Good day, welcome to the Nomad Foods Q4 2018 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Taposh Bari, Head of Investor Relations. Please go ahead, sir.
Thank you, Carrie. Thank you all for joining us to review our Q4 and full year 2018 earnings results. With me on the call today are Chief Executive Officer, Stéfan Descheemaeker, and Chief Financial Officer, Samy Zekhout. Before we begin, I would like to draw your attention to the disclaimer on slide two of our presentation. This conference call may make forward-looking statements that are based on our view of the company's prospects at this time. Actual results may differ due to risks and uncertainties, which are discussed in our press release, our filings with the SEC, and this slide in our investor presentation, which includes cautionary language. We will also discuss non-IFRS financial measures during the call today. The non-IFRS financial measures should not be considered a replacement for, and should be read together with IFRS results.
Users can find the IFRS to non-IFRS reconciliations within our earnings release and in the appendices at the end of the slide presentation that is available on our website. Finally, please note that certain financial information within this presentation represents adjusted figures for 2017 and 2018. All adjusted figures have been adjusted for exceptional acquisition-related and share-based payment and related expenses, all comments from here on will refer to those adjusted numbers. With that, I will hand the call over to Stéfan.
Thank you, Taposh, thank you all for joining us on the call today. Earlier today, we reported Q4 and full year 2018 earnings results. Highlights from the Q4 include organic revenue growth of 4.2%, representing our strongest quarter of the year, with solid contribution from both volume and price. Adjusted gross margin of 29.9%, in line with our expectations as gross margin expansion in the base business was offset by acquisition mix. Adjusted EBITDA of EUR 101 million, represent an increase of 23% year-on-year. Adjusted EPS of EUR 0.29 per share, representing growth of 7%. Q4 performance exceeded our guidance, capping a strong end to 2018, which marked a second consecutive year of low single-digit organic revenue growth, market share gains, and double-digit adjusted EPS growth.
Importantly, Q4 performance reflected broad-based strength across the portfolio with 10 of our 13 countries in growth. The innovations that we launched in the back half of 2018, namely Veggie Power, Pulses, and Plant Protein, have been very well received by the trade and with strong early signs of consumer acceptance. We are also pleased with the progress that we are making on acquisitions as we continue to not only integrate Aunt Bessie's and Goodfella's, but also strengthen our capabilities to be a best-in-class acquirer and integrator in years to come. Both brands are posting strong year-on-year revenue growth with performance ahead of plan, paving the way for another good year in 2019. Finally, our business results continue to drive strong cash generation, reducing our profile leverage to 3.8x as of year-end, and providing us with a flexible balance sheet to accommodate accretive capital deployment.
Overall, we are quite pleased with these results, which continue to reflect the power of brands and the level of focus and determination throughout the entire organization. Looking back at the performance of our company over the past two years, I can say with confidence and with pride that investments that we have been making in our people, our brands, and our culture are paying off. The strategic prioritization of our core power SKUs, strong execution of our commercial plans, and a cost-conscious mindset are combining to drive margin accretive growth while helping fuel our future. We have achieved eight consecutive quarters of organic revenue growth since implementing this strategy, resulting in 3.9% organic revenue growth in 2017 and 2.6% growth in 2018. During each of these years, we gained market share in a growing category while achieving increases in both price and volume.
These results demonstrate the strength of our brands and product offering, the sustainability of our growth model, and the durability of our portfolio. Looking out to 2019, I would like to provide you with a few of our top priorities. First and foremost, we expect to deliver another year of top and bottom line growth in line with our long-term growth algorithm, which begins with low single-digit organic revenue growth. Consistent with the trend that you have come to expect from us over the past two years, growth in 2019 is once again expected to be driven by our core portfolio, also known as our must-win battles. These categories account for approximately 70% of our sales, carry the highest growth margin market share within our portfolio, and have the greatest headroom for growth.
While we have made good progress on our core, there is further opportunity to increase penetration through continued execution of our growth model. We will look to build on the innovation that we brought to market in 2018 by further developing our pipeline in line with consumer trends, notably health and wellness, convenience, and sustainability. The trade acceptance to our recent launches has been strong, with equally encouraging early feedback from our consumers. We have exciting plans to further develop our pipeline in 2019, including the launch of Plant Protein products in the U.K., a new line of artisan breadcrumb coatings in our fish portfolio, and further modernization of our vegetable offerings. We expect to deliver another strong year of cash flow in 2019 through a combination of EBITDA growth, working capital efficiency, and strong overall discipline around cash use.
