Greetings, and welcome to the General Mills third quarter fiscal 2022 earnings Q&A webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded on Wednesday, March 23, 2022. I would now like to turn the conference over to Mr. Jeff Siemon. Please go ahead.
Thank you, Frank, and good morning, everyone. Thanks for joining us today for our Q&A session on third quarter results. I hope everyone had time to review our press release, listen to our prepared remarks, and view our presentation materials, which were made available this morning on our investor relations website. As a reminder, beginning this quarter, we are reporting results under a new segment structure. You can find supplementary information on our website that shows our historical net sales and segment operating profit results recast for this new segment structure. I'll also remind you that in our Q&A session, we may make forward-looking statements that are based on management's current views and assumptions. Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call.
Joining me this morning are Jeff Harmening, our Chairman and CEO, Kofi Bruce, our CFO, and Jon Nudi, Group President of our North America Retail segment. Let's go ahead and get to the first question. Frank, could you get us started, please?
Thank you. Ladies and gentlemen, if you would like to register a question, please press the one four on your telephones. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. One moment, please, for the first question. Our first question comes from Andrew Lazar with Barclays. Please proceed.
Good morning, everybody.
Morning.
Morning, Andrew.
Andrew.
Great. Thank you. Jeff, maybe if we put aside General Mills's comments from CAGNY around sort of 3Q expectations and such, I guess the bottom line is the company still raised its full year outlook above, you know, above where that initial sort of set of company forecasts were prior to the start of 3Q, despite a very tough environment. I guess a twofold question on that. First, what do you think enabled that? Because I think there's, you know, has been still ample industry skepticism around, you know, the industry's ability to sort of deal with the current environment as it is.
More importantly, you know, I know you're not gonna give, you know, sort of detailed guidance for next year until next quarter, but do you think this dynamic of managing through this can hold as you move through fiscal 2023? Because the concern I hear from many investors really is that, you know, the industry is just sort of kicking the can down the road, so to speak, about when the impact of, you know, of certain things like costs, particularly in light of recent global events, will ultimately catch up to the group. That would be my question. Thank you.
Andrew, as I think about this year, I mean, you know, importantly, we ended the Q3 with momentum. The reason we ended with momentum is because our service levels improved. As a result, our volume improved more than we had thought, even before we went, you know, going into CAGNY. As we look at the fourth quarter of this year, I think it's important to realize we're still gonna have inflation. In fact, inflation in the fourth quarter will be higher. Our pricing will also be higher in the fourth quarter. In line, you know, Q3, our inflation, our pricing was in line with what we expected, and so we feel as if we have a good handle on both those items.
What's really driving the improvement in the fourth quarter is just a little bit better volume than what we had anticipated, given given service levels a little bit higher. We're also seeing, you know, a lot's been made of elasticities. I mean, it's a pretty benign elasticity environment right now, which is not to say there's no elasticity. Certainly, as prices go up, there will be some level of elasticity, but it's also important to note that it's not in line with historical elasticities, given this current environment. Our raise on the fourth quarter really is confidence in our underlying assumptions around inflation and pricing. We are, as we said, mostly hedged on commodities through the calendar here, which obviously includes the fourth quarter.
Inflation and pricing, you know, we saw the pricing we thought we would get through, and really has increased confidence in our ability to service the business in the fourth quarter. Now, our service levels won't be as they have historically been. We're not anticipating getting all the way back to that. As you look at 2023, I mean, it's a pretty volatile environment. You know, usually, as you well know, Andrew, we don't comment even on hedging. We don't comment past, you know, past the current fiscal year. But these are unusual times, and we thought we'd give a little bit of color into what we have hedged through the calendar year.
What our hedging really does is it mostly buys us time. We'll have inflation in our fiscal 2023. We'll have a significant inflation in fiscal 2023. It just won't be at the level of the spot prices, at least through the calendar year that you see now in the market.
Our next question comes from Ken Goldman with JP Morgan. Please proceed.
Hi. Thanks so much. I wanted to just ask specifically on pet for the margin, you know, I think dropped to its lowest level since you bought Blue Buffalo. Can you talk a little bit about what caused the pressure in terms of input costs? I assume that those are, you know, here to stay for a while. I think you also mentioned higher SG&A. I'm just curious, how do you think about the potential for pricing to start offsetting some of these headwinds? When do you expect sort of the bottom in that margin to be reached? Just trying to get a little bit of a better sense for how to view that progression.
