Earnings Call: Q3 2018

Nov 8, 2018

day, everyone, and welcome to the Nomad Foods Third Quarter 2018 Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Taposh Maury, Head of Investor Relations. Please go ahead, sir. Great. Thank you, operator, and thank you all for joining us to review our Q3 2018 earnings results. With me on the call today are Chief Executive Officer, Stefan Deschmaker and Chief Financial Officer, Sami Zekun. Before we begin, I would like to draw your attention to the disclaimer on Slide 2 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. These 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 available on our website. And finally, please note that certain financial information within this presentation represents figures for 2017 2018 and that all adjusted figures have been adjusted for exceptional acquisition related and share based payment and related expenses And then all comments from here on will refer to those adjusted numbers. And with that, I will hand the call over to Stephane. Thank you, Taposh, and thank you everyone for joining us on the call today. Early this morning, we reported Q3 financial results, which reflect another quarter of solid progress against our strategy. Highlights from the Q3 include organic revenue growth of 1.9 percent, adjusted gross margins of 28.4%, reflecting 50 basis points of improvement before the adverse effects from an unfavorable PR investment acquisition mix. Adjusted EBITDA was €80 €4,000,000 representing an increase of 7% year on year and finally, adjusted EPS growth of 8% year on year to 0.26 €0.26 per share. Based on our year to date results and visibility into the remainder of the year, we are raising our full year guidance to the upper end of the prior range. Turning to Slide 4, I would like to provide some more detail behind our 3rd quarter performance. 3rd quarter organic revenue growth was 1.9%, representing a 7th consecutive quarter of organic growth for NoMad Foods. Through the 1st 9 months of 2018, organic revenue growth was 2.1% with balanced contribution between volume and price. We experienced strong performance in many of our largest markets during the Q3, notably the U. K, which was once again a stand alone performer with organic revenue growth of 5.8%. U. K. Growth was broad based and led by fish and poultry. The U. K. Has benefited from strong marketing campaigns all year, including our new Captain campaign, which I am proud to say was recently recognized as brand relaunch of the year by the U. K. Food and Drink Federation. Strong execution in the U. K. Is leading to increase in market share, higher household penetration and a significantly healthy dialogue with our trade partners. Overall, we're very encouraged to see the U. K. Hitting its stride with strong year to date results, providing a solid foundation for the Birds Eye team to integrate our recent acquisitions on Besseys and Goodsellas. Turning to other country highlights during the Q3, Italy and Germany grew 3% 1% respectively, on top of very healthy growth rates a year ago. Other notable highlights include Austria, which grew double digits and the Netherlands, which grew mid single digits. Sweden, which remains in turnaround, was effectively flat in Q3 after declining in the first half. We successfully navigated through unseasonably warm temperatures in Q3, which as in the Q2, had back consumption of frozen food and resulted in a category which was effectively flat. As Sami will describe in more detail, weather also had an adverse impact on our pea harvest, which negatively impacted gross margin during the Q3. Importantly, harvest uncertainty was factored into our prior guidance with Q3 capturing the large majority of the cost impact. Overall, we are pleased with the results and the way the team has managed through the challenging external conditions. And more importantly, we are happy to see the harvest issues behind us. We continue to upgrade our portfolio through a combination of renovation innovation. On the renovation front, we brought our new captain campaign to Germany in the 3rd quarter Q3, sorry, and the results have been outstanding. Similar to what we have seen earlier this year in other markets, Ipsos tracking results for this new campaign are well above norm. Indeed, German consumers are making both a strong connection to the Igloo brand and recognizing our message around the fact that our fish is real food simply made. Q3 also marked the launch of several new innovations as we began to more closely align our portfolio with emerging consumer trends, such as plant protein, convenience and health and wellness. We've been quite pleased with the trade response to our new products, which are attracting millennials to our brands and to the category. While still very early, we're happy with the progress and look forward to updating you in coming months. Moving on to M and A, we're seeing strong performance from our recent two acquisitions, which are growing nicely on the top line. Gross profit and EBITDA are consistent with our expectations. Since closing on our M Pesis and Goodfella's earlier this summer, we've been working hard to develop the optimal organizational structure for these brands to be managed at the run roof along with Birds Eye. Last month, we finalized and announced these plans, which will become fully in place in the New Year. With the team now finalized, we have already started to apply our growth