Good day, and welcome to the Altria Group 2015 third quarter earnings conference call. Today's call is scheduled to last about one hour, including remarks by Altria's management and a question and answer session. In order to ask a question, please press star followed by the number 1 on your touch-tone phone at any time. Representatives of the investment community and media on the call will be able to ask questions following the conclusion of the prepared remarks. I would now like to turn the call over to Ms. Sarah Knakmuhs, Vice President, Investor Relations for Altria Client Services. Please go ahead, ma'am.
Thank you. Good morning, and thank you for joining us. We're here this morning with Marty Barrington, Altria's CEO, and William Gifford, Altria's CFO, to discuss Altria's 2015 third quarter and nine-month business results. Earlier today, we issued a press release regarding these results. For a detailed review, please see the earnings release on our website at altria.com or through the MO Investor Relations. During our call today, unless otherwise stated, we're comparing results to the same period in 2014. Our remarks contain certain forward-looking and cautionary statements and projections of future results. Please review the forward-looking and cautionary statements section at the end of today's earnings release for various factors that could cause actual results to differ materially from projections. Future dividend payments and share repurchases remain subject to the discretion of Altria's board. The timing of share repurchases depends on marketplace conditions and other factors.
Altria reports its results in accordance with the U.S. generally accepted accounting principles. Today's call will contain various operating results on both a reported and adjusted basis, which excludes items that affect the comparability of reported results. Descriptions of these non-GAAP financial measures and reconciliations are included in today's earnings release, which is available on our website and via the MO Investor Relations. Now I'll turn the call over to Marty.
Thanks, Sarah. Good morning, everyone. We're pleased to report yet another strong quarter for Altria Group. We delivered outstanding performance in the third quarter and for the first nine months of 2015. We grew adjusted diluted earnings per share 8.7% in the quarter and 11.5% for the year to date. Each of our reporting segments has contributed to our strong earnings performance, especially the smokable product segment led by the terrific Marlboro brand. Let's begin there. The smokable product segment grew adjusted operating company's income more than 11% in the third quarter and over 13% for the first nine months. For the year to date, solid net price realization, the benefit from the end of the federal tobacco quota buyout payments, and higher volume continued to support double-digit adjusted OCI growth and good margin expansion.
The industry continued to benefit from near-term moderation in cigarette volume declines, which combined with PM USA share gains, resulted in strong volume results for PM USA. Reported cigarette shipment volume for the quarter was up 0.1%. After adjusting for trade inventory changes and other factors, PM USA estimates that its cigarette volume was unchanged in the third quarter. For the year to date, reported cigarette shipment volume grew 1.5% and PM USA estimates that its adjusted cigarette volume increased approximately 0.5% versus the year ago period. In line with strategy, Marlboro gained 0.1% of retail share in the third quarter and 0.2% for the year to date. Our investments in the Marlboro architecture continue to pay off. By all key measures, OCI, margin, price realization, volume, and share, our smokable segment is performing very well. Turning to the smokeless product segment.
USSTC delivered income growth and combined retail share growth on Copenhagen and Skoal. The smokeless product segment grew adjusted OCI 2.5% in the third quarter and almost 4% for the first nine months, primarily through higher pricing, partially offset by higher promotional investments and SG&A expenses. The iconic Copenhagen brand remained the fastest-growing brand in the category, with 0.8% of retail share growth for the first nine months of 2015. Thanks to investments in Skoal's equity and overall value equation, the brand's retail share declines continued to moderate. Our objective remains to seek combined share momentum on these two brands in this competitive category. The wine business continued its strong performance. Ste. Michelle grew OCI almost 13% in the third quarter and nearly 20% for the year to date, primarily through increased volume and improved premium mix. In innovative tobacco products, Nu Mark continues pursuing disciplined innovation in e-vapor.
We've seen encouraging trial on MarkTen XL, allowing us to expand our lead market presence. Nu Mark also continues its in-store evaluation of Green Smoke's retail positioning. We focused first on getting the product right, and we're learning a great deal about the adult tobacco consumer response. We're optimistic about these brands as we move forward. Of course, Altria continued to return cash to shareholders. We paid approximately $3 billion in dividends in the first nine months of 2015. Additionally, we raised our quarterly dividend by 8.7% in August to an annualized rate of $2.26 per share, marking our 49th dividend increase in 46 years. We remain focused on our target dividend payout ratio of 80% of adjusted diluted EPS. Our year-to-date results have been very strong, and we're happy with our progress against our full-year plans.
