通用磨坊 (GIS) 2021 Q3 法說會逐字稿

Greetings, and welcome to the fiscal 2021 Q3 earnings call.

(Operator Instructions) As a reminder, this conference is being recorded Wednesday, March 24, 2021.

I would now like to turn the conference over to Jeff Siemon, VP of Investor Relations.

Please go ahead.

Thanks, Jennifer, and good morning to everyone.

On behalf of my colleagues at General Mills, thanks for joining us.

We are looking forward to have our live Q&A session on our third quarter results.

I hope everyone had a chance to review our press release, listen to our prepared remarks and view our presentation materials, which are made available this morning on our Investor Relations site.

Also refer to the press release we issued yesterday announcing our proposed sale of our European Yoplait operations to Sodiaal.

I'll just note that in regard to that transaction, we have a memorandum of understanding and that is still subject to appropriate labor consultations, regulatory filings and other customary closing conditions, and we expect to close that proposed transaction by the end of the calendar year.

Furthermore, it's important to note that in our Q&A session today, we may make forward-looking statements that are based on management's current views and assumptions, including facts and assumptions related to the potential impact of the COVID-19 pandemic on our results in fiscal '21.

Please refer to this morning's press release for factors that could impact our forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call.

I'm here virtually with Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; Bethany Quam, Group President for our Pet segment; and John Nudi, President for North America Retail.

We're holding this call from different locations, so hopefully, technology cooperates and everything goes smoothly.

And with that, we can get into the first question.

Jennifer, you can get us started.

(Operator Instructions) Our first question comes from the line of Andrew Lazar with Barclays.

I think I'd like to stick with the 2-year growth CAGR methodology that you kind of laid out and discussed in the prepared remarks.

Thinking about it that way would imply fiscal 4Q organic sales growth that would look to be roughly in line with what you reported in fiscal 3Q, again, on a 2-year basis.

And then I realize some of this is likely a bit of a shift of inventory refill from -- that you expected in 3Q into 4Q, but it would seem to suggest that you believe sales growth -- the sales growth deceleration as reopening occurs is likely to be maybe slower than many currently expect.

So I'm just trying to get a sense if that's a fair characterization of your thinking at this juncture.

And if it is, sort of what's informing that viewpoint?

Yes.

Thank you, Andrew.

This is Jeff Harmening.

You do have that -- you have that exactly right.

I mean as we look at the third quarter of this year, demand was high all over the world, including the U.S., fueled by clearly the pandemic as well as stimulus spending and, in addition to that, some weather-related events.

As we look at Q4, we really believe that our sales, both in terms of pounds and pricing, is going to be higher than it was pre pandemic.

And we're seeing that in the first couple of weeks of the month.

And we're confident the consumer behaviors aren't changing as quickly as some would think.

And what fuels that, Andrew, is really, as you look at the last year, if you look at 2020, our foodservice business, in general, in the U.S., the industry declined about 25%.

And of that, about 25% was quick service restaurants, schools and health care.

And we've seen quick service restaurants bounce back, and school are gradually getting online as is health care.

So that will bounce back relatively quickly.

Another 25% of that decline was related to casual dining, and that's going to take longer to come back.

And then finally, about half of the decline we've seen over the last year in away-from-home heating is really driven by travel, leisure, business and industry, think canteens at places of work.

And clearly, that's going to take a longer-term to cut back, if it ever does at all, because we're not going to work the same way.

We're going to be working at home a little more than we were before.

People want flexible schedules.

While consumers may be making vacation plans now more than they have, business people are not going to be traveling as much because technology has cut up, and we realize we can do a lot of things remotely.

So we have what fuels our belief in the fourth quarter, and we're confident there's not only inventory buildup, but moving will be better than what some expected based on what we've seen over the past year and kind of what we see in the first few weeks of this month, this quarter.

Our next question comes from the line of Ken Goldman with JPMorgan.

2 for me.

First, how should we think about your appetite for being aggressive on share repo?

Just looking back prior to the Buff deal, there were some years the company spent upwards of $1.7 billion on buybacks.

So should we think this level is at least within the realm of possibilities?

Or do you want to keep a little more dry powder around?

That's my first one.

Sure, Ken.

This is Kofi.

Thanks for the question.

Look, I think we're absolutely in a position where we ended the quarter with a really strong balance sheet.