We're happy to see leverage below four times, which we expect to decline further throughout the year based on the free cash flow we expect to generate. This leaves us with plenty of flexibility to pursue our M&A ambitions as we see fit. Finally, we will maintain our discipline and focus as we look to successfully navigate another year of raw material inflation, as well as a potential Brexit. I'll first comment on inflation and then provide a few words on Brexit. As we indicated last quarter, the cost of fish is increasing due to a combination of supply and demand factors. This has led us and the rest of the industry to raise price. We continue to maintain a constructive dialogue with our trade partners, who are observing similar dynamics in their private label businesses.
At the same time, we continue to invest in our brands, elevate the frozen food category, and develop our net revenue management capabilities. While it's still early in the year, we expect our advancement in these areas to enable us to successfully navigate raw material inflation in 2019, just as we did in 2018. Before I turn the call to Samy, I would like to provide some updated thoughts on Brexit. As a reminder, the U.K. represents 30% of our sales on a pro forma basis, with more than half of their sales produced within the U.K. at our factory in Lowestoft. While the final outcome of Brexit remains uncertain, there are some elements that are fairly clear to us. First and foremost, our business model is compatible with the post-Brexit world.
We have the scale, agility, and levers to successfully adapt to Brexit and are prepared to take action as the situation gains clarity. Second, we have the necessary contingency plans in place to manage the risk of near-term disruption in the event of a no-deal Brexit. Specifically, we have a concrete action plan to ensure uninterrupted service to customers. This includes building additional safety stocks ahead of March 29th. While a no-deal Brexit scenario would likely lead to higher product costs during the short term as a result of WTO tariffs, it would also result in higher prices. Our brands are in good health, and we believe we are well-equipped to navigate this scenario. In summary, we're very pleased with the results that we reported this morning, have strong momentum in our business, and are excited to deliver another year of growth in 2019.
With that, I will hand the call over to Samy to discuss our results in more detail and provide our initial thoughts on 2019 guidance. Samy?
Thank you, Stéfan, and thank you all for your participation on the call today. Going to slide six, I will provide more detail on our key Q4 operating metrics, beginning with revenues, which increased 21% to EUR 650 million, driven by 4.2% organic revenue growth and 17.1 percentage point from the acquisition of Aunt Bessie's and Goodfella's. Foreign exchange translation offset revenue growth by 0.5 percentage points during the Q4. Adjusted gross margin was 29.9%, declining 160 basis points year-on-year. Base business gross margin expanded 20 basis points, driven by volume mix and price, which more than offset COGS inflation and some residual effect from a poor harvest. The 20 basis points increase in the base business was offset by 180 basis points of acquisition mix, which we expect to moderate in 2019 as the acquisition enter the base and commercial initiative are realized.
Moving down to the rest of the P&L. Adjusted operating expense increased 8% year-over-year, primarily due to the inclusion of acquisitions. Within operating expense, A&P increased 10%, and indirect expense increased 7%. Adjusted EBITDA was EUR 101 million, representing 23% growth versus the prior year. Adjusted EBITDA margin of 16.4% compared to 16% in the year ago period due to the aforementioned factors. Adjusted EPS was EUR 0.29 for the quarter, an increase of 7%, reflecting underlying EBITDA growth offset by higher finance costs in Q4, mainly due to phasing. Turning to slide seven, I would like to review the P&L highlights for our full year 2018 results. Revenue increased 11%, driven by 2.6% organic revenue growth and 9.4 percentage points from acquisitions. Foreign exchange translation offset revenue growth by one percentage point during the year.
Adjusted gross margin was 30.3%, declining 30 basis points primarily due to the effect of acquisition mix of 110 basis points. Adjusted operating expenses increased 5% as disciplined expense management in our base business helps fund investments in A&P. Absolute growth in OpEx was largely driven by acquisitions. Adjusted EBITDA increased 15%. We achieved 50 basis points of EBITDA margin expansion ending the year at a margin of 17.3%. And finally, we delivered adjusted EPS of EUR 1.19, which grew 19% year-on-year. We are pleased to have reported full year EBITDA and EPS ahead of our prior guidance. Turning to cash flow on slide eight, we generated EUR 291 million of adjusted free cash flow during the year, representing 99% adjusted operating cash flow conversion.
