Kraft Heinz Co [KHC] Conference call transcript for 2022 q4
2023-02-15 12:34:09
Fiscal: 2022 q4
Operator: Good day, and thank you for standing by. Welcome to The Kraft Heinz Company Fourth Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I'd now like to hand the conference over to your speaker today, Anne-Marie Megela. Please go ahead.
Anne-Marie Megela: Thank you, and hello, everyone. This is Anne-Marie Megela, Head of Global Investor Relations at The Kraft Heinz Company, and welcome to our Q&A session for our fourth quarter 2022 business update. During today's call, we may make forward-looking statements regarding our expectations for the future, including related to our business plans and expectations, strategy, efforts and investments and related timing and expected impacts. These statements are based on how we see things today, and actual results may differ materially due to risks and uncertainties. Please see the cautionary statements and risk factors contained in today's earnings release, which accompanies this call as well as our most recent 10-K, 10-Q and 8-K filings for more information regarding these risks and uncertainties. Additionally, we may refer to non-GAAP financial measures, which exclude certain items from our financial results reported in accordance with GAAP. Please refer to today's earnings release and the non-GAAP information available on our website at ir.kraftheinzcompany.com under News & Events for a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP financial measures. Before we begin, I'm now going to hand it over to CEO, Miguel Patricio, for some brief opening comments.
Miguel Patricio: Thank you, Anne-Marie, and thank you, everyone, for joining us here today. Let me first take a moment to say, how proud I am of Kraft Heinz team. We have come so far on our transformation journey. It's quite amazing. And the fourth quarter was no exception. You can see the momentum building across our business, service levels and market share trends are improving. Base volumes are positive. We are outpacing the competition in foodservice and emerging markets and by a lot. And importantly, we continue to invest for growth. Once again, we have unlocked efficiencies over $400 million this year, and this allow us to invest in new tools and capabilities for our teams, a new product innovation for our consumers. From a pricing perspective, 99% of all needed pricing has already been announced for 2023. As we look to the rest of the year, we have no current plan to announce new pricing in North America, Europe, Latin America and most of Asia. I am very optimistic. I'm very excited about how we are positioned to deliver long-term sustainable growth. With that, Iâll ask Andre, Carlos and Rafael to join me. So let's open the call for the Q&A.
Operator: . Our first question comes from Andrew Lazar with Barclays.
Andrew Lazar: Great. Thanks. Good morning, everybody. Your EBITDA guidance for fiscal '23 excluding the impact from the 53rd week is actually in line with your long term algorithm. And when you detailed this, I guess at CAGNY a year ago, you sort of I think said it would take multiple years to reach this level of growth. So I guess in this regard, I'm trying to get a sense of whether -- if I have this right, whether you are ahead of schedule? And if so, what you attribute it to? Like, what's gone better or faster maybe than you anticipated? And I guess most importantly, are you in a place where you see this level of growth now as more sustainable? Thank you.
Miguel Patricio: Thank you, Andrew, for the question. Andre, could you answer this question?
Andre Maciel: Sure. Hi, Andrew. Good morning again. And thanks for the question and thanks a lot for noticing it. In fact, we feel very proud about what we have been achieving as a company. And I think in 2023, we will mark another step-up in our performance. And as we all notice, we are on the long-term algorithm already on net sales and also on EBITDA, if we remove the effects from currency and from the 53rd week. And I think this is the best way to show that transformation is working through results, right? And it's good to see how 2022 that we finished in very strong momentum, how that's translating into a stronger performance in 2023. This is a consequence of our market share in the U.S. continuing to improve. Still negative but improving, as foodservice continues to deliver at high at above 30%, emerging markets growing double-digits in a strong rate. So all these, in terms of growth, are working in our favor. Supply chain efficiencies continue to happen. And in 2023, as you might have noticed in guidance, we are expanding gross margin and see our path to go back to 2019 levels, which is allowing us to continue to increase the investment in the business for growth. So we are in 2023 increasing investments behind marketing, technology and people, which are critical levers for us to fuel the growth of the company. So we feel good about, where we are moving. We still want to do, but we will.
Operator: One moment for our next question. Our next question comes from Bryan Spillane with Bank of America.