Sure. Ken, I'll take that. This is Kofi . Thanks for the question. One of the important things to also think about here is the impact of pet brands on pet margins. That is dilutive to the margins this year. There's some specific one-time charges related to purchase accounting flowing through and weighing on the margins as well. We expect as we both bring that more fully into our production system and get it online for HMM, that we'll see those margins improve on the pet brands business. Acquired brands.
On the acquired brands. Excuse me. As we step forward, we expect the gap between inflation and pricing to close. Pet will be a meaningful contributor to the pricing step-up we expect in Q4.
That's great. Thanks a lot, Kofi. Appreciate it.
You bet.
Our next question comes from Michael Lavery with Piper Sandler. Please proceed.
Thank you. Good morning.
Good morning.
I appreciate just even a little peek under the tent for fiscal 2023. I guess, maybe I'm pushing our luck here, but would love just to know when you say you've got some coverage, you know, through calendar 2022, it's still noted that there's significant inflation. If things are where they sit now, if that holds, would that be an acceleration in inflation or does the coverage give any moderation? Maybe just order of magnitude, what you're seeing as far as a little bit of a further look ahead.
Yeah. Michael, thanks for the question. Yeah, you might be pushing your luck a little bit. I think it's fair to say we expect the inflation to be significant. I wouldn't wanna go much further than that. I think our expectation at this point in the year would be or normal policy would be to be about 50% hedged, which is the prospective idea on why we guided you to calendar 2022. The goal here is to buy ourselves the time to get actions lined up and in the market, and frankly, to give ourselves time to read whether or not we see the inflation as being structural.
Okay. Thanks. That's still helpful. Maybe just a follow-up. On the service levels for pizza and dough and snack, you said you kinda really pushed to get more out the door in the last couple weeks of the quarter. Short period of time, but your margin performance was still quite good in North America Retail, relatively speaking, with fairly modest sequential and year-over-year declines compared to what we've been seeing. Was it just the pricing that really drove that, and obviously it was significant? Or is there some other things going on that are just good to keep in mind for how we think about your momentum and margin outlook in that segment?
Yeah. I'll start and then I'll ask Jon to provide any color if I miss anything. I think you've got it mostly right. We saw pricing actions come in in the quarter, probably towards the middle to tail end of the quarter. As we go forward, we'd expect that to be a meaningful step up in this segment as well as a meaningful contributor therefore to the step up for the total company. On top of that, as Jeff referenced in his comments on the first question, we expect service levels to, you know, perform closer to in line with what they had been trending prior to the quarter.
I think the combination of those two things is what gives us a good portion of the confidence that drove our guidance raise.
Yeah, I think that's exactly right. Again, pricing and service are the two big things that we're focused on across NAR. Maybe I'll spend just a minute, go a little bit deeper on service. Obviously that's been a big challenge for us this year, and it's really evolved as well. At the beginning of the year, it was really about our distribution centers and logistics. That was the bottleneck. We've done a nice job of staffing distribution centers up and feel good about our ability to move product now. The biggest issue we're seeing is really around material disruptions, so ingredients coming into our plants to run our products. In Q3 was particularly challenging, particularly in RBG, pizza and hot snacks with things like fats and oils and starch and packaging.
We spent a lot of time really working as a team to improve on those platforms. We've seen an improvement in our case fill and on-shelf availability, but our service levels are still, you know, quite a bit below historical levels. We target 98%-99%. We were in the 70s overall for Q3. We expect to get better, but not near historical levels. We expect to be in the 80s as we go into Q4. We've taken lots of actions. Really proud of the team. You know, the supply chain team is doing a yeoman's work, and it's really, you know, one business team working together. We've pulled many levers. We've started up control towers, you know, on a daily at the working team level.
On a senior level, we're meeting once a week on things like RBG and hot snacks and some of our other constrained platforms just to make sure that we're removing hurdles. We're, you know, at the senior level, getting on the phone with suppliers at senior levels to make sure that we're getting prioritized for ingredients. We've adjusted formulations on some of our products. We've reformulated over 20x year to date. Every time you make an ingredient change, you have to change the formulation, which is obviously a lot of work by our ITQ teams. We adjusted freight lanes, as well, pretty significantly to make sure that we can get to our customers on time. We've added capacity on things like Old El Paso, fruit, cereal, Totino's. We're adding ESC. We're spending a good chunk of our time making sure that we can service our business.