Factors contributing to the free cash flow in 2018 included Adjusted EBITDA of EUR 36 million, a working capital inflow of EUR 32 million, CapEx of EUR 36 million, cash taxes were EUR 33 million, and finally, cash interest and other was EUR 48 million. We are pleased to be reporting another year of strong cash flow generation. Before turning to guidance, I would like to spend a moment providing you with some background on IFRS 16. This is a new accounting standard on leases which came into effect on January the 1st of this year, and whose impact will become apparent in our financial results beginning in the Q1 of 2019. For those of you familiar, this rule is similar but not exactly the same as the lease accounting standard which companies following U.S. GAAP are affected by.
We have summarized the impact of IFRS 16 on our financial in 2019 on slide nine. Beginning in 2019 and the Q1 to be specific, we will be required to capitalize operating leases onto our balance sheets. After IFRS 16 will have a few effects on our P&L. First, it will increase EBITDA by approximately EUR 15 million due to the effect of the lower lease expense, which will be offset by higher depreciation and interest expense charges. The impact on gross profit and SG&A will be relatively minor as this is effectively a reclassification out of lease expenses and into D&A and interest expense. Please keep in mind that the actual impact of IFRS 16 will depend on leases that we enter and terminate in 2019, making this figure best estimates which may be subject to change.
When netting all of these factors, IFRS 16 is expected to be approximately EUR 5 million dilutive to pre-tax profit and EUR 0.02 dilutive to EPS. With that, let's now turn to slide 10 to review our initial 2019 guidance, which includes the aforementioned impact of IFRS 16 and is based on foreign exchange rates as of February 26, 2019. For the full year 2019, we expect the following. Organic revenue growth at a low single-digit percentage rate, which assumes moderate category growth and continued market share expansion. Adjusted EBITDA of approximately EUR 420 million-EUR 430 million, which includes the anticipated benefit of EUR 15 million as a result of IFRS 16. When stripping out IFRS 16, Adjusted EBITDA is expected to grow 8%-10%, reflecting growth in the base and contribution from acquisitions.
Adjusted EPS in a range of EUR 1.28-EUR 1.32, which approximately includes EUR 0.02 of dilution as a result of IFRS 16. Implied in our 2019 full year guidance are the following. Base business gross margin are expected to increase for the year, offset by negative mix from acquisition in Q1 and Q2 until we anniversary a full year of ownership mid-year. For the year, operating expense are expected to grow roughly in line with sales. Finance costs are expected to be approximately EUR 70 million, including approximately EUR 5 million related to IFRS 16. We expect an effective tax rate of 21% and are modeling a share count of 176 million. Finally, there are some quarterly variation that we anticipate in 2019, which I would like to bring to your attention for modeling purposes. As you may know, Easter falls three weeks later this year versus last.
This will result in shipments phased from Q1 to Q2 versus a year ago, shifting an estimated 2% of organic revenue growth from Q1 to Q2. Second, on a consolidated basis, we expect year-on-year A&P growth to be greatest in the Q1, with growth moderating throughout the year and declining in Q4. Taking all of these factors into consideration, we expect Q4 to represent the highest quarter in both absolute EBITDA and year-on-year growth. That concludes our remarks. I will now turn the session over to Q&A. Thank you. Operator, back to you.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Andrew Lazar with Barclays.
Good morning, everybody.
Morning, Andrew. How you doing?
Good, thank you. In thinking about organic growth in the Q4, obviously quite a bit stronger than we, and I think most, had modeled. Volume was very solid. The real upside, if you will, to organic was the pricing piece, as that comes through. It was good to see, obviously, volume remain positive in the face of that pricing. I guess two questions on this. One is, what does that suggest to you all about elasticity? Is that running broadly in line with what your thoughts or expectations had been, or perhaps is it a bit more positive?
As additional pricing comes into play, as you go through 2019, in light of some of the inflation you're facing, would you expect that sort of dynamic to continue, or would we think the organic growth that you get in 2019 becomes increasingly pricing led versus volume? Thank you.