Bryan Spillane: Thanks, operator. Good morning, everyone. My question is about just the free cash flow, and I have a couple of questions related to that. I guess the first is just simply, Andre, can you give us a little bit more insight in terms of, I guess, the inventory build? Is it finished goods inventory? Is it raw materials, the decision to do that? And I guess, in the prepared remarks, it's tied to service level. So are you going to need to carry elevated inventories through '23? Is my first question.
Andre Maciel: Sure. Thanks for the question. Look, as we said, as you have seen throughout 2022, we had to rebuild inventory. Our case fill rate at the end of '21 was in the low 80s, which is extremely low. So we had a lot of recovery to do. So you have seen throughout the year, the effect of us build inventory. Keep in mind that we finished 2022 is still in the low 90s. So it's still not what retailers are expecting it should be and what we expect ourselves should be. Being said that, we do have, compared to historical levels, higher inventory coverage in average in raw and package materials, also, which is normal because we're also trying to build the buffers given all the volatility and uncertainty. So we expect that those raw and package materials should decline over time, including starting in 2023. And in finished goods, even though we need to increase inventory in certain spots where the inventory service levels are still low, we still have a lot of opportunity to rebalance our inventory across the network. I think one of the consequences of the pandemic, the demand volatility is that we started to have inventory straight in the wrong warehouses to meet the demand. And that takes time to sort itself out, right, because of actual cost of product and shipping items across the network. So because of these effects and all the investments that we have made in the past two years to automate demand forecast, we are investing a lot of resources in better supply planning. We are -- we have a big project starting -- that already started to network simplification. So the combination of these investments, plus the rebalance of the network, plus we going back to the more historical levels of averaging raw and package materials should start to system recovering inventory starting '23, but -- or into the future.
Bryan Spillane : So I guess this was kind of bridging that now to maybe how we should be thinking about free cash flow and free cash flow conversion for '23. Can you give us a little bit of perspective on, I guess, capital spending? Will inventory or working capital be a tailwind? Like can we get back to more normal free cash flow conversion in '23? Or is it still going to be somewhat, I guess, subdued relative to previous years?
Andre Maciel : So free cash flow will be better than 2022. We were still not going to be in the long-term algorithm of 100%, and that's in great part because of CapEx investments. As we have said as well during -- when we unveiled the long-term algorithm, we are investing for growth. And we have stepped up investment in CapEx. You have seen in 2022, we are spending a little more than $900 million, which is a big increase versus $700 million, $750 million that were in the past. We are ramping up this again in 2023 and 2024 as part of our long-term plan. And then we should go back down to closer to 3.5% of net sales starting 2025. That's the current perspective. So when the CapEx starts to come down, that will help us to give the step-up change to go back to achieve the 100% as we said the long-term outlook. So this year, I mean -- if you want to expect something this year, it should be like about 80% or so is going to have addressable back in line.
Operator: Our next question comes from Chris Growe with Stifel.
Chris Growe: I just had a question for you in relation to promotional spending. And you had some data and some charts that showed it was down since 2019 and down more than your branded competition. I just want to get a sense of -- do you expect to increase that? Is that kind of tied to service levels as those improved throughout the year? And then also to better understand what's the appropriate bogey for that level of rebuilding promotional spending? So what portion of that 5% decline you show in 2019 should rebuild? You've got some good data and capabilities now. Can you be more efficient with promotional spending? I think the answer is yes, but just want to get a little more color on that.
Miguel Patricio : Maybe, Andre, you can start and then Carlos comment specifically in U.S.
Andre Maciel : Yes. So -- and thanks for the question. We have increased trade investment in a very significant way from 2017 to '19, more than $1 billion in the United States alone. So we have restarted from a very high base. We increased late 2019. We created a centralized revenue management organization. We have more than 50 people fully dedicated to that in North America alone, and we have started to gathering power of our sales organization. We put a lot of discipline and science behind making promotional decisions in a way that benefits us and retailers. And you have seen a lot of that coming to fruition now in the results of the last three years. That is obviously an impact from service level as well. But just to put in perspective, if you look at Q4 volume sold on promotion, we had about 24% of volume sold on promotion in Q4 '22. That's higher than 2021, but above 23% as a 2 percentage point in the past, still lower than the branded competitors in our categories. But in 2019, it was 34%. So that's too much. And if you look at where we are right now in terms of promotional investments, we still have a significant amount of promotions that have negative ROIs. So it's not about cutting promotions, it's about deploying it in a smarter way. So we are in the journey, and we have seen the results from that, but there's still a lot of opportunities for us to go ahead. We will deploy it, and want it step-increasing. It is not for me to give you a precise number of where this is going to land. But what I can tell you with confidence is that we're not going to get anywhere close to 2019 levels.
