Sonoco Products Company

Good day and thank you for standing by. Welcome to the first quarter 2023 Sunoco Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and thanks to everyone for joining us today for Sonequa's first quarter 2023 earnings call. Joining me this morning are Howard Coker, President and CEO, Rob Dillard, Chief Financial Officer, and Roger Fuller, Chief Operating Officer. Last evening, we issued a news release highlighting our financial performance for the first quarter, and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website. As a reminder, during today's call, we will discuss a number of forward-looking statements based on current expectations, estimates, and projections. These statements are not guaranteed to please take a moment to review the forward-looking statement on page two of the presentation. Additionally, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial conditions and results of operations. Further information about the company's use of non-GAAP financial measures, including definitions as well as reconciliations to GAAP measures, is available under the investor relations section of our web. After management's prepared remarks, we will host a Q&A session. If you will please turn to slide four in our presentation, I will now turn the call over to our CEO, Howard Coker.

Howard Coker Thank you, Lisa, and thanks to all of you for joining us today. As our first quarter results show, we've had a good start to the year. productivity under 10, but we consider a strong Q1 performance. As I mentioned before, we are not immune to the secular headwinds around our customers and the economy in general, but this demonstrates our better portfolio management and business mix provides less volatile results than in previous business cycles. We have a backlog of growth and efficiency investments that are material to future earnings, While we navigate near-term macro volatility, we're going to invest in the businesses and place our investments on projects with the highest return for our shareholders. I would like to say to our Sunoco employees and our operations within our sales and engineering teams and all those that support the business around the world, thank you for what you do. And thank you for supporting our customers, Sunoco, and your focus on execution day in and day out. But before Rob takes you through the financial results and guidance, please turn to slide five. I want to highlight, we released our updated corporate responsibility report last week and provided the QR code in this presentation that you can scan to directly download the document. Now, at Sunoco, we report quarterly to our senior leadership team and our board on the ESG commitments we're making, including those highlighted in our refreshed document. We're excited to On the social side, we have updated our workplace diversity hiring progress as well as updates on our supplier diversity and spending programs. Lastly, we have many R&D efforts centered on developing new and innovative products to meet the sustainability goals of our customers. We are tremendously proud of our capabilities and the work on this front. We'll be right back.

at over 17%. Finally, earnings per share was $1.40. These results exceeded our initial guidance as we continue to execute our operating model to achieve price and productivity despite uneven end-market conditions. Next, we have the sales and operating profit bridges on slide 8. On the sales bridge, volume index was negative That's the operating profit. productivity once volumes normalized. Slide 9 has an overview of our segment performance for the quarter. Consumer sales grew 5% to $909 million due to acquisitions and strong price performance. Sales increased 3% sequentially. However, elevated customer inventory and normalizing supply chains continue to interrupt volumes across the consumer business, and our near-term volume outlook is less positive than it was consumer volumes declined 1%, including acquisitions from divestitures. Volumes in flexibles and paper containers were essentially flat. Metal packaging can volumes were down, as food growth was offset by low aerosol volumes due to high-cost ram and toy shovels. industrial volumes were down 13%. operational excellence efforts. Our weather operating profit increased 88% to $27 million due to strong price calls and productivity. Our weather is a notable example of the results of our disciplined operating model as we continue to operate these important businesses for optimal results. We beat our initial target. our businesses with agility. We are affirming our EBITDA guidance of $1.1 billion to $1.15 billion. Likewise, we are affirming our operating cash flow guidance of $925 million to $975 million. We anticipate continued benefits from networking capital management throughout 2023. Now, Roger will discuss the outlook on a segment basis.