Our leverage ratio at 2.8x net debt-to-EBITDA, which means we've continued to make great progress against our capital goals.

I expect we will restore our full capacity to use all of our levers of cash return.

And I think with the signal that I think was important is that we've already started.

So while I can't commit to anything beyond what we've done, we continue to have the flexibility to act and use the balance sheet to the extent that the full extent of our capital allocation policy.

And I think, as a reminder, share repurchase is the last of those.

So that is where we would look to manage the leverage and steer any excess free cash flow.

And then Bethany, within broader pet food, the refrigerated customer state, it's really small, but it's growing quickly, not really showing a lot of signs of slowing down, except for some supply chain issues.

Has Blue Buffalo's appetite to break into this subcategory changed at all?

Or is it still sort of a wait-and-see attitude?

It is not necessarily what you've said, but some of your predecessors may have kind of implied in talking about it?

Well, thanks for the question.

What we really have seen is that pet parents throughout this pandemic have really wanted to continue to offer their pets different forms.

So you're talking about different forms here.

So we've seen mixing between Kibble and then wet food from cans.

Our wet business is performing incredibly well as fresh.

It's still a very small part of the category, but the trend is pet parents continuing to mix different kinds of food.

So we'll continue to look at all those different areas and continue to take the Blue Buffalo master brand where we think pet parents want to see it.

Our next question comes from the line of Chris Growe with Stifel.

I just had a question for you on -- to start first with the -- with cost inflation and to better understand the kind of the moving pieces in the gross margin that gets very clear about the inflation and there was some cost to secure incremental capacity.

So just to understand a couple of simple things, was weather a factor at all in the gross margin for you this quarter?

And then I also just want to understand like the rate of inflation and then how fourth quarter inflation might look in relation to the third quarter.

Sure.

Chris, I'll be happy to address your question.

Thanks for asking.

So as you think about the other factors, certainly, as you -- as we flagged, there are higher costs to operate in this higher demand environment.

And I will tell you that part of the cost in our logistics network costs have gone up in relation to responding to the high demand environment.

Specifically, as we're operating in an environment where we need to open new lanes of freight to reach our external supply capacity but also to reposition within the network, which is where we've seen some incremental costs as related to the weather in the quarter.

And as we get to Q4, while we're not giving guidance on Q4 inflation, I think it's important to note for the full year, we are still expecting about 3% inflation.

And the way I'd characterize it is our expectation at the beginning of the year were 3%, and we were rounding up to about 3%, and we're in a position now where we will be rounding down to about 3% inflation.

And I think the critical thing for us is we're taking the opportunity to act with all of our SRM and our HMM levers to set ourselves up to -- in anticipation of higher inflation as we step into F '22.

Okay.

And then I had a separate question, if I could, on Pet, so perhaps for Bethany.

But just in relation to -- you had some incremental promotional costs around Taste Fools, the launch of that.

Does that continue?

Do you see a step-up sort of increase in promotional spending for that business?

And then that's also a division where there has been higher costs.

Is that one where we could see some pricing coming through?

Has that come through at all in the industry, not looking for forward commentary there, but have you seen that yet in the industry?

Well, starting with the support.

We're launching a new business and so you have costs to do that.

And so we see ourselves spending at a rate that's right for the category.

And again, we can work within the entire portfolio.

So those are launch costs that we're talking right now.

In terms of premiumization, that is absolutely continuing in every part of the category.

So the premium cost per pound, wet cat food, definitely higher than what you see in dry.

But every part of the category continue to see premiumization on a cost per pound basis.

And Chris, this is Jeff Siemon.

I'd just add to the original question about costs in the quarter, I'd just note that on a year-to-date basis, the Pet segment is at about a little over 24% margin versus 22.5% last year.

So while the quarter was -- maybe there was a little bit of incremental cost, we feel -- still feel very good about where we are year-to-date for that business from a margin and a growth standpoint.

Our next question comes from the line of Michael Lavery with Piper Sandler.

Just following up on the Pet segment.

You've had some accelerating volume growth over the course of the year.

Can you give a sense of how much of that is driven from pipeline fill behind new launches versus just kind of a more run rate type momentum?

Yes.

Thanks for the question.

So we've continued to see the movement of the business accelerate.

And so in Q2, we had talked a little bit about movement when we had reported 18% sales being a little bit ahead of our inventories, but our movement accelerated as we went into Q3.