I would put it that way, Andrew, elasticity, it's a bit too early in 2018. However, obviously, we started to implement some price increases. Definitely the bulk of the price increase is on the shelf in 2019. Talking about in 2019, what we've seen so far is early signals in terms of price elasticity is good. I would put it that way. It would be a bit premature in 2018. The more important thing is obviously quarter by quarter, you can have some spikes here and there. What really matters for us is obviously the low single-digit organic revenue growth that we have in mind. Yes, Q4 was very strong. This being said, what really matters for us is to go throughout all the quarters with that kind of algorithm in mind. Back to price elasticity, so far so good.
I would put it that way.
Okay. Thanks for that.
Does that answer your question?
It did. That's helpful. Thank you. Just from a full year perspective, when we think about the type of flexibility that may be in the model, I'm trying to get a sense of how much, if any, incremental potential Brexit costs that you may have built into the model. Is it that you built in some of the contingencies that you've been or that you will take, but obviously if something goes to the, whatever, the worst-case scenario, I would think that's not built in fully, of course, to the type of guidance?
Correct.
Just a little more clarity.
Correct. The no deal, what everybody calls the no deal is not in our guidance because by definition, nobody knows, starting with the politicians, nobody knows exactly what that really implies. We obviously have some ideas, but it's really premature. At the same time, we are, in any case, in terms of Brexit, yes, we're preparing ourselves, and in terms of inventory, in terms of the capabilities and all these things. We have incorporated a bit of cost no matter what, because we have to be prepared, that's with or without any deals. The good news for us is overall in the no- deal Brexit scenario is our brands are doing extremely well. We know that obviously if there is a no deal, there will be tariffs, and those with the strongest brands will obviously be the best equipped in terms of price increase.
Yep. Great. Thank you.
We'll take our next question from Steve Strycula with UBS.
Hi, good morning, and congratulations on a good quarter.
Thank you.
Stéfan, curious operationally, it sounds like both of the acquisitions that you recently acquired are tracking ahead of plan. Is that purely distribution growth, or is there something you're tactically doing in the marketplace that is leading to that revenue performance there? What innovations do you have planned for those businesses for 2019? I'll stop there, but I have a follow-up afterwards.
Yeah. I think to start with, you are absolutely right, that was part, by the way, of our plans. We knew that by incorporating these two brands together with the Birds Eye, it would lead to obviously additional listings. You have just to start with the initial reaction from the trade. Trade told us, fine, we like this idea of incorporating these brands because if you do what you have been doing with the Birds Eye, I think it can only be a win-win. With the trade, in the field, we see the difference. That's really the first piece. In terms of improvement and all the rest of it. The first manifestation is with these two additional brands. They really have embraced this must-win battle strategy, which is about focus.
It means also, by the way, that we are defocusing some pieces of the portfolio and that they understand what it means, which is good news. They see that it's starting to pay off. In terms of the rest of the flywheel, which is obviously improved packaging, improved quality, improved innovation, and advertising, it's on its way. More to come probably in Q2 and Q3.
Okay. A quick follow-up on the EBITDA bridge that you guys outlined today. Should we think about, is there any synergy factored into that assumption net of the investment spend you would put behind those brands? Again, maybe cost synergies net of the advertising spend you'd put back into the brands. Is any of that baked into guidance? I'll pass it on.
Yes. It is baked into the guidance.
We'll take the next question, Carrie.
We'll take our next question from John Baumgartner with Wells Fargo.
Good morning. Thanks for the question.
Hi, John.
Samy, I'd like to drill into the outlook for the 2019 EBITDA a bit more broadly because I think we've been expecting another step up in brand investment for the portfolio, and then obviously the Brexit contingencies are there as well. Could you maybe just outline where you see the margin support in terms of synergies versus lean manufacturing versus shared services or anything else going on there? Just your progress overall.
Yeah. As I mentioned in the remarks, we're expecting effectively margin growth over the year. The one element about the investments that we are carrying now in the portfolio is we are really building up on the synergies and the cost-saving program that we have put in place in order for us to extract funding to self-fund our intervention. The source of funding are around leveraging, if you want, our strategies as defined. I mean, net revenue management is definitely providing an upside in many areas, whether it is going to be about pricing, whether it's going to be about mix, which we then can use to reinvest. Supply chain productivity is another one.