Carlos Abrams-Rivera : Yes. Let me -- it's Carlos here, Chris. Listen, what I would say is just building on some of the comments that Andre just mentioned is that as we think about promotional activity going forward, it really is about being surgical about how we invest those promotion dollars. Thinking through making them around event-based activity. So that way, we are thinking through how do we make sure that we are driving the best utilization of that particular event versus a price-based activity. And I think what happens then is it allows us to actually make sure we are focused in terms of driving positive ROIs. And I think if you -- as you heard from Andre, we have made a huge thrive from where we went to 2019, and we're not going back. In fact, when you look at some of our focus on improving the ROI of our programs, today, on average, if you think of 2022 versus 2019, we've actually tripled the level of ROI returns of our promotions from three years ago. So again, it is a signal that all the investments we're doing in terms of revenue management are agile still work in terms of better understanding how to read the data and how to utilize our funding is actually driving specifically better ROI in every funding that we're doing.
Operator: Our next question comes from Cody Ross with UBS.
Cody Ross: Just a quick question around your organic sales guidance. You guided 2023 organic sales growth of 4% to 6%. Based on wraparound pricing from 2022 and the incremental price that you discussed for 2023, we estimate that your volume growth assumption is flat to down low single digits. Is that correct? And then if so, what gives you the confidence that elasticity will remain so low as we move throughout the year?
Miguel Patricio : Andre?
Andre Maciel : Yes. Hi, Cody, thanks for the question. So as well noted, we are finishing Q4 growing about 10%. And we just have a new round of price that we just implemented. So that certainly has a positive effect in the first half of the year. We expect gradually throughout the year for us to be -- as we circulate the price increases from last year that we end up landing in the second half on something closer to our long-term growth algorithm, okay? Being said that, the growth in 2023 is all driven by price. So volume is still negative. Obviously, it improves throughout the quarters as we start to lap the prices. But even at the end of the year, will still be negative. That's something that as we think about the future, it's not the negative balance that we want. We want a good balance as we think about top line growth between price and volume. And we're going to talk a lot about that the next week in CAGNY. We have contemplated the guidance and increased level of elasticity compared to what we saw in 2022, but still not the way up to the historical levels. In terms of what gives confidence. So you saw the sell-out for the industry to our Q4 was still very strong. In fact, if you look at sell-out elastic, just looking at price and volume based on the sell-out, Q4 was better than any other quarter in the year. Now we obviously need to -- we need to keep actively monitoring and we are because throughout this year, we can see maybe consumers will change the behavior. Carlos, do you want to comment something on that?
Carlos Abrams-Rivera : The one thing I would add there, Cody, is the fact that we also are making sure that we continue to expand in terms of -- in the number of formats and price points that we offer within our categories to make sure we maintain the consumers that have been with us over the last couple of years. So that is -- means that if you look at the data, for example, in Q4, those earnings over $100,000 in consumers, actually with that particular group, we actually grew over 13% in terms of consumption. And at the same time, we're making sure that as consumers going to club, we are actually increasing the number of offerings, whether it's Mac & Cheese and JELL-O in terms of club and those consumers are going to dollar stores, we're actually improving the number of SKUs that we have available to them. So that way, there's a point in which they can come into the category and those who are choosing to look at value in terms of club sizes, we also have those formats. So it is for us to be agile in terms of how we think about the consumer continue to change, and we've been having an offer that provides the best value for them regardless of the socioeconomic situation.
Operator: Our next question comes from Ken Goldman with JPMorgan.
Ken Goldman : Just hoping to get a better sense of the magnitude of the gross margin improvement you're expecting this year. And besides the obvious ones in terms of the cadence of inflation, if there's any considerations we should have about maybe the timing from quarter-to-quarter of that improvement?
Miguel Patricio : Andre, please?