We did better, I think, as we ended the quarter. We've got a lot more work to do, and we will stay very focused on that.
Okay, really helpful. Thanks so much.
Our next question comes from Robert Moskow with Credit Suisse. Please proceed.
Hi. Thank you. Just a couple of quick ones. Jeff, can you talk a little bit about your plans for capacity expansion in this calendar year? I believe you're adding more in refrigerated dough. I wanted, you know, some more specifics there and see if there's any other categories that you're gonna expand in. Then secondly, I wanna know in the flour milling grain merchandising business, do you expect any kind of benefits from dislocation in the grain markets? Thanks.
Rob, on the two questions, in terms of capacity expansion, you know, I probably won't go product line by product line. However, I do appreciate the question. What I will say is that we are certainly willing and will be spending capital to expand capacity on a few of our lines in the coming year. Really, the businesses that we'll spend money on are the ones that performed well pre-pandemic and, you know, continue to have momentum during the pandemic, and there are actually a number of those. What you'll see from the company in the coming year is that we will expand capacity on several of our major businesses.
I will probably give an update at the end of the year on where we then tend to do that. Your question is a fair one, and just know that we do, you know, our first call on capital is investing in our current business. We have momentum on a number of businesses that we had pre-pandemic and we have during the pandemic. In terms of the question about flour milling and dislocations, I mean, I don't know that we're gonna see any benefits. Having said that, I think we'll have full supply on, you know, on our grain milling businesses. We're world-class in that. We've been milling flour since 1866, so we have a pretty long history of being able to do that effectively.
Our next question comes from Steve Powers from Deutsche Bank. Please proceed.
Hey, thanks, and good morning, everybody. I guess you performed well on HMM cost savings despite the supply constraints that you've been talking about. I guess I'm curious just to what degree you know you think that HMM cost savings momentum can you know continue but may actually be able to accelerate to some degree as those supply constraints abate, and you're able to focus more on so-called business as usual conditions hopefully into the new year. Just some commentary around HMM would be great.
I appreciate the question, and I'd love for business as usual conditions tomorrow if you've got that in your powers. Look, I think our expectation is HMM is a core capability for us. We've been at it as a discipline really since close to the start of this century. We've been pretty consistent delivering mid-single digit cost productivity off of it. I don't have any concerns about our ability to keep doing that.
What I would expect is that if and when, or when, I should say, we get to, and it's hard to say when that is, when we get to more stable conditions, that we'll be in a position that HMM will be the lever that allows us to shed a lot of the operating costs that we put on in this environment due to disruption. What that'll do is allow us to bring our margins, our gross margins back up as a result of the SRM actions that we've taken in this environment to deal with the extraordinary inflation.
Yes. Great. Okay, thanks. If I could, just on a totally different tack, just on pets. I'd love your perspective on how you expect the category broadly, I mean, your brands specifically, but the category broadly, you know, high-end premium pet care, pet food to hold up if we enter a more adverse consumer environment. Just how you think that category, you know, has evolved and solidified itself to be able to persevere through a cycle.
Yeah. Steve, this is, you know, it's we anticipate the category will continue to perform well, and we think that our segment will continue to perform quite well. You know, even through the last recession, which was a long time ago, one of the things before we even bought Blue Buffalo, we looked at how the category performed during a recession, and it turns out it performs very well. The last thing you wanna do in tough times is suboptimize what you're gonna give your pet. I would tell you that on top of that, the predominant trend in pet food now, and I think will be going forward, is the humanization of pet food.
We're clearly very well positioned in that area, given that we're the, you know, the number one natural pet food in the pet category by a long, long way. We believe we have the best brand and the best part of a really good segment and a really good category that holds up well during recessions. By the way, as a result of all those things, it has very low exposure to private label.
Great. Very good. Thank you so much. Take care.
Thanks.
Our next question comes from Bryan Spillane with Bank of America. Please proceed.