And so we feel pretty good about the levels of inventory at this point.

Okay.

Great.

And then just following up on the inflation question looking ahead a little bit.

Can you give a sense of how much you're positioning yourself for '22 and just trying to get a sense of how much you think the current kind of run-in prices might be sticky versus waiting to take some positions if it may come back?

What's your thinking on that at a high level?

Well, certainly, at a high level, we are preparing for higher inflation.

And I don't want to get too far ahead.

We'll come back and talk to you in Q4 about F '22 inflation expectations.

But I will just reiterate, we are taking actions on the basis of that preparation specifically around our HMM and our strategic revenue management plans and using all of the levers of strategic revenue management.

Our next question comes from the line of Robert Moskow with Crédit Suisse.

Kofi and Jeff, I think I'm going to get the same answer as Michael just got.

But inflation is accelerating higher than you thought.

And I know you have multiple levers to offset it.

But within SRM, I think list price increases are one of those levers.

So is it fair to say that, that will have to be utilized more than originally contemplated?

And look, a lot of retailers are talking about inflation right now, a lot of your competitors are talking about inflation.

Is it fair to say that there's more willingness to pass that through?

I know it's never easy, but it's not just you who's facing the inflation.

So this is Jeff, let me take that question because if you get the same answer, then at least you get it from a different person.

If you would, please.

Yes.

So the -- I would start by saying that inflation is very broad-based, and it's actually global.

So we're seeing it across the globe.

We're seeing inflation, and it's broad-based across commodities, across logistics, across things like aluminum and steel.

And so whenever you see this kind of broad-based inflation and it's global, that's an environment where you're going to realize net pricing.

And we certainly go to HMM first, but in this kind of environment, just like a few years ago when we saw the same thing, our retailers are seeing it.

Our competitors are seeing it.

We're seeing it.

And so we will realize pricing.

We'll also, just we will use all of the tools, and that includes list pricing.

But it's list pricing.

It is price pack architecture.

It's how we manage trade and then finally, price and mix.

We'll need to use all those levers.

And when it comes to pricing, you go from the macro to the micro pretty fast.

And so the levers we pull certainly depend on category and they certainly depend on geography.

And so I want you to know what use all those -- would use all the levers at our disposal.

And we'll begin in that process here in the fourth quarter.

Yes.

And let me just add for additional context.

A reminder that our first lever is holistic margin management, right?

So our cost of goods sold productivity, which has been averaging about 4% annually.

So we're not relying just on SRM to address the issue.

The first 4 points or so, we would expect to get through to gross margin productivity.

Our next question comes from the line of Jason English with Goldman Sachs.

I guess I was going to keep coming back at sort of the same point of question, and that's just really just trying to understand the margins here.

Kofi, I think, clearly, great margins this quarter.

And I think your guiding for a profit or margins to actually be below fiscal '19 levels in the fourth quarter, so below pre COVID.

And I'm trying to wrap my head around it.

You're talking about HMM savings exceeding inflation.

So for the year, you're actually net deflation on those 2. You've got phenomenal volume leverage, huge pricing rolling through, were the best pricing of years.

What is the other offset?

You've stacked those up right there, and I would expect meaningful margin expansion for the year, not profit actually falling below pre COVID.

What are the other offsets?

Can you help us quantify them?

And which of those offsets may be transitory and related to COVID, with costs falling out as we look over the next, say, 12, 24 months?

Sure.

Sure.

So let me speak to some of the key drivers here.

Foundationally, after those, you need to look at the higher operating costs in this environment related to us securing additional capacity from external supply chain.

And with that, the logistics cost associated with operating in that environment puts us in a position where we are securing more lanes for freight to support that external capacity at higher spot market rates, which we would note that we're seeing about mid-single-digit inflation in freight in this environment.

So as we're exposed to the spot markets on those external supply chain lanes, the cost of delivering to customers and distribution centers is higher.

So those 2 factors, I would expect to be largely linked to the demand environment and as supply and demand come more into balance.

As our inventory levels in the system come more into balance, I would expect those costs to abate.

And obviously, we're lapping a tremendously strong Q4 where a fair amount of leverage was driven just in part because of the inventory in the system that both us and the retailers used to draw down to service the demand.

That's really helpful.

Is there any way to quantify some of those things like these transitory logistics costs that can fall away?