Thanks, Ross. Please turn to slide 13 for our viewpoints. across consumer for the second quarter of 2023 we expect sequential volume growth across the segments including metal cans. We see increasing demand for sustainable packing solutions and new products and we're closely monitoring any potential softening based on consumer spending. In Q2 as Rob noted we'll work through the remaining inventory impacted by metal price overlap which will not continue in the second half of the year. Beyond this year we'll continue to invest In our industrial segment, we see continued softness in volumes globally and are converting in trade paper sales in the second quarter. We're monitoring Europe and Asia demand recovery carefully, as that will be critical to the overall volume outlook for the full year. While some inflationary impacts are lessening, labor and related costs continue to increase. Our global uncoated recycled paper mill operations in the second quarter, we will maintain reasonable backhaul levels by region. In North America for the second quarter, there is no planned lack of business downtime, with normal levels of scheduled maintenance downtime, similar to the first quarter, as we've seen the North American URB network supply and demand stabilize in the last month. We will continue to take periodic lack of business downtime in Europe and Asia at similar levels to the first quarter until demand improves. In our other businesses, we continue to have net stable volume demand across this collection of businesses. With improving productivity and favorable pricing actions, we expect continued increases in profitability this year. Overall, we had a good start to productivity in the consumer and all other businesses, and we expect to see the benefits in industrials when volume growth returns. We're seeing the positive impact of our increased capital spending in the last few years focused on productivity and a fairly significant easing of supply chain constraints on our materials and labor. With improvements across the breadth of our excellence programs and just really executing well, we're continuing to build resiliency in our operating model. With that, back to you, Howard. Okay. Well, thank you, Roger. If you would, turn to slide 14. I want to end our discussion as we look ahead to 2023 and beyond. First, Sunoco is a global leader in high-value sustainable packaging. Our funnel of packaging solution designs provides Sunoco with a long runway for its opportunities across our businesses. We are continuing to transform this great company through portfolio management and strategic M&A. We have spent the last 18 months transformation to solidify our base. In the future, you're going to see increased efforts to further focus the portfolio. We will exit some business and expand others, all with the right timing to maximize value, and we will keep you informed, obviously, as we progress through this journey. We're in the early stages of leveraging our operating model to expand margins. Our operating model is solid. It's sound. Through our excellence programs, footprint optimizations, enterprise standardization, how we operate the business will only get better through time and is reflective of our solid performance in uncertain times as we live in today. As Rob covered very well earlier, we remain disciplined in capital allocation and we expect And lastly and importantly, we are committed to improving the lives of our team members, our customers, and the communities in which we live and work. Our recent CRR report only scratches the surface of the great things happening within Sunoco to fulfill these commitments. We look forward to keeping you informed along the way of all the improvements we're undertaking. And with that, operator, we are pleased to open up the questions.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our Q&A roster. Our first question comes from the line of Gunsham Panjabi with Baird. Your line is open. Please go ahead.

Yeah, thank you. Good morning, everybody. I guess first off, could you just give us some more granularity on the first quarter volumes across the various consumer verticals? If you covered some of this, I apologize. We had some audio issues on our end during the prepared comments.

Yeah, we can talk about the different consumer verticals in Q1. So, you know, from a volume perspective or from an OP perspective?

Volume would be helpful.

Okay. drivers there.

Gotcha. And then in terms of productivity, you know, you hit the first quarter was around 20 million plus. How should we think about the rest of 2023? And then also on price cause, you said you expected the full year to be positive. Just expand on that in terms of sequencing for the full year. Thanks.

Yeah, on productivity, gotcha, Mr. Roger. I think you should expect pretty similar levels by quarter. As I said, we're seeing supply chain constraints He's up, labor, he's up to some degree. And the team executing extremely well on the capital that we put in place over the last few years, focused on productivity, footprint optimization, as Howard already mentioned, and the supply chain team working extremely well with the businesses. So I think you should see somewhere levels going forward.

And on price-cost?

Yeah, on price-cost, I'd say...

Thanks so much.

Thank you. And one moment for our next question.

And our next question comes from the line of Anthony Pentaneri with Citi.

Your line is open. Please go ahead.

Good morning. I was wondering if you could talk a little bit more about maybe customer inventory positions, maybe starting with consumer. Where are we in sort of the stocking cycle in metal composite food cans versus aerosol versus flexibles? And then on the industrial side, are there any sort of trends you'd flag in North America versus rest of the world in terms of customer inventories in that stocking cycle and where we are?

Anthony, this is Howard. You know, as Rob said, and we noted when we updated our guidance at the end of the first quarter, when we came out in January, it really felt true in terms of the deep stocking activities on the consumer side, particularly in our legacy businesses. And we came out of the box really, really strong January, early February. And I don't think it's unique to Sunoco that we started But we did see some backing down there. So I would suggest to you that on our legacy side of the business that there's still question marks in terms of the full value chain from retailer to supplier of folks like us, basic raw materials, but not as a concern as what we had first expected and how we came out of the block. On the metal side, the results are relatively consistent with what you've heard from others as well at CMI. Up on the food can side, down on the aerosol side, in our case, we've got a couple of customers that the destocking activities have extended longer than they and or we expected. that we're looking at secular improvements quarter to quarter and getting assurances that they should be working through their situations, let's call it, through the mid to the end of this year. So unique one-off situation on the aerosol side, and we'll just have to ride that out.