Andre Maciel : Hi, Ken. Good morning. Thanks for the question. You have seen that in Q4, we happened to have -- that we said we would have a relevant sequential improvement, which put us in Q4 in line with the 2019 gross margins. We expect in Q1 to maybe the gross margin to go a little bit down as we have contracts that are getting renewed and some inflation that was not passed over to us last year, now is going to affect us. And we had that contemplated in our guidance. But then -- but you should expect somewhere close to flattish in Q1 compared to prior year and from there you should start to see expansion on a year-over-year basis. In terms of a ballpark, you should think about 50 bps to 100 bps, so on magnitude of gross margin expansion, which that is what's allowing us to increase investments behind marketing, technology and people, which are so important to us.
Operator: Our next question comes from Pamela Kaufman of Morgan Stanley.
Pamela Kaufman : Can you talk about the competitive dynamics within your categories? In the prepared remarks, you indicated that private label share is increasing, but that is primarily coming from your branded competitors. So maybe if you could just elaborate on what you're seeing there? That would be helpful.
Miguel Patricio : Maybe Andre and Carlos can comment on that.
Carlos Abrams-Rivera : Sure. Let me start. Thank you for the question, by the way. As you saw, and let me speak for the North America business first, and then maybe Andre can give you his perspective over other company. We do see the continued share improvements as we continue to go forward. I mean, in Q4, you saw that misadjusted share actually improved by 20 basis points. And when you look at the market share that is now misadjusted in December, it actually was flat. And what we're seeing is that the bet that we're making in terms of continuing to invest in our businesses in terms of renovating our key products, making sure we're invest in innovation, make sure we invest in our marketing, that actually is paying us. So when you see that in terms of those particular platforms and brands that we want to continue to drive our growth are, in fact, driving the share improvements as well, whether that is in places like Lunchables, in places like Kraft Cheese, in places like Heinz Ketchup, Mac & Cheese, all those going to drive actually positive shares as you look at Q4. So for us is, how do we continue to make sure we're built on those. At the same time, that we are also making sure we have relatively the potential still some supply chain constraints that we have in a couple of categories. So for us, it's making sure that as we are driving the investments that we're making in the brands, that those are, in fact, already transferring into share improvements and now making sure that we are continuing to support the brands that are still a little bit challenged in terms of supply chain so that we can, in fact, unleash the continued growth of our retail environment.
Miguel Patricio: Andre, do you want to talk about is there anything you would like to add from an international standpoint on this question?
Andre Maciel : Probably the only thing is that we have to look a bit of different regions, right? Because I mean in Europe, indeed, the situation is a bit tougher from a private label perspective, growing more. I mean the price gap has been widening, although the private label has been put in price the same, but the gap has been widened. I mean, we have put a lot of initiatives in place like relaunching value brands where we are not like we didn't have to -- like HP being an example, that is in the fast process category. So -- and then also do a lot of activities in price spec architecture. So this is like -- it's really keeping us strong, especially versus branded competition. But then in the rest of the world, in emerging markets, specifically, you don't see that much of private label issue and we continue to gain share.
Miguel Patricio : Okay. Yes. Just to put it in perspective, retail in Europe is about 5% of our business, and that's what Rafael was talking about. I just want to add to these points that 2/3 of our growth are coming from emerging markets and from foodservice. And on these two channels, we continue gaining share and growing in a very, very positive way, double digit?
Operator: Our next question comes from Stephen Powers with Deutsche Bank.
Stephen Powers : Two questions. The first one is on service levels and fill rates. On Slide 16, you got -- you show how you've seen improvement in the fourth quarter, really every month within the fourth quarter. I guess question is -- number one on this is, just has that improvement continued into '23 thus far? And what have you really assumed sort of as the base case for '23 relative to the ultimate goal of getting back to the high 90s. Is that an assumption in the guidance? Or is that more of an aspiration to have some less than allowances in the outlook?
