Nomad Foods Ltd (NOMD) 2018 Q4 法說會逐字稿

Good day, and welcome to the Nomad Foods Fourth Quarter 2018 Earnings Conference Call.

Today's conference is being recorded.

At this time, I would 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 fourth quarter 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 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 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 and all comments from here on will refer to those adjusted numbers.

And with that, I will hand the call over to Stéfan.

Thank you, Taposh, and thank you all for joining us on the call today.

Earlier today, we reported fourth quarter and full year 2018 earnings results.

Highlights from the fourth quarter 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 represented an increase of 23% year-on-year and adjusted EPS of EUR 0.29 per share representing growth of 7%.

Fourth quarter performance exceeded our guidance, capping a strong end to 2018, which marked the second consecutive year of low single-digit organic revenue growth, market share gains and double-digit adjusted EPS growth.

Importantly, fourth quarter 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, are being very well received by the trade and with strong early signs of consumer acceptance.

We're also pleased with the progress that we're 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.

And finally, our business results continue to drive strong cash generation, reducing our pro forma 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 our brands and the level of focus and determination throughout the entire organization.

Looking back at the performance of the company over the past 2 years, I can say with confidence, and with pride, that the investments that we've been making of people, of brands and of culture are paying off.

The strategic prioritization of our core product SKUs, strong execution of our commercial plans and a cost-conscious mindset have combined to drive margin-accretive growth while helping fuel our future.

We have achieved 8 consecutive quarters of organic revenue growth since implementing the 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 the growing category, while achieving increases in both price and volume.

These results demonstrate the strength of our brands and product offering, the sustainability of growth -- of our growth model and the durability of our portfolio.

Looking out to 2019, I'd 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 trends that you've come to expect from us over the past 2 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, carries the highest gross margin, market share within our portfolio and have the greatest headroom for growth.

While we've 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 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 very 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 4x, 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 all M&A ambitions as we see fit.

And 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.

So 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 a 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 our customers.

This includes building additional safety stocks ahead of March 29.

While a no-deal Brexit scenario would likely lead to higher product stocks during the short term as a result of WTO tariffs, it will 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 result 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 initial thoughts on 2019 guidance.

Samy?

Thank you, Stéfan, and thank you all for your participation on the call today.

Turning to Slide 6, I will provide more detail on our key fourth quarter operating metrics, beginning with revenues, which increased 21% to EUR 615 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 fourth quarter.

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 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 enters the base and commercial initiatives 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 7, 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 inflation offset revenue growth by 1 percentage point during the year.

Adjusted gross margin was 30.3%, declining 30 basis points, primarily due to the effects of acquisition mix of 110 basis points.

Adjusted operating expenses increased 5% as disciplined expense management in our base business helped 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 the 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 8. 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 376 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 were 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 1 of this year and whose impact will become apparent in our financial results beginning in the first quarter 2019.

For those of you familiar, this 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 financials in 2019 on Slide 9. Beginning in 2019, and the first quarter to be specific, we will be required to capitalize operating leases on to our balance sheet.

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 pretax 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 to 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% to 10%, reflecting growth in the base and contribution from acquisitions.

Adjusted EPS in the range of EUR 1.28 to 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 acquisitions 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 quarter -- quarterly variations that we anticipate in 2019, which I would like to bring to your attention for modeling purposes.

As you may know, Easter falls at 3 weeks later this year versus last.

This will result in shipments made 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 first quarter, 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.

(Operator Instructions) And we'll take our first question from Andrew Lazar with Barclays.

So in thinking about organic growth in the fourth quarter, obviously quite a bit stronger than we, and I think most, had modeled.

Volume was very solid, but the real upside, if you will, to organic was the pricing piece, as that comes through.

And it was good to see, obviously, volume remained positive in the face of that pricing.

So I guess 2 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 have been, or perhaps is it a bit more positive?

And then as additional pricing comes into play as you go through '19, 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 '19 becomes increasingly sort of pricing-led versus volume?

So I would think that way, Andrew, elasticity, it's a bit too early in 2018, however we started to implement some price increases, so -- but definitely, the bulk of the price increases in the share -- on the share in 2019.

So talking about 2019, what we've seen so far is early signals in terms of price elasticity is good.

But I would put it that way, this would be a bit premature in 2018, but 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 revenue, organic revenue growth that we have in mind.