And at the industrial, Mr. Rodger, we modeled

And that's really driven by Europe and Asia, this continued weakness there. Someone else, the textile business out of Turkey with the impact of the earthquake has a pretty significant impact. As I said earlier, the North American market, we've seen it stabilize. We're not modeling any growth there, but we've seen it stabilize over the last month, and that's what we're expecting for the second quarter. So really the watch out is Europe and Asia as far as the second half of the year. Yeah, and that's what I'd say, you know, I'm going back to my prepared remarks and to this team and frankly the activities we've undertaken over the last, I said 18 months, but two, three years in terms of transforming how we manage the day-to-days of the business, the operations side. I just cannot be prouder of a relatively... weak volume scenarios and posting the type of productivity numbers that we're posting. And I tell you, it just gives me a nice, warm feeling that volume, as it will return over time, that we're in an extremely solid position to leverage that productivity in a more material way. So I guess thanks to Roger and the team and what they're doing on the operations side and others.

Okay, that's very helpful. And maybe just one follow-up on productivity. You know, all other, obviously a smaller part of the business, but the margins there were quite strong in the quarter, certainly versus historical levels. I'm just wondering if you could talk about maybe some of the internal improvements you've made in those businesses, maybe the sustainability of that kind of margin and just how you're thinking about that segment strategically.

You know, to start with, Anthony, If we go back a year or two ago, we restructured not only how we report out from a segment perspective, but how we manage the businesses. As you recall, we created, in the all-orbit category, a more entrepreneurial-type environment, allowing them to operate within the guidelines of the unique businesses that they support. And from that, we're seeing the results. And again, pockets and across the rest of the company, similarly, you're seeing. How we're looking at it for the long term, these are good businesses, many of which are one or number two in the market segments. And we're going to continue to operate them to their full capability and continue to drive through. While they operate independent, we're still driving through the productivity and other other transformational type programs that we have in place for them. So they really set up well to show you in a snapshot of what we're seeing across the company. We'll be evaluating businesses over time and I think I did mention it in my prepared remarks that when time is right, there's some businesses that may belong better off with others and from an acquisition perspective, we see the over the amount of value that our shareholders expect. And they're very resonant, as you know, Anthony, and they manage price costs extremely well in the first quarter, and we'll do the same in the second.

Okay, that's very helpful. I'll turn it over.

Thank you, and one moment for our next question. And our next question comes from the line of George Stappos with

Bank of America Securities. Your line is open. Please go ahead.

Thanks a lot. Hi, everyone. Good morning. Thanks for the details. I guess the first question I had, if you had already mentioned it, I apologize, but can you provide the lack of order downtime by region in the first quarter?

I can, George, Roger. About right at 10% in North America, closer to 20%

pretty significant okay and if you Roger if you could help us just in terms of tons what would that look like I mean we can go back into it but just you know while I have you quickly if you don't have it go ahead okay that's fine perfect perfect I guess the next question I had, and you're right, other companies saw a deceleration as the quarter went on, and March was in some ways year-on-year weaker for many companies than was the beginning of the quarter. Given the number of consumer companies you talked to, the breadth of your product line and therefore the input that you get back. In a couple senses, not solving for world peace here, but what do you think happened? Because your businesses are relatively stable. Going into the quarter, I think you were looking for mid-single growth in food cans. I think pretty similar growth in flexibles. volumes don't swing around that much. So what you're hearing from your customers, what happened to the consumer that they went into the bunker to such a degree? And maybe it's just that, but what are your thoughts there?

Yeah, George, this is Roger. From our large consumers, I mean, you can see in their results that they're taking significant price in the marketplace.

Yeah.

And some of our customers' products are very – That came in about where we expected.

Okay.

And the other, maybe the other supply was some of the inventory and some of our other customers, the supply chain challenges they've had, and they've just built up more inventory than we expected coming into the first quarter. But, Jordan, I know you don't want warranties, and I will not give you warranties. What I will say is that, you know, we are staying conservative with our outlook on volume recovery and, you know, You know, we're really looking at seasonal increases quarter to quarter on most of the consumer side of the business, including the number five. And then the industrial, we're saying, look, we're not expecting any recovery for the period.