model and strategic framework both on Besseid and Goodfella's. In fact, our existing relationships have also opened up new business for the Own Beside brand earlier than we had originally planned. Turning to slide 5. We're also making good progress on the commercial integration. At Ownedexis, we recently launched a broad brand marketing new campaign designed to increase midweek consumption of the roast dinner occasion. The new campaign titled Bring Out of Besi New marks a new and exciting era for the Body's beloved brand. We expect to build on the momentum of this new campaign in the coming months. We're also working on the full relaunch of the Goodfella's Pizza brand, which we expect to go live in the spring of 2019. As part of the relaunch, we've been making noticeable enhancements across all elements of the marketing mix, including advertising, packaging and product quality. Overall, both businesses are performing well this year and expected to begin their transformations in the coming quarters, which will drive top line performance and enable the realization of synergies and consequently higher gross margins. To summarize, we're pleased with our Q3 and year to date financial performance, which were achieved against more difficult year ago comparisons and particularly challenging weather conditions this summer. With 2 months remaining in the year, we are now tracking towards the upper end of our prior guidance range, which represents another year of solid organic revenue and adjusted EBITDA growth. As we look out to 2019 and beyond, we're excited by the opportunities ahead for our business and the category. European frozen food remains a dynamic growth category and our market leading brands are well positioned to continue to gain market share. We have good momentum across our markets, a proven toolkit of capabilities and the right playbook to grow both organically and through acquisitions. And most importantly, we have the right team in place along with a winning culture. This will prove fundamental for 2019 and beyond as we actively manage raw material inflation notably in fish and gain more clarity around Brexit. In net, we look forward to reinforcing the sustainability of our growth model and delivering against our long term growth algorithm for years to come. With that, I will hand the call over to Sami to discuss our financial results in more detail. Sami? Thank you, Stefan, and thank you all for your participation on the call today. Turning to slide 6, I will provide more detail on our key Q3 operating metrics, beginning with revenues, which increased 15.6 percent to €531,000,000 driven by 1.9% organic revenue growth and 14.7 percentage points from the recent acquisition of Arm Besse and Goodfella's. Foreign exchange translation offset revenue growth by 1 percentage point during the Q3. Moving on to adjusted gross margin, which were 28.4% in the 3rd quarter and declined 190 basis points year on year. However, gross margin increased 50 basis points when excluding 2 transient factors. First, 90 basis points related to an unfavorable harvest, mainly in these and second, 150 basis points of mix related to the inclusion of Goodfella's and our ambitious revenue, which carry lower gross margin than the base business. Each of these factors in more detail, beginning with the base business, which experienced 50 basis points of underlying gross margin improvement during Q3. Improvement was once again driven by volume mix and price and promotions. We are pleased with this outcome, which reflects the investments we are making in our core portfolio and net revenue management capabilities. Turning to the harvest, which had a negative gross margin impact of 90 basis points during the Q3, but only 20 basis points when taken in the context of the 1st 9 months of the year. As was widely discussed in the press, 2018 was one of the hottest and driest summers on record across most of Europe. As a result, many vegetable producers experienced crop shortages and higher expenses. For our business, this effect was most noticeable in peas, which have a particularly short harvest window and with great sensitivity to weather. The P and L impact from our other crops is expected to be relatively minimal. From a P and L perspective, the large majority of the harvest related impact on gross margin has been captured in Q3. In addition, the team has successfully secured alternate sources of P supplies for 2019. And when factoring in price, promo and PPA levers, the financial impact of the harvest on EBITDA should be negligible in 2019. The other factor impacting Q3 gross margin was 150 basis points year on year, diluted impact from the inclusion of revenues from Goodfella's and on basis, which for now carry a lower gross margin than our base business. This impact was slightly below our expectations, mainly due to the fact that the acquisition are outpacing their prior revenue projections, and to some extent skewing slightly towards lower margin channels. Overall, we are pleased with the performance of the acquisition, whose gross profit and EBITDA performance are tracking very much to plan. We are eager to activate our commercial plan at both brands in the coming months, which will enable us to drive synergies and gross margin expansion in the years to come. Looking out to Q4, we expect to see sequential improvement in our consolidated gross margin rate as we move past the harvest. Moving down to