So yes, quarter 4 was very strong.

This being said, we know what really matters for us is to go through, throughout all the quarters with that kind of algorithm in mind.

But back to price elasticity, so far, so good, I would put it that way.

Thanks for that, and then, just...

Does this answer your question?

Yes, that's helpful.

And then, 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 of any incremental potential Brexit costs that you may have sort of 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?

So a little more clarity.

Correct, correct.

The no deal, what we call, what everybody calls the no deal is not in our guidance, because by definition, nobody knows, starting with 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.

And so we having incorporated a bit of cost, no matter what, because that's -- because it's we have to be prepared, so that -- with or without any deal.

The good news for us is overall in the Brexit, in the no-deal Brexit scenario is our brands are doing extremely really well.

We know that obviously, 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.

And we will take our next question from Steve Strycula with UBS.

Stéfan, I'm 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 that you're tactically doing in the marketplace that is leading to that revenue outperformance there?

And kind of what innovations do you have planned for those businesses for '19?

I'll stop there, but I have a follow-up afterwards.

Yes, I think to start with, you're absolutely right, and that was part, by the way, of our plans.

We knew that by incorporating these 2 brands, with, together with the Birds Eye, it would lead to obviously, to additional listings.

And 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." And on -- with the trade, in the field, we see the difference.

So that's really the first piece.

In terms of improvement and all the rest of it, the first manifestation is with these 2 additional brands, is obviously, they're becoming part of, they really have embraced this must-win battle strategy, which is about focus.

So -- and it means also, by the way, that we are defocusing some pieces of the part of the portfolio.

And that they understand what it means, so which is good news.

They see that it is starting to pay off.

Then in terms of the rest of the flywheel, which is obviously, improved packaging, improved quality, improved innovation and advertising, it's on its way.

So more to come, probably in Q2 and Q3.

Okay.

And then 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?

So again, maybe cost synergies net of the advertising spend you'd put back into the brands, is any of that baked into guidance?

Yes, I mean, Steve, it is baked into the guidance.

And we'll take our next question from John Baumgartner with Wells Fargo.

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.

So 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 kind of your progress overall?

Yes, I mean, as I mentioned in the remarks, we're expecting effectively margin growth, I mean, 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 cross-selling program that we have put in place in order for us to extract funding to self-fund our intervention.

And the source of funding are around leveraging, if you want, our strategies as defined.

Net revenue management is definitely providing upside in many areas, whether it is going to be about pricing, whether it is going to be about mix, which we can then use to reinvest.

Supply chain productivity is another one and the other piece is we continue effort in the area of indirect, where we are, now have the ability to implement some important projects that are effective shooting you again to the growth through efficiency that we are now generating.

Okay.

And then Stéfan, just a 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?

And then, I guess, in terms of the numbers, how do you think about profitability in the U.S. versus Europe?

And I guess, also to what extent is the distribution factored into your organic revenue for 2019?

Let's face it, it's going to be -- it's a starting point.

The Findus brand is a global brand, which is good news, and apparently has good recognition in the U.S. It is going to be, obviously, a price -- it's going to be well-priced, more as a good- to 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 and so at this stage, I wouldn't take too much out of this.

It's an encouraging start, but much more to be done, obviously.

And for us in terms of exports, U.S. is one piece.

We also believe that we have a lot to do in our -- 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.

So again, back to export, we're also trying very hard to focus beyond the limited number of countries, which was probably why it's not what it was in the past.

And we'll take our next question from Jon Tanwanteng with CJS Securities.

Maybe I'll start with Brexit.

Within your guidance, how much impact are you expecting from no-deal Brexit?

At this stage, 0. So basically it's impossible to have a clear definition of what it is going to be, as I said, even -- ask those politicians, they have no clue.

So we're working very hard, obviously, in terms of what's our risk within trade and all these things.

But we know, which is good news, is our model provides us with the right level of agility and flexibility to move within the next 2 years to fully adapt ourselves to whatever a no-deal Brexit would be, and in terms of price, in terms of footprint, in terms of leading with co-packers and all the rest of it.

So level of preparedness for the near term is high, that's very clear.

So we, the priority #1 for us is to make sure that our customers are not going to be -- that we're going to be able to supply them and so we've added a significant number of weeks ahead of what we already have, so additional inventory.