Thus, we reaffirm that we expect to deliver adjusted diluted EPS in a range of $2.76-$2.81, representing growth of 7.5%-9.5% from our 2014 adjusted diluted EPS base of $2.57. This guidance reflects expected moderated EPS results in the fourth quarter as compared to last year due to several factors we've discussed previously, including lapping the benefit from the expiration of federal tobacco quota buyout payments, lapping some of the effects of a stronger economy and lower gasoline prices, and a higher effective tax rate on operations. Additionally, trade inventories for cigarettes may moderate moving going forward, and unfavorable foreign currency translation could affect prior year comparisons of earnings from Altria's equity investment in SABMiller. Finally, let us provide you with a word on the proposed AB InBev combination with SABMiller.
We know there is a great deal of interest in this transaction, and we look forward to providing the details for us at the appropriate time. As I hope you can appreciate, we have to wait until final terms have been reached before doing so. Until then, here's a brief update and some background on this transaction. Earlier this month, AB InBev and SABMiller announced an agreement in principle on key terms regarding a possible transaction between the two companies. Yesterday, AB InBev and SABMiller jointly announced that the U.K. Takeover Panel has extended the relevant deadline until November 4, 2015. We're pleased to see this transaction moving forward and that the parties are reporting progress has been made, including AB InBev's completion of confirmatory due diligence of SABMiller, reconfirming the financial and other terms of the possible offer, and confirming the availability of financing facilities.
The extension gives AB InBev and SABMiller additional time to finalize the details necessary for AB InBev to announce a firm intention to make an offer for SABMiller. As you know, Altria has been a shareholder of SABMiller since 2002. Indeed, its largest shareholder. The SABMiller stake has provided us with access to the global brewing profit pool, diversified our business, contributed nicely to our long-term earnings growth, and strengthened our balance sheet. Of course, the approach we have always taken is to manage that asset for the best interest of Altria shareholders. We believe that combining the largely complementary businesses of SAB and AB InBev to create the world's largest brewer is a compelling opportunity. We're excited about the proposed transaction and are working constructively with the parties to complete the transaction. With that, I'll turn things over to Billy.
Thanks, Marty, and good morning, everyone. As Marty mentioned, stronger volume in the smokable product segment helped deliver double-digit adjusted OCI growth for the first nine months. When adjusted for trade inventory changes and other factors, PM USA estimates that industry cigarette volume was down 1% in the third quarter and 0.5% for the first nine months. In addition to retail share gains on Marlboro, L&M also gained share, allowing PM USA's total retail share to hit 51.3% for both the quarter and the first nine months. This represents an increase of 0.4 retail share point and half a retail share point, respectively, from the year-ago periods. Cigar volume growth also contributed to the smokable product segment's results. Middleton's reported shipment volume increased just over 1% in the third quarter and nearly 4% for the first nine months.
Contributions from Black & Mild Jazz and Casino helped Black & Mild grow its leading position in the high-margin cigar segment. In fact, Black & Mild Casino was recently recognized by CSP Magazine as the 2015 retailer's choice Best New Product in the cigar category. In total, the smokable product segment increased adjusted OCI margins by 2.7 points in the third quarter to 47%. For the year-to-date, adjusted OCI margins in the smokable product segment expanded 2.8 points. In the smokeless product segment, USSTC reported shipments increased approximately 1% in the third quarter and 2% for the first nine months. We estimate that smokeless industry volume has grown approximately 2.5% over the past six months. In both the third quarter and for the first nine months, Copenhagen and Skoal grew their retail share on a combined basis.
In the third quarter, higher pricing was partially offset by higher promotional investments and SG&A expenses, resulting in adjusted OCI margins contracting 1.1 percentage points to 63.8%. For the year-to-date, adjusted OCI margins narrowed a tenth of a percentage point to 64.5%. In the wine segment, reported shipment volumes have remained robust, growing at nearly 9% in the third quarter and over 6% for the first nine months. OCI margins expanded eight tenths of a percentage point to 21.7% in the third quarter, and over two points to 21.7% for the year-to-date. Additionally, Altria recorded reported equity earnings from our SABMiller investment of $187 million in the third quarter and $546 million for the year-to-date.