Carlos Abrams-Rivera : It's Carlos. Let me comment. So to give you a perspective, I guess, the way we see it kind of in North America, as you said, we are, in fact, seeing progress in our supply chain and our service level. In fact, when I look at December numbers, those were the highest service levels we had across the entire year. Now at the same time, we are still seeing the industry having continued to see some challenges, particularly upstream when you think about ingredients and some packaging materials. Now as we go forward, our goal is, in fact, to get to the kind of service levels that our customers and we did towards the end of the year. I think for us, what we are seeing is that the recovery in some of the ingredients and packages, it comes in very asymmetrical. So if you think about for us, we're still with the remnant of the avian flu and the impact that, that had in terms of the industry, in some of our business in and in places like in our cream cheese soft business where some packaging materials have been a challenge. And those -- so those are the type of things that now we're working through. It's places where, in fact, while most things are beginning to come in the terms of more stable supply chain, there are still a couple of places where we are seeing some of those kind of challenges. At the same time, our team is making sure that we are adapting to every situation that's happening. And I'll give you an example of that, which is, as you saw, the price of eggs go so high, we need to make sure that we also are adapting the products that go with eggs. So a product like Just Crack an Egg, we need to make sure we actually brought down the inventories to make sure that understand that consumers may not be having a reduced demand on that type of product. So we are both focused on how do we make sure we continue to drive that service levels towards the 98%, which is our goal. And then secondly is making sure that as we do that, we are agile in term responding to those specifically ingredients that may be challenged in the short term, but that we see improving significantly as we exit 2023.
Stephen Powers : Okay. Great. If I could follow up also -- sorry.
Miguel Patricio : Go ahead.
Stephen Powers : I was just going to ask if I could follow up on the elasticity point that you've been talking about. You also exited the year with elasticity sort of at their most favorable point, just kind of going off the data on Slide 9. You've obviously talked about assumption of those elasticities sort of normalize directionally through '23. I guess the question is just what's your base case assumption of the pacing of that normalization? And you talk about an ultimate assumption of not going all the way back to historical elasticity. So just how do we think about that as we expect '23 to be sort of the mirror image of '22 from an elasticity standpoint? Or any more color you can offer around that would be great.
Miguel Patricio : Andre?
Andre Maciel : Yes. So look, as we have said, right, we contemplated the guidance that elasticities gradually go back to the historical levels, and we expect historical levels in the guidance to be established towards the end of the year. And we expect Q1 to be the way that we contemplated now to be a little worse than it was in Q4, and again, it goes -- if you want to think about that linearly going back to historical levels towards the end of the year. There are obviously things that we keep a close eye on, like we are obviously fully aware and have put the actions in place on its net reduction in the subsidies, which is happening when that has implications and we are ready for that. So I mean we are monitoring each of those things, right? But we believe that elasticities will normally graduate back to the historic plans.
Andre Maciel: Carlos, do you want to say anything about the actions that you're taking?
Carlos Abrams-Rivera : Yes, I think for us, Andre said, we have seen this coming. So for us, it's making sure that we continue to provide great value to consumers regardless of the situation they're in. And I think as I mentioned earlier, for us, it is making sure we use kind of the full price size architecture in terms of options for consumers so that make sure that we also maintain them in the franchise. And that we talked about in terms of our promotion levels, we're using much more rigorous way in which we can understand the ROIs of investments so that consumers are looking for particular events, whether it's certain key holidays and so forth. We are present but in a way that actually allows us to be in a much more positive ROI than in the past. So it is part of what we see. And like Andre said, in North America, we have seen -- our stance right now is that by the end of the year, we'll go back to historical levels. And we are -- that's the way kind of rebuilding our guidance as we think about 2023.
Anne-Marie Megela: Operator, we will take one more question.
Operator: Sure. One moment for our next question. Our next question comes from Michael Lavery with Piper Sandler.
Michael Lavery : I just wanted to drill into your foodservice growth pillar a little bit more. In Slide 13 or 12, I guess it is interesting with some color here. Can you just unpack a little bit of how you're gaining share relative to competitors? Is it new items in existing customers? Is it broadening your distribution into new accounts? And -- is it -- are those customers gaining share? I'm sure there's some components of maybe a few different things. But what's the primary driver of outperformance there?
Miguel Patricio: Michael, we are having a great momentum in foodservice across the globe, both on U.S. and -- or North America and the international zone. So I will ask Carlos and then Rafael to comment.
