at that data going forward, like, should we, I guess, you know, think that you will be tracking nicely ahead of that data, given the same drivers, or maybe not, because you're also saying you ship to consumption, but it's not what we see, and it's not what we've seen for the past, like, 11 quarters. So I'm just... There was something in there, and that's why we're all asking, but I just didn't really get it.
spk08: Well, Rob, I think there's possibly two different questions there, and I'd make an attempt at what I think you're getting at, which is what we're seeing in our business, and we read our business through Cercana, and that's a much broader, more refined view of our categories. And so we are, you know, reflecting that kind of data in our performance as we talk about it. Compared to what Nielsen might be reporting, I think traditionally over time, we've seen differences in that reporting. We don't really reconcile that on the call or do anything of that nature, but there have been at times a difference in what Nielsen might be reporting in terms of how they're capturing the category versus the more refined higher-level broader view as we look at spices and seasonings in our category. So that might address part of your question. Now, the other half of that could be it's about unmeasured channels, et cetera. And I will go back to the comments that I made earlier that we largely see everything pretty much being in line between shipments and consumption. We are getting a lot of strong growth in e-commerce, as I called out earlier in the call. So that certainly is something that could create a difference in the numbers and the metrics. And, you know, obviously, you know, good performance in Canada and Latin America. I'm going to pause to see if maybe if we thoughtfully address, I think.
spk05: Yeah, no, I think that's fair. That's fair. That's fair. Totally, totally get it. I just thought I'd ask one last time. And then just quickly, you know, on the Mexico business, the J.V., I know guidance is for mid-teens. I think it's mid-teens growth for the year. You put up like 50% in Q1. So maybe just kind of if you could just discuss kind of what actually did occur to drive that growth in Q1. And then, you know, given what we saw in Q1, you know, should like why do you think you'd still grow mid-teens if you're already so ahead?
spk08: No, our manufacturing venture had a great first quarter. I mean, it's comping against a weaker first quarter, too, so there's some of that in there. It's a little bit too early to call the year. Just like here, there's the economy in Mexico. There's a lot of price volume things they're going through also as they've managed the year. So, again, strong underlying business, and we're really happy with it, and we're hoping the rest of the year is just as strong as the first quarter, but it's a little bit too early to call on that one.
spk05: Okay. All right. All right. Fair enough. And then just quickly, uh, Mike, I'm glad you asked the question cause we don't get a lot.
spk08: I mean, it's such a large part of our portfolio. It gets ignored because it's below operating profit, but very profitable business. We have dominant, they're not dominant, but we have real strong brand positions down there across a couple of categories and we export into the U S too, uh, mayonnaise and other things too. So it's really, really good business for us.
spk05: Um, yeah. And it was actually core driver of net income. Um, Anyway, and then I guess just, Mike, quickly, I don't think I heard you speak to interest expense guidance, but you do frequently provide that. So I don't know if you have that, and that's all I have.
spk08: The fact that we didn't provide it means it's not really that material. I think last year was the first year we provided it, but it was roughly equal for the first quarter, so I wouldn't expect a whole lot of change for the year.
spk05: Cool. Thank you so much. Perfect.
spk10: Thank you. That concludes our question and answer session. I'll turn the floor back to Ms. Freja for any final comments.
spk09: Thank you, and thanks to all for joining today's call. If you have any further questions regarding today's information, please feel free to contact me. This concludes our conference call.
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