Finally, you'll remember that we completed our $1 billion share repurchase program early in the third quarter, and that our board authorized a new $1 billion program, which we expect to complete by the end of 2016. That wraps up our results. Marty and I will now take your questions. While the calls are being compiled, I'll direct your attention to altria.com. Along with today's earnings release, for your reference, we posted a list of quarterly metrics to include pricing, inventory, and other items. Operator, do we have any questions?
Thank you. Once again, as a reminder, if you would like to ask a question, please press the star key followed by the number one on your touchtone phone at this time. Investors, analysts, and media representatives are now invited to participate in the question and answer session. We will take questions from the investment community first. Our first question comes to the line of Bonnie Herzog with Wells Fargo.
Good morning, everyone.
Morning, Bonnie.
I have a two-part question on Marlboro. First, could you talk a little bit more about your new Marlboro line extension, Marlboro Midnight, how that brand will be positioned relative to the rest of the Marlboro portfolio? Second, I'd be curious to hear more about your new MHQ app and your goals for this new technology.
Thanks for those questions. I think they both represent good examples of how Marlboro is innovating at the core of our business. We talk about innovation in the innovative product side, but it's important to remember that innovation is everywhere. Boy, at Marlboro, you see it all the time. Marlboro Midnight is the latest innovation under the architecture. It will come out in the Black family. It is a unique and a bold menthol for Marlboro and should help Marlboro participate in the growing menthol category. Has a very differentiated and unique pack. It's going to be supported with beautiful POS to raise awareness among adult smokers, we'll position it as a new and exciting product in the Marlboro family, particularly for menthol smokers. We're excited about Midnight, and I think it's off to a good start.
I think it's going to hit wholesale, if I recall, Bonnie, in mid-November, and it'll be retail a couple of weeks after that, you'll be seeing it there. On the digital side, we continue to see strong innovation as well. We now have mobile couponing. As you know, that coupons can be delivered to adult smokers' smartphones. It's a tremendous step forward in terms of efficiency and meeting adult smokers where they are. That's now available nationally. We have launched a MHQ app. It's available on the two large app platforms. It's responsibly done, age-verified, and it'll be a place for the brand to connect again with adult smokers in a very innovative way in the digital space. We're excited about both those innovations.
No, that makes a lot of sense. Just to clarify on the app, is the goal there to increase customer engagement? Could we also see more efficient promos and maybe a reduction in expenses because of this app rollout?
All of the above. What we're trying to do is connect the brand to its adult smokers, and the app obviously gives us another way of doing that in addition to all the other marketing tools that the Marlboro team is doing such a good job with.
Okay, that's helpful. I have a question on your smokeless business. You generated higher pricing in the business, and then Copenhagen volume was strong, but margins were down a bit. Could you talk about some of the dynamics at play here, and then how sustainable this better pricing is with share gains for Copenhagen? Skoal still seems to be quite weak and underperforming, so any updated plans to turn this around?
Sure. Let me mention one or two things, and then I'll ask Billy maybe to comment on the cost side. Actually, we're pretty spot on strategy in the smokeless business, I would say. Our strategy there is to grow our income by growing volume in line or better if we can, with the category. Of course, the category volume has picked back up again. We estimate about 2.5%. Actually, you see Copenhagen and Skoal combined doing a little bit better than that at about 2.9. Copenhagen is growing, you're right, and Skoal doesn't grow share. I would point out that I think we've begun to moderate the share. If you look at it sequentially, it's at 19.8, I think, if you look at the year-to-date number, Bonnie.
Boy, I tell you, we're glad to have 20 share points of Skoal business in this category that has 65% operating margins. Skoal can always work harder. It's got to compete with both Copenhagen and its principal competitor. We're pretty pleased. I think they're having a solid performance. There maybe Billy can comment on your cost question. Sure, Bonnie. If you look at it on a year-to-date basis, you can see margins are basically flat, as Marty mentioned, right around the 65% margin base.
When you look at a quarter-to-quarter comparison or a shorter period of time, you can see fluctuations based on the timing of expenses flowing through. Again, I think if you look at it on a year-to-date, the margins are very high compared to other consumer products categories and virtually flat.
Okay. Thank you, everyone.
Thanks for calling in, Bonnie.
Our next question comes from the line of Michael Lavery with CLSA.
Good morning.
Hi, Michael. Good morning.