The other piece is we continue the effort in the area of indirect, where we are now the ability to implement some important projects that are effectively fueling again to the growth through efficiency that we are now generating.
Okay. Stéfan, just to follow up, I also wanted to touch on the agreement with Ocean Beauty for the U.S. market. Can you go into the details there on that a bit, just in terms of entering with Findus into food service and moving on from there? I guess in terms of the numbers, how do you think about profitability in the U.S. versus Europe? I guess also to what extent is the distribution factored into your organic revenue for 2019?
Let's face it's a starting point. Findus brand is a global brand, which is good news. Apparently, it has a good recognition in the U.S. It's going to be well-priced more as a good high-quality product. For the rest, quite frankly, John, it's too early to say. I would say it's early investment in the U.S., which is a huge market. At this stage, I wouldn't take too much out of this. It's an encouraging start, but much more to be done, obviously. For us in terms of export, U.S. is one piece. We also believe that we have a lot to do in some of our neighboring countries, like Central and Eastern Europe, where things like the Captain, for example, has a high recognition, and potentially also Middle East.
Again, back to export, we're also trying very hard to focus behind a limited number of countries, which was probably not what it was in the past.
Excellent. Thanks for your time.
You're welcome.
We'll take our next question from Jon Tanwanteng with CJS Securities.
Good morning, gentlemen, and a very nice quarter.
Thanks .
Maybe to start.
Within your guidance, how much impact are you expecting from a no-deal Brexit?
At this stage, zero. Basically, it's impossible to have a clear definition of what it's going to be. As I said, even as the politicians, they have no clue. We're working very hard, obviously, in terms of how it would entail and all these things. What we know, which is good news, is our model provides us with the right level of agility and flexibility to move within the next two years to fully adapt ourselves to whatever now this Brexit would be, and in terms of price, in terms of footprints, in terms of dealing with co-packers, and all the rest of it. Level of preparedness for the near term is high. That's very clear. The priority number one for us is to make sure that we're going to be able to supply them.
We've added a significant number of weeks ahead of what we already have, additional inventory. Don't be disappointed by the end of the quarter if inventory is increasing. The working capital obviously will have to adapt itself, but we're doing this for the right reasons.
Got it. That's helpful. Any color on Q1 sales, just now that we're two months in? How are the markets doing, the new products being accepted in the market?
Well, it's in line with our expectations at this stage and in line with our algorithm.
Okay, that's fair. Finally, just a little more color on the pipeline and your capacity for acquisitions now. I know you've been working your leverage down very nicely. How do the valuations and the number of opportunities look in the pipeline compared to, say, 90 or 180 days ago?
To your point, I think in terms of ratio, we're moving in the right direction. 3.9 is fine. We know that we'll be significantly lower by the end of the year, which is good, which again, creates the additional M&A opportunities for us. This being said, we will keep our discipline. The first piece for us is organic growth, and second is obviously, synergy. Let's say acquisitions need to be fully in line with our strategy. The priority number one is to reinforce our position as the leader in the category of the frozen food industry in Europe.
Great. Thanks, Stéfan.
We'll take our next question from Bill Chappell with SunTrust.
Hi, this is actually Grant on for Bill. Thanks for taking the question.
Yes.
Was just wondering on the innovation, and the consumer that's kind of been buying the innovation, especially the vegetable and plant-based protein. Are you finding that that's a consumer that's bought your brands in the past? Is that someone that's new to the frozen category? I guess trying to get at, are those kind of incremental sales to your other branded sales, or is that somebody maybe switching to a different option?
I think the answer is that it's going to be both, I would say. We definitely are, let's say, innovating to target new users. Attracting new users is going to be very important, particularly millennials that are very interested by all of these new vegetable forms. That's going to be really one of the areas of focus. The other element is I think for our existing user base, is provide them with a broader range of the portfolio. They like our brands, they consume our brands, and we have a wider range, and I think it's good for them as well to have access to a broader range.
Got it. Then I guess just one other question on kind of the commodity outlook. Obviously, you said fish is up this year. Is that specific to certain species? Is that across the board? Any other outlook to maybe the crop so far this year? Thank you.
Yeah, it's across the board. Most of the species are up. I mean, on fish for sure.
Got it. Thank you.
We'll take our next question from Robert Moskow with Credit Suisse.
Hi, thank you. Congrats on a great year.