So if I keep – it sounds like you're being very sort of consistent, basically assuming very little sequential improvement. What do you have? I think, Roger, you said – You're looking for mid-single-digit declines, correct me if I'm wrong, on industrial and 2Q. What do you have dialed in across the big categories for 2Q and for the year on a volume basis embedded in your guidance?

In consumer, high single digits sequentially in the second quarter over first. And then all other, again, I think some are volume. And again, if it's seasonal, part of it is, certainly not.

Okay, thanks. I will turn it over. Thank you, guys.

Thank you.

And one moment for our next question. Our next question comes from the line of Mark Reintraub with Seaport Research Partners.

Your line is open. Please go ahead.

Thank you. Just one question. I'm not sure I heard it exactly right. You said something on the metal price overlap. I thought you said it was a negative. You're thinking of it as a negative 26 for this year or last year. I'm suspecting I misheard you. Could you just clarify that?

Yeah, the metal price overlap this year was negative 86 and Q1.

86, okay.

86, yeah, and we anticipate that for the full year. Okay, thank you. That makes a lot more sense than what I thought I heard, which was wrong.

Second, I'm just trying to understand a little bit. I think you said that you don't see

any lack of order downtime in your North American industrials business kind of going forward, which I guess seems surprising to me given the reduction in demand that we have seen, and you weren't talking about it getting a lot stronger. Can you sort of just help me piece that together?

Yeah, if you think about the,

and volume is not significantly improving but it's not but it's stabilized it's not falling so we feel like that'll that'll hold for the quarter okay so is it fair to think that that the the level of downtime taken in the first quarter essentially almost overshot you to a point where even with demand a little bit weaker there there's a bit of cushion and and then you know hopefully we get a little bit stronger demand in the latter part of the year and if that's the case then we're we're in in good shape and Otherwise, we potentially have some more lack of order downtime later in the year. Is that a reasonable way to think of it?

Well, I think if you think about the volumes on a year-over-year basis, you know, there is a reduction in volume on the URB side associated with the conversion of number 10 and the remainder of the Project Horizon activities.

got it got it and then lastly just to come back to kind of questions coming up a few times I think you had suggested you thought consumer volumes this year could be up as much as four to five percent last quarter recognizing it's gotten murkier there's lots of uncertainty and you talked about the consumer pulling back do you have kind of a perspective on what you think that number for 2023 year-over-year built into your guidance might look like. I assume it's lower than that 4% to 5%. Is that fair?

Yeah, that is a fair mark. You know, again, as we came out of the year, it was pretty impressive with what we were seeing, and it certainly slowed down. So we're moderating our expectations for the full year. by the time it's all said and done, but gosh, I guess we missed it in terms of the exuberance that we were feeling as we interviewed here with that. I'm just going to keep going back and pointing towards the execution side of the business and being able to not only... Thank you for the callers.

Thank you, and one moment for our next question. And our next question is going to come from the line of Kyle White with Deutsche Bank.

Please go ahead.

Hey, good morning. Thanks for taking the questions. I wanted to follow up a little bit on that last question, but also just broader, looking at your full year outlook. Can you just talk about some of the moving parts considering 1Q from an earnings standpoint was a bit above your initial expectations, but yet you're maintaining the EBITDA range for the full year. Is that just driven by the mercury and the softness in terms of the volume backdrop that we're seeing right now? Or was it also driven by maybe tan vending chip prices being a little bit weaker than what was initially assumed? Maybe just any details you can provide there would be helpful.

Yeah, I think the The volume mix, as we think about it, productivity was really an offset in the early part of the year, and we feel good about how productivity is unfolding through the rest of the year, even if volumes in the consumer side are a little bit weaker than what we had originally planned.

And we have built in some margin compression over a quarter in industrial business for the balance of the year in our guidance.

Got it. If I can follow up on that, I assume you're keeping current list prices for tan bedding chips in North America. Is that fair assumption in the guidance?

Yeah, that's fair.

And we're also assuming, let's call it a $15 to $20 increase in the average OCC price between now and the end of the year. So there is some cost increase coming in, but we left tan bedding chips flat for the year.

For my second question, there's a lot of weather events this past quarter. Just curious if that had any impact on your fresh fruit packaging business, and then also if there's any anticipated impact for the pack harvest related to it.