Thanks. Thanks, operator. Good morning, everybody. My question's around elasticity, and I guess wanted to just get two perspectives on it. Jeff, I think in the prepared remarks you mentioned. There's a mention about the sort of expectation that this elevated level of demand, you know, is. You expect it to stick. Is part of that just a function of now given where inflation is, just an expectation that, you know, consumers just be eating more at home. We've kind of shifted from being at home because of COVID to now eating more at home because it's so expensive to go out. And then maybe just the second point, maybe from Jon Nudi. Anything that you're seeing now in terms of like cross elasticities between channels.
Are consumers making different choices in terms of maybe avoiding you know food stores and/or or convenience stores or just anything that's going on between channels as we're just watching this the pricing set in? I know there's a lot there, but we'd appreciate it. Thank you.
Thanks, Bryan. This is Jon. Maybe I'll tackle pricing largely here, and I'll get to elasticity in just a second. Obviously, I mean, I talked about supply chain, pricing, the other, you know, subject we're spending a lot of time on. We do believe that we're pricing effectively within the market. For each brand that looks different. One of the things I'm really proud of is the SRM capability or Strategic Revenue Management capability we've built over the past five or six years under Jeff's leadership. Our SRM plans look different for every brand and really go down to the SKU level. It's an always on capability. We're looking at what's coming at us from an inflation standpoint. We're looking at what's happening in the market, and then we're leveraging the full SRM toolkit.
That's Carload, Advances, it's Trade Optimization, Pack Price Architecture, and Mix. In the U.S., our measured data, our average unit prices are up a bit more than our categories, and that's really where we wanna be. In many cases, we're the leaders in the category. We feel like it's on us to make sure that we have clear pricing strategies. At the end of the day, our goal is to pass as little as needed, but certainly with inflation, we need to take pricing at this point to preserve our margins. We work closely with our retailers. We know pricing is never an easy discussion. You know, everyone is facing inflation, though.
Again, if we can walk in and provide good rationale for why we're taking the pricing and more importantly, a coherent plan for what pricing will look like in market, we've been able to find good acceptance and more importantly, good reflection in the market. It's been a big focus area for us. I feel great about what we've done to date, and we've got a roadmap for each of our brands and down to the SKU level for the future as well if more pricing is needed. In terms of elasticity, I mean, Jeff touched on this earlier. I mean, we are seeing elasticity, again, it's not like we're not. It's just not at historical levels. We've seen the elasticities remain pretty consistent quarter to quarter. What we saw in Q3 was consistent to Q2.
We expect that to be the case in Q4. Now granted, we're gonna have more price mix in Q4, so expect to see a bit more elasticity as a result, but again, not back to historical levels. In terms of what's happening, you know, across segments and categories and channels, there's obviously a lot of noise in the data, everything from product availability to consumer mobility to government support levels and significant inflation away from home channels. It's really hard to try to parse it out, but we'll continue to try to do that. Again, elasticities have remained constant. That's the important thing to remember, and not at historical levels as well.
Okay. Thank you.
Our next question comes from Alexia Howard with Bernstein. Please proceed.
Good morning, everyone.
Morning.
Morning, Alexia.
Morning. Could I ask about marketing and innovation? Obviously, there's so much disruption going on in the industry. You've talked about supply chain issues starting to be resolved. I can imagine there's a lot of fires to put out right now. But on the underlying marketing, it sounded as though SG&A was down this quarter. Does that mean that the marketing spending was down? Is that likely to remain that way until things get easier on the supply chain? On the innovation side, has that also had to be ratcheted back just because of the current state of play out there in the world? Thank you, and I'll pass it on.
Alexia, you know, I really do appreciate that question. This is Jeff. I think the key to remember is that, you know, we've gained market share in more than 60% of our categories for four years in a row. There's a reason why we've done that, is that that's because we really haven't cut back on marketing spending or our levels of innovation. In fact, our levels of new product innovation have led most of our categories, all over the world, and we've actually increased our marketing spending over time. You know, you can't just turn on and off marketing spending on brands and have those brands be effective, and the same will be true of innovation.
Through this whole pandemic, one of the things we see is that companies that come out of rough periods like we have been through, the ones who invest in their brands, whether that's new product innovation or whether that's marketing, are the ones that are successful. With regard to the latest quarter, the reason our SG&A is down, the number one reason is that our admin costs are down. Our marketing spending is down just a touch, but that really is a reflection of a very short period in time. Broader picture, we've continued to innovate, and we've continued our marketing, and that's the reason why we're growing share, pretty much everywhere in the world.