the rest of the P and L. Adjusted operating expenses increased 12% year over year, primarily due to the inclusion of acquisitions. Within operating expense, A and P increased 18% due to primary acquisition and phasing as we rebalanced our A and P spend more towards Q3 than in prior years. Indirect expenses increased 8%, again driven by acquisitions. Adjusted EBITDA was €84,000,000 representing 7% growth versus the prior year. Adjusted EBITDA margin of 15.8 percent compared to 17.1% in the year ago period due to the aforementioned factors. And adjusted EPS was €0.26 for the quarter, an increase of 8%. Turning to cash flow on slide 7. We generated EUR 100,000,000 of adjusted free cash flow throughout the 1st 9 months of the year, which equates to operating cash flow conversion of 51%. Factors contributing to the free cash flow through the 1st 9 months of 2018 are as follows: adjusted EBITDA of 2.76 €1,000,000 which grew 12% year on year working capital was €160,000,000 offset due to the seasonal effect of harvest, phasing and acquisitions. CapEx was $18,000,000 dollars below last year due to the anniversary of machinery and equipment purchases related to the Finis integration. Cash taxes were 11,000,000 dollars And finally, cash interest and other were $31,000,000 Notwithstanding a number of transitory factors during Q3 and throughout 2018, we remain committed to generating strong free cash flow and continue to expect cash flow conversion to be approximately 90% by year end once working capital seasonality reverse in our favor. Turning to slide 8 on 2018 guidance, which is based on foreign exchange rate as of November 8, 2018. Based on our year to date performance and visibility into the rest of the year, we are raising our full year 2018 guidance to the upper end of the range. We now expect 2018 adjusted EBITDA at the upper end of €365,000,000 to €370,000,000 and adjusted EPS at the upper end of €1.14 to €1.17 per share. When translated into U. S. Dollar, the curve in which our shares trade, adjusted EPS guidance equates to a range of $1.30 to $1.33 per share. Full year guidance continues to be based on an underlying assumption of low single digit organic revenue growth. Based on current exchange rates, we expect FX translation to represent approximately 30 basis points of drag on reported revenues in the 4th quarter and 90 basis points for the full year. Full year guidance continues to include approximately $20,000,000 of expected EBITDA contribution from the combination of Goodfella's and Aunt Bessie's. As a reminder, this contribution will reflect 8 months of ownership of Goodfella's and 6 months of ownership of our Besseeds in 2018. Looking out to Q4, we expect to report another quarter of low single digit organic revenue growth. In addition, we continue to expect stronger year on year EBITDA growth in Q4 versus Q3, reflecting contribution from acquisition and sequential improvement in our gross margin rates. That concludes our remarks. I will now turn the session over to Q and A. Thank you. Operator, back to you. Thank you, And we will hear first from Steve Strycula of UBS. Hi, good morning. Sami, a question on the P harvest. Just want to walk through the treatment of the accounting a little bit. Can you help us understand what is do you really record the raw material inflation upfront in Q3 and is largely contained there? And we should receive a little bit of a benefit from pricing as it pushes through the retail system in Q4 and beyond. Can you walk us through those mechanics? And then I have a quick follow-up. Thanks. Sure. Thank you, Steve. Yes, actually, if you want to, the mechanics is pretty simple. When you have effectively a full harvest as the one we have experienced, you get lower volume and therefore when you buy the product which we do upfront because we store we freeze and store the product actually recognize the entire inflation upfront. So that was exactly the impact that we incurred over Q3. And then once it is in our inventory, then the sellout happened in the following quarter. So it's a large extent to incur the cost in Q3 and after that you reflect the intervention in the following quarter as you mitigate the exposure driven by the higher cost either through pricing or other effect. Okay, great. And then a question for, I guess, both you and Stephane. From a revenue piece perspective, Stephane, how should we think about the customer orders coming in for Aunt Bessie's and for Goodfellas? Are they coming in line with plan a little bit better? And then from a cost perspective, as you think about the integration, when should we start to expect the synergy start to flow through? Is that a Q4 event? Or is it really not until the beginning of 2019? Thanks. Okay. Starting with your first question, actually sales are getting better than expected. At least they're better than planned, I would put it that way, compared to a business plan. So that's synergies are starting top line synergies are starting to come in. For example, access to our network, access to some of our trade relationship, for example, definitely helped our own bases. At the same time, that's exactly not what we mentioned. Obviously, to some extent, this is partly also lower mix in terms of trade. So that has an impact on gross margin, but very pleased with what we're seeing. In terms of synergies, the majority of the synergies will come next year, so first half of twenty nineteen. We're