Thank you.
I wanted to know, I think in your opening remarks, you said that list prices are in place now, list price increases are in place starting in Q1. I think you also said that discussions are ongoing with retailers regarding price. Does that mean that you are looking at taking more pricing during the course of the year? I don't know, maybe you've touched on this already, but is there a lag in Q1 between price and inflation? When do you think that lag would be caught up?
Thank you, Robert. Maybe I wasn't clear enough, actually. Sorry for this. Overall, we are, let's say, in line with our expectations, and our expectations is that in some countries, we would have all our price ready by the end of the year, even before. In some other countries, it will take more time. Structurally, that's always the same in Europe. You have countries like U.K., which probably you can put it in place in, as I said, in Q4, and in countries like France, for example, structurally, you have to wait until the very end of Q1, which is what we have. Overall, we're very much in line with our expectations. We're getting there overall. Some countries obviously went faster than expected. Some others went a bit more slowly than expected. Yeah, I think it's in line with expectations.
What's important to say is also in the countries where we already put some prices, let's say again, early signals, and that you can imagine it's something that we are monitoring very closely. We're checking the price elasticity. Elasticity seems to be moving in the right direction. Again, too early to say, and absolutely crucial for us.
Okay. As we try to model your gross margin, and I know there's some noise with the acquisition, which is dilutive, should we assume that, I don't know, that your gross margin eventually catches up and levels out because it looks like you have a couple of factors in the first couple of quarters that are diluting it, and then does it catch up eventually? If so, should we then be modeling most of the leverage from the SG&A line to get to your 8%-10% EBITDA growth?
Yeah. Let me take that one. The fact is that I think our gross margin overall, as I had mentioned for the year, will be up. In total, it's going to be up for the base, actually, just to be very clear.
Okay.
In total, our gross margin in half one will be down in total, and it's going to be up in half two. Okay? You're going to see the effect of the acquisition indeed, playing off from that perspective. It's the mix driven by the acquisition.
Okay. Understood. Thank you very much.
You're welcome.
Once again, that is our signal for a question. We'll take our next question from Brian Holland with Consumer Edge Research.
Thank you. Sorry. Good morning. Good afternoon, where you are. Quick housekeeping question on the uptick. Forgive me if you touched on this earlier in finance costs in Q4. What was that tied to?
It's probably due to phasing of accounting, and that's probably it, I mean, overall. There's nothing to be concerned for the year ahead.
Okay, perfect. Thank you. Most of my questions have been answered, but did want to ask a follow-up around the pricing component on the fish side. Is it too early or do you have a sense? Is the competitive landscape fairly in lockstep with you with respect to what they're pushing through, such that you're pretty comfortable with where you're positioned on the other side of that? Is it fair to assume everyone's moving with you guys directionally?
The answer is yes. Because everybody's confronted with the same issue, which is obviously price. I mean, COGS are really increasing.
Okay. Last one from me. On the plant-based side, which seems to have been a really successful launch for you. I'm just curious, what's the competitive landscape there like? Are you a first mover in the sub-segment that you're playing in there? How crowded is that? How much room do you feel like you have to expand over time, sort of, in that niche state, if you will?
Actually, we definitely believe it's a category that has a great future. That's one thing. Definitely, our brand will play well with this category, together with our distribution, obviously. When you think about it, Plant Protein, which is even better, it's a pea protein for us, which I would argue is even better than some other vegetables. We're definitely very confident that even if, to your point, a lot of people are starting to get in, we have what it takes to be the number one in the category.
Thanks so much. That's it.
It plays all the right trends in terms of health and wellness, sustainability, and all these things, together with frozen food, by the way.
Understood. Thank you.
You're welcome.
That concludes today's question and answer session. At this time, I would like to turn the call over to Mr. Stéfan Descheemaeker.
Thank you for joining us on the call today to review our Q4 and full year results. We're pleased to have reported a second consecutive year of growth and have an ambitious agenda ahead of us in 2019 to continue our journey. Thanks to the investment that we've been making in our brands and the collective effort of our nearly 5,000 employees, I'm proud to say that we're well-positioned to deliver another year of performance in line with our long-term growth algorithm. Thank you, and I look forward to updating you on our Q1 results in May.
This concludes today's call. Thank you for your participation. You may now disconnect.