Our next question comes from Laurent Grandet with Guggenheim. Please proceed.
Hey, good morning, everyone. I'd like to come back a bit on pets and pricing, because that's a question I've got from many investors. First, then what is the price, what is the mix in pet food in the third quarter? What if you can maybe net of all those too. Are you seeing pet parents trading down to smaller bag size? As we have seen for some of the brands. Anything you could share on price elasticity, again, as it's one of the major concern specifically for that business and from investors. Finally, could you please update us on the split between mass retail and e-commerce and pet specialty in pet and what are the dynamics here?
Thank you.
Sure. This is Kofi. I'll start with the front part of the question on price mix. Just to give you the sense here, we saw about seven points of price mix on pet in the quarter. Our expectation is that we'll see that step up as we go forward into Q4. I think the rest of your question was about the channel split, which we may have to get back to you just to verify. I don't have that at my fingertips. Do you have it, Jeff?
Yeah. I think, Laurent, I mean, you know, broadly, the channel splits we're at about a third, a third, a third across food, drug, and mass. Probably a little bit higher in food, drug, and mass, now maybe closer to 40%. Then e-commerce and specialty, maybe about 30% each. In kind of broad terms, that's roughly where we are from a channel. I just wanted to
Yeah.
To correct Kofi's comment on, he was looking at maybe on the reported number. On the for pet on an organic basis, price mix was plus 13% in the quarter. That's a you got a combination of pricing, which, you know, was. We did have some pricing go into the market in the quarter, so we only have a partial benefit of that in the quarter. Then some mixed benefit as, you know, you heard us talk about at CAGNY, our Tastefuls launch, for instance, on wet cat food, you know, on a price per pound basis. As you know, both treats and wet food are advantaged relative to dry, and those are growing faster for us, both from Tastefuls as well as from the acquired brands that we've had here recently.
You know, you, Laurent, you asked a couple other questions, you know, more detailed questions. In terms of elasticity, the pet category is relatively inelastic. Even in recessionary periods, it's relatively inelastic. You asked about pack sizes. One of the things we've seen is that demand has been so strong in the pet category, and we anticipate it going forward. You know, consumers really are buying what they can find on the shelves. Whether that's wet food or whether that's dry food, the availability really is driving consumer acquisition at this point. There's really not a trade down in pack sizes or a trade-off in pack sizes. Availability is the key because the category is so strong, and we believe it's going to remain strong.
As we said in our kind of opening remarks, as we look at the fourth quarter, our pricing will catch up to inflation, which will have a positive impact on our pet margins in the fourth quarter.
Our next question comes from Chris Growe with Stifel. Please proceed.
Thank you. Good morning.
Good morning, Chris.
Just had two quick questions. The first would just be, maybe one for Kofi. As we think about this pricing cost dynamic and inflation picks up, so there's going to be double digits, I should say, in the fourth quarter, the pricing's accelerating as well. Obviously, that's reflected in the guidance. Should we expect the same kind of gross rate of change in gross margin year-over-year? And therefore it should improve sequentially, but should it be down still year-over-year? Just trying to get some order of magnitude there. I had a second question, I think maybe more for Jon. On the undershipment in North America Retail, you had that three-point gap you called out. Does that quantify the sales shortfall in the quarter from the service issues you had?
I guess also I'm curious about rebuilding inventory. Are you still hoping to do that? Should you be shipping ahead of consumption theoretically to keep up with demand here? Thank you.
Okay. Let me take the first part of your question. I expect the price mix step up to be meaningful. You know, obviously embedded in our range, if you do the squeeze on gross margin would be absolutely a sequential improvement, and the possibility obviously of a gross margin increase year-over-year.
On the shipments versus consumption question, Chris, U.S. net sales did lag Nielsen measured retail sales growth by 3 points in the quarter, as you mentioned, really driven by the service issues on RB&G pizza and hot snacks. We don't expect the shipments to lag sales in Q4. We also don't expect to rebuild inventories in Q4, and that's really reflected in the guidance. If we can do a bit better and service levels improve, we might be able to rebuild a bit. But that likely will push into fiscal 2023, where we hopefully can get back to more historical inventory levels.