seeing already some obviously some early signals of the synergies, but most of them will come in 2019 and in 2020. Did it answer your question, Steve? Yes. Thanks. I'll pass it along. Okay. And we'll move to our next question from Rob Dickerson of Deutsche Bank. Great. Thank you. So, Stefan, I had and Sami, more of a kind of bigger picture question with respect to 2019. I know you historically you've shown this slide right that shows kind of your net revenue management capabilities inclusive of your capabilities, promos, price, price pack architecture and trade terms. And it's it was always it going to always show that 2019 is really when essentially all the stars aligned. And when we look at Q3, which is a good thing, right, we're not really seeing much pricing yet. We're seeing strong volume growth on top of a very tough year ago compare, which signals that hopefully consumer response and retailer response to the new innovation and then the base business remains strong. So as we think out to 2019, are we thinking there might be a bit more price or there might be improved price pack architecture benefits such that you could hopefully keep the volume momentum, but we start to see a little bit more price, so there could even be an acceleration on the top line or not? Thanks. Thanks, Rob. And let me start first with Q2, Q3 because just a little correction there was obviously a bit of phasing between Q2 and Q3. So promotions were much more when we phased from Q2, Q3, though that's one of the reasons, obviously, you see that the 10 basis points from price and promotion. So that's a bit that's one thing. 2nd point, you're absolutely right. We've worked very hard and we see the results in terms of network management, which really something that is one of our strong points. It's about promotion efficiency, but it is also price. And then as we said, we're working very hard right now in terms of preparation of these plants. As we know, the environment is more inflationary, especially in fish. And so that's definitely the kind of things we are working on right now. U. K, for example, which always comes ahead of the other countries is really working hard right now with the trade, but very let's say in a very positive way how to obviously make sure that the things are going to be reflected in 2019. So that's that. So too early to say, premature to say, but net revenue management and the combination with very strong brands, obviously, will help to pass the price increases in 2019 as a result of obviously a more inflationary environment in commodities. And at the same time, look, the momentum is very strong, which always helps when you have a conversation with the trade. Sure, it does. And then quickly, Sami, just some perspective on SG and A for the quarter and kind of and go forward expectations. The company did better than expected from a decent amount, I think, relative to where a lot of people were forecasting for the quarter in SG and A, but it's not due to a pullback in advertising or brand support. So just wondering, were there more efficiencies than you had thought in the quarter or is it just general as Stephane said could there be a bit more synergistic benefits coming through a little bit earlier and therefore as we look into Q4 and go forward that maybe the SG and A is a bit more efficient than we had thought? And that's it. Thank you. Yes, no problem. Thank you. Thank you for the question, Rob. We have only seen actually an NPE shift of about $2,000,000 to $3,000,000 from Q3 to Q4, primarily to adapt, if you want, the E and P together with our business plans. But as far as indirect are concerned, there's no change with the plan, I mean, for the total year. So, it's primarily a phasing, I mean, approach there. We definitely are determined to continue to invest in our brand and continue to leverage our expense discipline. But versus the plan, we are exactly on par versus the full year plan. Perfect. Thank you. And we'll go to our next question from John Baumgartner of Wells Fargo. Good morning. Thanks for the question. Sami, just in terms of the M and A on the margin front, I think excessive trade promotion has been an issue for I guess both of these businesses. So where do you stand right now in terms of adjusting those programs? How far along are you at Goodfellas? And then I guess given that Dessi is only closed in July, is it too soon to think that we can see material benefit in merchandising already in Q4? I mean, how should we think about the phasing there? I think you're right. When you just I would invite you to go back to our growth model in the merchant battles where we really work very hard for each and every mushroom battle to also have to be ready with the right packaging, with the right quality, with the right advertising and all these things. And then at some stage then from that moment, when you're ready, one after the other, then you can obviously invest you can really go through the whole the full growth model, including obviously how to reduce promotion, how to be more efficient in terms of promotion, I will put it that way. And just consider this business as must win battles, exactly the same way, and we're not going to change. It takes a bit of time, but it's more than ever. We've come to the conclusion you first need to have all flywheel ready, so then have to come up with the full story. And so our basis is going to be to start a bit early as you can