Just so as we look to attack our model, we've got sort of the right puts and takes that we're contemplating.

Yes.

I don't want to get too specific on Q4, but I think it's fair to say that those -- as you think about the offsets to some of the key drivers and specifically leverage, those are more than sufficient to offset some of the leverage benefits we expected to see this year.

Our next question comes from the line of Faiza Alwy with Deutsche Bank.

So I guess I wanted to follow-up on Andrew's question, and that was what I wanted to see if you could talk about how you think consumption patterns will trend from here.

And within that, specifically, how you think about the snack bar category, which is one of your global platforms.

But Jeff, you talked about how you don't expect consumer habits to change.

So I'm curious how you're thinking about the recovery in that category.

The overall category is fragmented.

And there are many different segments.

So just wondering if you could share your aspirations around how you would like to play in the overall category.

Yes.

So let me make -- thanks for the question.

Let me make a clarifying point.

What we see happening is that demand will be higher in the near future than it was pre pandemic.

Certainly, as people return to eating out and people return to schools, we'll see a reversion of some of that volume back to where it was before, just not all the way back.

So I would envision an environment where demand is not as high as it is today in at-home meeting, but it's higher than it was pre pandemic.

And I think some investors and some analysts feel as if volume is just going to snap back to the way it was before the pandemic.

And what we've seen outside the U.S., what we're currently seeing in our current channel will lead us to believe that any return to normal will be more elongated, and that return to normal will eventually be different.

So as we see that, the same would hold true of our bars category, and I'll give a little high level commentary, and then Jon Nudi may want to weigh in.

In bars because it really is energy on-the-go, the fact that the category has been down recently,is because people have not been on-the-go as much.

As people start to get out a little bit more, we've seen the category improve a little bit.

In fact, I'm really pleased with our progress in terms of share.

We're competing effectively all over the world in the bars category, that would be the U.S. as well as Europe as well in Australia.

And so we're starting to see that category return a little bit, and we've been competing quite effectively in it.

Jon, do you have any other -- anything you want to add to that?

I mean you really hit it, Jeff, with the on-the-go nature of the categories.

I mean, a tough time where the grain snacks is down high single digits year-to-date.

Performance bars is down double digits.

So again, that's been the toughest to play.

As Jeff mentioned, we've been really focused.

In fact, one of the things I'm proud of is that we're actually growing share in total bars.

As many of you remember, we've been struggling with this category for the last few years.

And our turnaround is really known by Nature Valley base brands.

We've got some really strong marketing out there, some great news around recyclable wrapper that just rolled out as well as the #1 launch in the category, which is packed this past year.

So we feel good about how we're performing.

And as Jeff mentioned, when we get back to a more normal time, the categories will bounce back to growth.

Great.

And then just I wanted to also take advantage of Bethany being on the call.

And Bethany, I was hoping you could give us a little bit more color on the treat side of the business.

Early on, there was a view that as Blue Buffalo moves into FDM, that is the channel where treats are more prevalent.

And I think it's been a bit disappointing relative to everything else that Blue has done.

So I'm curious if you have any thoughts on the long-term potential of the treats business and whether there's sort of more innovation, more marketing?

Any more work you can do or that you think needs to be done around that side of the business?

Yes.

Thanks.

You're absolutely correct, right, as you get exposed into the food drug mass channel, there is more treats that are sold in that channel.

Blue Buffalo definitely resonates with pet parents in terms of treating.

You'll see here in the fourth quarter, we are launching a new innovation behind bones.

And so that is the opportunity for pet parents to clean -- to feed a bone alternative, crunchy biscuits that meets the true Blue promise.

And so we are continuing to do well in the treats category, but we know we can do better.

And so we have both innovation launching as well as we're doing some price pack architect work as well.

And so we're able to merchandise.

If you look at the Pet category, the treat segment is obviously more responsive to merchandising than your food segment.

And so if you look in our remarks today, we have a picture of how the whole portfolio will show up now.

And so when we merchandise, retailers are able to offer the new bone, our sticks, our sizzlers, and we really cover all different treat types.

So we're continuing to press merchandise.

We also are starting to do some different types of marketing behind tradable moments.

And so we are pushing on all areas to continue to drive that business.

It's a huge category.

We've got growth.

We'd like to have a higher share of it.

Our next question comes from the line of Nik Modi with RBC Capital Markets.