Our next question comes from Ken Zaslow with Bank of Montreal. Please proceed.
Hey, good morning, guys.
Morning.
Morning.
I just wanted to dig a little deeper into the elasticity question. You said that there's been a little bit of elasticity. Is it a similar level across all your categories or is there a spectrum of elasticity where certain categories are showing zero elasticity and some categories are showing a greater variability of elasticity? Can you talk about either the spectrum or if it's flat?
Yeah. This is Jon Nudi. You know, it's for us and for no one alone, we compete in over 25 different categories. We have pet obviously in the U.S. and in our global businesses. I can tell you every category is reacting differently. We are seeing elasticities that vary. There's not a single category that has zero elasticity, though. When you take price, and particularly the levels of pricing that we're seeing due to the heightened inflation, there are elasticities for sure. Again, there are changes between categories, but at this point, we are seeing elasticity in everything. As I mentioned earlier, though, those elasticities are generally holding. Again, they're not increasing, they're not getting towards historical levels. They're holding at lower levels than what we've seen in the past.
Okay. My second question is, on data analytics, can you talk about the speed to which the real-time data analytics? You know, the idea that, you know, the service levels came back quicker, is obviously a positive. Was it in your understanding how quick it came back? Were you able to understand that it came back in real time or was there a lag in the understanding of when it actually occurred? Just kind of figuring that out. Is this real time data? Is your data analytics on real time data analytics improved, changed or stayed the same? I'll leave it there, but appreciate it.
Yeah. Related to data analytics, I mean, this one I think was pretty simple. At the end of the day we had, particularly on RB&G, pizza and hot snacks, more demand than supply and was really focused on getting as much as we could out of our plants. The big issue again was not so much capacity on those platforms, it was getting the ingredients to get our lines running, literally 24 hours a day. As we got towards the end of the quarter, we put a full court press. Our teams did a great job and we were able to pump out significantly more volume than what we had originally thought. We shipped that, you know, directly to customers.
Again, through our distribution centers in some cases direct to our retailers. As a result of that we were able to see some stronger sales to end the quarter in our. Again, it really wasn't a data analytics thing, it was more about just our ability to run product and again, our supply chain did a terrific job really significantly improving a bad situation.
We have time for one more, Frank.
Our next question comes from Nik Modi with RBC Capital Markets. Please proceed.
Yeah, thank you. Good morning, everyone. Just two quick questions on the consumer. You know, you guys talked at CAGNY about meal prep fatigue, so just wanted to see if you have any more evolved thoughts on that and what you've been seeing. Then I guess, you know, given what's been happening with inflation and just thinking about the consumer, would you guys agree with the statement that, you know, perhaps the low income consumer is gonna, you know, maybe go into a quasi-recession, you know, sooner rather than later, just given what's going on with all the external pressures? Or, you know, is that not the way you see it?
I guess I would start by saying, I mean, I think our success is gonna be determined by how fast we can pivot as witnessed by Jon Nudi's latest comment about supply rather than our ability to predict exactly what's gonna happen in the future. I mean, I'm not trying to be opaque on purpose, it's just there are so many moving pieces. You know, we have some people returning back to the office, yet demand will be at greater than pre-pandemic levels for quite a while. There is a possibility of recession, but it's certainly not here yet. There is going to be inflation, but how much that inflation is a couple quarters from now is yet to be determined.
You know, the state of the consumer and, you know, their financial wellbeing, their consumers are in a good place now, how's that gonna look for 2, you know, 2 quarters from now is difficult to say. You know, I think our ability to be successful over the last couple of years has really been predicated on not our ability to determine what's gonna happen next, but our ability to react with what's happened next. That's what I feel great about. You'll see that in Pet, you see that in North America Retail, you see it all over the world. As we think about the future there are a variety of outcomes that are possible. I will tell you there've been a variety of outcomes over the last few years and we've been successful through all of them.
We're confident that whatever comes at us next, we'll be able to deal with that at least as well as our competitors, if not perfectly.
Great, Frank. I think that's all the time we have today. Appreciate everyone following along and appreciate the good questions this morning. Please feel free to reach out to the IR team if you have follow-ups today. Otherwise, wish you a good day and we'll talk next quarter.
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.