see. We already started with a new advertising campaign. Good sellout is coming in Q1 as we said. We first need to make sure that we have the right quality, the right packaging and the right advertising. And so that's exactly what we're going to do. We're not going to deviate. That's the way to that's the only way for us demonstrate the best efficiency in terms of promotion efficiency. So that's that. So we're not bottom line, we're not changing the model. The model works and we don't see any reason we wouldn't work for the new acquisitions. Okay. And then Stefan, I also wanted to touch on your approach to Brexit. We've already heard some reports of food companies stockpiling some inventories in the event that it does take a hard turn. So can you update us on your thoughts and preparations there? Should negotiations kind of go south and you see a worst case scenario? I mean, how much of a risk should it be? Yes. So let me first start with a bit of background. So business in the U. K. Is around 30%, but a good portion of this is also internal because we have a big plant in the northwest of the country in lower stuff to be very specific. So and we're very pleased with that. So from there, obviously, you're working from different scenarios from I would say, the worst case being the terminology sorry for the terminology, Jon, but it's a no deal Brexit. I'm becoming a specialist to something which might be Canada approach, which basically wouldn't have a big impact on us. Number 1, because short term there will be a long transition and second, there will the tariffs will be very low, if any. So we're working on the different solutions. Short term, anyway, to your point, if there is, for example, no deal, we're working on short term solution in terms of how to make sure we have the right level of inventory, which by the way is better in frozen food. That helps us obviously compared to fresh or chilled. So that's a big difference. And then if there is no deal, obviously, we were investigating different solutions between the P and L and CapEx, but that part is too early to say. That's going to take more that's going to take more time. And but we're monitoring the situation very closely, I would think that way. Okay. And then just one last one, if I could, Stefan. In terms of the innovation in vegetables and the peas product, how are you seeing the trade and consumer response to that? And I guess going forward, how do you think about your capabilities in the meat alternative segment? Do you need to lean more on M and A for better capabilities and resources? Are there JV partners out there? And just how fast can you really develop that category relative to any internal constraints? Okay. So let me start with the short term. So overall, I'm just taking even a broader view in terms of innovation, not necessarily limited to plant protein obviously, but plant protein included. The TRIL acceptance has been very good. Obviously, it's with the exception of Portugal, you remember, that started earlier, It's too early to say from the consumer standpoint because the first thing is, obviously, we're loading first, then we see how the impact is. But that's it. The very first test which is very encouraging trade likes our products, they're very much in line with the new trends and the rest of it. And it's obviously same thing in terms of PEs. So that's very good. But more to come obviously in Q1 2019. So back to your second question, which is should we do this it's a classical question of buy or build, if I understand your question well. I think it's going to be a combination. We definitely believe we have a lot of expertise internally to build these products. But at the same time, you also have to be very open minded because a lot of things happening right now in the market. And so definitely we have to be open to any new innovations, any new partners. I think more and more things will be more in terms of partnership than anything else. So we're ready for this as well. But definitely the starting point is a very strong expertise internally. Thanks for your time, Stefan. You're welcome. And our next question comes from Robert Moskow of Credit Suisse. Hi, thank you. Just a couple of small questions. The guidance, can I assume that the guidance for 4th quarter gross margin is that it would still be down year over year because of the acquisition dilution or maybe you gave something more specific that I didn't catch? And then second, Stephane, I got to imagine that private label is raising prices as well in response to the weak crop. So in your view, is this a pretty logical conversation to have with retailers about private label and brands raising price at the same time? Thanks. [SPEAKER DOCTOR. DEREK CHALMERS:] Derek Chalmers:] I'll start first. On your question, I would say, yes, it will be down versus last year, but it will be up versus quarter 3. And back to your second question, Rob, I would put it slightly differently. We are the category leader. So in most of the cases, it's our job to start with the price increase. And I wouldn't say that we have a dialogue with the trades, but definitely we're monitoring afterwards what they're doing with their own private label. I think that's the way it works more than a let's say an explicit dialogue with them. Okay. So maybe the follow-up then is, is it pretty logical to assume that the private label pricing will have to raise will have to move