So I just wanted to ask about new items.

My understanding is General Mills is going to be pretty active in this area in 2021.

And just within a construct in the backdrop of SKU rationalization happening at retail, I just wanted to kind of understand how that kind of -- is going to work as you look to really get all these new products onto the shelf?

And then I just have a quick follow-up.

Jon, do you want to take that?

Yes, sure.

So obviously, there's some SKU rationalization going on really driven by click-and-collect, and retail is really optimizing the shelf space.

At the same time, consumers are always looking for new products and new innovation.

And I'll tell you, retailers are very engaged by that as well.

So in fiscal '21, our new products performed quite well.

In cereal, we've got 3 of the top 3 launches in the category.

In, the group we've got 3 of the top 4 launches, and we've got a great track record.

And that track record really helps us sell the new products.

So the bar is higher, and we've got to have good items.

We've got to perform.

And we really have a track record of doing that, which will help us as we place new items in the coming year.

The other thing it actually looking at is our share distribution is up overall and in our key categories as well.

And again, new products really help us with that.

So that's how we're going to approach it.

We're really excited about the plans we have coming for fiscal '22 as well, which we'll share as we get closer to the new year.

And John, just as we think about SKU rationalization and how retailers prioritize which brands to have on the shelf, I mean, would you expect additional space kind of over the next 12 months as a result of some of those changes?

Well, I think, I mean, obviously, the highest turning SKUs, getting those shelf space right now as they really are using the shelf for bricks-and-mortar shopping as well as their click-and-collect operations.

So our top SKUs continue to grow shelf space, and that's a really good thing for us.

And then from an innovation standpoint, again, I think that retailers are looking for a track record of success.

So as we have proven that we can do that, I think if we're looking to our items first, I think in some cases, the smaller companies that are coming in where a few years ago, retailers were jumping all over those items.

It's a tough environment for them right now.

So I do believe for manufacturers that have big brands that turn well, it's a good time with shelf.

And I think new products are really all about how excited you can get retailer to see about these items and building a track record to deliver.

And again, we've been able to do that more recently.

Our next question comes from the line of Jonathan Feeney with Consumer Edge.

I'd love to -- given a clearly -- and you touched on this a little bit before, but given the clear rise in visible costs here, I'm a little surprised there's not a more dedicated effort to raise pricing.

Is this something that's like just tactical inside your organization, just going to let it ride here?

Or is this a response to discounting and private label growth or fear about that in the marketplace?

Because you would look at your input cost and everything that's in the headlines.

And this would -- this feels like a 2006-type environment, and yet we're not seeing that, at least yet, on the pricing front?

Jon -- go ahead.

Go ahead, Kofi.

No.

Jon, I think just to answer your question, we certainly are responding right now on the expectation that inflation is going to be higher.

As Jeff referenced earlier, we're seeing it broad-based.

We're seeing it global, and we're, frankly, in all of our businesses, working hard at using the SRM levers.

So I think you'll see us acting.

And in fact, in some of our businesses, we already have actions in market on the SRM front.

So I would just sort of respectfully note that we're moving right now.

Okay.

I recognize it's a sensitive topic.

Our next question comes from the line of Laurent Grandet with Guggenheim.

I'd like to come back on the Pet segment.

I'd like to understand better the dynamics in price/mix as it was negative in the quarter.

Third quarter, you launched in premium weight and treats, but also where -- I mean as -- per what you said, I mean you grew in the pet specialty and for the first time, which probably asked for a premium price.

So I'd like to understand better what was driving this negative price/mix in the quarter and how we should think about price/mix in that segment going forward.

Again, thanks for the question.

So for the 9 months into the year, right, our sales are up 13% and our profit is up 22%.

So we feel really good about how we're able to drive the business in the quarter, right?

Our mix can vary depending on channel.

And so as we continue to build out, this is a really young business in some channels.

And so if we're building out the business, we didn't have a variance from the channel mix but also the product mix.

And so we invested behind the different parts of the business.

I feel good about the long-term price/mix.

Again, what's driving the pet category is premiumization.

Blue Buffalo is solely in that part.

And we will continue to ensure that we have the right price/mix, and it can vary by quarter, by channel, by product mix.

Laurent, this is Jeff Siemon.

I'd just add that, as a reminder to everyone, especially in the first half of the year, we were comparing against the first half last year where we were still expanding our Wilderness line more broadly into food, drug and mass.