Carlos Abrams-Rivera : Yes. And I would say North America, I would say, is -- in the items that you mentioned, it's all of them. So we grew in the Q4, we grew about almost more than 20%, and we actually gained share. And for me, the way I kind of look at it is the investments that we have put in place are paying us. So we have put new leadership in place. We have simplified our portfolio significantly, reducing almost 50% of the number of SKUs that we had only a couple of years ago. We have renovated our foodservice portfolio. We're bolstering kind of our sales team to make sure they drive distribution in the right places. And more importantly, we're also investing in capacity to make sure we support that growing demand. So as we look forward -- and just to give you a sense of the opportunity here is we still are only in 25 or top 50 QSR in the U.S. So we know that everything that we're doing continues to be an opportunity for us to further drive growth. And then going back specifically to your question is already what we have seen is that we are in fact expanding distribution across all areas of foodservice. We are winning with distributors. So we're actually expanding with key distributors at present. We're actually also expanding with no commercial accounts. So if you think about hospitalities and particular distributors who service those kind of non-commercial businesses, we have also made an effort against those, and those are working. We have expanded in new restaurants, with things like Fast Casual, think about from -- that is a type of restaurants that we actually have now increased the number of items we sell into them. And QSR, which continues to be a focus for us as a company. From Papa John to Pollo Tropical are places in which we are actually now expanding the number of SKUs we sell into. So it's an area that we continue to be bullish on, and we -- and why one of the places that we feel that we can be winning globally. And with that, I mean Rafael, if you want to build on the...
Miguel Patricio: Before, Rafael, I'll just build on one thing Carlos mentioned. One of the reasons of our improvement in growth as well is capacity. We've been investing throughout these years on capacity on foodservice, and we continue to do so. So now in May, we will have an extra 25% capacity in the U.S. on pouches and we'll have 50% more capacity on paper and squeeze, which are absolutely critical items for the growth of foodservice. With that in mind, Rafael, please go ahead.
Rafael Oliveira : Sure. Carlos, has been already said about our bright spot of foodservice. And I guess you'll see next week on CAGNY, we're going to go deeper on the reasons for success. But I would say two things that are adding up on the international front where we are winning. And indeed, they are growing a lot and winning big timeshare in foodservice. One is global partnerships. We're really leveraging our scale and then global capabilities to offer our partners like more insights and customized solutions. Remember, many times, we compete with local players, but we're having this global insight makes a big difference for us to test innovation on market and when successful scale up to additional markets. And we've been building this model and replicating consistently across the globe and itâs working really well. The second point is what we call the chef-led model. I mean that could be called our secret sauce, let's say, in foodservice. The strategy evolves around like talent chefs. I mean, basically, if you don't have a chef it's very easy to be on a discussion of price-led discussion basically transactional only. And when we bring our chef to the conversation, we're really partnering with the customers in different needs identifying menu concepts fit for their specific projects. And those two things, although sometimes basic, like the execution, the perfect execution of it is whatâs driving the foodservice. And just to remind within international foodservice still, although growing very strongly, it's 1/3 smaller as a percentage of the faced attrition than in the U.S. So although like we say size of the business comparable, we mean like we have a lot of room to grow in foodservice. So definitely, we hope we're going to continue to see very good strong success with this within the next quarters and years.
Miguel Patricio : Thank you, Rafael. On a nutshell, I would say that on foodservice, I think in the past, we were very transactional, and we define this as one of the strategic pillars for us for growth, and we've been investing on talent, with technology, on people, on portfolio and it's paying off. I mean we are very excited with that. Anne-Marie?
Anne-Marie Megela : Yes. So that will wrap up our Q&A session. Thank you all for your call. I am going to turn it over to Miguel for some closing comments.
Miguel Patricio : I just want to say that we continue to be very excited about what we are doing. We see our transformation evolving. The journey still very far from finishing but we are evolving every day. And why are we so excited? We are excited because we see the momentum building service level up, market share, especially in the growth platform is growing. Foodservice and emerging markets are gaining market share and with a great momentum. Second, we see a very different level of agility in our company. We have today a very agile organization that is able to change, to adapt, to predict much better than in the past. We are investing to grow. Gross margin expansion feeds investments in technology, in people, in marketing, in R&D. We are excited as well because we anticipated pricing and today, we have 99% of all our pricing for 2023 already announced. We have about 95% of our pricing already accepted, and we have about 90% already implemented. And so the way we see it, we'll continue delivering quarter-after-quarter year-after-year. With that, thank you so much for your attention, and I expect to see you on CAGNY next week. I think we have a lot of excitement to share with you. Thank you.
Operator: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.