Could you just talk about your market share momentum a little bit? You're still getting the modest momentum on Marlboro, but also a very strong lift from discount. Just how do you prioritize that or balance that? Obviously, you don't want to turn away discount share, but certainly your focus has always been on Marlboro. What are some of the priorities there and have you seen any sort of changes? This is the first full quarter since the competitor's transaction closed. Are you seeing any different competitive landscape? Obviously, it looks like L&M is still going quite strong.
Yeah, sure. Good questions. We have not seen any changes, to take the last part first. We do want to modestly keep momentum on Marlboro. You've heard us say this before, Michael Lavery, call it a tenth or two tenths, maybe a year, and you can see that year to date, that's exactly where we are on Marlboro. Our focus is on premium. 90% of those shipments for PM USA are premium, but L&M has a role to play, and what it does is it can piece nicely in the discount space without growing it. The industry as a whole is moving more towards premium, what you see is that L&M is basically consolidating share out of the other discount players. It works spot on strategy for PM USA. That's been the strategy, and that's how we're still thinking about it.
Okay, great. Just to follow up on Bonnie Herzog's question about Midnight, could you just maybe give a sense of magnitude or how maybe it compares to something like Rich Blue, which was another new extension in the menthol segment, but seems to have been a little more limited in scale. I think Rich Blue had a geographical, a regional focus. Is this national or does it have any geographical focus, and is it priced similar to the rest of Black at the introductory level, or does it have a different price point?
Yeah. It's going to be national. We'll do some special price promotions to go along with the POS so that we can promote trial. Again, in this category, where you don't have a lot of the traditional marketing tools, the place where you have to meet adult smokers to let them to try new products is at retail. We'll have some price promotions there. Basically, Michael Lavery, it'll be the same strategy. We want them to try the brand, we want them to be aware of it, and then obviously, as these brands get traction, we can dial back the promotions so as to pursue our strategy of maximizing the income out of this category.
Just in terms of scale, would this likely be a bigger opportunity than something like a Rich Blue, or can you put any context around what you might expect from it?
Well, I won't get ahead of our skis on that except to tell you that we're very excited about the brand. I think it's a terrific product. I think the package looks fabulous, and I think it's going to be very exciting for adult menthol smokers to try, and we're hopeful of getting conversion from competitive smokers.
All right. Thank you very much.
Thanks for calling.
Our next question comes from the line of Vivien Azer with Cowen and Company.
Hi, good morning.
Morning, Vivien.
I wanted to also follow up on the new Marlboro line extension. Sorry to belabor the issue. I was just curious, given that one of your key competitors had to pull a couple of SKUs out of the market because the FDA did not deem them to be substantially equivalent, whether this is innovation that's already grandfathered in or was marketed as a different Marlboro variant being transitioned from a packaging perspective.
Yeah, I don't want to get too tactical about how we bring our products to market under the FDA regime, we are confident that we are fully qualified to bring that product to market.
Okay, fair enough. On the inventory levels, obviously, the market share momentum has been good and easing industry volumes are certainly, I think, helping. As I look across your wholesale inventories, they've been growing sequentially for about 8 quarters now. I'm just curious to hear your thoughts on kind of what the right level of wholesale inventories is as we think about potential unwind in the fourth quarter.
Well, they go up and down over the course of the year. They usually smooth out for us over the course of the year for PM USA. We do have this trend this year, of course, where the volume declines have not been proceeding at the same pace as before. There's been probably a little bit of disruption there. Vivien, if you look at the quarterly comparisons in Q3, there's not much to say about that. They look to have about the same effect. You're right, they are a little bit higher at the end of Q3 than they were at the end of Q3 last year. That's why we've called out in our release and also in our script that they may moderate in the fourth quarter.
Perfect. Thank you. Billy, just one for you. I recognize currency has been a challenge for a lot of multinationals for quite some time. As I look at the SABMiller numbers this quarter, in isolation, I appreciate the drag from currency, as I look across prior quarters, it feels like kind of there was like a currency catch up or I'm just having a hard time understanding why there was such a big hit this quarter that we hadn't been seeing given where the dollar's been trending for over a year now.
Sure. Thanks for the question, Vivien. I think you have to step back first, I'd just put in context of the overall Altria enterprise. When you think about the earning streams that we have, we have very limited impact to foreign currency exposure. Specific to SAB, you're right. The primary driver there is foreign currency, it's really the strengthening of the dollar against their various emerging market currencies as well as currencies around the world. That is something that we've experienced year-to-date as well as in the third quarter, I think it's very reminiscent of what you're seeing with other global companies.