So don't be disappointed by the end of the quarter if inventory is increasing, so the working capital, obviously, will have to adapt itself, but we're doing that -- we're doing this for the right reasons.

Got it, that's helpful.

And then any color on Q1 sales, just now that we're 2 months in?

How are the markets doing, are 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 great.

And then 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 100 -- 180 days ago?

To your point, I think we, in terms of ratio, we're moving in the right direction, 3.9x is fine, so we know that it will be significantly lower by the end of the year, which is good, which again, re-creates the additional M&A opportunities for us.

This being said, we will keep our discipline and so 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 and the priority #1 is to reinforce our position as the leader and the consolidator of the frozen food industry in Europe.

And we'll take our next question from Bill Chappell with SunTrust.

This is actually Grant on for Bill.

We were 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 it 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 innovating to target new users.

I mean, attracting new users is going to be very important, and particularly, millennials that are very interested by all of these new vegetable forms, and that's going to be really one of the areas of focus.

The other element is especially 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, because they have access to a broader range.

Got it.

And then, I guess, just one other question on kind of the commodity outlook.

Obviously, you've said fish is up this year.

Is that specific to certain species, is that across the board?

And any other outlook to maybe the crop so far this year?

Yes, it's across the board.

It's most of the fishes are up, I mean, on fish, for sure.

We'll take our next question from Robert Moskow with Crédit Suisse.

I wanted to know -- I think in your opening remarks, you said that, that list prices are in place now, list price increases are in place starting in first quarter.

But then 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?

And I don't know, maybe you've touched on this already, but is there a lag in first quarter between price and inflation?

And when do you think that lag would be caught up?

Robert, maybe I wasn't clear enough, actually, sorry for this.

So overall, we are, let's say, in line with our expectations.

And our expectations in that -- in some countries, we will have all our price ready by the end of the year, even before.

And in some of the countries it would take more time.

Structurally, that's always the same in Europe, so you have countries like the U.K., which probably, you can put it in place, 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.

But overall, we're much in line with our expectations.

We're getting there, overall.

Some countries, obviously, went faster than expected; some others went a bit more slow -- slowly than expected.

But yes, I think it's in line with expectations and in the -- what is positive to say is also in the countries where we already put some prices, let's say, again, early signals, and that you can imagine that's something that we are monitoring very closely, we're checking the price elasticity.

It seems to be moving in the right direction.

But again, too early to say and absolutely crucial for us.

Okay.

So 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 you do have some -- it looks like you had a couple of factors in the first couple of quarters that are diluting it, and then does it catch up eventually?

And then if so, should we then be modeling most of the leverage from the SG&A line to get to your 8% to 10% EBITDA growth?

Yes, I can take that one.

I mean, the fact is that effectively, our gross margin overall the addition will be up.

And in total -- this will be up for the base, actually, just to be very clear.

In total, our gross margin in half 1 will be down in total, and it will be up in half 2, okay?

And you're going to see the effect of the acquisition indeed playing off, I mean, from that -- from this perspective, it's mainly driven by the acquisitions.

(Operator Instructions) We'll take our next question from Brian Holland with Consumer Edge Research.

Quick housekeeping question on the uptick, forgive me if you touched on this earlier, in finance cost in Q4, what was that tied to?

It's primarily due to phasing of accounting and that's primarily it overall.

So there's nothing to be concerned for the year ahead.

Okay, perfect.

And then most of my questions have been answered, but I 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, are 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, and because everybody is confronting the same issue, which is obviously, price -- I mean, COGS are increased.

Okay, and last one for me.

On the plant-based side, which seems to be a very successful launch for you, I'm just curious, what's the competitive landscape there like?

Are you a first mover kind of in the subsegment that you're playing in there?

How crowded is that and how much room do you feel like you have to expand over time, sort of in that need state, if you will?

Actually, we definitely believe it's a category that has a great future, that's one thing.

Definitely, our brands will play well with this category, and together with our distribution, obviously.

And 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, and to your point, a lot of people are starting to get in, we have what it takes to be the #1 in the category.

And it plays in all the right trends, in terms of health and wellness, sustainability and all these things, together with frozen food, by the way.

That concludes today's question-and-answer session.

At this time, I would like to turn the call over to Mr. Stéfan Descheemaeker.

So thank you for joining us on the call today to review our fourth quarter 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 first quarter results in May.

This concludes today's call.

Thank you for your participation.

You may now disconnect.