And so that -- it's a very high price/mix business.

And so that comparison was probably a headwind through the first half, maybe a little bit into the back half.

As we go forward, we've now fully comped all that expansion.

And as Bethany said, a lot of the innovation and news you're seeing is in the wet and the treat segments, which are certainly mix positive.

So we feel good about where we go from here.

My second question, I mean, a completely different topic.

It's about your play in Canada.

Not much visibility on the business there.

Could you maybe give us some colors as to, should we think about the same type of profitability in Canada that you got in the U.S. and also in terms of growth, is it growing faster?

I like to have a bit more color on your pre Canada, please.

We have a good market position in Canada.

Why don't I have Jon Nudi provide some of the commentary on that business.

Yes.

Laurent, we really like our business in Canada, our yogurt business.

It's about 1/3 of our total business in Canada.

And actually, the bigger business for us is Liberté.

So it's about 60% of our total yogurt business in Canada versus 40% for Yoplait.

And one of the things we love is Liberté takes a leading greek yogurt in Canada.

So while we -- a few years back into so well that trend in the U.S., we did very well in Canada and as a result of a strong market share and position in the market.

So we'll exposure to more as we move forward, and we'll probably highlight some of the new products and other things that we have coming, but we really like our businesses performing well in Canada as we speak.

Our next question comes from the line of David Palmer with Evercore ISI.

As you know, in the U.S., there are some markets that are reopening faster than others, Texas and Florida.

I'm wondering, as you look at some of those micro examples, what sort of 2-year trends are you seeing?

And maybe even within that, some insights that you're garnering about the reopen and the impact in individual categories, retail pet and within retail.

And I have a follow-up.

Yes.

So David, let me -- this is Jeff.

Let me provide a little background on the last year, and I'll tell you a little bit of what we're seeing in the last month or so.

But as we look at the past year, we've really seen the at-home trends across our markets.

And some have been relatively more open than others, as you know.

We've seen at-home trends have accelerated across those markets, even the markets that are more open.

And they may be a couple of points less growth at-home than those that have been relatively more closed, but we're seeing pretty consistent performance across markets over the past year, whether it's at-home or away-from-home consumption.

The -- there's been a lot of talk on reopening the last month, but the data gets really challenging because -- especially because of the weather situation.

So for example, Texas has opened up.

It's away-from-home eating, but they had a huge winter snowstorm over the last month, which elevated demand quite a bit.

And so trying to pick apart the pieces.

And the variables over the recent short term is really difficult to do.

And I don't say that to try to hide anything.

But if you look at it, you would see that at-home consumption in Texas would be up, which would be counterintuitive, but that's because of this huge storm.

And so I think we'll know a lot more at the end of this quarter once we've seen more.

So right now, what I can tell you is over the long term, over the last year, we have seen elevated demand across markets.

Over the shorter term, there are so many variables to play.

It really is hard to pick them apart.

I sympathize with that.

It feels like we're going to be looking week-by-week from now on.

But when we look at this last year, the fiscal '21, and we look backward, what are some COVID-related costs, both direct and indirect?

And for example, you cited the supply chain demand and the elevated trucking costs and that just basically freight and logistics being under such pressure that it's essentially an indirect COVID-related cost, but is there -- could you maybe sum that up in terms of gross margin headwinds that you will be lapping in fiscal 22?

And I'll pass it on.

Yes, sure.

And I'll add to that list some of the other COVID-related costs, such as some of the policy -- leave policy dispensation we've given to our employees.

Obviously, some of the security protocols and adjustments we've made in the early days.

And I expect a good portion of those costs as we work into a more normal environment to sort of get back in line with normal trends.

So I wouldn't build off of a base of this cost on a full go-forward basis as you think about F '22 and demand potentially for at-home consumption being lower than this year but even still elevated above pre-COVID levels.

I'm not going to quantify at this point, but we'll talk more about that as we work our way into F '22.

Jennifer, I think that's all the time we have.

So I think we'll go ahead and close up now.

Thanks, everyone, for taking the time out and the interest.

If there are follow-up questions, please reach out over the course of the next couple of days.

And we hope everybody is staying safe and healthy, and we'll talk you again next quarter.

Thank you.

This does conclude today's conference call.

We thank you for your participation and ask that you kindly disconnect your lines.

Have a good day, everyone.