Nothing in particular to call out in 3Q for SABMiller?
Nothing in particular, no.
Okay. Thank you.
Thanks for calling.
Our next question comes from the line of Owen Bennett with Nomura.
Good morning, guys.
Hi, Owen.
Hey. I just wanted to get your views on cigarette industry volumes for the year. Obviously, a bit of a slowdown into the second half, which you said was to be expected, but I was just wondering your views on how you see volumes for the full year now. You noted the stabilization in smokeless industry volumes now, which is encouraging. I was just wondering how you see the smokeless category trending from here. Thanks a lot.
Okay. Thanks for the question. Year to date, our estimate of industry volume decline is down a half. That obviously is a difference from what the historical trend has been of somewhere between 3%-4%, and we'll just have to see going forward what the effect is going to be. Historically, the long-term trend is more like 3%-4% on the smokable side. On the smokeless side, several years ago, the industry volume was growing at five-ish, and then it fell basically to nothing, and now we're trending back up, where our estimate for the latest six months is about two and a half. It's good news that the volume has come back into the category. Probably the principal driver there is that tobacco consumers continue to try different tobacco products throughout the categories.
That probably explains the greatest part of the change in the volume trend there. We're glad that the volumes are back.
Okay. Thanks a lot.
Thanks for calling.
Our next question comes from the line of Judy Hong with Goldman Sachs.
Thank you. Good morning.
Hi, Judy. Welcome.
Billy, I actually do want to go back to Vivien's questions about the equity income, because I still can't reconcile why the third quarter was down so much more than what we had been seeing in the first half of the year. It just doesn't seem to jive with the first half. You were down, I think, in the low single digits on a year-over-year basis, and then in the third quarter, that drop off was much more significant. I know there's a little bit of a sensitivity around what you can say about that performance, but just anything that we should be aware of just in terms of the third quarter impact?
No, Judy. I basically would reiterate what I said to Vivien. I think when you look at it really is primarily driven by the currency impacts that you see in other global companies. Anytime you look at a short-term period, you're going to see those fluctuations through time. I think if you look at it over the long term, it's very similar to what you're seeing with other global companies with currency impacts. Thanks for the question.
Okay. Then maybe just in terms of fourth quarter guidance, I know you talked about the comparison getting a little bit tougher. Obviously, the FX, it sounds like it's going to be another drag in terms of the fourth quarter. If I just looked at your smokable products segment in the fourth quarter last year, though, it doesn't look like the profitability comparisons are that much tougher. Is this really more of an FX issue? Are any other investments that we should be thinking about in the fourth quarter if you do get some volume upside that potentially you're looking to reinvest back the upside into any of those initiatives?
No, I wouldn't read that into what we've said. Honestly, the factors that we think are going to cause the moderation are called out in the release and in our remarks this morning. We're lapping a very significant effect from the quota. We believe that even though the adult tobacco consumer is doing much better, we are lapping the period where they got the effect towards the back end of last year in terms of gasoline prices and the like. It's nothing more than that.
Got it. Okay. Thank you.
Thanks for the questions.
Our next question comes from the line of Matthew Grainger with Morgan Stanley.
Hi, good morning, everyone.
Hi, Matt.
Hi. Two questions. First, I wanted to come back to smokeless. I guess the level of net pricing was a bit higher than what we've seen recently, both in absolute terms and on a year-on-year basis. This sort of comes against a backdrop of still somewhat choppy category growth, and we've talked in the past about the factors playing into that.
Yes.
I'm fishing a little bit here, has there been any shift in the way you're thinking about that balance between volume and pricing realization in that business over the near term?
No. The strategy remains the same. When I look at the pricing, it's up on a per can basis about 3%, call it, for the quarter. Actually, if you look at it year to date, Matt, it's about 2%, 1.9% or something. Naturally, we're happy to have the pricing there, with a category with 65% operating margins and where we've got more than 50% of the share, we're trying to grow income principally through volume gains.
Okay. Thanks, Marty.
Yeah.
Just two questions on vapor. One, we've seen more volatility in e-cigarette category growth, at least in measured channels recently, and I know it's hard to gauge, but do you have a sense of the level of growth that we're seeing in the overall vapor category to the extent you can track that?