Kyle, we certainly felt it in the variant trade business, which is, as you'll note, is California. You know, that season's what will be coming off in that late winter, January timeframe, strawberries, et cetera. And then, of course, we have the frost activity down in Florida. So it's certainly reflective to some extent of the performance of that business, that one business in the first quarter. I think we're working through that as we move forward. On the metal side, our... Our focus in the bean and tomato markets are really in the Midwest and where we have not seen the type of environmental issues that you see on the West Coast. But our customers are telling us business as usual as it relates to that type of business.

Got it. That's helpful. I'll turn it over. Thanks.

Thank you. And one moment for our next question. Our next question is going to come from the line of Cleve Rooker with UBS.

Your line is open. Please go ahead.

Hey, good morning, everybody. Thanks for taking my question. It's just a couple of follow-ups for me because I think a lot of the big key points have been addressed. But yeah, I just wanted to dig in a little bit more specifically on the volume decline you're talking about. I think we've talked a couple of times about industrial volumes being weak. They're stabilizing at a low level, but not really quite growing yet. Is that... pretty much entirely coming from the container board industry, or is that sort of a more broad comment across other end markets?

Yeah, clearly, this is Roger. It's broad. It's across all markets, textiles especially weak, really most every region globally, film also down. four of the categories that we tried.

Yeah. Okay. But it sounds like you're getting some confidence that orders are starting to pick back up. And at least from a, you know, from a volume from like tons produced standpoint, you're confident that Q1 was the trough.

In fact, we modeled in some continued modest declines in the second quarter driven by weaknesses. That's what we have in the guidance at this point.

Yeah, yeah, I'm sorry. But North America is starting to affirm.

Relatively, yeah, relatively flat quarter to quarter.

Yeah, and then just quickly on that. So in terms of the variability in the outlook, you know, just the kinds of things that we should track through the balance of the year as we think about, you know, skewing towards the top or the bottom end of the guidance. It sounds like really the European and Asian regions or where there's just some more question marks about how the second half is going to materialize.

For industrial specifically, that's correct. Yeah. Probably more Europe than Asia is really in total.

Right. Got it. Got it. And it was a nice set of results for the quarter. But that's not going unnoticed. Thanks, everybody. I'll turn it over. No, I'll talk to you guys later. Thanks.

Thank you.

And one moment for our next question. And our next question comes from the line of Gabe Haged with Wells Fargo Securities.

Your line is open. Please go ahead.

Good morning, guys.

Good morning.

I find it interesting that I feel like maybe some of your customers are probably maybe window dressing for balance sheets coming into the end of the specific quarters. Because if memory serves, December was a pretty bad month on the consumer side, and then January snapped back, and we kind of had a similar experience in March. So I'm curious. If you could comment at all about sort of how April is trending, I think you said, Howard, that you're expecting sort of the normal seasonal sequential step up in the food can business, maybe some moderation and destocking in the aerosol side, but then just maybe the legacy consumer business. And then maybe as we think about monitoring the quarters and the rest of the year as it progresses, maybe paying more attention to what your customers are saying in terms of maybe modulating their own purchases and responding to consumer behavior? I mean, is that sort of the wild card or the factor that we should be most mindful of, or is there something else going on?

Yeah, you know, Gabe, I would say it's certainly way too soon to say is this a new operating environment from our customers' perspective. That's probably... I'd like to think it's related to really what's going on in the macro world. And so I noted, and we all noted, there was a lot of question marks entering March with what was going on in the banking world and sector and how was that going to reverberate through the global economy. So I keep Can I hang my hat on that? Is that the decline that we saw? Certainly in December, the expectation was just bad. They were trying to draw all the inventories down and complete the year. Quarter to quarter, I don't think we're seeing a new phenomenon here that's sustainable. We may see it in December, which we all do in December, try to pull back on our capital as much as possible. And talk about improvements. that we're at right now from a sequential perspective. And yes, I mean, it's just natural that, or I should say historical, that we see elements of summer buildups in the spring as well as, as you noted and I noted, on the can side of the desert in terms of tax season and et cetera. Don't see a pattern here at this point in time, such a change, but I think it has to do with what's going on around the world and reactions and the timing of those reactions that impacted us in March.