higher? And do you have any kind of history to look back on to indicate what private label pricing tends to do in situations like this? The answer is yes. And as you're starting with the producer, most of the time it's some sort of cost plus. So they're going to be very clinical with how to pass the price increases. It's going to be very much COGS related. And then you obviously are all then is going to be absorbed by the trade. Same thing, it's most of the time you can see the past 2 years in the U. K. It's been a very I would almost say mathematical. Got it. Very good. Thank you. You're welcome. We'll go next to Bill Chappell of SunTrust. Hi. This is actually Grant on for Bill. Actually just had a question following up on that last line. Wondering if there's any regions maybe in particular where the retailer dynamics are maybe more competitive, that it may be more difficult to have those conversations, those pricing conversations or if kind of as the category leader you still feel like you have confidence that kind of doesn't matter the retailer dynamic you'll be able to work that pricing through? No. It's a trade is a trade at the end of the day, whether they're coming from Italy or from U. K. Or Germany or France. So they're dealing with the same kind of constraints. So I think what matters more is overall whether you have the right brands to these guys vis a vis these guys. And when you see our network and our geography that's exactly what we have. So I would say definitely not necessarily by the way geography related, but there will be some easier conversations, some others will be a bit more difficult, fine. But overall, the fact that we have the right brands, we have the right momentum, we're going to be disciplined as well by the way. So it's important obviously to pile the price increases because it's also I mean it has an impact on the long term. So it could happen at some stage that the relations will be a bit tense, but it's for the right reason. Got it. Thank you. And Mavim, we have a question from Jon Tanwanteng of CJS Securities. Good morning, guys. Thanks for taking my questions and a very nice quarter. Any update on the M and A pipeline? What you're seeing there? Does your ability to keep outgrowing a flattish market put pressure on any of your peers who are losing shares perhaps healthy? Well, by definition, in M and A, you need to be focused and you need to be at the same time flexible. So we're always looking at new targets or targets. We're monitoring all the situations. The only thing is by definition we're never going to comment on what's available, what's not available at this stage. Are we working on this or that? But we just have and that's exactly what happened with both by the way with Onvesys and Bootsy Labs. These are the kind of situation we have been monitoring for months in terms of for years. And then the moment it's happening because for whatever reasons the shareholders want to sell, you have to be well positioned. The good news is also in terms of frozen food in Europe, as it's we are the leader, which makes obviously the whole situation much easier because unavoidably people will come to us. So that's a big plus for us. Great. Thanks. And then just a little more color on the new product development and innovation products we have in the pipeline. Is there a target for what percentage of your portfolio you want to be kind of new innovative products? And just a little bit of color and update on the performance of the newer stuff in Q3 and as you had in Q4 and Q1 what's rolling out? Yes. Well, overall, as you said, we are in the region of 5% and the objective is to go to 10%. We don't want to be dogmatic, but at least it's a good discipline to get there. And we started really from a low baseline. Remember the priority was first renovation and then move little by little to innovation, especially new trends, while respecting the mushroom battles. That was absolutely key for us. Now what we can see as I said is we started probably a bit ahead of time in Portugal. So in Portugal we have both. We have the trade acceptance, which was very good and that's been reinforced by a very, very positive acceptance more than acceptance by the consumers. So to the point that there is really a new category of consumers coming to our product with veggie power. So that's very positive for us. Other countries are a bit later, So we have only the step 1, which is trade acceptance, which as I said is very much in line with what we've seen in Portugal. So it's a very good acceptance. Time obviously, let's wait until the moment it has been fully loaded Q1 twenty nineteen to see what the real consumer acceptance is. But we believe that if that what we've seen in Portugal should also happen in other countries. Got it. Thank you very much. And with no other questions in the queue, I would now like to turn the call back to CEO, Stefan Deyshmeger, for any additional or closing remarks. Thank you very much, and thank you for joining us on the call today to review our Q3 results. We are on pace to deliver another strong year of top and bottom line financial performance and our brands have good momentum in their respective markets. We're making good progress on the integration of our 2 recent acquisitions and look forward to this transformation in 2019 under the normal growth model. Thank you and I look forward to updating you on our Q4 and full year results in early 2019.