Yes
Secondly, just on deeming, have you had any dialogue with the FDA recently to get a sense of, not so much on timing, but any shift in their thinking as they're working toward a final rule on the deeming of other tobacco products?
Okay, thanks for the questions. Good ones, both. The answer to the first question is e-vapor growth has slowed down this year. We had triple digit gains, year-over-year a couple of years ago, then 50%-ish last year, and it's obvious that while the category continues to grow, it's not growing at anywhere near that rate. With respect to deeming, we know that the reg, as you know, has gone to OMB. We do not have any insight into what they took on board. I know there were lots of comments, including ours that were filed, in respect of the proposed deeming regulation. We don't have any insight into what they've sent over.
Okay, great. Thanks, Marty.
Thanks for calling.
Our next question comes from the line of Chris Growe with Stifel.
Hi, good morning.
Hi, Chris.
Hi. Just had two questions if I could. The first question, I know you had mentioned that you've seen very little change in the competitive dynamic in the category, but you have two competitors going through and selling in new retail contracts, and a lot of that comes to fruition here in the fourth quarter. I'm just curious if you've seen any change at the retail level from that. Are you seeing retailers potentially making some significant change in the shelf space and that kind of thing? Any opportunity then for Altria is what I'm trying to get to.
Okay. The answer is we really haven't. Just to frame this out, this isn't the first time that there have been changes in the industry. Naturally, everybody competes really hard at retail, Chris, so everybody's got a lot of experience with their trade programs. We've evolved our trade programs for 2016. We've obviously anticipated that there might be changes, and I think we're well-positioned to compete there. We haven't observed a lot yet, to answer your question directly.
Okay. I just had just a follow-up to Matt's question on vapor and kind of two-prong question, one being that MarkTen XL is expanding beyond select categories. Does that mean it's going national? Will we see this across the country, or is it just a slow methodical build from here? Maybe related to that then, how your promotional tactic has changed in the category, just given the category has slowed and we're lapping the initial launch of the product last year. Are you changing your promotional tactic now and maybe focusing more so on profitability than on pure trial of the product?
Yeah. The answer to both questions, the word I would use is disciplined. We're very happy with how MarkTen XL is performing. We were in lead markets, as you know, and then we've had a terrific consumer response there. What we're going to do is with discipline, we're going to roll it out into some additional lead markets through select accounts and learn more and try to get wider awareness and distribution of MarkTen XL. We're very encouraged about the consumer response to MarkTen. We'll do that in a disciplined way. I would say on promotions, it's the same thing. We have to get the product right. You have to listen to the consumer. You want to build awareness and trial, but you certainly don't want to overspend, particularly I might note in a category where the growth has slowed.
We'll be very disciplined about how we do that. It's a place where we want to play. Our aspiration is ultimately for leadership. This is an emerging product category. We want to do it with a lot of financial discipline.
Okay. Thank you for the time.
Thanks for calling, Chris.
Once again, if you would like to ask a question, please press the star key followed by the number one on your touchtone phone. Our next question comes from the line of Todd Duvick with Wells Fargo.
Yes, good morning.
Good morning.
A quick question for you on the balance sheet. I've noticed your debt has been going down the last couple of years, and your leverage is in really good shape, one and a half times. It's also declining. Can you talk about, are you wanting additional capacity on the balance sheet for something like a share buyback or acquisitions, or is this a change in financial policy and just deciding to operate at a lower leverage level?
Yeah. Thanks for the question. When we look at the balance sheet and our debt levels, we feel like we're in a good range, currently where we're at. We're always assessing the financing needs of the enterprise. When we make that decision that we want to go to the market, we look at market conditions and other factors to decide when we'll go. No, there's no change in our financial strategies, their policies, and we feel good about where we're at.
Okay. I guess, just related to the Anheuser-Busch SAB transaction, I think that you would be due some cash in the door from that transaction. Any ideas as to potential use of those proceeds?
I think it's too early for us to be talking about that. As I mentioned in our remarks, I just don't want to get ahead of a deal that has not been announced as to its final terms. If you can forgive us, we'll just hold off on that until that happens.
Fair enough. Thank you.
Okay. Thanks for calling in.
Thank you. At this time, I would like to turn the call back over to Sarah Knakmuhs for closing remarks.
Thank you everyone for joining the call this morning. If you have any follow-up questions, please contact us at Investor Relations.
Thank you. This does conclude today's conference call. You may now disconnect.