Okay. And then maybe getting back to this all other segment and the enhanced profitability, is there any way to maybe frame up for us sequentially and then maybe the segment overall? I mean, should we kind of expect this level of profitability to persist sort of on an either absolute dollar basis or margin perspective? Or was there something unique to the first quarter, you know, more sales of reels or something like that, that maybe swung things around a little bit more?

and are generating really great results as a result. So those aren't one-off or specific results that across the board, down the line of those

Okay. And one last one as it relates to the guidance. I mean, I think you guys kind of widened the range a little bit, which I maybe understand, but following a Q1B just feels a little odd. The one thing that jumped out at me and interest expense was tracking a little bit higher, I think you guys guided us 115 million. Has that assumption changed? And then maybe just sort of the rationale or the thought process behind the wider range versus what you had before.

With regards to the range and moving it up, I think what we were thinking really was

Okay, thank you.

Thank you. And again, if you would like to ask a question at this time, please press star 1-1 on your touch-tone telephone. One moment for our next question. Our next question is a follow-up question from the line of George Staffos with Bank of America Securities. Your line is open. Please go ahead.

Thanks very much. Hi, guys. Thanks for taking the follow-ons. Two questions from me. One, to the extent that you can comment, and again, if you'd mention this, apologies that I missed it. One, price cost for the year, where does that currently stand in terms of your expectation for 23 relative to what you would have had coming into the year and or your last guide? So, what was the positive variance here which seems to offset the volume uncertainty that you have, understandably, and similarly on productivity, where's productivity, where's operations, if there's a way to quantify to some degree now for the year relative to where you would have been entering the year, again, which helps to offset the volume uncertainty. The second question I had is just in terms of volume, and I think You had mentioned that you expect consumer to be up modestly this year. Recognizing there are no guarantees in life, is there a level of volume degradation that would begin to undercut especially the low end of your guidance range? Instead of very low single digit, if you put up a minus two or minus three at the end of Did that risk your guidance? How would you have us think about those sorts of questions? Thanks, guys, and good luck in the quarter.

Hey, George. Yeah, so as we think about the year and kind of where we've landed and what the bridge is, you know, we really do think that, you know, the positives are really going to be productivity and then a little bit of volume positive here and there. The price cost was, you know, the big drop. And then we'll be a big driver throughout the year, really overcoming the metal price overlap with a lot of really strong performance across the broader business. So I'd say metal price overlap is coming in higher than we had anticipated. So that's just a greater headwind than we had anticipated. And we're seeing pockets of strength. But overall, I think price costs will probably be weaker than what we had anticipated.

Weaker, OK. And productivity then, what was kind of, if you had a ballpark, what that's adding to you relative to your prior expectation?

Yeah, George and this is Roger. In our original plan for 2023, we had ramped up productivity throughout the year, expecting it to take more time for some of these capital projects and supply chain challenges to ease. So first quarter was probably twice what we expected. So if you think about the next several Okay.

And then just on the volume question, again, no guarantees, but is there a level? Certainly there is. What level would you say if you're seeing, you know, X amount of volume degradation where we start to, you know, you'd start to worry about your guidance factors? Thank you.

say is that I think what we've modeled out is what we believe to be true on the lower side, let's put it that way, through the course of the remainder of the year. And if you think of, you know, the question is more about what is the negative implications. What I would say is that we have, you know, history does not necessarily predict the future, but because we, for the most part, on the consumer side, we participate in staple food, some of the store, with really only one exception there, when things get tougher, it seems to attract more folks to the products that we were privileged to represent. And that's both store brand as well as name brand. I'd like to think that if things get tougher, consumer sizes would potentially benefit from that, but of course, that could have ramifications on other parts of the portfolio.

No, sure. Historically, though, on a relative basis, it does work for you, but thinking about it in absolute terms was driving that question. I'm sorry, go ahead.

No, I was just going to say, so I basically didn't ask you a question, but I...

It's all part of the mosaic, though, Howard. It's all part of the mosaic. We appreciate it. Thank you. Good luck in the quarter.

Thank you. And I am showing no further questions at this time, and I would like to hand the conference back over to Ms. Lisa Weeks for her closing remarks.

Yes, thank you all for joining us here today. I would highlight that we will be out on the road for the rest of the quarter, so please consult our website, and you'll see where you can connect with us. In the meantime, if you have any further questions, please don't hesitate to reach out. I hope you all have a wonderful day as we talk to you on our next training call. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.